In Shopoff Advisors, LP v. Atrium Circle, GP, the buyer and seller to a real estate transaction sued each other. No. 04-18-00438-CV, 2019 Tex. App. LEXIS 5764 (Tex. App.—San Antonio July 10, 2019, no pet. history). The plaintiff alleged that the defendant conspired with the escrow agent, who owed the plaintiff a fiduciary duty. The defendant filed a SLAPP motion, which the trial court denied. The Texas Citizens Participation Act (“TCPA”) is also known as Texas’s anti-SLAPP statute. Id. (citing Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001-.011). The defendant appealed. The court of appeals affirmed in part on other claims, but reversed as to the conspiracy claim. Regarding conspiracy, the court held:

“[C]ivil conspiracy is not an independent tort.” It “is a theory of vicarious liability”; “a lawsuit alleging a civil conspiracy that committed some intentional tort is still a ‘suit for’ that tort.” Thus, a party must prove the underlying tort. Additionally, to hold a party vicariously liable under a theory of civil conspiracy, a party must show the following: “(1) two or more persons; (2) an object to be accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result.”

Id. (citing Agar Corp. v. Electro Circuits Int’l, LLC, No. 17-0630, 2019 WL 1495211, at *4 (Tex. Apr. 5, 2019)).

The court of appeals held that there were no compensable damages due to the economic loss rule. The court stated:

With respect to the element of damages, the economic loss rule is not an affirmative defense; it “is a consideration in measuring damages.” … Furthermore, as the economic loss rule is a legal consideration of what should and should not be part of the proper measure of damages, the rule is applicable to whether Atrium has met its prima facie case on the element of damages with respect to its claims against Shopoff for conspiracy to breach the fiduciary duty owed to Atrium and for conspiracy to breach the escrow contract. “The economic loss rule generally precludes recovery in tort for economic losses resulting from a party’s failure to perform under a contract when the harm consists only of the economic loss of a contractual expectancy.” However, it does not prevent economic losses from being “recoverable under a variety of intentional tort theories absent a contractual obligation.” Further, “[e]ven if the matter in dispute is the subject of a contract, a party may elect a recovery in tort if the duty breached stands independent from the contractual undertaking, and the alleged damages are not solely the result of a bargained-for contractual benefit.” Thus, in deciding whether the economic loss rule applies to Atrium’s claims, we look to the source of the alleged duty and the nature of the claimed injury. In making this determination, we do not look to “the manner in which” a cause of action was pled, but instead “look to the substance of the cause of action.” Here, the underlying claims brought by Atrium are breach of fiduciary duty and misapplication of fiduciary property. Atrium generally alleged First American owed the following duties: (1) “the duty of loyalty”; (2) “the duty to make full disclosure”; and (3) “the duty to exercise a high degree of care to conserve the money and pay it only to the people entitled to receive it in accordance with the agreement.” The substance of the alleged breach by First American in relation to those duties was First American “refusing to release the funds required during periods when the judgment was not superseded.” This alone might show a breach of a contractual duty, but it is insufficient to raise breach of fiduciary duty or misapplication of fiduciary funds. Further, nothing in Atrium’s response to Shopoff’s motion to dismiss shows a breach of a duty separate from the alleged failure to comply with the contractual agreement. Thus, under the facts presented by the record in this appeal, we conclude the economic loss rule applies to Atrium’s claims and is a consideration in how Atrium can show proof of the element of damages. Because Atrium has not met its burden of establishing by clear and specific evidence a prima facie case for the element of damages with respect to its claims based on the email sent by Shopoff’s attorney, we conclude the trial court erred in denying Shopoff’s motion to dismiss pursuant to the TCPA.

Id. The court reversed and rendered under the TCPA that the plaintiff’s conspiracy to breach fiduciary duty claim should be dismissed.

Photo of David Fowler Johnson David Fowler Johnson

dfjohnson@winstead.com
817.420.8223

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

dfjohnson@winstead.com
817.420.8223

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law