Texas Cases March 30, 2023: Moody v. Greer, Herz & Adams LLP

Case Description

1

On Appeal from the 122nd District Court Galveston County, Texas Trial Court Case No. 20-CV-1564-A

MEMORANDUM OPINION

Panel consists of Justices Goodman, Hightower, and Guerra.

Gordon Goodman Justice

Greer, Herz &Adams LLP and Ross Rankin Moody both filed motions to dismiss Robert L. Moody, Jr.'s lawsuit under Rule 91a of the Texas Rules of Civil Procedure. The trial court granted the motions to dismiss and dismissed the suit.

We affirm.

2

BACKGROUND

Plaintiff's Allegations Against the Law Firm and His Brother

In his first amended petition, which is his live pleading, Robert L. Moody, Jr., who goes by the name of Bobby, sued three defendants. He sued the law firm of Greer, Herz &Adams LLP and one of its partners, Irwin Herz, Jr., for breach of fiduciary duty. Bobby's fiduciary-duty claim against Herz was severed from this case in the trial court and is not at issue in this appeal. Bobby also sued his brother Ross Rankin Moody for participating, aiding and abetting, and conspiring with the other two defendants-Herz and the firm-in breaching their fiduciary duty.

For more than 30 years, Herz and the law firm represented Bobby and businesses that he owned or controlled: Moody Insurance Group, Inc. and three urgent care clinics. Herz and the law firm also represented Bobby with respect to various real-estate investments or ventures. In October 2017, Herz and the law firm declined to continue representing Bobby and his businesses. Bobby alleges that, several months later at a board meeting for Moody National Bank, Herz said he would financially ruin Bobby and make Bobby's life miserable.

During the same period that Herz and the law firm represented Bobby and his businesses and also after they stopped doing so, Herz and the law firm represented a host of businesses and organizations affiliated with the Moody family or members of the family. These businesses and organizations include but are not limited to the

3

American National Insurance Company, National Western Life Insurance Company, Moody Foundation, Moody Endowment, Moody National Bank and its indirect parent company Moody Bancshares, Moody Neurorehabilitation Institute (formerly known as Transitional Learning Center), and Regent Care.

Herz also is the trustee of the Three R Trusts. Robert L. Moody, Sr. created these trusts in 1960. The Three R Trusts are governed by a single trust agreement, but the Internal Revenue Service treats them as individual trusts for each of its four beneficiaries, who are Moody, Sr.'s children. Moody Sr. initially served as trustee, but Herz has occupied the role of trustee for more than 50 years. These trusts include hundreds of millions of dollars in assets, including the controlling shares in a number of significant businesses, like Moody National Bank.

Herz and the law firm for many years-more than 35 years, apparently-also represented Bobby and Ross's father, Moody, Sr. After being diagnosed with Alzheimer's disease in 2015, Moody, Sr. executed a power of attorney giving control of his Moody-related organizations to Moody National Bank's trust department. Through this power of attorney, the Bank's trust department now manages Moody, Sr.'s assets. And because Moody National Bank itself is an asset within the Three R Trusts, Herz, in his role as trustee of these trusts, controls Moody, Sr.'s assets.

In general, Bobby alleges that Herz, the law firm, and Ross acted together to push him out of the Moody business empire, take charge of it for themselves, and

4

enrich themselves at his expense. For example, Bobby alleges Ross was put on the board of American National Insurance Company in November 2016 and became that board's chairman in April 2017, while Bobby was removed from its board in July 2017. Similarly, Bobby alleges he was removed as chairman of the board of Moody Bancshares in July 2018. Meanwhile, Ross now sits on the board of numerous other Moody-related organizations, including the National Western Life Insurance Company, Moody National Bank, Moody Foundation, and Moody Endowment.

Bobby alleges that Herz and the law firm owed him a fiduciary duty arising from their former attorney-client relationship. This fiduciary duty included corresponding duties of loyalty and to make full disclosure. Bobby further alleges that Herz and the law firm breached these duties in numerous ways-with his petition specifying a lengthy laundry list of breaches.

Bobby's breach-of-fiduciary-duty allegations fall into several general categories. First, Bobby alleges breaches of fiduciary duty based on the placement of persons other than himself-specifically, Ross or his preferred candidates-on the boards of Moody-related organizations and based on other acts that diminished Bobby's role in these organizations. Bobby alleges Herz and the law firm:

• successfully worked to have Ross placed on the boards of Moody National Bank and Moody Bancshares;

• successfully worked with Ross to have Ross's daughter placed on the board of the Moody Foundation instead of Bobby;

5

• conspired to prevent Bobby from being placed on the board of the Moody-related foundation-the Robert L. Moody Foundation-that will choose the next trustee of the Three R Trusts;

• conspired with Ross to put Ross and Herz on American National Insurance Company's board and make Ross chairman, while removing Bobby;

• conspired with Ross to put Ross on Moody National Bank's board in return for Herz and the firm becoming National Western Life Insurance Company's general counsel;

• conspired with Ross to eliminate Bobby from all board positions in Moody-related organizations and to end all contracts Bobby or his businesses had with these organizations;

• worked with Ross to eliminate the board fees that Bobby received from the Moody Endowment; • repeatedly lied to Bobby about board meetings and elections;

• failed to disclose to Bobby the board meeting at which current board members of the Robert L. Moody Foundation were chosen; and

• successfully worked with Ross to demote and replace the head of Moody National Bank's trust department.

Second, Bobby alleges breaches of fiduciary duty based on conflicts of interest arising both from the failure to disclose these conflicts and taking actions adverse to him based on these conflicts. Bobby alleges Herz and the law firm:

• repeatedly placed the interests of its other clients-including American National Insurance Company, Moody National Bank, and National Western Life Insurance-ahead of Bobby's interests;

• repeatedly placed their own interests-specifically their financial interests in representing Moody-related organizations that generated greater fees than Bobby's business interests-ahead of Bobby's interests;

6

• repeatedly placed their own interests in being appointed as board members of Moody-related organizations ahead of Bobby's interests;

• repeatedly failed to disclose conflicts of interest inherent in their legal representation of the various Moody-related organizations, including conflicts arising from the simultaneous representation of Bobby, American National Insurance Company, National Western Life Insurance, and Regent Care;

• failed to address conflicts of interest resulting from their legal representation of Bobby and various Moody-related organizations, including the use of information gained from representing the former while representing the latter;

• failed to disclose and eliminate conflicts of interest inherent in the representation of two competing insurance companies, American National Insurance Company and National Western Life Insurance Company;

• failed to treat beneficiaries of the Three R Trusts equally and worked to advance Ross's interests ahead of Bobby's interests; and

• failed to disclose and eliminate conflicts of interest inherent in representing multiple beneficiaries of the trust as well as entities within the trust.

Third, Bobby alleges breaches of fiduciary duty based on the use of confidential and nonconfidential information, including financial information, that Herz and the law firm gained while representing him and his business interests for 30-plus years. Bobby alleges that Herz and the law firm used this information to:

• have Bobby removed from the board of American National Insurance Company; • have Bobby removed from being chairman of Moody Bancshares;

• remove Bobby's ability to vote Moody Bancshares' interest in the stock of another business-Hometown Bank;

• prevent Bobby from being named chairman of Moody National Bank;

7

• work to end various contracts and agreements Bobby had with multiple Moody-related organizations, including American National Insurance Company, Regent Care, and Transitional Learning Center;

• assist and conspire in the cancelation of the marketing agreement between Bobby and American National Insurance Company;

• assist and conspire in the cancelation of the consulting agreement between Bobby and American National Insurance Company;

• end a significant line of business Bobby had with Regent Care;

• work to reduce and ultimately eliminate Bobby's commissions earned as a result of his work with Regent Care;

• work to remove Bobby as agent of record for the Transitional Learning Center; and

• work to harm Bobby financially with the goal of assisting Ross to gain control and leadership of all Moody-related organizations.

Fourth, Bobby alleges several breaches of fiduciary duty that do not fit into the preceding categories or form a coherent category of their own. In particular, Bobby alleges that Herz and the law firm breached their fiduciary duty by:

• repeatedly failing to deal fairly and in good faith with Bobby;

• trying to evict Bobby from his office of more than 33 years;

• charging all Moody-related organizations, the ones that are assets within the Three R Trusts in particular, greatly increased legal fees; and

• Herz stating that he would financially ruin Bobby and make Bobby's life miserable.

In addition, Bobby alleges that Herz in his role as trustee of the Three R Trusts breached the fiduciary duty he owes Bobby as a trust beneficiary. Bobby alleges that Herz breached this fiduciary duty in numerous ways, including a similarly lengthy

8

laundry list of breaches relating to Herz's stewardship of the trust. Many of these breach-of-fiduciary-duty claims mirror the ones made against Herz and the law firm with respect to their role as counsel for Bobby and his businesses.

Bobby further alleges that Ross knew Herz and the law firm owed fiduciary duties to Bobby in their respective capacities as his counsel and as trustee, and that Ross knowingly participated in breaching these fiduciary duties or aided and abetted Herz and the law firm in breaching these duties. Bobby additionally alleges that Ross conspired with Herz and the law firm to breach these duties so that Ross could gain control of the Moody business empire and Herz and the law firm could enrich themselves from legal fees. Bobby alleges that Ross, Herz, and the law firm had a meeting of the minds as to this purpose and took multiple unlawful overt acts.

Finally, Bobby alleges that the conduct of Ross, Herz, and the law firm, proximately caused him damages. Bobby seeks to recover compensatory damages, the amount by which the value of his portion of the Three R Trusts has been reduced, disgorgement of all legal fees acquired through conduct constituting a breach of fiduciary duty, and punitive damages. He alleges damages exceeding $100 million.

The Law Firm's and Ross's Motions to Dismiss

The law firm moved to dismiss Bobby's claim for breach of fiduciary duty as well as any claim for conspiracy to commit a breach of fiduciary duty as having no basis in law or fact. The firm argued that Bobby's allegations conceded that the firm

9

had stopped representing him in October 2017 and had only represented him in three categories of business endeavors beforehand: Moody Insurance Group, three urgent care clinics, and certain real estate ventures. Thus, the law firm further argued, any fiduciary duty it owed Bobby was limited to these representations. But according to the law firm, Bobby's alleged breaches of fiduciary duty did not arise from these representations and thus did not state a viable cause of action. Nor had Bobby alleged any facts relating to the law firm's representation of him or his business endeavors. Moreover, the law firm argued that Bobby could not bring claims for breaches of fiduciary duty the firm allegedly committed against others, like the various Moody-related organizations, due to lack of capacity or standing. Finally, the law firm argued that Bobby's allegations as to damages were conclusory other than his claim for disgorgement of attorney's fees and that Bobby only sought disgorgement of fees that others had paid to the law firm, which does not state a legally valid claim.

Ross likewise moved to dismiss Bobby's claims against him as having no basis in law or fact. In support, Ross argued he owed fiduciary duties to the organizations in which he served as a board member, not to Bobby. Furthermore, Ross urged, the various Moody-related organizations themselves did not have any fiduciary or other duty to Bobby. Ross maintained that Bobby had not alleged any facts, as opposed to conclusory assertions, suggesting that Ross had participated in anyone else's breach of fiduciary duty, conspired to commit such a breach, or aided

10

and abetted another to commit such a breach. Like the law firm, Ross also argued that Bobby had not alleged a viable claim for breach of fiduciary duty against the law firm or any injury resulting from the law firm's representation of him. Similarly, Ross also argued that Bobby lacked capacity or standing to seek the disgorgement of attorney's fees that others had paid the law firm. And because these firm-related aspects of Bobby's claims failed, so did any derivative claims against Ross.

Trial Court's Ruling

The trial court granted the law firm's and Ross's motions to dismiss, and the trial court dismissed Bobby's claims against these defendants with prejudice. The trial court deferred awarding dismissal-related attorney's fees until a later date.

Transfer, Fee Award, Severance, and Appeal

After granting the motions to dismiss, the trial court transferred the entire case from Harris County to Galveston County. Upon transfer, the new trial court awarded attorney's fees to the law firm and Ross based on their successful motions to dismiss, severed the claims made against them from those made against Herz, and entered a final judgment as to the claims against the law firm and Ross. Bobby appeals.

DISCUSSION

Bobby contends the trial court erred in granting the law firm's and Ross's motions to dismiss. Bobby maintains that the allegations of his first amended petition state legally cognizable claims in adequate factual detail. Thus, he concludes, his

11

claims against the firm and Ross are not susceptible to dismissal. Moreover, even if his claims were susceptible to dismissal, Bobby contends the trial court was required to allow him the opportunity to amend his petition before dismissing his claims. Bobby further contends that because we must reverse the trial court's dismissal of his claims, we must also reverse the trial court's award of attorney's fees.

Standard of Review

Whether a defendant is entitled to dismissal under the facts alleged by the plaintiff is a question of law. In re Farmers Tex. Cty. Mut. Ins. Co. , 621 S.W.3d 261, 266 (Tex. 2021). We therefore review de novo the merits of a trial court's ruling on a motion to dismiss under Rule 91a of the Texas Rules of Civil Procedure. Id.

Dismissal of a Cause of Action under TRCP 91a

With exceptions not applicable here, a party "may move to dismiss a cause of action on the grounds that it has no basis in law or fact." TEX. R. CIV. P. 91a.1. The motion must identify each cause of action to which it is addressed and specify the reasons a cause of action has no basis in law, fact, or both. TEX. R. CIV. P. 91A.2.

"A cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought." TEX. R. CIV. P. 91a.1. This standard is applicable in at least two situations, specifically, when the petition alleges (1) too few facts to state a legally cognizable

12

claim for relief or (2) additional facts that, if true, bar recovery. Guillory v. Seaton, LLC , 470 S.W.3d 237, 240 (Tex. App.-Houston [1st Dist.] 2015, pet. denied).

"A cause of action has no basis in fact if no reasonable person could believe the facts pleaded." TEX. R. CIV. P. 91a.1. This standard is like legal-sufficiency review, which asks whether a reasonable factfinder could make a given finding. City of Dallas v. Sanchez , 494 S.W.3d 722, 724 (Tex. 2016) (per curiam); Wooley v. Schaffer , 447 S.W.3d 71, 75 (Tex. App.-Houston [14th Dist.] 2014, pet. denied).

In evaluating the sufficiency of the plaintiff's allegations, the trial court must apply the fair-notice standard of pleading required by our procedural rules. Galperin v. Smith Protective Servs. , No. 01-18-00427-CV, 2019 WL 2376118, at *2 (Tex. App.-Houston [1st Dist.] June 6, 2019, no pet.) (mem. op.) (citing Wooley , 447 S.W.3d at 76). Under this standard, the allegations must give a defendant fair notice of the claim the plaintiff is making. TEX. R. CIV. P. 45(b), 47(a). To give fair notice, the allegations must inform the defendant of not only the cause of action but also the factual allegations underlying the legal claim as well as the relief sought. Montelongo v. Abrea , 622 S.W.3d 290, 300 (Tex. 2021); see, e.g. , San Jacinto River Auth. v. Burney , 570 S.W.3d 820, 832-38 (Tex. App.-Houston [1st Dist.] 2018) (plaintiffs adequately pled statutory taking where their petition included "extensive and detailed factual allegations," including allegations that river authority released water knowing that doing so had flooded area at issue in past and therefore knew its

13

decision to release water would likely flood and damage their properties), judg't aff'd sub nom. San Jacinto River Auth. v. Medina , 627 S.W.3d 618 (Tex. 2021).

The test as to whether a pleading provides fair notice is whether a competent lawyer can ascertain from the allegations the nature and basic issues in dispute and the type of evidence that likely is relevant. Lawrence v. Reyna Realty Grp. , 434 S.W.3d 667, 675 (Tex. App.-Houston [1st Dist.] 2014, no pet.). The purpose of fair notice, after all, is to ensure the defendant has the information needed to prepare a defense. Horizon/CMS Healthcare Corp. v. Auld , 34 S.W.3d 887, 897 (Tex. 2000). Thus, the fair-notice standard requires the plaintiff to do more than merely recite threadbare allegations of the elements of a cause of action supported by conclusory statements. Zheng v. Vacation Network , 468 S.W.3d 180, 186 (Tex. App.-Houston [14th Dist.] 2015, pet. denied). However, fair notice does not require a plaintiff to set out in his pleading the evidence on which he will rely to establish the cause of action he alleges. Tex. Dep't of Parks &Wildlife v. Miranda , 133 S.W.3d 217, 230 (Tex. 2004) (plurality op.) (citing Paramount Pipe &Supply Co. v. Muhr , 749 S.W.2d 491, 494-95 (Tex. 1988)). In other words, under the fair-notice standard, the plaintiff need not plead evidentiary matters with meticulous particularity. Schwartz v. Ins. Co. of State of Penn. , 274 S.W.3d 270, 276 (Tex. App.-Houston [1st Dist.] 2008, pet. denied). It is not a valid objection that a petition does not contain enough

14

factual details, provided that it gives the defendant fair notice of the claim. Aldous v. Bruss , 405 S.W.3d 847, 857 (Tex. App.-Houston [14th Dist.] 2013, no pet.).

In ruling on the merits of a motion to dismiss, the trial court "may not consider evidence" and "must decide the motion based solely on the pleading of the cause of action" as well as any pleading exhibits allowed under Rule 59 of the Texas Rules of Civil Procedure. TEX. R. CIV. P. 91a.6. Of course, the trial court may also consider the substance of the motion, response, and arguments of counsel. Bethel v. Quilling, Selander, Lownds, Winslett &Moser, P.C., 595 S.W.3d 651, 655-56 (Tex. 2020).

Analysis

I. Breach of Fiduciary Duty

A. Applicable law

In general, the elements of a claim of breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach; (3) causation; and (4) damages. First United Pentecostal Church of Beaumont v. Parker , 514 S.W.3d 214, 220 (Tex. 2017). An attorney owes a fiduciary duty to his client as a matter of law. Meyer v. Cathey , 167 S.W.3d 327, 330 (Tex. 2005) (per curiam). As a fiduciary, the attorney owes his client the utmost good faith in their dealings, must disclose all material facts that would affect their relationship as well as the legal consequences of these facts, including any conflicts of interest, and refrain from using the client's confidential information for his own benefit and against the client's interest.

15

Deutsch v. Hoover, Bax &Slovacek, L.L.P. , 97 S.W.3d 179, 190 (Tex. App.-Houston [14th Dist.] 2002, no pet.). An attorney breaches his fiduciary duty to a client if the attorney benefits improperly from the attorney-client relationship by, for example, subordinating his client's interest to his own, retaining the client's funds, engaging in self-dealing, improperly using client confidences, failing to disclose conflicts of interest, or making misrepresentations to achieve these ends. Stallworth v. Ayers , 510 S.W.3d 187, 191 n.3 (Tex. App.-Houston [1st Dist.] 2016, no pet.). But the attorney's fiduciary duty to his client generally extends only to the scope of the representation. Joe v. Two Thirty Nine Joint Venture , 145 S.W.3d 150, 159-60 (Tex. 2004). While actual damages must be proved to prevail for breach of fiduciary duty, in the context of an attorney-client relationship, the client need not prove actual damages to obtain forfeiture of attorney's fees he has paid as an equitable remedy when his attorney has committed a clear and serious breach of fiduciary duty. Parker , 514 S.W.3d at 220; Burrow v. Arce , 997 S.W.2d 229, 240-46 (Tex. 1999).

B. Evaluation of the plaintiff's claims

As discussed in our description of Bobby's petition, his allegations of breach of fiduciary duty by the law firm fall into four general categories. To wit:

(1) the placement of others, Ross and his preferred candidates in particular, on the boards of various Moody-related organizations in lieu of him;

(2) the failure to disclose conflicts of interest and subordination of his interest to the interest of others based on these undisclosed conflicts of interest;

16

(3) the improper use of confidential and nonconfidential information gained in the course of representing him to take actions against his interest; and

(4) a handful of breaches of fiduciary duty that neither fit into the preceding three categories of breaches nor form a coherent category of their own.

We address each of these categories of breach of fiduciary duty in turn.

1. Board placements

As to the first category, Bobby does not allege a claim that has a basis in law because his allegations, taken as true, together with inferences reasonably drawn from them, do not entitle him to relief for breach of fiduciary duty. By Bobby's own admission, the law firm represented him with respect to three business endeavors: Moody Insurance Group, three urgent care clinics, and certain real estate ventures. Bobby also alleges that the firm represented him personally, but he does not allege this representation included work to place him on the boards of any Moody-related organizations or keep others off of these boards. Nor may it reasonably be inferred that a law firm, let alone the law firm that Bobby alleges represents all these Moody-related organizations, could or would be engaged to achieve these ends, which on their face do not entail legal work. Simply put, because the law firm's representation of Bobby and his business interests did not encompass lobbying for board positions or representing Bobby in disputes about board positions, he cannot state a viable claim for breach of fiduciary duty based on these allegations, as the law firm did not

17

have any duty to act on Bobby's behalf in these matters. See Joe , 145 S.W.3d at 159-60 (scope of attorney's fiduciary duty is limited by scope of representation).

2. Conflicts of interest

Bobby's second category of allegations fares no better for similar reasons. While the failure to disclose conflicts of interest and the subordination of the client's interest based on such conflicts does constitute a breach of fiduciary duty, Bobby's factual allegations belie any such claim. In his petition, Bobby does not identify specific conflicts of interest arising from the law firm's representation of him and his business interests and the firm's representation of another client or the firm's own interest. Instead, Bobby in the main refers to conflicts of interest that ostensibly exist between one Moody-related organization and another, none of which he owns or controls. These alleged conflicts of interest, however, simply do not involve the law firm's representation of Bobby or his interests, and any viable claim for breach of fiduciary duty must arise from the scope of its representation of him. See id.

Bobby does allege in general terms that the law firm repeatedly placed its own interest or the interests of Moody-related organizations ahead of his interest, but these general allegations are too conclusory-devoid of factual details-to state a viable claim for breach of fiduciary duty. Here, context matters. While only fair notice is required, the facts and evidence of a given case affect the application of this relatively liberal standard. Low v. Henry , 221 S.W.3d 609, 612 (Tex. 2007). Bobby

18

alleges the law firm represented both him and the various Moody-related organizations for more than 30 years. Yet, in his pleading, Bobby does not identify specific conflicts of interest that compromised the firm's representation of him or his interest. Given the span of time involved, generic references to his interest, the interests of others, and unidentified conflicts between them are insufficient. No competent attorney could prepare a defense based on these threadbare allegations, which are not anchored in time or connected to any particular events or outcomes (other than the claims about board placements, which themselves are not actionable). See Montelongo , 622 S.W.3d at 300 (fair notice requires statement of factual allegations underlying legal claim); Zheng , 468 S.W.3d at 186 (fair notice requires more than threadbare or conclusory recitation of elements of cause of action).

Bobby also alleges the law firm did not disclose conflicts of interest arising from its representation of multiple beneficiaries of the Three R Trusts, failed to treat these beneficiaries' interests equally, and placed Ross's interest in particular ahead of Bobby's interest. But these allegations implicate Herz's performance as trustee, not his or the law firm's role as counsel-to Bobby, any of the Moody-related organizations, or even the trust itself. As trustee, Herz is a fiduciary of the trust beneficiaries. See Huie v. DeShazo , 922 S.W.2d 920, 923 (Tex. 1996). But lawyers performing legal work on behalf of the trust do not represent the beneficiaries. See id. at 925. And Bobby has not alleged that the law firm represented him in his role

19

as trust beneficiary, as opposed to representing him in other legal matters, or in connection with any trust-related transactions or disputes between the beneficiaries. In other words, Bobby has not alleged any basis on which the law firm would owe him a fiduciary duty with respect to the Three R Trusts based on its legal representation of him, his businesses, or his real estate ventures. Thus, Bobby cannot state a viable fiduciary-duty claim based on these allegations because the law firm did not have any duty in its role as his lawyer to act on his behalf in trust-related matters or represent his interests as a trust beneficiary. See Joe , 145 S.W.3d at 15960 (scope of attorney's fiduciary duty is limited by scope of representation).

Moreover, like his allegations about other conflicts of interest, Bobby's claims about conflicts of interests arising from the law firm's representation of multiple persons who happen to be beneficiaries of the Three R Trusts are conclusory. Bobby's allegations that the law firm did not treat the interests of the beneficiaries equally and subordinated his interest to Ross's are bereft of facts about when this happened, how it was accomplished, or any harm that resulted. Threadbare allegations of inequality and preferential treatment resulting from unspecified conflicting interests among the beneficiaries do not provide fair notice of the claims made. See Montelongo , 622 S.W.3d at 300 (fair notice requires statement of factual allegations underlying legal claim); Zheng , 468 S.W.3d at 186 (fair notice requires more than threadbare or conclusory recitation of elements of cause of action).

20

3. Improper use of client information

The improper use of client confidences or use of the client's confidential information for an attorney's own benefit and against the client's interest can serve as the basis for a claim of breach of fiduciary duty. However, Bobby's allegations to this effect are too threadbare to lend the necessary factual support to such a claim.

Bobby alleges that the law firm improperly made use of confidential and nonconfidential information, including financial information, that it gained during its representation of him. As an initial matter, it seems improbable that the firm's alleged use of nonconfidential information could support a claim for breach of fiduciary duty. See, e.g. , Kennedy v. Gulf Coast Cancer &Diagnostic Ctr. at Se. , 326 S.W.3d 352, 360 (Tex. App.-Houston [1st Dist.] 2010, no pet.) (attorney who uses client's confidential information for his own interest and against client's interest to client's detriment may be liable for breach of fiduciary duty). But whatever the case may be, Bobby has not identified particular information-confidential or nonconfidential-the law firm allegedly gained by representing him and then improperly used. In the context of a representation spanning more than 30 years, a general allegation that the firm misused some unidentified client information does not give fair notice of the claim. See Montelongo , 622 S.W.3d at 300 (fair notice requires statement of factual allegations underlying legal claim); Zheng , 468 S.W.3d at 186 (fair notice requires more than threadbare or conclusory recitation of elements

21

of cause of action); see also Brown v. Green , 302 S.W.3d 1, 11 (Tex. App.-Houston [14th Dist.] 2009, no pet.) (general and conclusory statements as to use of confidential information insufficient to resist no-evidence summary judgment).

Similarly, with respect to causation, Bobby alleges the law firm used his unspecified client information to achieve various ends, like removing him from the board of one Moody-related organization and securing the cancelation of marketing and consulting agreements with that same organization. But Bobby does not allege how the law firm used or could have used client information of any sort to bring about Bobby's removal from the board or the cancelation of contracts. While Bobby is not obligated to catalogue with meticulous particularity the evidence he would rely on to support these claims, he must at least allege the basic facts underlying them. Instead, he has merely made a conclusory assertion that the law firm improperly used his information to achieve these ends, a claim that requires some factual elaboration if for no other reason than because the boards of the Moody-related organizations would have been the decisionmakers, not the law firm.

Bobby tries to avoid this infirmity by alleging that the law firm acted indirectly, using his information to have him removed from the board by others and to assist and conspire with others in the cancelation of the contracts. But because these additional allegations are likewise conclusory-Bobby does not specify what client information was shared with whom or why this influenced them-they merely

22

make his claims that much murkier. When read as a whole, these allegations still do not provide the law firm with fair notice of the claim being made because at each step of the way they consist of conclusory assertions rather than factual allegations. See Montelongo , 622 S.W.3d at 300 (fair notice requires statement of factual allegations underlying legal claim); Zheng , 468 S.W.3d at 186 (fair notice requires more than threadbare or conclusory recitation of elements of cause of action).

4. Other alleged breaches

Without elaboration, Bobby alleges that the law firm repeatedly "failed to deal fairly and in good faith" with him. Assuming that Bobby means that the law firm did so during the course of representing him, that period spans more than 30 years. On its face, his conclusory assertion of repeated failures to be fair or act in good faith, without any suggestion of the conduct at issue, does not provide fair notice of the claims that Bobby is making against the law firm. See Montelongo , 622 S.W.3d at 300 (fair notice requires statement of factual allegations underlying legal claim).

Without elaboration, Bobby alleges that the law firm attempted to evict him from an office he has had for more than 33 years. Bobby does not allege the law firm is his landlord, and he premises his fiduciary-duty claim on the attorney-client relationship that once existed between him and the law firm, so he presumably does not mean the law firm tried to evict him from the office in the most literal sense. But Bobby also does not allege that the law firm represented his landlord-whoever that

23

might be-in an eviction suit or other eviction-related efforts. Bobby does not allege any factual allegations whatsoever in support of this claim, including when this happened, whether it was before or after the firm stopped representing him, the nature of any lease or other relevant agreement as to the office, the identity of the parties to this lease or agreement, or the circumstances of the attempted eviction. Nonetheless, it is possible that this eviction allegation provides fair notice to the firm of the claim being made simply because of the specificity of the issue of eviction. See Aldous , 405 S.W.3d at 857-58 (allegation that defendants accused plaintiff of numerous criminal offenses electronically, in writing, and orally was sufficient to provide fair notice that plaintiff was alleging claim for defamation per se even though plaintiff's petition did not recite specific defamatory statements at issue).

Even so, Bobby's attempted-eviction allegation does not state a claim that has a basis in law. As noted, Bobby alleges that the law firm breached the fiduciary duty it owed him as his onetime counsel. But Bobby does not allege that the scope of the firm's representation of him ever entailed securing office space on his behalf. Nor does Bobby allege that the law firm simultaneously represented him and another who was adverse to him with respect to the eviction. Without some alleged connection to the scope of legal services the firm provided, whatever it is the firm is alleged to have done-the court cannot ascertain what the firm allegedly did based on the conclusory allegation made-cannot be characterized as a breach of the firm's

24

fiduciary duty to Bobby as his counsel or former counsel. See Joe , 145 S.W.3d at 159-60 (scope of attorney's fiduciary duty is limited by scope of representation); IQ Holdings v. Stewart Title Guar. Co. , 451 S.W.3d 861, 871 (Tex. App.-Houston [1st Dist.] 2014, no pet.) (fiduciary duties don't extend beyond scope of relationship).

Without elaboration, Bobby alleges that once Herz "gained control," the law firm's legal fees charged to all Moody-related organizations, and specifically those within the Three R Trusts, "increased exponentially." Presumably, Bobby is alleging that the firm is engaged in some form of self-dealing. Once again, however, this fee allegation has nothing to do with the law firm's representation of Bobby or his business interests. Because this allegation, which concerns what other clients pay the firm, does not arise out of the attorney-client relationship that existed between Bobby and the firm, he cannot state a viable claim for breach of fiduciary duty on this basis. See Joe , 145 S.W.3d at 159-60 (scope of attorney's fiduciary duty is limited by scope of representation); see also Huie , 922 S.W.2d at 925 (lawyers performing legal work on behalf of trust do not represent trust beneficiaries).

Finally, Bobby alleges that Herz's threat to ruin him financially and make his life miserable is a breach of fiduciary duty. But Bobby alleges that Herz made this threat several months after the law firm stopped representing him and his interests. Because Herz threatened Bobby after the attorney-client relationship had ended, Bobby cannot state a viable claim for breach of fiduciary duty based on this threat.

25

See, e.g. , Burnett v. Sharp , 328 S.W.3d 594, 601-02 (Tex. App.-Houston [14th Dist.] 2010, no pet.) (indicating that outside context of suits involving attorney's failure to give client funds belonging to client after representation ends, rule is that attorney's fiduciary duty to client ends when attorney-client relationship ends); see also Jetall Cos. v. Hoover Slovacek LLP , No. 14-20-00691-CV, 2022 WL 906218, at *6 (Tex. App.-Houston [14th Dist.] Mar. 29, 2022, pet. denied) (mem. op.) (attorney owes fiduciary duty to client but, absent agreement to contrary, fiduciary duty created by attorney-client relationship ends when relationship ends).

II. Knowing Participation, Civil Conspiracy, and Aiding and Abetting A. Applicable law

A third party who knowingly participates in the breach of fiduciary duty that a fiduciary owes to someone else becomes a joint tortfeasor with the fiduciary and is liable as such. ERI Consulting Eng'rs v. Swinnea , 318 S.W.3d 867, 881 (Tex. 2010); JSCNeftegas-Impex v. Citibank , 365 S.W.3d 387, 411 (Tex. App.-Houston [1st Dist.] 2011, pet. denied). To be liable on the basis of knowingly participating in the breach of another's fiduciary duty, the third party must take part in the breach with actual awareness that the fiduciary owed such a duty and was breaching this duty. See JSC Neftegas-Impex , 365 S.W.3d at 411; see also DeYoung v. Beirne, Maynard &Parsons, L.L.P. , No. 01-13-00365-CV, 2014 WL 1058201, at *6 (Tex. App.-Houston [1st Dist.] Mar. 18, 2014, no pet.) (mem. op.) (stating that to

26

establish knowing participation plaintiff must prove that third party (1) knew of fiduciary's breach of duty and (2) was aware of its own participation in breach of fiduciary duty). The third party need not be a fiduciary in his own right to be liable for knowingly participating in another's breach of fiduciary duty. Villarreal v. Wells Fargo Brokerage Servs. , 315 S.W.3d 109, 126-27 (Tex. App.-Houston [1st Dist.] 2010, no pet.). Liability based on knowing participation is derivative liability, inasmuch as the third party's liability depends on the underlying breach of fiduciary duty by the fiduciary. In re Est. of Poe , 648 S.W.3d 277, 286 (Tex. 2022).

Civil conspiracy is a vicarious liability theory that imparts liability to a coconspirator who may not otherwise be liable for the underlying tort or other wrong. Agar Corp. v. Electro Circuits Int'l , 580 S.W.3d 136, 140-42 (Tex. 2019). The elements of civil conspiracy are: (1) a combination of two or more persons; (2) the persons seek to accomplish an object or course of action; (3) the persons reach a meeting of the minds on the object or course of action; (4) one or more unlawful, overt acts are taken in pursuit of the object or course of action; and (5) damages occur as a proximate result. Parker , 514 S.W.3d at 222. To be cognizable, a civil conspiracy requires the coconspirator to have the specific intent to agree to accomplish something unlawful or to accomplish something lawful by unlawful means. Id. This is because the plaintiff's injury arises from the underlying tort or wrong, not the conspiracy in and of itself. Agar Corp. , 580 S.W.3d at 141-42.

27

It is an open question whether Texas recognizes aiding and abetting another to commit a tort as a basis for liability. Our Supreme Court has not decided whether a claim for aiding and abetting exists. Parker , 514 S.W.3d at 224. Nor have we. See Nguyen v. Watts , 605 S.W.3d 761, 792 n.19 (Tex. App.-Houston [1st Dist.] 2020, pet. denied) (declining to decide issue based on appellate record). To the extent aiding-and-abetting liability exists, the Court has said that it is a derivative or vicarious theory of liability. Nettles v. GTECH Corp. , 606 S.W.3d 726, 738 (Tex. 2020). Our sister court has listed the elements as: (1) the primary actor committed a tort; (2) the defendant knew that the primary actor's conduct constituted a tort; (3) the defendant intended to assist the primary actor; (4) the defendant gave the primary actor assistance or encouragement; and (5) the defendant's conduct was a substantial factor in causing the tort. Immobiliere Jeuness Establissement v. Amegy Bank Nat'l Ass'n , 525 S.W.3d 875, 882 (Tex. App.-Houston [14th Dist.] 2017, no pet.).

B. Evaluation of the plaintiff's claims

Bobby's allegations of knowing participation, conspiracy, and aiding and abetting on Ross's part are perfunctory and devoid of factual detail of any sort. After referencing his allegations against Herz, Bobby then alleges that Ross knew Herz, in his role as a lawyer and trustee, owed Bobby fiduciary duties and Ross also knew he was benefitting from, participating in, and providing assistance to Herz in breaching these duties. In addition, Bobby alleges that Ross conspired with Herz and

28

the law firm to gain control of the Moody-related organizations and enrich themselves. According to Bobby, they "had a meeting of the minds on this objective," and they "took multiple unlawful and overt acts toward this objective."

Bobby's allegations are conclusory. He essentially does no more than recite the elements of these derivative or vicarious theories of liability. But fair notice requires more than threadbare allegations of the elements of a cause of action supported by conclusory statements. Zheng , 468 S.W.3d at 186. Fair notice requires one to disclose the factual allegations underlying a claim. Montelongo , 622 S.W.3d at 300. As Bobby has not done so, his claims against Ross have no basis in law. See, e.g. , Darnell v. Rogers , 588 S.W.3d 295, 305 (Tex. App.-El Paso 2019, no pet.) (affirming dismissal of "claims for aiding and assisting, aiding and participating, acting in participation, and conspiracy" that recited elements in general terms).

In particular, we note that the various derivative or vicarious theories of liability Bobby asserts as to Ross require knowledge or knowing participation on his part. But Bobby alleges this knowledge or knowing participation in purely conclusory terms without any supporting factual allegations whatsoever. For this reason in particular, Bobby's derivative or vicarious claims have no basis in law. See, e.g. , Fiamma Statler, LP v. Challis , No. 02-18-00374-CV, 2020 WL 6334470, at *12 (Tex. App.-Fort Worth Oct. 29, 2020, pet. denied) (mem. op.) (holding that unadorned recital that defendant "knew" or had "full knowledge" of breach of

29

fiduciary duty without supporting factual allegations did not provide fair notice and thus affirming trial court's dismissal of aiding-and-abetting claim as conclusory).

To the extent Bobby makes any specific claims (ones about specific subjects, however lacking in the factual allegations necessary to support them they may be), for the reasons we have already stated, these complaints-the ones about board appointments, cancelation of contracts, and attempted eviction-cannot support an underlying claim for breach of fiduciary duty against Herz and the law firm. And because Bobby's theories of liability as to Ross are all derivative or vicarious of the claim made against Herz and the firm, the derivative or vicarious claims fail too. See, e.g., Transcor Astra Grp. v. Petrobras Am., 650 S.W.3d 462, 479-80 (Tex. 2022) (conspiracy and aiding-and-abetting claims based on fiduciary-duty and fraud claims that were subject to summary judgment were also subject to summary judgment); Agar Corp. , 580 S.W.3d at 148 (conspiracy claims based on underlying torts that were barred by statute of limitations were also barred by limitations).

III. Amendment of Pleadings

Bobby argues that the trial court erred in not allowing him to amend his petition in lieu of dismissing his claims because Rule 91a allows amendment.

A. Applicable law

When a defendant files a motion to dismiss under Rule 91a, three general courses of action are available to the plaintiff. The plaintiff may (1) nonsuit a

30

challenged cause of action; (2) amend a challenged cause of action; or (3) maintain a challenged cause of action as he has pleaded it. See TEX. R. CIV. P. 91A.5.

If the plaintiff nonsuits a challenged cause of action at least three days before the hearing on the motion to dismiss, the trial court may not rule on the motion. TEX. R. CIV. P. 91a.5(a). If he amends a challenged cause of action at least three days before the hearing on the motion to dismiss, the defendant may withdraw the motion to dismiss or file an amended motion, so long as he does so before the hearing date. TEX. R. CIV. P. 91a.5(b). If the defendant withdraws the motion, the trial court may not rule on it. TEX. R. CIV. P. 91a.5(c). Whereas, if the defendant files an amended motion, the deadlines for the plaintiff to nonsuit or further amend a challenged cause of action restart. TEX. R. CIV. P. 91a.5(d). Unless the parties agree otherwise, the trial court must rule on a motion to dismiss if the motion has not been withdrawn or the challenged cause of action has not been nonsuited. TEX. R. CIV. P. 91a.5(c).

In ruling on a motion to dismiss, the trial court cannot consider an amendment to a challenged cause of action that was not filed at least three days before the hearing. TEX. R. CIV. P. 91a.5(b), (c). Rule 91a does not provide for the amendment of a challenged cause of action after the trial court has granted a motion to dismiss.

B. Evaluation of the plaintiff's position

Bobby did not amend the challenged causes of action at least three days before the hearing on the law firm's and Ross's motions to dismiss. Nor did he try to

31

untimely amend the challenged causes of action. Instead, in his response to the motions to dismiss, he argued that his allegations were adequate, and asked for permission to amend his first amended petition if the trial court disagreed. In other words, Bobby sought leave to amend only in the event of an unfavorable ruling.

Rule 91a expressly sets forth when a plaintiff may amend a challenged cause of action, providing that this must be done at least three days before the hearing on a motion to dismiss and "the court must not consider" a proposed amendment that does not comply with Rule 91a's deadline. TEX. R. CIV. P. 91a.5(b), (c); see also Gaskamp v. WSP USA , 596 S.W.3d 457, 467 (Tex. App.-Houston [1st Dist.] 2020, pet. dism'd) (en banc) (noting Rule 91a expressly addresses amendment of pleadings). In Dailey v. Thorpe , we ruled that Rule 91a does not allow a plaintiff to seek a ruling and amend in the event the ruling is an unfavorable one resulting in dismissal. 445 S.W.3d 785, 790 (Tex. App.-Houston [1st Dist.] 2014, no pet.).

Bobby argues that Dailey is not binding because our court disapproved of amendments after the trial court makes a Rule 91a ruling in dicta. We disagree.

In Dailey , the court made two distinct determinations. First, the court determined that the plaintiffs were not entitled to amend in lieu of dismissal because they had not requested this relief in the trial court. Id. Second, the trial court determined that Rule 91a's text does not allow for "an opportunity to cure any defects after the fact." Id. When, as in Dailey , a court could have relied on either of

32

two determinations-there, error preservation and application of Rule 91a's text- to reach its ultimate conclusion-there, no entitlement to replead-the court's determinations are alternative holdings, not dicta. See State Farm Mut. Auto Ins. Co. v. Lopez , 156 S.W.3d 550, 554-55 (Tex. 2004) (distinguishing between dicta and alternative holdings in case involving latter-waiver and substantive ruling).

At any rate, even if one could accurately describe Dailey 's determination that Rule 91a does not allow a plaintiff to replead after an unfavorable ruling as dicta, its determination is correct because the language of Rule 91a is not open to any other interpretation. Accordingly, we would hew to Dailey even if its determination were dicta because we are persuaded that its determination of this issue is correct.

IV. Attorney's Fees

When a trial court grants a motion to dismiss, the trial court generally may award costs and attorney's fees to the prevailing party. TEX. R. CIV. P. 91a.7. Here, the trial court did so, and Bobby solely challenges the trial court's fee award on the basis that the award must be reversed because the trial court improperly dismissed his claims. Because we have held that dismissal was proper, we reject this challenge.

33

CONCLUSION

We affirm the trial court's judgment.