Well-drafted contracts, cunning negotiators in contract disputes, and expert commercial lawyers are more than a luxury for most businesses. And yet the intricacies of the law, rarely make for interesting dinner conversation. At first glance, the Texas Supreme Court’s ruling in 2017 in First United Pentecostal Church of Beaumont vs Leigh Parker appears to be one of those important, but rather drab rulings.
Recent Ruling. The Texas Supreme Court distinguished between the elements requiring proof in cases requesting actual damage relief (money) from those seeking equitable remedies in breach of fiduciary duty cases. (An equitable remedy is a Court ruling that directs a party to do or not do something. An example is an injunction or when a remedy such as money damages does not adequately redress the injury). In the case of equitable remedy relief, no evidence that the breach of duty actually caused the plaintiff’s harm is required. The plaintiff need only prove the breach of fiduciary duty and damages for equitable relief.
The Back Story. If you take a few minutes to devour the entire opinion you will find what appears to be quite an interesting back story. The pastor and church were defending a sexual harassment lawsuit at a time when receiving property damage insurance receipts from Hurricane Rita of over $1,000,000.00. According to the court, Kip Lamb’s law firm agreed to hold the money “in an attempt to shield it from potential judgment creditors.” Three years later when the church’s new pastor requested the money be returned, the church discovered Kip Lamb had stolen their money.
Professional Corporation, a/k/a PC. Parker, an attorney operating as a PC, independent of Kip Lamb’s PC or law firm, was the defendant of this commercial lawsuit. It was Lamb who stole the money from Lamb’s trust account, not Parker. While the court recognized that Parker “was not in a joint venture with Lamb in stealing the church’s money,” the Supreme Court reversed the part of the Court of Appeal’s decision that upheld summary judgment for Parker on the breach of fiduciary duty claim. NEWS FLASH: If you think that your professional corporation designation or limited liability company designation is a “get out of jail free card,” pay attention to cases such as this one. Consult with a commercial litigation attorney (breach of contract attorney) to determine how to best minimize your liability.
Of Conspiracy and Cover-up. As to the church’s conspiracy claim, the Supreme Court held in favor of Parker. When Parker learned of Lamb’s theft, he did not tell the church. Parker agreed with Lamb to wait to tell the church until a pending water development matter in West Africa was completed which Lamb said would provide money to repay the church. According to the Supreme Court, “The damage to the church had already been done when Parker and Lamb agreed to cover up the theft and try to replace the money.”
Whatever Happened to Lamb? According to the local news source, Lamb received a 15-year sentence for his misuse of fiduciary funds. While Lamb is no longer licensed to practice law, the church is the one left holding an empty bag after placing their trust in their pastor and an attorney.
We hope you never find yourself in the midst of a deal that garners negative media attention. However, if you have questions regarding a commercial litigation matter, or you do find yourself in need of a breach of contract attorney, we are here to help.