Texas: The First Court of Appeals Authors a 39 Page Opinion Feeling Sorry for a Law Firm Seeking to Collect on a 20 Year Old Judgment

A Houston law firm’s 20-year effort to collect a $38,000 judgment from a nonpaying client is back on track after an appellate court reversed the former client’s summary judgment victory and remanded the case to a trial court.

Two decades ago, Spencer & Associates represented Stephen Harper in a case, and he didn’t pay his legal fees, according to the Aug. 6 opinion in Spencer & Associates v. Harper. In a fee dispute, the firm in 1999 won a judgment against Harper for more than $33,200 in damages and $5,000 in attorney fees, plus 10 percent post-judgment interest.

“In the 20 years since the county court rendered its judgment, Harper has resisted all attempts to execute on the judgment,” said the opinion by Houston’s First Court of Appeals, which noted that since then, Spencer Law Firm lawyers have spent more than $166,000 of attorney time seeking to collect on the underlying judgment.

As part of that effort, the Spencer firm in 2013 conducted post-judgment discovery and litigation regarding nonexempt assets from Harper, his wife and her company, and other entities. Then in December 2016, the firm sued the Harper parties for common-law fraud, fraud by nondisclosure, conspiracy to commit fraud, and violation of the Texas Uniform Fraudulent Transfer Act. The suit alleged that Harper evaded collection efforts by serving as president and director of his wife’s company while reporting he did not earn income or assets. The firm also alleged Harper’s wife conspired to thwart its collection efforts by paying for her husband’s personal expenses so that he could claim he had no income.

The Harper parties countered that the firm’s lawsuit was part of a long line of harassing legal proceedings against Harper, and claimed that the firm over many years received voluminous financial documents, but could never prove that Harper possessed assets to satisfy the judgment.

The Harper parties won a summary judgment ruling on all of the firm’s claims, while Spencer & Associates got a take-nothing judgment.

In its appeal, the law firm argued it had raised fact issues on all of its claims, and that the trial court had erred in granting summary judgment for the Harper parties, the opinion noted.

For example, on its common-law fraud and fraud by nondisclosure claims, the firm produced evidence that Harper disclosed one bank account with a less than $1 balance, but didn’t disclose another with a more than $12,000 value. That account was drained of funds before the firm ever learned of its existence, according to the ruling.

For the conspiracy claim, the opinion said there was a fact issue because the firm presented evidence that Harper worked for his wife’s company and didn’t get a paycheck, but that the company directly paid for more than $200,000 in bills and expenses for Harper as its method of compensating him. The appellate court also found fact issues regarding the firm’s claim for violation of the Texas Uniform Fraudulent Transfer Act.

The First Court reversed the trial court’s summary judgment decision and remanded the case to the trial court.

Henke, Williams & Boll partner Kathleen Boll of Houston, who represents the Harper parties, said she disagrees with the opinion and plans to confer with her clients about seeking rehearing, or appealing the ruling.

“We think there is no evidence of causation or damages,” she said, noting that her clients deny the law firm’s allegations. “It’s not appropriate for a fraudulent transfer lawsuit.”

Spencer Law Firm senior counsel Dawn Meade, who represents her firm, didn’t return a call or email seeking comment before deadline.

IF EVER THERE WAS A LEGAL DEFENDER FOR LAWYERS ON THE APPEALS PANEL, EVELYN KEYES IS THAT JUSTICE

Justice Evelyn V. Keyes was appointed to the First Court of Appeals by Governor Rick Perry in May 2002. She was elected in November 2002 to the remainder of her predecessor’s term and re-elected to six-year terms in 2004, 2010, and 2016.

Before joining the First Court, Justice Keyes was a partner in Clements, O’Neill, Pierce, Wilson, and Fulkerson, L.L.P., practicing complex civil litigation. She also served as a Special Assistant Attorney General to then Texas Attorney General John Cornyn.

She is a founder of the Court’s undergraduate judicial internship program, which is affiliated with the Judicial Practicum program at Rice University.

Justice Keyes is a member of the Texas State Bar, and, before joining the state bench, the United States Supreme Court Bar, and federal bars for the Southern and Western Districts of Texas and the Fifth Circuit. She is a member of the American Law Institute, an advisor to the ALI Government Ethics Project, and a member of the Members Consultative Group for several projects. She is also a former member of the National Advisory Council of the American Judicature Society and a member of its Ethics Committee and of the successor National Center for State Court Ethics Committee.

Justice Keyes is a member of the American Bar Foundation; a life member of the Texas Bar Foundation and Houston Bar Foundation; and a member of the Texas State Bar College. She is a member of the American Bar Association and a former national Chair of its Young Lawyers Division Ethics Committee.

She is a member of the Texas State Bar Association, where she served two terms on the Judicial Section Board of Directors and chaired the Section’s Ethics Committee and By-laws Committee. She also served on the State Bar’s Standing Committee on the Texas Disciplinary Rules of Professional Conduct, the State Bar Court Rules Committee, and the 4-H Grievance Committee.

She has been appointed to the Judicial Mental Health Commission’s Collaborative Council. She is also a member the Houston Bar Association, where she has served on various committees. Justice Keyes has published several articles in law and legal philosophy and has given a number of presentations on legal and jurisprudential topics. She has also served in many positions on the Executive Committee of the Houston Philosophical Society, including as President and as Chair of the Long-Range Planning Committee

Justice Keyes received her Doctor of Jurisprudence degree cum laude from the University of Houston Law Center. She was Chief Articles Editor of the Houston Law Review and a member of the Order of the Coif, the Order of the Barons, and Phi Delta Phi and was awarded the Wall Street Journal Award and a Distinguished Service Award.

She served as an intern to the Honorable Carolyn R. King, United States Court of Appeals for the Fifth Circuit.

She is a former member of the University of Houston Law Alumni Board of Directors and a former and current member of the Law Review Board. In 2014, she was awarded the Law Center’s Public Sector Achievement Award.

Prior to receiving her law degree, Justice Keyes earned an M.A. and Ph.D. in Philosophy from Rice University and an M.A. and Ph.D. in English from the University of Texas, where she was a University Fellow and Woodrow Wilson Fellow. She has returned to Rice to teach Philosophy of Law. Justice Keyes received her B.A. from Sophie Newcomb College, Tulane University, magna cum laude, with honors in English, after spending her junior year abroad in Paris. She is a member of Phi Beta Kappa.

Justice Keyes and her husband, David, have four adult children and grandchildren. They are members of St. John the Divine Episcopal Church.