A Texas appeals court allows class certification of a breach of fiduciary claim against a non-lawyer who teamed with a law firm to provide Medicaid planning services, but the court reverses the certification of the class based on a claim of unconscionability against the non-lawyer and law firm. Peter G. Milne, P.C. v. Ryan (Tex. Ct. App., 6th Dist., No. 06-14-00106-CV, Oct. 15, 2015).
Non-lawyer Richard Hicks operated a business offering Medicaid planning and application services. After a lawsuit, the court enjoined Mr. Hicks from practicing law without a license and preparing legal documents. In response, Mr. Hicks teamed up with attorney Peter Milne to continue providing Medicaid planning services. Mr. Hicks marketed himself as connected to the law firm, and Mr. Hicks and Mr. Milne split the fees generated. Val and Joy Ryan met with Mr. Hicks after placing Val's parents in a nursing home. Mr. Hicks recommended that the parents invest in a promissory note. He also drafted several estate planning documents, including a will and trust. The promissory note turned out to be a Ponzi scheme and eventually ran out of funds.
The Ryans filed a class-action lawsuit against Mr. Milne's law firm and Mr. Hicks, asking the court to certify claims for breach of fiduciary duty and unconscionable conduct. The trial court certified a class defined as everyone who paid a fee for services that Mr. Hicks was enjoined from performing. Mr. Milne's law firm appealed, arguing that with regard to the unconscionability claim each class member's situation is too different, so common issues of law and fact did not predominate over individual issues.
The Texas Court of Appeals, 6th District, reverses in part, holding that the proposed class does not meet commonality and predominance requirements with respect to the unconscionability claim, but that the class certification for the breach of fiduciary duty claim against Mr. Hicks is proper. According to the court, for an action to be unconscionable as a matter of law, it must be detrimental to every class member, and the unauthorized practice of law is not unconscionable as a matter of law.
For the full text of this decision, go to: https://www.search.txcourts.gov/SearchMedia.aspx?MediaVersionID=b1ea7405-c1fc-4f2b-81f9-327cee4f58b3&MediaID=4298e0df-0fad-437e-9f4f-c1ebd3382e0d&coa=%22%20+%20this.CurrentWebState.CurrentCourt%20+%20@%22&DT=Opinion
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