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Affirmed and Memorandum Opinion filed July 29, 2008.

 

 

In The

 

Fourteenth Court of Appeals

_______________

 

NO. 14-06-01055-CV

_______________

 

PRAISE TABERNACLE OUTREACH & FAMILY WORSHIP CENTER

and REFLECTIONS OF CHRIST=S KINGDOM, Appellants

 

V.

 

THE RESTORATION FINANCIAL GROUP, INC.

and FELECIA W. WARD, Appellees

                                                                                                                                                

On Appeal from the County Court at Law No. 2 & Probate Court

Brazoria County, Texas

Trial Court Cause No. Cl033103

                                                                                                                                               

 

M E M O R A N D U M   O P I N I O N


In this contract dispute, appellants contend the evidence is legally and factually insufficient to support the jury=s finding that appellees substantially complied with the terms and conditions of a contract to procure financing for a church.  Appellants further assert that the trial court abused its discretion in denying their motion to disqualify appellees= attorney.  Because we conclude sufficient evidence supports the challenged jury finding and the trial court did not abuse its discretion in denying appellants= motion to disqualify, we affirm the trial court=s judgment.

I.  Factual and Procedural Background

A.        The Breach of Contract Claim

Felecia W. Ward advises individuals and organizations in obtaining refinancing of existing property.  Through her company, the Restoration Financial Group, Inc. (ARestoration@), she also assists churches in obtaining loans.  In the summer of 2003, Ward met Dr. Dana Carson, pastor and chief executive officer of Praise Tabernacle Outreach & Family Worship Center (APraise Tabernacle@) in Austin and Reflections of Christ=s Kingdom (AROCK@) in Alvin.  After gathering some initial information from Carson regarding Praise Tabernacle=s financial situation, Ward determined that she would need assistance in  obtaining refinancing for Praise Tabernacle.  She consulted with a colleague, David Mitchell, who suggested that Church Consulting Services (ACCS@) could help in the refinancing effort.

On September 27, 2003, Praise Tabernacle entered into a loan consulting agreement with CCS.  CCS agreed to assist Praise Tabernacle to obtain a loan of between $2.5 million and $3.1 million within sixty days, and in return, CCS would be paid an amount equal to 1.75 percent of the loan principal.  Ward assisted in collecting and reviewing loan documents, and, although she did not work for or have a contract with CCS, Mitchell, an independent consultant with CCS, agreed to pay her a Areferral fee@ equal to 0.05 percent of the loan principal.

On November 26, 2003, Praise Tabernacle contracted directly with Ward to obtain assistance from Ward and Restoration in obtaining a loan for $3.1 million.  Ward drafted the contract and described the parties= duties as follows:


1.         I will identify a lender who will make a loan in the amount of $3,100,000.00 that will enable the church to refinance the existing mortgage and consolidate other existing loans into one payment and reduce the interest rate.  There could be additional fees associated with doing this loan[,] i.e. appraisal, CPA costs, underwriting fees, closing costs[,] etc.

2.         Services - I will be responsible for the collecting and assist with the compiling of all required documents into a loan package necessary for this loan transaction to be underwritten, approved and funded.  Additionally, I will be responsible for getting the loan package to the lender.  I will track the loan process in its entirety.  I will ensure that the church gets the very best rates and terms available.

Further, I will work closely with the team you have organized to expedite the loan process.  Remember that this is a team effort and in order for the loan process to work[,] we must move swiftly and promptly.  If at anytime [Restoration] is not getting the requested documents in a timely manner the said contractor reserves the right to cease all work in connection with your loan until the required information is received.

If the Church desires any other assistance (i.e. accountant, design/builder, appraiser and attorney) that can be discussed at the signing of this contract.  I will communicate with you on a weekly basis and be available to you whenever you need me to answer any questions during this process.

3.         Fees - For the above services, you agree to pay me 2.0% of the loan amount.  $62,000.00 is due to [Restoration] for services rendered in connection with [Praise Tabernacle] receiving this loan.  This fee is due and payable upon the closing of your loan.  If the fee is not paid on time[,] you will be assessed an additional fee of $100/per day for each day that the fee is late.


In performing the contract, Ward contacted CCS  for assistance in seeking refinancing for Praise Tabernacle, but their efforts initially were unsuccessful.  Ward testified that she could not identify a willing lender because Praise Tabernacle was in foreclosure and had insufficient income and assets to demonstrate an ability to make payments.  She further stated that Comerica Bank, the prospective lender, told her the loan would not be completed unless ROCK=s property was included in the collateral.  According to Ward, she reported this conversation to Carson, and he responded that he did not want to refinance ROCK=s property at that time.  Ward explained she informed Carson that the loan would not be possible without adding ROCK=s property, and about a week after the conversation, Carson agreed to add ROCK and its property to the loan collateral.  Ward testified that she contacted Comerica and reported Carson=s decision, and the bank increased the amount of the loan under consideration to over $4 million.

On April 23, 2004, the bank approved the loan to Praise Tabernacle and ROCK for $4 million.  On the same day, Ward sent Carson a new contract to replace her earlier contract with Praise Tabernacle.  The replacement contract added ROCK to the agreement with Ward and Restoration, increased the identified loan amount to $4 million, and in accordance with the higher loan amount, provided that Ward=s fee would be $80,000.  In addition, Ward agreed to defer payment until after the loan closing.  Ward told Carson that if he did not sign the amended contract with her, then the loan would not go through.     

Carson executed the contract on behalf of both churches on May 3, 2004,[1] and the loan closed in June 2004.  Praise Tabernacle and ROCK paid CCS, but refused Ward=s demands for payment.  Ward and Restoration then sued Praise Tabernacle and ROCK for breach of contract. 


Shortly before trial, Praise Tabernacle and ROCK sought to disqualify Ward=s attorney, former Praise Tabernacle member Jimmie L. J. Brown, Jr., on the grounds that his representation violated or threatened to violate Texas Disciplinary Rules of Professional Conduct 1.09 and 1.05.[2]  The trial court conducted a brief oral hearing on the disqualification motion on September 18, 2006.  After the trial court denied Praise Tabernacle and ROCK=s motion to disqualify, jury selection commenced that day. The jury was selected and sworn, and trial began on September 18, continuing until the jury reached a verdict on September 20, 2006.

After hearing all the evidence, the trial court charged the jury on the breach-of-contract issue, as well as Praise Tabernacle and ROCK=s affirmative defenses of fraud and accord and satisfaction.  The jury found in favor of Ward and Restoration on all issues, and against Praise Tabernacle and ROCK on their affirmative defenses.  The trial court then rendered judgment based on the jury=s findings.  Praise Tabernacle and ROCK challenge the judgment only based on the jury=s affirmative finding to the following question:

Do you find from a preponderance of the evidence that Plaintiff (The Restoration Financial Group, Inc. and Fel[e]cia Ward) substantially complied with the terms and conditions of the April 23, 2004 contract?

ASubstantial Compliance@ means the performance of all important particulars and any omissions or deviations from the agreement must be inadvertent and unknowing and not due to bad faith.

Following is a summary of the testimony and evidence relating to this finding.

1.         Felecia Ward

Ward testified that she met Carson in September 2003 and was helping him with a residential loan.  She told Carson she could also help him get a loan for his church.  She sent a financial-analysis form to Carson to complete regarding Praise Tabernacle=s finances.  After reviewing the completed form, she determined that the church would be able to participate in a loan program.  According to Ward, she gave Carson her contact information, and from that point until the loan process was complete, she and Carson spoke approximately eight to ten times a week. 


Ward explained that, after reviewing the church=s financial analysis information, she sent Carson a loan-checklist form, requesting specific documents necessary to further the loan-application process.  According to Ward, Carson gave that checklist to church staff; staff members assembled the information and returned it to Ward.  She reviewed the information, contacting Praise Tabernacle=s staff for any missing or additional information.  Based on her review of the loan information provided by the church, she determined that Praise Tabernacle lacked sufficient assets or income to support the $3.1 million loan it sought.  She then informed Carson that she needed to bring in Asomeone else to assist@ her with the loan-application process.  Ward stated, AI believed I needed to bring in Church Consulting Services because I had worked with them in the past and they had experience working with churches who were in the financial condition of Praise Tabernacle. . . .@ 

Ward testified that she accessed CCS=s website and downloaded several forms.  She gave the forms to Carson to complete, along with a loan application.  Carson returned the completed forms to Ward; she reviewed them for completeness and then submitted them to David Mitchell, a consultant for CCS.  According to Ward, she had known Mitchell for several years and had worked on other Adeals@ with him in the past.  Ward stated that she set up a meeting between CCS, Carson, and other church personnel and attended the meeting by telephone.  Ward explained that the purpose of the meeting was to coordinate responsibility for various tasks during the loan identification and application process.  Ward testified, AWe coordinated our efforts. [Restoration] would interact directly with the church, Praise Tabernacle. . . . [Restoration] would then interact with [CCS] and Morgan Keegan and Comerica Bank.@  Ward=s loan file was entered into evidence; among other things, it contained communications between Ward, Mitchell, Praise Tabernacle=s accountant Julia Floyd, CCS=s executive director Marv Hoeflinger, and Comerica Bank and Morgan Keegan personnel. 


Ward indicated that her normal process was to require a deposit before working with an organization, but Carson told her Praise Tabernacle could not afford to pay it.  According to Ward, Carson asked that she begin work and assured her she would be paid because he would sign a contract.  She worked from September 2003 until the first contract was signed in November 2003, during which time neither Restoration nor CCS were successful in obtaining a loan for the church.  Ward testified that the main problem in obtaining financing was that Praise Tabernacle was in the midst of foreclosure proceedings with its current mortgage holder, Colonial Trust Co., and that the church lacked assets or income to sustain a $3.1 million loan.  Ward explained that Comerica Bank did not want to make the loan to Praise Tabernacle because of the foreclosure lawsuit; Comerica Bank told Ward that ROCK=s property in Alvin needed to be added to the loan collateral to justify the loan amount.

Ward testified she contacted Carson and informed him that the bank wanted the Alvin property added as collateral; Carson initially refused, but when Ward explained the bank would not make the loan without the addition of the Alvin property, Carson agreed.  With the additional collateral of ROCK=s Alvin property, the loan amount increased to $4.1 million.  Ward stated, AI pleaded with the bank . . . to do the loan with the foreclosure in place.  Originally, they were demanding that the foreclosure be lifted in order for them to give us an approval; so I asked the bank if they would do the loan knowing that they would be paying off this other debt.@  Comerica Bank approved the loan on April 23, 2004, the same date as Ward=s second contract with Praise Tabernacle and ROCK.  Initially, Ward stated she did not know the loan was approved before requesting that Carson sign the contract and she did not tell Carson that if he would not sign the contract, the loan would not go through.  Later, however, she admitted she was aware that the loan had been approved prior to sending Carson the second contract and that she had informed Carson the loan would not go through unless he signed the contract.


Ward explained that, after the loan was approved, she was responsible for updating information prior to closing.  She testified that, as part of the loan agreement, Praise Tabernacle agreed to move its bank accounts to Comerica Bank.  She called the bank a few days before closing to make sure the accounts had been moved.  She stated that she spoke with Carson about her payment, and Carson told her he would pay her after closing because the church would not have the funds to pay her until then.  She testified that she also spoke with Julia Floyd about payment for her services.  Floyd reported that Comerica Bank said Praise Tabernacle could access its trust funds by submitting an invoice and a check would be issued.  Ward stated that she received a call from Marv Hoeflinger during the loan closing regarding a referral fee she was to receive from Mitchell.  She further testified that during this phone call, she spoke with Carson and Ahe was aware that we had a contract, a signed contract, that he had agreed to honor.@  She denied agreeing that Hoeflinger or CCS was to pay her the $80,000 owed under her contract with Praise Tabernacle and ROCK.  She testified that she was never paid for her services under the contract and received no response to her payment inquiries. 

Ward admitted that after getting documents and information from Praise Tabernacle, she entered into an agreement with Mitchell to assist with preparing the church=s loan application; Mitchell agreed to pay Ward 0.5 percent of the loan amount as a Areferral fee.@  She indicated she spent four months assembling a loan package on behalf of Praise Tabernacle without a signed contract.  She further stated she asked David Lucero, a member of Praise Tabernacle, to help her in getting the contract signed.[3]  When asked whether there were any services under her contract with Praise Tabernacle that she was not already providing as part of her agreement with CCS, Ward could not identify any specific services.  Finally, Ward acknowledged that her name was not on any of the loan-closing documents.


2.         David Mitchell                     

Mitchell worked with CCS when these events occurred and had worked on several projects and loans with Ward in the past.  Mitchell stated that Ward was a Amortgage broker@ who brought churches to his attention that needed money; they worked together to help the churches get financing.  Mitchell testified that Ward had numerous contacts with churches and banks.  According to Mitchell, he suggested that CCS could help Praise Tabernacle obtain a lower rate on a loan.  He agreed with Ward that obtaining this loan was difficult because of Praise Tabernacle=s foreclosure proceedings.  According to Mitchell, Ward was able to gather information that explained the foreclosure situation and why Praise Tabernacle was not current with its mortgage.  Mitchell testified  that Ward Aproactively@ informed CCS about the foreclosure.

Mitchell stated he never heard Ward tell Carson about the referral fee she was to receive from him.  He also admitted he was unaware that Ward had a contract with Praise Tabernacle and ROCK, but he knew she had worked that way in the past.  He stated he discovered Ward=s Aside deal@ with the church when Ward asked him to write a letter detailing what she had done to help close the loan.  He clarified that Ward helped Adefuse@ the problem with the foreclosure situation, but admitted that Hoeflinger Agot to the bottom@ of the foreclosure problem and Agot the loan through[.]@  Mitchell further testified that the loan could not have been made without Ward=s efforts.

3.         Dr. Dana Carson

According to Carson, he spoke to Ward on average twice weekly throughout the loan process.  Carson testified he initially thought Ward was part of CCS=s organization.  He stated that he Areluctantly@ signed her contract:


When I got that contract from Ms. Ward, that was the first time I was made aware there was a distinction between [CCS] and the fees associated with the loan and her fees.  And I B I wasn=t accustomed to anything like that; and so I felt very hesitant about that.  I didn=t know she was representing herself and then they were representing B she was B you know, themselves.  When she said Awe,@ I thought they were teamed together.

Carson indicated the church=s legal counsel did not review the contract before Carson signed it.  He acknowledged that when he signed the original contract in November, he intended to pay Ward=s fee.  He further stated that he understood that separate payments were due to Ward and CCS.  He also testified that Ward told him if he refused to sign the second contract, the loan would not go through.

Carson explained that Hoeflinger was paying Ward for the services she provided, but he acknowledged that nothing in Ward=s contract with Praise Tabernacle and ROCK required Hoeflinger to pay her.  Carson also stated that he did not inform Ward she would not be paid, but thought it was implicit that she had gotten Acaught with her hand in the cookie jar@ and that she would not be paid.  He testified:

I believed that she got a B she got B I entered a contract with her, and I was paying B I got an agreement to pay her for the work that she had already contracted with [CCS]; she went around and she got us to pay her for the same things they were paying her for and she kept all of us in the dark from one another, charging us for the same service.

4.         Marvin Hoeflinger

Hoeflinger explained that he consults with non-profit organizations to help put together long-term financing.  He testified that Mitchell was an independent contractor for CCS.  Hoeflinger stated he never saw Ward=s contract with Praise Tabernacle and ROCK, and did not know about it until several months after this lawsuit was filed.  In his opinion, there was no need for such a contract because no services other than those provided by CCS were necessary. 


According to Hoeflinger, he and Morgan Keegan identified a lender, and Ward and Restoration had nothing to do with identifying a lender.  He stated that Ward did not contact any lenders; CCS was responsible for transmitting the loan package to the lender, not Ward.  Hoeflinger stated that CCS performed all negotiations with the lender.  He acknowledged that the loan was difficult to obtain because of the foreclosure proceedings on Praise Tabernacle=s property, but he stated that he Adid 100% of the work on the foreclosure problem.@  He also explained that, with Floyd=s assistance, he reviewed all the church=s payments to the prior lender.

Hoeflinger stated that Ward should not be paid two percent of the loan because:

She did not do anything.  She was paid from Mr. Mitchell 50 basis points for her services, which is well overcompensated. [CCS] received 75 basis points for all the work that we did, and we did the majority of the work.  90 percent of the work was done by our office.  Now, I don=t know why someone would charge [two] percent on top of what has already been paid, half a point, for doing what they did.  It is a rip-off, and it=s not right.

Hoeflinger acknowledged that Ward assisted with the loan, but stated that he believed that Ward=s payment from Mitchell was sufficient compensation for her services.  He also acknowledged that CCS=s policy does not bind its clients, who can enter good or bad contracts with others if they so choose.

5.         Vincent Aldridge

Attorney Vincent Aldridge testified that he works in real estate and title transactions and is familiar with closings and real-estate settlements.  According to Aldridge, the rights of the parties at closing are generally included in the closing documents.  In his opinion, Ward=s fee would be Aunbearable@ to Praise Tabernacle and ROCK because fees come out of the loan proceeds and are paid from church resources.  He believed her fee would be justified only if all the parties in the process were aware of it.


Aldridge acknowledged that Ward could have been paid before providing services to Praise Tabernacle, which is often the case in such transactions.  He further stated that he never consulted with the church regarding this loan prior to closing.  Finally, he stated that the church became aware of all the parties Aat the closing table,@ but had worked, either directly or indirectly, with all the parties prior to closing.

B.        The Hearing on the Motion to Disqualify        

As noted above, Praise Tabernacle and ROCK filed a motion to disqualify Ward and Restoration=s counsel, Jimmie L. J. Brown, Jr., the week before trial was scheduled to begin.  At the hearing on the motion, Praise Tabernacle and ROCK called Vincent Aldridge to testify regarding information he believed Brown possessed because of Brown=s prior relationship with Carson and the church.  Aldridge testified that Brown was a former member of the church and had represented Carson in a family matter in the past.  Aldridge explained that the church=s general counsel, Fred Garrett, often had engaged Aldridge and Brown in general conversations about legal matters facing the church.  But when asked whether Aldridge had any conversations with Brown regarding the facts related to this case, Aldridge denied relating any specifics to Brown.  Aldridge testified that Brown was privy to financial information regarding the church and Carson.  Aldridge expounded on his opinion regarding the impropriety of Brown=s representation of Ward and Restoration:

My opinion is that he should be removed and B based on his closeness to the ministry, his integral workings not only in the ministry but the pastor in representation.  For the most part, I think that any B it gives the appearance of B that there could be a reasonable potential conflict that would come up at any point in time in this case that could really poison this case from a jury standpoint, and it would lead to a mistrial.  And a lot of those things may not come into play into the case in chief, depending upon which route he takes with the case.


The trial judge repeatedly asked what information might have been divulged to Brown that was relevant to the facts of this case.  The judge explained, A[F]or me to grant a motion to disqualify, I got to know, One, that there was an attorney/client relationship; Two, that there was some specific information relative to this lawsuit divulged to the other side; Three that that was not going to be readily ascertainable or discoverable through the ordinary process.@  In response, Aldrigdge stated,

I think the way this case has been prepared, ultimately it would draw into play that actual knowledge Mr. Brown has concerning personal matters of the church, personal matters of the B our pastor, Dr. Dana Carlson.  I think he=s really tried to use that to see if this case would settle; but when the case didn=t settle, he found himself in this unfortunate position sitting across the table.  Now I think he=s going to try to use it to really taint a jury to get a jury to think that this is just a bad ministry, this is a bad man.  And, ultimately, this information B ultimately, there are some things that may come up on the personal level that Mr. Brown was privy to in his representation that has nothing really B that B

The trial judge responded that although Brown may have been privy to some information, he questioned how any of this information related to this contract case.  He assured the parties that the court would Atry this lawsuit . . . not . . . the ministry.@ 

Brown responded that the only legal work he did for Carson involved a modification of child custody.  He also explained that he worked on a mediated hearing regarding a lease.  Brown admitted that he had been asked a general question concerning a contract matter by Garrett, but no specific facts were revealed to him.  Aldridge then stated that he had spoken with Brown regarding this matter recently, although no names were discussed.  The trial judge stated that, based on this information, he was Ainclined to grant the motion,@ but that he would give Ward and Restoration Aample time@ to obtain new representation.  In response, Brown argued,

Your Honor, I=ve been in this case since September [2005].  In September, as I stated in my response to the motion, I indicated to them that if they are going to file their motion [to disqualify], file the motion and we=ll discuss it at that time.  I can honestly represent to this Court I didn=t B there is no way I could have had the conversations because I wasn=t there.  That=s why I don=t see how this conversation could ever have taken place.


Brown denied any recent conversations with Aldridge regarding this case.  He further argued that Praise Tabernacle and ROCK were precluded from raising this issue because they failed to file a motion to disqualify in a timely fashion.  The trial judge orally denied the motion to disqualify without stating his reasons.

II.  Issues Presented

In its first and second issues, the Church[4] challenges the legal and factual sufficiency of the evidence to support the jury=s finding that Ward substantially complied with the terms and conditions of the contract.  In its third issue, the Church contends the trial court abused its discretion in denying its motion to disqualify Ward=s trial counsel.

III.  Analysis

A.        Sufficiency of the Evidence

To determine whether the evidence is legally sufficient to support the judgment, we review the entire record, crediting favorable evidence if reasonable jurors could and disregarding contrary evidence unless reasonable jurors could not.  City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).  We assume that jurors decided questions of credibility or conflicting evidence in favor of the verdict if they reasonably could do so.  Id. at 819, 820.  If the evidence would enable reasonable and fair‑minded people to differ in their conclusions, then it is legally sufficient to support the verdict.  Id. at 822.


 When considering a factual-sufficiency challenge, we review and weigh all the evidence, not just the evidence that supports the verdict.  See Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406B07 (Tex. 1998); Nip v. Checkpoint Sys., Inc., 154 S.W.3d 767, 768B69 (Tex. App.CHouston [14th Dist.] 2004, no pet.).  We may set aside the verdict only if it is so contrary to the overwhelming weight of the evidence that the verdict is clearly wrong and unjust.  Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001) (per curiam) (citing Pool v. Ford Motor Co, 715 S.W.2d 629, 635 (Tex. 1986)); Mar. Overseas Corp., 971 S.W.2d at 407; Nip, 154 S.W.3d at 769.  We may not simply substitute our judgment for that of the jury because the jury is the sole judge of the credibility of witnesses and the weight to be given their testimony.  Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003) (citing Jones v. Tarrant Util. Col., 638 S.W.2d 862, 866 (Tex. 1982)).

As noted above, the Church challenges the sufficiency of the evidence supporting the jury=s affirmative finding that Ward and Restoration Asubstantially complied with the terms and conditions@ of the contract.[5]  ASubstantial compliance@ was defined in the jury charge as the performance of all important particulars, with any omissions or deviations from the contract being made inadvertently and not in bad faith.  According to the Church, the Aimportant particulars@ of this contract included: (a) identifying the lender; (b) collecting documents and compiling a loan application package; (c) transmitting the loan package to the lender; (d) ensuring that the Church got the best loan rate and terms available; and (e) working closely with the Church=s team to expedite the loan process.  The Church asserts that the only Aimportant particular@ of this contract accomplished solely by Ward and Restoration was the compilation of the loan package. 


Significantly, however, the terms of Ward=s contract did not prohibit her from using an intermediary such as CCS to assist her in completing the agreed services.  Moreover, the jury did not necessarily place the same importance on the contract provisions emphasized by the Church.  For instance, the jury could have concluded that the most Aimportant particular@ regarding this contract was the result, and the testimony is uncontroverted that without Ward and Restoration, this loan would not have been made.

Moreover, even if we consider the rest of the Aimportant particulars@ identified by the Church, Ward testified that she assisted CCS in identifying the lender, and nothing in the contract indicates that Ward was required to identify a lender without assistance.  In addition, Ward testified that she spoke with the lender numerous times, and the paperwork in her loan file confirmed that she communicated with the lender.  And, as noted above, the witnesses did not agree on the particulars of Ward=s role in the loan process.  For example, Ward testified that she was instrumental in convincing the lender to approve the loan even though the Church was involved in foreclosure proceedings.  Hoeflinger, on the other hand, insisted that he was responsible for the loan approval despite the foreclosure.  But the jury could have determined that Ward was more credible and placed more weight on her testimony than that of Hoeflinger.[6]  The jury also could have inferred that Ward obtained the best rates available by bringing in CCS, which had a unique program to assist churches in obtaining loans.  Further, it was undisputed that Ward worked closely with the Church=s team in expediting the loan process.  Although she may not have personally Atransmitted the loan package@ to the lender, the jury could have placed less importance on this administrative detail than did the Church.


After reviewing the entire record, we conclude that reasonable and fair-minded people could have determined that Ward substantially complied with the terms of the contract.  We further conclude that the jury=s finding is not contrary to the overwhelming weight of the evidence.  The fact that the Church also contracted directly with CCS to provide the same services Ward contracted to provide has no bearing on whether Ward substantially complied with the terms of her contract with the Church, nor does the fact that Ward received a referral fee from Mitchell for providing some of these services.  We therefore overrule the Church=s first and second issues.

B.        Motion to Disqualify

We review the trial court=s denial of a motion to disqualify for an abuse of discretion.  See Metro. Life Ins. Co. v. Syntek Fin. Corp., 881 S.W.2d 319, 321 (Tex. 1994) (per curiam).  It is well-established that disqualification of a party=s attorney is Aa severe remedy.@ In re Nitla S.A. de C.V., 92 S.W.3d 419, 422 (Tex. 2002) (per curiam) (quoting Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656 (Tex. 1990).  Because disqualification of counsel Acan result in immediate and palpable harm, disrupt trial court proceedings, and deprive a party of the right to have counsel of choice,@ a trial court considering a motion to disqualify Amust strictly adhere to an exacting standard to discourage a party from using the motion as a dilatory trial tactic.@  Id.  Mere allegations of unethical conduct or evidence showing a remote possibility of a violation of the disciplinary rules will not satisfy this standard.  In re Sw. Bell Yellow Pages, Inc., 141 S.W.3d 229, 231 (Tex. App.CSan Antonio 2004, no pet.). Merely establishing a prior attorney-client relationship is insufficient to establish cause for disqualification.  In re Chonody, 49 S.W.3d 376, 379 (Tex. App.CFort Worth 2000, no pet.). And even if a lawyer violates a disciplinary rule, the party requesting disqualification must demonstrate that the opposing lawyer=s conduct caused actual prejudice that requires disqualification.  Nitla, 92 S.W.3d at 422; In re Users Sys. Servs., Inc., 22 S.W.3d 331, 336B37 (Tex. 1999).

Here, the Church moved for disqualification based on Rule 109(a)(2) of the Texas Disciplinary Rules of Professional Conduct (the ARules@), which provides, in pertinent part:

Without prior consent, a lawyer who personally has formerly represented a client in a matter shall not thereafter represent another person in a matter adverse to the former client . . . if the representation in reasonable probability will involve a violation of Rule 1.05 . . . .


Tex. Disciplinary R. Prof=l Conduct 1.09(a)(2), reprinted in Tex. Gov=t Code Ann., tit. 2, subtit. G app. A (Vernon Supp. 2007) (Tex. State Bar R. art. X ' 9).  Rule 1.05 addresses the revelation or use of privileged information or confidential information acquired Aduring the course of or by reason of the representation of the client.@  Id. 1.05(a) (Vernon 2005). 

The Church has not established that the trial court abused its discretion in denying its motion to disqualify Ward=s counsel for several reasons.  At the hearing on the motion, the Church asserted that it was only when it deposed a particular witness a month before trial that it learned of Brown=s intent to make some use in the trial of this case of information about the Church=s accounting practices that he obtained from his representation of the Church=s pastor in a child custody proceeding or that he learned from consultations with the Church=s general counsel.  Despite these assertions, the Church did not request the inclusion of this witness=s deposition in the appellate record, and as the trial court pointed out, the Church=s accounting practices are irrelevant to the breach of contract claim before the court.  Moreover, the Church was aware for nearly a year that Brown was representing Ward, but  did not move for disqualification until the week before trial.[7] 

In sum, the Church has identified no confidential information allegedly possessed by Brown relevant to Ward=s breach of contract case, nor has the Church identified any authority that would support reversal of the trial court=s judgment on this basis.  We therefore overrule the Church=s third issue.


IV.  Conclusion

In sum, we conclude the evidence is both legally and factually sufficient to support the jury=s finding that Ward substantially complied with the terms of her contract.  We further determine that the trial court did not abuse its discretion in denying the Church=s motion to disqualify Ward=s attorney.  Having overruled all of the Church=s issues, we affirm the judgment of the trial court.

 

 

/s/        Eva M. Guzman

Justice

 

Judgment rendered and Memorandum Opinion filed July 29, 2008.

Panel consists of Justices Yates, Guzman, and Brown.

 

 



[1]  Although Carson did not execute the contract for more than a week, the contract was referred to at trial as the AApril 23, 2004 contract.@

[2]  Our record does not contain a copy of the motion to disqualify.  But the parties agree that one was filed the week before trial was set to begin on September 18, 2006, and the reporter=s record from the hearing on the motion is part of our appellate record.

[3]  Ward stated that she agreed to pay Lucero one-half of her fee because he assisted her in getting information together for the loan application package.  Much of the testimony regarding Lucero, the fee Ward agreed to pay him, and his relationship with Carson relates to Praise Tabernacle and ROCK=s claims of fraud, which are not part of this appeal.

[4]  None of the parties regularly distinguish between Praise Tabernacle and ROCK.  Instead, they frequently label either one or both of the entities as Athe church.@  For ease of analysis, we will follow suit, referring to both entities hereinafter as the AChurch.@ 

[5]  AThe doctrine of substantial compliance excuses contractual deviations or deficiencies which do not severely impair the purpose underlying the contractual provision.@  Burtch v. Burtch, 972 S.W.2d 882, 889 (Tex. App.CAustin 1998, no pet.). 

[6]  See City of Keller, 168 S.W.3d at 819 (AJurors are the sole judge of the credibility of the witnesses and the weight to give their testimony.  They may choose to believe one witness and disbelieve another.@). 

[7]  AA party who fails to file its motion to disqualify opposing counsel in a timely manner waives the complaint.@  Vaughan v. Walther, 875 S.W.2d 690, 690 (Tex. 1994) (per curiam) (orig. proceeding).  In Vaughan, the Supreme Court concluded that because the opposing party was aware of a possible conflict of interest regarding the relator=s attorney some six months prior to seeking the attorney=s disqualification, the trial court abused its discretion by disqualifying the relator=s attorney.  Id. at 690B91.