Texas Real Estate Firm Prevails Over Malpractice Claim on Appeal

• Suit alleged breach of standard of care, gross negligence
• Jury instructions unfairly prejudiced defendant, court says

A commercial real estate firm and one of its attorneys won an appeal to reverse a jury trial’s verdict that made them liable for malpractice because they failed to timely assign someone as a responsible third party in a fraud lawsuit, a Texas appeals court ruled.

Real estate broker Henry S. Miller Commercial Co. was represented by Newsom, Terry & Newsom LLP in a lawsuit over damages from a property sale that fell through after buyer James Flaven disappeared. The company later sued the firm and attorney Steven Terry, claiming that they must pay the full $12 million in damages because Terry failed to designate Flaven as a responsible third-party until 24 days before the trial.

The case has been up to the Texas Court of Appeals, Fifth District, twice. This most recent time, the court recognized some of the language from the jury’s instruction as coming from its first opinion on this case but said it was given to the jury out of context.

The excerpt said that the attorney didn’t have to prove that fraud was committed to designate the buyer as the responsible third party, making many jurors think that the attorney’s reasoning for designating the buyer so late in the case was flawed, the appeals court said Wednesday. Click to read more at www.bloomberglaw.com.