Forshee v. Moulton: Texas Court Dismisses Legal Malpractice Claim

The case of Forshee v. Moulton involved claims of legal malpractice and breach of fiduciary duty brought by Paula Forshee and her affiliated businesses against attorney Cynthia R. Levin Moulton and her law firms. The dispute arose from a 2014 business transaction in which Forshee alleged that Moulton failed to adequately represent her interests, drafted contracts that led to financial harm, and had undisclosed conflicts of interest. The Texas Court of Appeals ultimately affirmed the trial court’s summary judgment in favor of Moulton, dismissing all claims against her.

Background and Legal Issues

Forshee, who owned and operated a property management company, entered into a series of contracts with business partners Alan Schnur and David Anderson to merge their real estate ventures. Forshee alleged that Moulton represented all parties in the transaction but failed to protect her interests when drafting the contracts, leading to her exclusion from future deals.

Forshee filed a lawsuit against multiple parties, including Schnur, Anderson, and Moulton. She settled with Schnur and Anderson but continued her claims against Moulton, asserting:

1. Breach of Fiduciary Duty – Claiming Moulton had conflicts of interest and concealed her involvement with the opposing parties.
2. Legal Malpractice (Professional Negligence) – Alleging Moulton failed to properly draft the contracts, resulting in financial harm.

Moulton moved for summary judgment, arguing that:

• She had no attorney-client relationship with Forshee.
• Forshee’s breach of fiduciary duty claim was, in essence, a legal malpractice claim and should not be treated separately.
• Forshee failed to present evidence proving that any alleged negligence caused her financial losses.

Court’s Analysis and Findings

The court analyzed whether Forshee’s claims should be treated as distinct causes of action or if they were all rooted in legal malpractice. It found:

• The breach of fiduciary duty claim was barred by the anti-fracturing rule, which prevents plaintiffs from recharacterizing legal malpractice claims as separate fiduciary breaches. The court ruled that Forshee’s allegations—failure to disclose conflicts, hiring another law firm without informing her, and failing to draft favorable contracts—were all issues of legal representation and not distinct fiduciary breaches.
• The legal malpractice claim failed due to insufficient evidence of proximate cause. Forshee claimed that the contracts should have included additional protections for her but did not provide evidence that Schnur and Anderson would have agreed to such terms. Without proof that better contract terms were achievable, her malpractice claim could not succeed.

The court also found that Forshee’s expert witness failed to establish a direct causal link between Moulton’s actions and any quantifiable damages.

Conclusion and Ruling

The Texas Court of Appeals affirmed the trial court’s summary judgment in favor of Moulton. The court ruled that Forshee’s claims were improperly characterized as separate fiduciary breaches and that her malpractice claim lacked the necessary evidence to prove causation.

This case underscores the importance of establishing clear evidence of damages and causation in legal malpractice claims, as well as the limitations on recharacterizing malpractice allegations as breaches of fiduciary duty.

Legal Guidance for Businesses

For businesses facing professional negligence disputes, experienced legal counsel is essential. Our team at Whitcomb, Selinsky, PC provides strategic guidance on legal malpractice claims, fiduciary obligations, and contract disputes.