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					                  No. 10-0474
                      Tr. Ct. No. 2008-43381
                 Ct. of App. No. 14-09-00387-CV
       ______________________________________________

                           IN THE
                 SUPREME COURT OF TEXAS
       ______________________________________________

                 IN RE STEVEN TUAN PHAM
       ______________________________________________

                                From
          The 215th Judicial District Court of Harris County
                              and from
       The Court of Appeals for the Fourteenth Judicial District
       ______________________________________________

           PETITIONER’S BRIEF ON THE MERITS
       ______________________________________________


                                      TIMOTHY A. HOOTMAN
                                      SBN 09965450
                                      2402 Pease St
                                      Houston, TX 77003
                                      713.247.9548
                                      713.583.9523 (fax)
                                      Email: thootman2000@yahoo.com

                                      LANCE CHRISTOPHER KASSAB
                                      SBN 00794070
                                      1420 Alabama
                                      Houston, TX 77004
                                      713.522.7400

                                      ATTORNEYS FOR RELATOR,
                                      SHELLY LETNEY

ORAL ARGUMENT REQUESTED
                  IDENTITY OF PARTIES AND COUNSEL
      The following is a list of all parties and the names and addresses of all
counsel.

Relator:                    Shelly Letney

Attorney for relator
(in the trial court):       Lance Christopher Kassab
                            SBN 00794070
                            1420 Alabama
                            Houston, TX 77004
                            713.522.7400
                            713.522.7410 (fax)

Attorneys for relator
(in this proceeding):       Lance Christopher Kassab

                            Timothy A. Hootman
                            SBN 09965450
                            2402 Pease St
                            Houston, TX 77003
                            713.247.9548
                            713.583.9523 (fax)
                            E-mail: thootman2000@yahoo.com

Respondent:                 Hon. Steven E. Kirkland
                            Trial judge of the 215th Judicial District
                            201 Caroline, 13th Fl
                            Houston, TX 77002
                            713.368.6330

Real parties in interest:   Steven Tuan Pham

Attorneys for real party Kevin T. Cloves
in interest:             SBN 24031955
                         13700 Veterans Memorial, Ste 100
                         Houston, TX 77014
                         832.484.9015
                         832.286.0488 (fax)




                                          ii
                                                  TABLE OF CONTENTS
IDENTIFY OF PARTIES AND COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii
INDEX OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iv
STATEMENT OF CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii
STATEMENT REGARDING EMERGENCY DEADLINES. . . . . . . . . . . . . . ..vii
STATEMENT OF JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii
ISSUES PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SUMMARY OF ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
          I.        Standard of review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
          II.       Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
          Issue One (restated):              Are arbitration contracts that violate the
                                             Texas Disciplinary Rules enforceable?. . . . . . . . . .8
          I.        Two dissenting opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
          II.       Recognized defenses to arbitration provisions. . . . . . . . . . . . . . . . 8
          III.      Discussion regarding unconscionability and public policy.. . . . .10
          VI.       Conclusion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
          Issue Two (restated):              May parties contract to apply the Federal
                                             Arbitration Act (“FAA”) even if the
                                             contract does not affect interstate
                                             commerce?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
          I.        Parties may not contravene the FAA by contracting that
                    the FAA applies even when the contract does not affect
                    interstate commerce.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
          II.       The contract in this case does not affect interstate
                    commerce.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
          Issue Three (restated): Does a legal malpractice claim constitute a
                                  personal injury claim for purposes of
                                  section 171.002 of the Texas Arbitration
                                  Act (“TAA”)?. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
PRAYER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
CERTIFICATE OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

                                                           iii
                                     INDEX OF AUTHORITIES

Federal Cases:
Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995). . . . . . . . . . . . . 17, 19
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) . . . . . . . . . . .6, 14
Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (2003). . . . . . . . . . . . . . . . . 19, 20, 22
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) . . . . . . . . . . . . . . . 6
Gibbons v. Ogden, 14 U.S. 1 (9 Wheat 1) (1824). . . . . . . . . . . . . . . . . . . . . . . . . .19
Hall Street Assocs. v. Mallel, Inc., 128 S.Ct. 1396 (2008) . . . . . . . . . . . . . . . . . . 14
Maryland v. Wintz, 392 U.S. 183 (1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
McLeod v. J.E. Dilworth Co., 322 U.S. 327 (1944) . . . . . . . . . . . . . . . . . . . . . . . 20
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) . . . . . . 9, 20
Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945) . . . . . . . . . . . . . . . . . . 18, 23
Southerland Corp. v. Keating, 465 U.S. 1 (1984) . . . . . . . . . . . . . . . . . . . . . . .9, 19
Specialty Healthcare Mgmt., Inc. v. St Mary Parish Hosp.,
      220 F.3d 650 (5th Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
United States v. Lopez, 514 U.S. 549 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533 (1944) . . .19, 21

Texas Cases:
Archer v. Griffith, 390 S.W.2d 735 (Tex. 1964). . . . . . . . . . . . . . . . . . . . . . . .10, 13
Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Chambers v. O’Quinn, 242 S.W.3d 30 (Tex. 2007) . . . . . . . . . . . . . . . . . . . . . 8, 14
Fleming v. Campbell, 537 S.W.2d 118 (Tex. App.—Houston [14th Dist.]
      1976, writ ref’d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105, 107 (Tex. 1985) . . . . . . .ix, 7
Haase v. Herberger, 44 S.W.3d 267 (Tex. App.—Houston [14th Dist.]
      2001, no pet.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Hearthshire Braeswood Plaza Ltd. Partnership v. Bill Kelly Co.,
      849 S.W.2d 380 (Tex. App.—Houston [14th Dist.] 1993, writ denied). . . . .6
Henry v. Gonzalez, 18 S.W.3d 684 (Tex. App.—San Antonio,
      pet. dis’d agr) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 8, 24
In re First Merit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) . . . . . . . . . . . . . . . . .9, 10


                                                         iv
In re Godt, 28 S.W.3d 732 (Tex. App.—Corpus Christi 2000, no pet.) . . . . . . . . . . . . . .24
In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002) . . . . . . . . . . . . . . . . . . . . . . .6, 9
In re Hartigan, 107 S.W.3d 684 (Tex. App.—San Antonio 2993,
       pet. denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24, 25
In re John M. O’Quinn, P.C., 155 S.W.3d 195 (Tex. App.—
    Tyler 2003, orig. proceeding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
In re L&L Kempwood Assocs., 9 S.W.3d 125 (Tex. 1999) . . . . . . . . . . . . . . .17, 21
In re Nexion Health at Humble, Inc., 173 S.W.3d 67 (Tex. 2005) . . . . . . . . . 17, 21
In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571 (Tex. 1999). . . . . . . . . . . . . 6
In re Palacios, 221 S.W.3d 564 (Tex. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . .8, 21
In re Prudential Ins. Co of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) . . . . . . . . .ix
In re Weekley Homes, L.P., 180 S.W.3d 127 (Tex. 2005) . . . . . . . . . . . . . . . . . . . .8
In re Wilson Const. Co., 196 S.W.3d 774 (Tex. 2006) . . . . . . . . . . . . . . . . . . . . . . 6
Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266 (Tex. 1992) . . . . . . . . . . . . . . . 8
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) . . . . . . . . . . . . . . . . 6
Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 918 (Tex. 1985) . . . . . .ix, 7
Judwin Properties v. Griggs & Harrison, 911 S.W.2d 498 (Tex. App.—
      Houston [1st Dist.] 1995, no writ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Loftin v. Martin, 776 S.W.2d 145 (Tex. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . .ix, 7
Miller v. Brewer, 118 S.W.3d 896 (Tex. App.—Amarillo 2003, no pet.) . . . .24, 25
Sample v. Freeman, 873 S.W.2d 470 (Tex. App.—Beaumont 1994,
      writ denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Sanes v. Clark, 25 S.W.3d 800 (Tex. App.—Waco 2000, pet. ref’d) . . . . . . . . . .10
Strake v. Court of Appeals for First Supreme Judicial Dist.,
       704 S.W.2d 746 (Tex. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix, 7
Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105 S.W.3d
      244 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) . . . . . . . . . . . . .14
Taylor v. Wilson, 180 S.W.3d 627 (Tex. App.—Houston [14th Dist.]
      2005, pet. denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Tempest Broadcasting Corp. v. Imlay, 150 S.W.3d 861 (Tex. App.—
   Houston [14th Dist.] 2004, no pet.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6, 7
Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex. App.—Houston
      [14th Dist.] 1997, pet. dism’d agr.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11



                                                          v
Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992). . . . . . . . . . . . . . . . . . . . .ix, 7
Willis v. Maverick, 760 S.W.2d 642 (Tex. 1988) . . . . . . . . . . . . . . . . . . . . . . 10, 25

Statutes:
TEX. CIV. PRAC. & REM. CODE § 171.002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
TEX. GOV. CODE § 82.065. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
TEX. R. APP. P. 28.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 7, 16
TEX. R. PROF. COND. 1.03(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
TEX. R. PROF. COND. 1.04(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
TEX. R. PROF. COND. 1.05(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
TEX. R. PROF. COND. 1.08(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
9 U.S.C. § 2 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 17, 19
U.S. CONST. Art. I, § 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
U.S. CONST. Art. VI, § 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Secondary sources:
Op. Tex. Ethics Comm’n No. 586 (2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
RESTATEMENT (SECOND) OF AGENCY § 390 cmt. e . . . . . . . . . . . . . . . . . . . . . . . . 11
RESTATEMENT (THIRD) OF AGENCY § 1.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
RESTATEMENT (THIRD) OF AGENCY § 8.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 11
RESTATEMENT (THIRD) OF AGENCY § 8.01, cmt. d. . . . . . . . . . . . . . . . . . . . . . . . . 10
RESTATEMENT (THIRD) OF AGENCY § 8.11. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 12
RESTATEMENT (THIRD) OF AGENCY § 8.15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
RESTATEMENT (SECOND) OF CONTRACTS § 173. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
RESTATEMENT (SECOND) OF CONTRACTS § 178. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 6. . . . . . . . . . . . . . .10
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 15 cmt. b. . . . . . . . 12
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 20. . . . . . . . . . . . . .13
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 34 cmt. b. . . . . . . . 11




                                                         vi
                            STATEMENT OF CASE

1.     This is a legal malpractice claim against a lawyer that allegedly failed to
       file a personal injury lawsuit within the applicable statute of limitations.
       The issue on appeal is whether an arbitration provision contained within the
       contingency fee attorney-client contract is enforceable.

2.     On November 24, 2008, the Honorable Levi Bennet of 215th Judicial
       District Court of Harris County, Texas signed an order denying a motion to
       compel arbitration. On August 10, 2009, the Honorable Steven E.
       Kirkland, who now presides in the 215th Judicial District Court, signed an
       order denying the motion to compel arbitration. The Fourteenth Court of
       Appeals granted a conditional writ of mandamus to vacate the order
       denying the motion to compel arbitration.

3.     Letney, the relator, believes the trial court order denying the motion to
       compel arbitration was proper and therefore request the Supreme Court to
       order the court of appeals to vacate the conditional writ of mandamus.

4.     Pham filed a petition for writ of mandamus and an interlocutory appeal in
       the Fourteenth Court of Appeals challenging the trial court’s denial of the
       motion to compel arbitration. The petition and the interlocutory appeal
       were consolidated.

5.     On March 4, 2010, a Majority Opinion authored by Chief Justice Hedges
       and joined by Justice Sullivan was filed. On that same day a Dissenting
       Opinion authored by Justice Seymore was filed. On March 27, 2010, a
       Substitute Majority Opinion authored by Chief Justice Hedges and joined
       by Justice Sullivan was filed. On that same day a Dissenting Opinion
       authored by Justice Seymore was filed. These opinions are attached hereto
       as appendixes 1 thru 4.

               STATEMENT OF EMERGENCY DEADLINES

       There are no emergency deadlines pending in the trial court that bear on

this petition for writ of mandamus. The trial court has abated proceedings until

resolution of the appellate proceedings.




                                           vii
                       STATEMENT OF JURISDICTION

       This Court has jurisdiction because the court of appeals conditionally

granted a writ of mandamus against the trial court for having denied a motion to

compel arbitration. Loftin v. Martin, 776 S.W.2d 145, 146 (Tex. 1989); Strake v.

Court of Appeals for First Supreme Judicial Dist., 704 S.W.2d 746, 747 (Tex.

1986); Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 918 (Tex. 1985);

Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105, 107 (Tex. 1985). This Court

has jurisdiction pursuant to Section 22.02 of the Government Code to issue a writ

of mandamus agreeable to the principles of law regulating such a writ. TEX. GOV.

CODE § 22.002. Moreover, this Court has jurisdiction to issue a writ of mandamus

because the ruling of the trial court that the relators complain of is a clear abuse of

discretion and there is no adequate remedy by appeal. In re Prudential Ins. Co of

Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); Walker v. Packer,

827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding).




                                          viii
           ISSUE PRESENTED


                      Issue One
Are arbitration contracts that violate the Texas
Disciplinary Rules enforceable?

                     Issue Two
May parties contract to apply the Federal Arbitration
Act (“FAA”) even if the contract does not affect
interstate commerce?

                    Issue Three
Does a legal malpractice claim constitute a personal
injury claim for purposes of section 171.002 of the
Texas Arbitration Act (“TAA”)?




                         ix
                              STATEMENT OF FACTS

      Shelly Letney suffered personal injuries from a rear-ender automobile collision

where she was in the front vehicle (CR 3 and 26).        Letney entered into a written

agreement with Steven Pham, Sarita Garg, and Smith & Garg, LLC formally retaining

them on an hourly fee basis to represent her regarding her claims arising from the

collision (CR 26-29). The agreement contains the following arbitration provision:

             Any and all disputes, controversies, claims or demands
             arising out of or relating to this Agreement or any provision
             hereof, whether in contract, tort or otherwise, at law or in
             equity, for damages or any other relief, shall be resolved by
             binding arbitration pursuant to the Federal Arbitration Act in
             accordance with the Commercial Arbitration Rules then in
             effect with the American Arbitration Association. Any such
             proceeding shall be conducted in Harris County, Texas
             pursuant to the substantive federal laws established by the
             Federal Arbitration Act. Any party to any ward (sic) rendered
             in such arbitration proceeding may seek a judgment upon the
             award and that judgment may be entered by any federal or
             state court in Montgomery County, Texas having jurisdiction
             (CR 40).

      Letney filed the presently pending legal malpractice suit against Pham, Garg, and

Smith & Garg, LLC because they allowed the statute of limitations applicable to her

personal injury claim to pass without filing suit (CR 3). Pham, Garg, and Smith & Garg,

LLC filed a motion to compel arbitration of the legal malpractice claim based on the

above contractual provision (CR 31-42).        In their motion, they argue the Texas

Arbitration Act requires that the case be arbitrated—they did not cite to or argue the

Federal Arbitration Act.




                                           1
       In response to the motion to compel arbitratin, Letney filed her affidavit which

states in relevant part:

               On February 15, 2006, I was involved in an auto accident. I
               was rear ended by a third party who was insured by State
               Farm Insurance Company (“State Farm”). There was clear
               liability against State Farm’s insured. After researching the
               internet for qualified counsel, I hired the law firm of Smith &
               Garg, LLC to pursue my lawsuit against State Farm and it’s
               insured to recover for my personal injuries which resulted
               from the accident. In making my decision to hire Defendants,
               I relied on various representations regarding the firm’s
               diligence, experience, and expertise as listed on the firm’s
               website.

               At all times prior to and during my representation,
               Defendants held themselves out to be expert lawyers in the
               field of personal injury and promised to file suit against State
               Farm and litigate my case so I would receive the maximum
               allowable damages under the laws of Texas. Unfortunately,
               Defendants failed to file my personal injury lawsuit timely
               and the statute of limitations lapsed on my suit.

               Attached hereto as Exhibit 1 is a true and correct copy of the
               attorney/client contract I signed with Smith & Garg law firm
               (Contract). When I signed the Contract I was not represented
               by an attorney. I did not have an attorney advise me
               regarding the legal aspects of all terms and conditions of the
               Contract. No one from Smith & Garg advised me or told me
               about the arbitration clause in the Contract or what it meant. I
               have no legal training and do not know what arbitration is or
               what it means to arbitrate. No one from Smith & Garg
               advised me or told me that by signing the Contract I could be
               waiving my constitutional rights to a jury trial.

               No one from Smith & Garg went over Exhibit 1 with me. No
               one from Smith & Garg informed me about the pros, cons,
               advantages or disadvantages, effects and ramifications of the
               arbitration clause contained in Exhibit 1. No one from Smith
               & Garg informed me about my rights and duties under the
               arbitration clause. I did not obtain advice from outside
               counsel, or any counsel regarding the arbitration clause prior


                                              2
              to signing Exhibit 1 and no one from Smith & Garg ever
              advised me to obtain legal advice from outside counsel
              regarding the arbitration clause.

              I trusted Defendants to advise me on all matters regarding
              Defendants’ representation of me. Defendants never advised
              me in any manner whatsoever regarding the arbitration
              clause. I was unaware that Exhibit 1 even contained an
              arbitration clause. Lastly, I did not intend to agree to an
              arbitration clause (CR 50-51).

        The legal arguments asserted by Letney as to why the motion should be denied

were:

           • The dispute involves a claim for personal injury and therefore the
             arbitration provision must comply with Section 171.002(a)(3),
             (c)(1)-(2) of the Texas Arbitration Act (CR 45-49).
           • The Federal Arbitration Act does not apply because the contract
             does not affect interstate commerce (CR 57-59).
           • The arbitration clause is unconscionable (CR 58-59).
           • The arbitration clause is void against public policy (CR 57, 59-60).

        The trial court denied the motion to compel arbitration (CR 61). Pham, Garg, and

Smith & Garg, LLC filed an interlocutory notice of appeal. Garg and Smith & Garg,

LLC moved to be dismissed from the appeal before filing briefs. Pham proceeded with

his appeal and filed a brief. Letney pointed out in her brief that the Federal Arbitration

Act (FAA) issues must be raised by mandamus, so Pham filed a petition for writ of

mandamus.      The court of appeals consolidated the interlocutory appeal and the

mandamus proceeding.




                                            3
       Letney argued that:

          • Her claims are exempt under the Texas Arbitration Act (TAA) because she
            seeks recovery for personal injuries;
          • The FAA is inapplicable because the contract at issue did not affect
            interstate commerce;
          • The arbitration clause is unconscionable; and
          • The arbitration clause violates the Disciplinary Rules of Professional
            Conduct.

The court of appeals dismissed the interlocutory appeal because the parties agreed to

proceed under the FAA. The court of appeals conditionally granted the mandamus after

dealing with Letney’s arguments by concluding that (1) injuries arising because of legal

malpractice are not personal injuries and therefore the TAA exemption do not apply (this

is strange because the appeal was dismissed on the grounds that the TAA does not apply);

(2) whether the contract affects interstate commerce is irrelevant because the parties

agreed to apply the FAA irrespective of whether the contract affects interstate commerce;

(3) the arbitration clause is not unconscionable because the legislature authorizes such

clauses; and (4) the arbitration clause does not violate the Disciplinary Rules.




                                             4
                      SUMMARY OF ARGUMENT

       Arbitration provisions contained in attorney-client contracts are not enforceable if

they were obtained in violation of the attorney’s fiduciary obligations. Under the specific

circumstances of this case the arbitration provision is unenforceable because it is

unconscionable and violates public policy. And, the unrebutted affidavit testimony of

Letney in this case provides legally sufficient evidence that the her lawyer, Pham,

violated his duty to disclose all material information regarding the attorney-client

contract so that Letney could make an intelligent and informed decision as to whether to

enter into an agreement that contained an arbitration provision.

       Parties to a contract may not contravene the Federal Arbitration Act by agreeing to

apply the Act where the contact does not affect interstate commerce.

       For purposes of the section 171.002 of the Texas Arbitration Act a legal

malpractice case is personal injury in nature.




                                             5
                                   ARGUMENT

I.       Standard of review.

         Generally, appellate review of an arbitration agreement is limited to whether (1) a

valid arbitration agreement exists between the parties, and (2) the scope of the agreement

encompasses the claims raised.1 In this case the larger question is whether the arbitration

agreement between Pham and his client, Letney, is valid. In reviewing the trial court’s

determination that Letney did not assent to arbitrate and that she established her defenses

to the arbitration provision, the Court should look to Texas contract law.2 The Court

should apply a no-evidence standard of review to the trial court’s ruling because it is

predicated on factual findings.3 Had the only evidence before the trial court been the

arbitration provision, the standard of review would be de novo.4 However, that is not the

case here, and therefore, the de novo standard of review does not apply.5

         Generally, to be entitled to a writ of mandamus, the relator must establish that the

ruling of the trial court constitutes a clear abuse of discretion, and that there is no




     1
        In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (per curiam), abrogated by
In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002).
     2
       Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006); First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 944 (1995); Oakwood Mobile Homes, 987 S.W.2d at 574.
     3
       Henry v. Gonzalez, 18 S.W.3d 684, 688-89 (Tex. App.—San Antonio 2000, dis’m agr.);
Hearthshire Braeswood Plaza Ltd. Partnership v. Bill Kelly Co., 849 S.W.2d 380, 384 (Tex. App.—
Houston [14th Dist.] 1993, writ denied).
     4
       See In re Wilson Const. Co., 196 S.W.3d 774, 781 (Tex. 2006); J.M. Davidson, Inc. v. Webster,
128 S.W.3d 223, 227 (Tex. 2003).
     5
       TEX. R. APP. P. 28.1; Tempest Broadcasting v. Imlay, 150 S.W.3d 861, 867-68 (Tex. App.—
Houston [14th Dist.] 2004, no pet.).


                                                  6
adequate remedy by appeal.6 This Court may also grant a writ of mandamus against a

court of appeals that has already conditionally granted a writ of mandamus against the

trial court as has occurred here.7

II.       Introduction.

          Pham argued in the trial court that the arbitration provision contained in the

attorney-client agreement should be enforced because Letney signed the agreement and

arbitration agreements are strongly favored under the law (CR 21). The only evidence

offered by Pham in support of this argument was the attorney-client agreement.

          Letney asserted the affirmative defenses to enforcement of the arbitration

provision of unconscionability, voidness against public policy, and non-compliance with

171.002 of the Texas Arbitration Act (“TAA”). She offered her affidavit in support of

these defenses, which was not rebutted. She also argued that the Federal Arbitration Act

(“FAA”) was not applicable because the attorney-client contract does not affect interstate

commerce.

          The factual circumstances leading up to the signing of the arbitration provision

described by Letney in her affidavit, and accepted as true by the trial court,8 render its

      6
        In re Prudential Ins. Co of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); Walker
v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding).
      7
        Loftin v. Martin, 776 S.W.2d 145, 146 (Tex. 1989); Strake v. Court of Appeals for First Supreme
Judicial Dist., 704 S.W.2d 746, 747 (Tex. 1986); Johnson v. Fourth Court of Appeals, 700 S.W.2d 916,
918 (Tex. 1985); Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105, 107 (Tex. 1985).
      8
         TEX. R. APP. P. 28.1 (Regarding interlocutory order, “[t]he trial court need not but may—within
30 days after the order is signed—file findings of fact and conclusions of law.”); Tempest Broadcasting
Corp. v. Imlay, 150 S.W.3d 861, 867-68 (Tex. App.—Houston [14th Dist.] 2004, no pet.) (when the trial
court does not make findings of fact after considering evidence offered regarding an interlocutory order
all facts necessary to support the order and supported by the evidence are implied and the review is for
legal sufficiency of the evidence, that is, no evidence).


                                                   7
enforcement unconscionable and therefore voidable at Letney’s election.

          Pham appealed the trial court’s ruling as far as the TAA is applicable, and sought

mandamus as far as the Federal Arbitration Act (“FAA”) is applicable.9 The court of

appeals dismissed the appeal and conditionally granted the mandamus relief sought by

Pham. For the following reasons the mandamus relief should not have been granted.

                                          Issue One
                                          (restated)
                Are arbitration contracts that violate the Texas Disciplinary
                Rules enforceable?

I.        Two dissenting opinions.

          The majority opinion concluded that arbitration provisions are always enforceable

regardless of the special fiduciary relationship that exists between a lawyer and client.

The dissenting opinion disagreed. In Henry v. Gonzalez, 18 S.W.3d 684 (Tex. App.—

San Antonio 2000, pet. dism’d) the majority agrees with the majority in this case; and,

the dissent in Henry agrees with the dissent in this case. It is clearly time for the

Supreme Court to weigh in on this question.

II.       Recognized defenses to arbitration provisions.

          The FAA specifically leaves open the traditional legal and equitable defenses to




      9
        The TAA allows a party to “appeal an order or judgment that either: (1) denies an application to
compel arbitration made under section 171.021, or (2) grants an application to stay arbitration under
section 171.023.” Chambers v. O’Quinn, 242 S.W.3d 30, 31 (Tex. 2007) (per curiam) (citing TEX. CIV.
PRAC. & REM. CODE § 171.098(a)(1)-(2)). At the time in question, an order denying arbitration under the
Federal Arbitration Act (FAA) is reviewable by mandamus. In re Weekley Homes, L.P., 180 S.W.3d 127,
130 (Tex. 2005); see also In re Palacios, 221 S.W.3d 564, 565 (Tex. 2006) (per curiam) (citing Jack B.
Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992).


                                                   8
contract formation.10        Procedural and substantive unconscionability are recognized

defenses to arbitration provisions.11                Procedural unconscionability refers to the

circumstances surrounding the adoption of the arbitration provision.12                      Substantive

unconscionability refers to the fairness of the arbitration provision itself.13 “[T]he basic

test for unconscionability is whether, given the parties’ general commercial background

and the commercial needs of the particular trade or case, the clause is so one-sided that it

is unconscionable under the circumstances existing when the parties made the contract.”14

This helps prevent unfair surprise and oppression resulting due to superior bargaining

power caused by the positions of vulnerability of the parties.15

         Public policy considerations factor into the determination of whether the

enforcement of a contract would be unconscionable.16 Public policy is reflected in the

state statutes and rules, including the State Bar Rules.17 Because of this, an attorney-

client contract that violates a State Bar Rule renders the contract voidable at the client’s



    10
        See 9 U.S.C. § 2 (“. . . save upon such grounds as exist at law or in equity for the revocation of
any contract. . . .”); Southerland Corp., 465 U.S. at 17-18 n.11 (Stating that “a party may assert general
contract defenses such as fraud to avoid enforcement of an arbitration agreement.”); Prima Paint Corp.,
388 U.S. at 401 (Stating that arbitration agreements procured by fraud in the inducement are not
enforceable.); In re Firstmerit Bank, N.A., 52 S.W.3d 749, 556-57 (Tex. 2001) (Stating that, although the
party that was resisting the arbitration provision did not meet its burden of proof that the provision was
unconscionable, such claims are valid defenses to arbitration provisions.).
    11
         Halliburton Co., 80 S.W.3d 566; In re First Merit Bank, N.A., 52 S.W.3d 749, 757 (Tex. 2001).
    12
         See Halliburton, 80 S.W.3d at 571.
    13
         Id.
    14
         First Merit Bank, N.A., 52 S.W.3d at 757.
    15
         Id.
    16
         RESTATEMENT (SECOND) OF CONTRACTS § 178 (2006).
    17
         Id.



                                                      9
election, because such contracts are against public policy.18 Similarly, a breach of the

attorney’s fiduciary duty can cause the attorney-client contract to be voidable at the

client’s option.19

         The burden of proving unconscionability is on the party opposing arbitration.20

III.     Discussion regarding unconscionability and public policy.

         A lawyer owes his or her client a high degree of care.21 This is because the lawyer-

client relationship is a fiduciary one,22 wherein the lawyer is the agent and the client the

principal.23 A duty of undivided loyalty is what distinguishes the fiduciary relationship




    18
         See TEX. GOV. CODE § 82.065 (contingent fee contract for legal services is voidable by client if it
is procured as result of conduct violating laws of this state or rules of State Bar of Texas regarding
barratry by attorneys or other persons.); Sanes v. Clark, 25 S.W.3d 800 (Tex. App.—Waco 2000, pet.
ref’d) (contract that authorized attorney to settle without consulting with client was voidable at client’s
option); Fleming v. Campbell, 537 S.W.2d 118 (Tex. App.—Houston [14th Dist.] 1976, writ ref’d) (oral
agreement to split a referral fee that was not disclosed to client was not enforceable). See also
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 6 (2001); and RESTATEMENT (SECOND) OF
CONTRACTS § 173, which states:
             § 173 When Abuse of a Fiduciary Relation Makes a Contract Voidable
             If a fiduciary makes a contact with his beneficiary relating to matters within the
         scope of the fiduciary relation, the contract is voidable by the beneficiary, unless (a) it is
         on fair terms, and (b) all parties beneficially interested manifest assent with full
         understanding of their legal rights and of all relevant facts that the fiduciary knows or
         should know.
    19
         RESTATEMENT (THIRD) OF AGENCY § 8.01, cmt. d (2006) (“Because it constitutes a material
breach of the contract by the agent, an agent’s breach of fiduciary duty may also privilege the principal to
terminate the principal’s relationship with the agent in advance of a time for termination in any contract
between them.”); Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) (attorney fee forfeiture where there is
finding of breach of fiduciary duty); Haase v. Herberger, 44 S.W.3d 267 (Tex. App.—Houston [14th
Dist.] 2001, no pet.) (attorney fee forfeiture).
    20
         First Metro Bank, 52 S.W.3d at 756.
    21
         RESTATEMENT (THIRD) OF AGENCY § 8.01.
    22
        Willis v. Maverick, 760 S.W.2d 642, 645 (Tex. 1988); Archer v. Griffin, 390 S.W.2d 735, 739
(Tex. 1964).
    23
         RESTATEMENT (THIRD) OF AGENCY § 1.01.


                                                      10
from other relationships.24 It is important to note that an agency relationship is not a

contractual relationship, and that a contractual relationship is not an agency relationship.

The lawyer and client, of course, may well also be parties to an ancillary compensation

contract, but the lawyer-client relationship first and foremost is a fiduciary one, not a

contractual one.25 Thus the contract that is incident to a fiduciary relationship is subject

to special rules.26

         An agent-fiduciary, that is an agent vested with discretion, owes the principal a

general duty of loyalty.27 The lawyer-agent is no exception. Incident to the general duty

of loyalty is the ongoing affirmative duty to furnish the client-principal with all material

information that is in the lawyer-agent’s possession and relevant to the agency, regardless

of whether the client-principal asks for the information.28 What constitutes material


    24
         RESTATEMENT (THIRD) OF AGENCY § 8.01 cmt. b.
    25
       See RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 34 cmt. b (confirming that
“[l]awyers . . . owe their clients greater duties than are owed under the general law of contracts”).
    26
         See, e.g., RESTATEMENT (SECOND) OF AGENCY § 390 cmt. e (1958) (providing that “[i]f . . . in
the case of attorney and client, the creation of the relation involves peculiar trust and confidence, with
reliance by the principal upon fair dealing by the agent, it may be found that a fiduciary relation exists
prior to the employment and, if so, the agent is under a duty to deal fairly with the principal in arranging
the terms of the employment”).
    27
        RESTATEMENT (THIRD) OF AGENCY § 8.01 (“An agent has a fiduciary duty to act loyally for the
principal’s benefit in all matters connected with the agency relationship.”).
    28
         RESTATEMENT (THIRD) OF AGENCY § 8.11, cmt. b (“An agent owes the principal a duty to
provide information to the principal that the agent knows or has reason to know the principal would wish
to have.”); Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex. App.—Houston [14th Dist.] 1997, pet.
dism’d agr.) (breach of fiduciary duty upheld where there was some evidence that firm failed to disclose
its conflicts of interest with client and then acted in firm’s own interest rather than in best interest of
estate it represented). See also TEX. R. PROF. COND. 1.03(a), reprinted in TEX. GOV’T CODE, Tit. 2,
Subtit. G, App. A (“A lawyer shall keep a client reasonably informed about the status of a matter and
promptly comply with reasonable requests for information.”); and cmt. 1 (“The client should have
sufficient information to participate intelligently in decisions concerning the objectives of the
representation and the means by which they are to be pursued, to the extent the client is willing and able
to do so.”); and cmt. 2 (“Adequacy of communication depends in part on the kind of advice or assistance
involved. For example, in negotiations where there is time to explain a proposal the lawyer should review


                                                    11
information? Material information is any information the client-principal would need to

have in order to adequately further and protect his interest, whether in the courts or non-

judicially,29 as well as to refine and adjust the scope of the agency on an ongoing basis.30

         When a lawyer and client are negotiating an attorney-client contract, fiduciary

duties arise because the mere consultation, without a formal attorney-client contract,

gives rise to the fiduciary relationship.31 Accordingly, the lawyer has a duty to disclose

material information regarding the pros and cons of the attorney-client contract that the

lawyer is proposing be signed.32 Because the fiduciary duty exists before the signing of


all important provisions with the client before proceeding to an agreement. In litigation a lawyer should
explain the general strategy and prospects of success and ordinarily should consult the client on tactics
that might injure or coerce others. On the other hand, a lawyer ordinarily cannot be expected to describe
trial or negotiation strategy in detail. Moreover, in certain situations practical exigency may require a
lawyer to act for a client without prior consultation. The guiding principle is that the lawyer should
reasonably fulfill client expectations for information consistent with the duty to act in the client’s best
interests, and the client’s overall requirements as to the character of representation.”).
    29
         Thus, “[I]f an agent has acted beyond the scope of the agent’s authority, the agent’s duty to the
principal may require the agent to inform the principal of the unauthorized action and the courses of
action reasonably open to the principal.” RESTATEMENT (THIRD) OF AGENCY § 8.11, cmt. b.
    30
         RESTATEMENT (THIRD) OF AGENCY § 8.11, cmt. b (“Information that the agent provides to the
principal may enable the principal to reconsider a course of action that the principal has previously
decided upon, leading the principal to revise or rescind prior instructions given to the agent and thereby
enabling the principal to shape how the agent’s actions may affect the principal’s legal relations with third
parties in light of developments reported by the agent.”).
    31
         RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 15 cmt. b.
    32
         RESTATEMENT (THIRD) OF AGENCY § 8.11 states:
            § 8.11 Duty to Provide Information.
                 An agent has a duty to use reasonable effort to provide the principal with facts
            that the agent knows, has reason to know, or should know when
                         (1)      subject to any manifestation by the principal, the agent knows or
                     has reason to know that the principal would wish to have the facts or the facts
                     are material to the agent’s duties to the principal; and
                         (2)      the facts can be provided to the principal without violating a
                     superior duty owed by the agent to another person.
    Comment c thereunder states: “[I]f the creation of the relationship between an agent and a principal
involves peculiar trust and confidence, and the prospective principal relies on the prospective agent to
deal fairly with the prospective principal, the prospective agent is subject to a duty to deal fairly in


                                                     12
the attorney-client contract, the contract formation is subject to the following rules:

         1.        Dealings between attorney and client regarding the terms of
                   the attorney-client contract require the utmost good faith.33
         2.        Dealings, intentions, and intendments between attorney and
                   client regarding the terms of the attorney-client contract are
                   subject to exacting scrutiny.34




arranging the terms of the agency relationship, as if the prospective agent were an agent dealing as a
adverse party with the principal, with the principal’s knowledge. See § 8.06. The duty to deal fairly may
require a prospective agent to furnish the prospective principal with information that is not otherwise
reasonably available to the prospective principal and that is material to the principal’s decision whether to
engage the agent.”
    RESTATEMENT (THIRD) OF AGENCY § 8.15 states:
               § 8.15 Principal’s Duty to Deal Fairly and in Good Faith.
                   A principal has a duty to deal with the agent fairly and in good faith, including a
               duty to provide the agent with information about risks of physical harm or pecuniary
               loss that the principal knows, has reason to know, or should know are present in the
               agent’s work but unknown to the agent.
             Comment c thereunder states: “Duty to provide information to agent. A principal’s general
duty to deal with an agent fairly and in good faith requires that the principal furnish information to the
agent, in particular, information about circumstances of which the agent is unaware that might subject the
agent to physical or pecuniary loss in acting on the principal’s behalf. The duty does not require the
principal to provide an agent with all information known to the principal about a product that the agent
sells on the principal’s behalf; the principal’s duty is limited to information material to the agent’s
professional reputation or risk of pecuniary loss to third parties with whom the agent deals on the
principal’s behalf.”)
               RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 20 states:
               § 20 A Lawyer’s Duty to Inform and Consult with a Client
                  (1) A lawyer must keep a client reasonably informed about the matter and must
              consult with a client to a reasonable extent concerning decisions to be made by the
              lawyer under §§ 21-23.
                  (2) A lawyer must promptly comply with a client’s reasonable requests for
              information.
                  (3) A lawyer must notify a client of decisions to be made by the client under §§
              21-23 and must explain a matter to the extent reasonably necessary to permit the client
              to make informed decisions regarding the representation.
    33
         See Judwin Properties v. Griggs & Harrison, 911 S.W.2d 498, 506 (Tex. App.—Houston [1st
Dist.] 1995, no writ).
    34
         See Archer, 390 S.W.2d at 739.


                                                       13
         3.     Conflicts of interest regarding the terms of the attorney-client
                contract must be disclosed and where necessary outside
                counsel consulted.35
         4.     Non-liability agreements contained in attorney-client
                contracts are prohibited unless outside counsel is obtained in
                advance.36
         5.     Referral fees regarding attorney-client contracts must be
                disclosed.37

         There is no doubt that arbitration provisions contained in attorney-client contracts

are enforceable in some circumstances,38 which is consistent with the “national policy

favoring [arbitration].”39 However, there are limits. In this regard, a recent Ethics

Opinion issued by the Professional Ethics Committee for the State Bar of Texas

concludes:

                It is permissible under the Texas Disciplinary Rules of
                Professional Conduct to include in an engagement agreement
                with a client a provision, the terms of which would be unfair
                to a typical client willing to agree to arbitration, requiring the
                binding arbitration of fee disputes and malpractice claims
                provided that (1) the client is aware of the significant
                advantages and disadvantages of arbitration and has sufficient
                information to permit the client to make an informed decision
                about whether to agree to the arbitration provision, and (2) the

    35
        See TEX. R. PROF. COND. 1.05(b)(2); 106(b) and (c) and cmt. 7 and 8; 1.07(a)(1) and cmt. 2 and
6; and 1.08(a), reprinted in TEX. GOV’T. CODE, Tit. 2, Subtit. G, App. A.
    36
        See TEX. R. PROF. COND. 1.08(g), reprinted in TEX. GOV’T. CODE, Tit. 2, Subtit. G, App. A (“A
lawyer shall not make an agreement prospectively limiting the lawyer’s liability to a client for malpractice
unless permitted by law and the client is independently represented in making the agreement, or settle a
claim for such liability with an unrepresented client or former client with out first advising that person in
writing that independent representation is appropriate in connection therewith.”).
    37
         TEX. R. PROF. COND. 1.04(f), reprinted in TEX. GOV’T. CODE, Tit. 2, Subtit. G, App. A.
    38
        Chambers, 242 S.W.3d at 31; In re John M. O’Quinn, P.C., 155 S.W.3d 195, 197 (Tex. App.—
Tyler 2003, orig. proceeding); Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105 S.W.3d
244, 248-249 (Tex. App.—Houston [14th Dist.] 2003, pet. denied).
    39
        Hall Street Assocs. v. Mallel, Inc., 128 S.Ct. 1396, 1402 (2008) (quoting Buckeye Check Cashing,
Inc., 546 U.S. at 443.


                                                     14
               arbitration provision does not limit the lawyer’s liability for
               malpractice.40

This Opinion is consistent with the above discussion; namely, when negotiating the terms

of a contract with a client, the lawyer has duty to disclose the fact that the proposed

contract contains an arbitration provision, to have a meaningful discussion regarding the

fact that the contract contains an arbitration provision, and to discuss the pros and cons of

an arbitration provision. This is consistent with the well-founded rule that an attorney-

agent has a duty to disclose material information to the client-principal so that the client-

principal can make an intelligent and informed decision about how to proceed.

        The undisputed facts impliedly found by the trial court in this case are that

appellee-client:

        • met with the defendants to discuss hiring them to represent her
          regarding her personal injury automobile accident;
        • was told by the defendants that they were qualified to handle cases like
          hers;
        • relied on the defendants counsel leading up to signing the contract;
        • relied on the representations of the defendants;
        • was not advised by independent counsel regarding the contract;
        • was not told by the defendants what the arbitration clause meant or that
          the effect of the clause would result in a waiver of a jury trial;
        • was not informed by the defendants of the “pros, cons, advantages or
          disadvantages, effects or ramifications” of the provision;
        • was not informed by the defendants of her rights and duties under the
          provision;
        • was unaware that the contract contained an arbitration provision; and
        • did not intend to agree to arbitration. (CR 50-51).

   40
        Op. Tex. Ethics Comm’n No. 586 (2008), reprinted in 72 TEX. BAR J. 128, 129 (Feb. 2009).


                                                 15
           Applying the legal sufficiency standard of review to the trial court’s denial of the

motion to compel arbitration as required,41 these factual circumstances show that a

fiduciary relationship arose before the signing of the attorney-client contract, which

imposed a duty upon the appellant-lawyer to disclose material information to the

appellee-client regarding the attorney-client contract and the arbitration provision

contained therein; that the defendant-lawyers did not disclose anything whatsoever to the

appellee-client regarding the arbitration provision; that the appellee-client did not know

that the arbitration provision was included in the attorney-client contract; that the

appellee-client had no idea what arbitration was or how it affected her rights regarding

contract.       Under these circumstances, the trial court’s implied conclusions that the

arbitration provision is unconscionable and against public policy should be affirmed as

founded upon legally sufficient evidence.

VI.        Conclusion.

           The standard of review in this case is legal sufficiency of the evidence. The trial

court implicitly found and concluded that the manner Letney was led into signing the

attorney-client contract that contained the arbitration provision was unconscionable. The

evidence in support of this implicit factual findings and conclusions of law was the

affidavit of Letney, and was unrebutted. Accordingly, the trial court’s order denying the

motion to compel arbitration should be affirmed and the court of appeals’ conditional

grant of writ of mandamus should be set aside.



      41
           TEX. R. APP. P. 28.1; Imlay, 150 S.W.3d at 867-68. Both quoted at footnote 1.


                                                     16
                                        Issue Two
                                        (restated)
                May parties contract to apply the Federal Arbitration Act
                (“FAA”) even if the contract does not affect interstate
                commerce?

I.        Parties may not contravene the FAA by contracting that the FAA applies
          even when the contract does not affect interstate commerce.

          Letney argued that the trial court’s order denying the motion to compel arbitration

should be denied because the attorney-client contract does not impact interstate

commerce. (CR 57-59).42 The majority opinion avoids the question of whether the

attorney-client contract impact’s interstate commerce by holding that Pham and Letney

chose the FAA as the controlling law. The majority opinion states in this regard:

                Here, the arbitration provision in question clearly specified
                arbitration under the FAA; accordingly, the trial court erred if
                it denied the motion to compel because the transaction in
                question had no impact on interstate commerce. Maj. Op., p.
                8.

This holding conflicts with Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995).

          In Dobson, the United States Supreme Court construed the FAA to extend as far as

the Commerce Clause will reach. Id. at 272-74. In reaching this conclusion, the Court

said that the words “evidencing a transaction involving commerce” from section 2 of the

FAA must turn out, in fact, to have involved interstate commerce, even if the parties did

not contemplate an interstate commerce connection. Id. at 276-81. In this case, the court


     42
        See 9 U.S.C. §§ 1-2 (2000) (The FAA covers any contract “evincing a transaction involving
commerce, “that is, “commerce among the several states or with foreign nations,” including territories
and the District of Columbia.); In re Nexion Health at Humble, Inc., 173 S.W.3d 67, 68-69 (Tex. 2005)
(per curiam); Palacios, 221 S.W.3d at 565; In re L&L Kempwood Assocs., 9 S.W. 125, 127 (Tex. 1999)
(per curiam).


                                                 17
of appeals’ opinion holds that parties may agree to apply the FAA even if the contract has

no impact on interstate commerce. This is in direct conflict with Dodson. The FAA does

not apply, even if the parties agree otherwise, unless the contract impacts interstate

commerce.

         Article I, Section 8 of the United States Constitution contains the Commerce

Clause, which states in relevant part:

                The Congress shall have Power . . . To regulate Commerce
                with foreign Nations, and among the several States, and with
                the Indian Tribes[.]

From this, the United States Supreme Court has made clear that there is a “national

interest in keeping interstate commerce free from interferences which seriously impede

it.”43 Similarly, Article VI, Section 2 of the United States Constitution contains the

Supremacy Clause, which states:

                This Constitution, and the Laws of the United States which
                shall be made in Pursuance thereof; and all Treaties made, or
                which shall be made, under the Authority of the United
                States, shall be the supreme Law of the Land; and the Judges
                in every State shall be bound thereby, any Thing in the
                Constitution or Laws of any State to the Contrary
                notwithstanding.

Regarding this provision, the United States Supreme Court said long ago that if laws of a

state “come into collision with an act of Congress . . . [they] must yield to the law of




    43
        Southern Pac. Co. v. Arizona, 325 U.S. 761, 795 (1945) (Douglas, J., dissenting) (“[T]he question
presented is whether the total effect of Arizona’s train-limit as a safety measure is so slight as not to
outweigh the national interest in keeping interstate commerce free from interferences which seriously
impede or burden it.”).


                                                   18
Congress[.]”44 The Federal Arbitration Act (FAA) invokes both of these constitutional

provisions, and the language of what the FAA covers provides:

                  “A written provision in any maritime transaction or a contract
                  evidencing a transaction involving commerce to settle by
                  arbitration a controversy thereafter arising out of such
                  contract or transaction, or the refusal to perform the whole or
                  any part thereof, or an agreement in writing to submit to
                  arbitration an existing contract, transaction, or refusal, shall
                  be valid, irrevocable, and enforceable, save upon such
                  grounds as exist at law or in equity for the revocation of any
                  contract.”45

The FAA is applicable in state courts and pre-emptive of state law because of the

Commerce and Supremacy Clauses.46

II.        The contract in this case does not affect interstate commerce.

           The words of the FAA, “involving commerce,” have been interpreted by the

United States Supreme Court so as to implement the intent of Congress to exercise its

commerce powers to the fullest extent.47 It has never been easy to determine exactly

what activity affects interstate commerce,48 or exactly what test should be applied to the


      44
           Gibbons v. Ogden, 14 U.S. 1, 210 (9 Wheat 1) (1824).
      45
           9 U.S.C. § 2 (2000) (emphasis added).
      46
        See Southerland Corp. v. Keating, 465 U.S. 1, 16 (1984) (“In creating a substantive rule
applicable in state as well as federal courts, Congress intended to foreclose state legislative attempts to
undercut the enforceability of arbitration agreements.”) (footnotes omitted) and at 17 (Stevens, J.,
concurring in part and dissenting in part) (“The Court holds that an arbitration clause that is enforceable
in an action in a federal court is equally enforceable if the action is brought in a state court. I agree with
that conclusion.”).
      47
        Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 115 (2001) (“The phrase ‘affecting commerce’
indicates Congress’ intent to regulate to the outer limits of its authority under the Commerce Clause.”);
Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 277 (1995).
      48
         See United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533, 550-51 (1944) (“The
precise boundary between national and state power over commerce has never yet been, and doubtless
never can be, delineated by a single abstract definition. The most widely accepted general description of
that part of commerce which is subject to federal power is that given in 1824 by Chief Justice Marshall . .


                                                     19
ever-tangled skein of human affairs in making the determination of whether a given

activity at issue affects interstate commerce.49 Regardless of the test though, it is clear

that a contract, taken alone, that does not have a substantial effect on interstate

commerce, may still be regulated, but only if the aggregate economic activity represents a

general practice that bears on interstate commerce in a substantial way.50 It is also

important to bear in mind that the fundamental purpose of the Commerce Clause is to

create an area of free trade among the states.51 In spite of the courts’ difficulties with

stating an abstract test, there are many opinions deciding what particular activities are

subject to federal regulation because they in fact affect interstate commerce.

         Prima Paint Corp. v. Flood & Conklin Mfg. Co. presents are good example of the

types of activities the United States Supreme Court believes affect interstate commerce—

the Court explained:

                 Prima Paint acquired a New Jersey paint business serving at
                 least 175 wholesale clients in a number of States, and secured
                 F & C’s assistance in arranging the transfer of manufacturing
                 and selling operations from New Jersey to Maryland. The
                 consulting agreement was inextricably tied to this interstate
                 transfer and to the continuing operations of an interstate
                 manufacturing and wholesaling business. There could not be
                 a clearer case of a contract evidencing a transaction in


. . ‘Commerce, undoubtedly, is traffic, but it is something more: it is intercourse. It describes the
commercial intercourse between nations, and parts of nations, in all its branches. . . .’”) (footnote and
citation omitted).
    49
        See United States v. Lopez, 514 U.S. 549 (1995) (The majority opinion as well as the two
concurring opinions and the three dissenting opinions struggled with the thorny question of what standard
should be applied to the determination of what activities affect interstate commerce.).
    50
         Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56-57 (2003).
    51
       McLeod v. J.E. Dilworth Co., 322 U.S. 327, 330-31 (1944) (“The very purpose of the Commerce
Clause was to create an area of free trade among the several States.”).


                                                    20
                interstate commerce.52

Other examples are found in other United States Supreme Court opinions,53 in Fifth

Circuit Court of Appeals opinions,54 and in Texas Supreme Court opinions.55 These

opinions, although not always articulating a coherent analytical standard, present clear

factual patterns that, in the courts’ view, affect interstate commerce and may therefore be

regulated by federal legislation. The facts and circumstances presented in these example

cases are not of the type or kind presented in this case.                   All of those cases were

commercial in nature in the sense that there was some direct and tangible manner by

which the activities impacted interstate commerce. Here, Letney is a resident of Harris

County, Texas. Pham is a resident of and has his law office in Harris County. The

    52
         388 U.S. 395, 401 (1967 (footnotes omitted).
    53
         See, e.g., South-Eastern Underwriters Ass’n, 322 U.S. at 549-50 (“It is interstate commerce
subject to regulation by Congress to carry lottery tickets from state to state. So also is it interstate
commerce to transport a woman from Louisiana to Texas in a common carrier; to carry across a state line
in a private automobile five quarts of whiskey for personal consumption; to drive a stolen automobile
from Iowa to South Dakota. Diseased cattle ranging between Georgia and Florida are in commerce, and
the transmission of an electrical impulse over a telegraph line between Alabama and Florida is intercourse
and subject to paramount federal regulation. Not only, then, may transactions be commerce though non-
commercial; they may be commerce though illegal and sporadic, and though they do not utilized common
carriers or concern the flow of anything more tangible than electrons and information.”) (citations
omitted).
    54
        See, e.g., Specialty Healthcare Mgmt, Inc. v. St Mary Parish Hosp., 220 F.3d 650, 654 n.13 (5th
Cir. 2000) (“Neither party has contended that their agreement did not relate to interstate commerce, and
we have no reason to say it did not: the agreement involved the staffing and management of a Louisiana
hospital by an out-of-state corporation.”).
    55
         See, e.g., In re Palacios, 221 S.W.3d 564, 565 (Tex. 2006) (“The arbitration agreement does not
indicate whether it is governed by the Federal or Texas Arbitration Act, and neither do the parties. But as
Palacios pleaded that she gave her realtor a power of attorney to purchase the duplex while she was in
Mexico, the transaction appears to involve foreign commerce, and thus implicates the FAA.”); In re
Nexion Health at Humble, Inc., 173 S.W.3d 67, 69 (Tex. 2005) (“evidence of Medicare payments made to
HHC on John’s behalf is sufficient to establish interstate commerce and the FAA’s application”); In re
L&L Kempwood Associates, L.P., 9 S.W.3d 125, 127 (Tex. 1999) (“The parties to the contract in the
instant case also reside in different states—Georgia and Texas—and the renovation work on Houston
apartments was to be done by a Texas business for Georgia owners. The contract here thus involves
interstate commerce.”).


                                                    21
subject matter of the attorney/client contract that contained the arbitration provision is

personal injury arising out of an auto accident that occurred in Harris County. The

contract was signed in Harris County and everything in the record indicates that the

contract was to be performed in Harris County.

        The power of the federal government to regulate commerce, though broad indeed,

has limits.56 In finding these limits, Citizen Bank makes clear that a contract, taken alone,

that does not have a substantial affect on interstate commerce may still be regulated by

federal legislation, but only if the aggregate economic activity would represent a general

practice that bears on interstate commerce in a substantial way. 539 U.S. at 56-57. For

example, if Congress wanted to regulate personal injury attorney/client contracts in

general, it would surely be able to do so under the Commerce Clause because the overall

“business” most certainly affects interstate commerce in a substantial way. Therefore a

federal statute subjecting all personal injury attorney/client contracts to regulation would

be binding on even those contracts that had no impact on interstate commerce, such as the

contact in this case. The FAA however is specifically designed to cover of all human

activity but only if (1) the parties agreed to arbitration, (2) the transaction specifically

involves interstate commerce, and (3) the contract is not barred by such grounds as exist

at law or in equity for the revocation of any contract. The FAA is not directed at any

given industry—the focus when the FAA was adopted was not on any particular

   56
        Maryland v. Wintz, 392 U.S. 183, 196-97 n.27 (1968) (“Neither here nor in Wichard [v. Filburn]
has the Court declared that Congress may use a relatively trivial impact on commerce as an excuse for
broad general regulation of state or private activities. The Court has said only that where a general
regulatory statute bears a substantial relation to commerce, the de minimus character of individual
instances arising under that statute is of no consequence.”).


                                                 22
industry’s impact on interstate commerce. Rather, the FAA uniquely allows parties and

courts to focus on the impact of a particular contract on interstate commerce.57

Therefore, the question is not whether the aggregate of all attorney/client personal injury

contracts have a substantial impact on interstate commerce, but rather whether this

contract involves interstate commerce.

         Here, the contract had no specific impact on interstate commerce. The record does

not reflect that, aside from the particulars of this contract, Pham’s practice ever left the

State of Texas. The record does reflect however that this particular contract involved a

case that was completely confined to Harris County, Texas. The implicit finding by the

trial court that the facts surrounding this contract do not affect interstate commerce

should be respected. In short, the court of appeals should have denied Pham’s petition

for writ of mandamus because the contract does not affect interstate commerce and

therefore the FAA is inapplicable.

                                       Issue Three
                                        (restated)
                Does a legal malpractice claim constitute a personal injury
                claim for purposes of section 171.002 of the Texas
                Arbitration Act (“TAA”)?

         The court of appeals concluded that the motion to compel in this case only seeks

arbitration pursuant to the FAA and therefore dismissed the appeal and considered the

merits of the petition for writ of mandamus. Op., 4-5. Strangely, the majority assumed

    57
         See Southern Pacific Co., 325 U.S. at 769-70 (“Congress has undoubted power to redefine the
distribution of power over interstate commerce. It may either permit the states to regulate commerce in a
manner which would otherwise not be permissible, or exclude state regulation even of matters of
peculiarly local concern which nevertheless affect interstate commerce.”) (citations omitted).


                                                   23
that section 171.002 of the TAA “can apply to an arbitration agreement selecting FAA

procedures” and then sided with the split of Texas court of appeals opinions holding that

legal malpractice claims do not constitute personal injury claims for purposes of section

171.002. Op., 6-7. Because of this assumption the issue arises of whether a legal

malpractice claim constitutes a personal injury claim for purposes of section 171.002 of

the TAA. The appellate opinions called upon to determine whether legal malpractice

claims are “personal injury” claims for purposes of Section 171.002 are mixed and

constitute a split in authority that has not been resolved by the Texas Supreme Court.



Pro:                                             Contra:

In re Godt, 28 S.W.3d 732, 738-39 (Tex. Taylor v. Wilson, 180 S.W.3d 627, 630-31
App.—Corpus Christi 2000, no pet.)       (Tex. App.—Houston [14th Dist.] 2005, pet.
                                         denied)
Henry v. Gonzalez, 18 S.W.3d 684, 692-93
(Tex. App.—San Antonio, pet. dis’d agr) Miller v. Brewer, 118 S.W.3d 896, 899
(Hardberger, C.J., dissenting)           (Tex. App.—Amarillo 2003, no pet.)

                                                 In re Hartigan, 107 S.W.3d 684, 690-91
                                                 (Tex. App.—San Antonio 2993, pet.
                                                 denied)


       An independent and separate legal impediment to enforcement of an arbitration

provision is Section 171.002 contained in the TAA, which provides that the TAA “does

not apply to . . . a claim for personal injury except . . . if: (1) the parties to the agreement

agree in writing to arbitrate; and (2) the agreement is signed by each party and each




                                              24
party’s attorney.”58 Section 171.002 applies only to personal injury claims. If a legal

malpractice claim is “personal injury” as that term is contemplated by Section 171.002,

then the arbitration provision in this case is not enforceable because independent counsel

was not obtained by Letney.

            Whether this provision is applicable to attorney-client contracts requires an

interpretation of whether the words “personal injury” includes a claim for legal

malpractice. As a general proposition, the appellate opinions describe legal malpractice

claims as “sounding in negligence” and “based on negligence principles.”59 One opinion

held that a legal malpractice claim is for “personal injury” when it applied to the pre-

judgment interest statute.60

            Here, the underlying case is a claim for personal injuries arising from an

automobile collision. In Taylor, the plaintiff’s “underlying claim was for economic

losses rather than for personal injury.” Id. at 628. Because the underlying claim here

was for personal injury, the holding in Taylor is inapplicable. This line of reasoning

seems to have been important to other appellate courts called upon to determine whether

legal malpractice claims are personal injury as contemplated by Section 171.002.61


    58
            TEX. CIV. PRAC. & REM. CODE § 171.002(a)(3) and (c)(1)-(2).
    59
            E.g. Willis, 760 S.W.2d at 644 (“A cause of action for legal malpractice is in the nature of a
tort[.]”)
    60
        Sample v. Freeman, 873 S.W.2d 470, 476-77 (Tex. App.—Beaumont 1994, writ denied) (in
applying the prejudgment interest statute the court held that a legal malpractice claim was a suit for
personal injuries where the defendant-lawyers in the underlying case failed to timely file a Jones act suit
for personal injuries sustained while aboard a ship).
    61
        See In re Hartigan, 107 S.W.3d 684 (Tex. App.—San Antonio 1993, pet. denied) (underlying
claim arose from representation in a divorce proceeding); Miller v. Brewer, 118 S.W.3d 896 (Tex. App.—
Amarillo 2003, no pet.) (underlying claim arose from representation in an employment discrimination


                                                     25
Accordingly, the trial court’s implied ruling is that the arbitration provision is barred by

Section 171.002 because the malpractice claim in this case is a personal injury claim.

This Court should adopt that reasoning.

                                          PRAYER

       The relator, Shelly Letney, requests that this Court grant a writ of mandamus

against the Fourteenth Court of Appeals commanding it to vacate its conditional writ of

mandamus as to the trial court’s order denying the motion to compel arbitration.

                                                   Respectfully submitted,


                                                   ______________________________
                                                   TIMOTHY A. HOOTMAN
                                                   SBN 09965450
                                                   2402 Pease St.
                                                   Houston, TX 77003
                                                   713.247.9548
                                                   713.583.9523 (fax)
                                                   E-mail: thootman2000@yahoo.com

                                                   LANCE CHRISTOPHER KASSAB
                                                   SBN 00794070
                                                   1420 Alabama
                                                   Houston, TX 77004
                                                   713.522.7400

                                                   ATTORNEYS    FOR               RELATOR,
                                                   SHELLY LETNEY




claim were economic damages were sought). See also Bennett v. Leas, No. 13-06-469-CV, 2008 Tex.
App. LEXIS 4817 (Tex. App.—Corpus Christi June 26, 2008).


                                              26
                            CERTIFICATE OF SERVICE

      On this day, I sent a copy of this brief by certified mail, return receipt requested, to

the following:

                    Mr. Kevin T. Cloves
                    Pham & Cloves, PLLC
                    10333 Harwin Dr., Suite 155
                    Houston, TX 77036

Dated: ___________
                                                  ___________________________
                                                  TIMOTHY A. HOOTMAN




                                             27
                              STATEMENT OF FACTS

      Shelly Letney suffered personal injuries from a rear-ender automobile collision

where she was in the front vehicle (CR 3 and 26).        Letney entered into a written

agreement with Steven Pham, Sarita Garg, and Smith & Garg, LLC formally retaining

them on an hourly fee basis to represent her regarding her claims arising from the

collision (CR 26-29). The agreement contains the following arbitration provision:

             Any and all disputes, controversies, claims or demands
             arising out of or relating to this Agreement or any provision
             hereof, whether in contract, tort or otherwise, at law or in
             equity, for damages or any other relief, shall be resolved by
             binding arbitration pursuant to the Federal Arbitration Act in
             accordance with the Commercial Arbitration Rules then in
             effect with the American Arbitration Association. Any such
             proceeding shall be conducted in Harris County, Texas
             pursuant to the substantive federal laws established by the
             Federal Arbitration Act. Any party to any ward (sic) rendered
             in such arbitration proceeding may seek a judgment upon the
             award and that judgment may be entered by any federal or
             state court in Montgomery County, Texas having jurisdiction
             (CR 40).

      Letney filed the presently pending legal malpractice suit against Pham, Garg, and

Smith & Garg, LLC because they allowed the statute of limitations applicable to her

personal injury claim to pass without filing suit (CR 3). Pham, Garg, and Smith & Garg,

LLC filed a motion to compel arbitration of the legal malpractice claim based on the

above contractual provision (CR 31-42).        In their motion, they argue the Texas

Arbitration Act requires that the case be arbitrated—they did not cite to or argue the

Federal Arbitration Act.




                                           1
       In response to the motion to compel arbitratin, Letney filed her affidavit which

states in relevant part:

               On February 15, 2006, I was involved in an auto accident. I
               was rear ended by a third party who was insured by State
               Farm Insurance Company (“State Farm”). There was clear
               liability against State Farm’s insured. After researching the
               internet for qualified counsel, I hired the law firm of Smith &
               Garg, LLC to pursue my lawsuit against State Farm and it’s
               insured to recover for my personal injuries which resulted
               from the accident. In making my decision to hire Defendants,
               I relied on various representations regarding the firm’s
               diligence, experience, and expertise as listed on the firm’s
               website.

               At all times prior to and during my representation,
               Defendants held themselves out to be expert lawyers in the
               field of personal injury and promised to file suit against State
               Farm and litigate my case so I would receive the maximum
               allowable damages under the laws of Texas. Unfortunately,
               Defendants failed to file my personal injury lawsuit timely
               and the statute of limitations lapsed on my suit.

               Attached hereto as Exhibit 1 is a true and correct copy of the
               attorney/client contract I signed with Smith & Garg law firm
               (Contract). When I signed the Contract I was not represented
               by an attorney. I did not have an attorney advise me
               regarding the legal aspects of all terms and conditions of the
               Contract. No one from Smith & Garg advised me or told me
               about the arbitration clause in the Contract or what it meant. I
               have no legal training and do not know what arbitration is or
               what it means to arbitrate. No one from Smith & Garg
               advised me or told me that by signing the Contract I could be
               waiving my constitutional rights to a jury trial.

               No one from Smith & Garg went over Exhibit 1 with me. No
               one from Smith & Garg informed me about the pros, cons,
               advantages or disadvantages, effects and ramifications of the
               arbitration clause contained in Exhibit 1. No one from Smith
               & Garg informed me about my rights and duties under the
               arbitration clause. I did not obtain advice from outside
               counsel, or any counsel regarding the arbitration clause prior


                                              2
              to signing Exhibit 1 and no one from Smith & Garg ever
              advised me to obtain legal advice from outside counsel
              regarding the arbitration clause.

              I trusted Defendants to advise me on all matters regarding
              Defendants’ representation of me. Defendants never advised
              me in any manner whatsoever regarding the arbitration
              clause. I was unaware that Exhibit 1 even contained an
              arbitration clause. Lastly, I did not intend to agree to an
              arbitration clause (CR 50-51).

        The legal arguments asserted by Letney as to why the motion should be denied

were:

           • The dispute involves a claim for personal injury and therefore the
             arbitration provision must comply with Section 171.002(a)(3),
             (c)(1)-(2) of the Texas Arbitration Act (CR 45-49).
           • The Federal Arbitration Act does not apply because the contract
             does not affect interstate commerce (CR 57-59).
           • The arbitration clause is unconscionable (CR 58-59).
           • The arbitration clause is void against public policy (CR 57, 59-60).

        The trial court denied the motion to compel arbitration (CR 61). Pham, Garg, and

Smith & Garg, LLC filed an interlocutory notice of appeal. Garg and Smith & Garg,

LLC moved to be dismissed from the appeal before filing briefs. Pham proceeded with

his appeal and filed a brief. Letney pointed out in her brief that the Federal Arbitration

Act (FAA) issues must be raised by mandamus, so Pham filed a petition for writ of

mandamus.      The court of appeals consolidated the interlocutory appeal and the

mandamus proceeding.




                                            3
       Letney argued that:

          • Her claims are exempt under the Texas Arbitration Act (TAA) because she
            seeks recovery for personal injuries;
          • The FAA is inapplicable because the contract at issue did not affect
            interstate commerce;
          • The arbitration clause is unconscionable; and
          • The arbitration clause violates the Disciplinary Rules of Professional
            Conduct.

The court of appeals dismissed the interlocutory appeal because the parties agreed to

proceed under the FAA. The court of appeals conditionally granted the mandamus after

dealing with Letney’s arguments by concluding that (1) injuries arising because of legal

malpractice are not personal injuries and therefore the TAA exemption do not apply (this

is strange because the appeal was dismissed on the grounds that the TAA does not apply);

(2) whether the contract affects interstate commerce is irrelevant because the parties

agreed to apply the FAA irrespective of whether the contract affects interstate commerce;

(3) the arbitration clause is not unconscionable because the legislature authorizes such

clauses; and (4) the arbitration clause does not violate the Disciplinary Rules.




                                             4
                      SUMMARY OF ARGUMENT

       Arbitration provisions contained in attorney-client contracts are not enforceable if

they were obtained in violation of the attorney’s fiduciary obligations. Under the specific

circumstances of this case the arbitration provision is unenforceable because it is

unconscionable and violates public policy. And, the unrebutted affidavit testimony of

Letney in this case provides legally sufficient evidence that the her lawyer, Pham,

violated his duty to disclose all material information regarding the attorney-client

contract so that Letney could make an intelligent and informed decision as to whether to

enter into an agreement that contained an arbitration provision.

       Parties to a contract may not contravene the Federal Arbitration Act by agreeing to

apply the Act where the contact does not affect interstate commerce.

       For purposes of the section 171.002 of the Texas Arbitration Act a legal

malpractice case is personal injury in nature.




                                             5
                                   ARGUMENT

I.       Standard of review.

         Generally, appellate review of an arbitration agreement is limited to whether (1) a

valid arbitration agreement exists between the parties, and (2) the scope of the agreement

encompasses the claims raised.1 In this case the larger question is whether the arbitration

agreement between Pham and his client, Letney, is valid. In reviewing the trial court’s

determination that Letney did not assent to arbitrate and that she established her defenses

to the arbitration provision, the Court should look to Texas contract law.2 The Court

should apply a no-evidence standard of review to the trial court’s ruling because it is

predicated on factual findings.3 Had the only evidence before the trial court been the

arbitration provision, the standard of review would be de novo.4 However, that is not the

case here, and therefore, the de novo standard of review does not apply.5

         Generally, to be entitled to a writ of mandamus, the relator must establish that the

ruling of the trial court constitutes a clear abuse of discretion, and that there is no




     1
        In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (per curiam), abrogated by
In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002).
     2
       Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006); First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 944 (1995); Oakwood Mobile Homes, 987 S.W.2d at 574.
     3
       Henry v. Gonzalez, 18 S.W.3d 684, 688-89 (Tex. App.—San Antonio 2000, dis’m agr.);
Hearthshire Braeswood Plaza Ltd. Partnership v. Bill Kelly Co., 849 S.W.2d 380, 384 (Tex. App.—
Houston [14th Dist.] 1993, writ denied).
     4
       See In re Wilson Const. Co., 196 S.W.3d 774, 781 (Tex. 2006); J.M. Davidson, Inc. v. Webster,
128 S.W.3d 223, 227 (Tex. 2003).
     5
       TEX. R. APP. P. 28.1; Tempest Broadcasting v. Imlay, 150 S.W.3d 861, 867-68 (Tex. App.—
Houston [14th Dist.] 2004, no pet.).


                                                  6
adequate remedy by appeal.6 This Court may also grant a writ of mandamus against a

court of appeals that has already conditionally granted a writ of mandamus against the

trial court as has occurred here.7

II.       Introduction.

          Pham argued in the trial court that the arbitration provision contained in the

attorney-client agreement should be enforced because Letney signed the agreement and

arbitration agreements are strongly favored under the law (CR 21). The only evidence

offered by Pham in support of this argument was the attorney-client agreement.

          Letney asserted the affirmative defenses to enforcement of the arbitration

provision of unconscionability, voidness against public policy, and non-compliance with

171.002 of the Texas Arbitration Act (“TAA”). She offered her affidavit in support of

these defenses, which was not rebutted. She also argued that the Federal Arbitration Act

(“FAA”) was not applicable because the attorney-client contract does not affect interstate

commerce.

          The factual circumstances leading up to the signing of the arbitration provision

described by Letney in her affidavit, and accepted as true by the trial court,8 render its

      6
        In re Prudential Ins. Co of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); Walker
v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding).
      7
        Loftin v. Martin, 776 S.W.2d 145, 146 (Tex. 1989); Strake v. Court of Appeals for First Supreme
Judicial Dist., 704 S.W.2d 746, 747 (Tex. 1986); Johnson v. Fourth Court of Appeals, 700 S.W.2d 916,
918 (Tex. 1985); Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105, 107 (Tex. 1985).
      8
         TEX. R. APP. P. 28.1 (Regarding interlocutory order, “[t]he trial court need not but may—within
30 days after the order is signed—file findings of fact and conclusions of law.”); Tempest Broadcasting
Corp. v. Imlay, 150 S.W.3d 861, 867-68 (Tex. App.—Houston [14th Dist.] 2004, no pet.) (when the trial
court does not make findings of fact after considering evidence offered regarding an interlocutory order
all facts necessary to support the order and supported by the evidence are implied and the review is for
legal sufficiency of the evidence, that is, no evidence).


                                                   7
enforcement unconscionable and therefore voidable at Letney’s election.

          Pham appealed the trial court’s ruling as far as the TAA is applicable, and sought

mandamus as far as the Federal Arbitration Act (“FAA”) is applicable.9 The court of

appeals dismissed the appeal and conditionally granted the mandamus relief sought by

Pham. For the following reasons the mandamus relief should not have been granted.

                                          Issue One
                                          (restated)
                Are arbitration contracts that violate the Texas Disciplinary
                Rules enforceable?

I.        Two dissenting opinions.

          The majority opinion concluded that arbitration provisions are always enforceable

regardless of the special fiduciary relationship that exists between a lawyer and client.

The dissenting opinion disagreed. In Henry v. Gonzalez, 18 S.W.3d 684 (Tex. App.—

San Antonio 2000, pet. dism’d) the majority agrees with the majority in this case; and,

the dissent in Henry agrees with the dissent in this case. It is clearly time for the

Supreme Court to weigh in on this question.

II.       Recognized defenses to arbitration provisions.

          The FAA specifically leaves open the traditional legal and equitable defenses to




      9
        The TAA allows a party to “appeal an order or judgment that either: (1) denies an application to
compel arbitration made under section 171.021, or (2) grants an application to stay arbitration under
section 171.023.” Chambers v. O’Quinn, 242 S.W.3d 30, 31 (Tex. 2007) (per curiam) (citing TEX. CIV.
PRAC. & REM. CODE § 171.098(a)(1)-(2)). At the time in question, an order denying arbitration under the
Federal Arbitration Act (FAA) is reviewable by mandamus. In re Weekley Homes, L.P., 180 S.W.3d 127,
130 (Tex. 2005); see also In re Palacios, 221 S.W.3d 564, 565 (Tex. 2006) (per curiam) (citing Jack B.
Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992).


                                                   8
contract formation.10        Procedural and substantive unconscionability are recognized

defenses to arbitration provisions.11                Procedural unconscionability refers to the

circumstances surrounding the adoption of the arbitration provision.12                      Substantive

unconscionability refers to the fairness of the arbitration provision itself.13 “[T]he basic

test for unconscionability is whether, given the parties’ general commercial background

and the commercial needs of the particular trade or case, the clause is so one-sided that it

is unconscionable under the circumstances existing when the parties made the contract.”14

This helps prevent unfair surprise and oppression resulting due to superior bargaining

power caused by the positions of vulnerability of the parties.15

         Public policy considerations factor into the determination of whether the

enforcement of a contract would be unconscionable.16 Public policy is reflected in the

state statutes and rules, including the State Bar Rules.17 Because of this, an attorney-

client contract that violates a State Bar Rule renders the contract voidable at the client’s



    10
        See 9 U.S.C. § 2 (“. . . save upon such grounds as exist at law or in equity for the revocation of
any contract. . . .”); Southerland Corp., 465 U.S. at 17-18 n.11 (Stating that “a party may assert general
contract defenses such as fraud to avoid enforcement of an arbitration agreement.”); Prima Paint Corp.,
388 U.S. at 401 (Stating that arbitration agreements procured by fraud in the inducement are not
enforceable.); In re Firstmerit Bank, N.A., 52 S.W.3d 749, 556-57 (Tex. 2001) (Stating that, although the
party that was resisting the arbitration provision did not meet its burden of proof that the provision was
unconscionable, such claims are valid defenses to arbitration provisions.).
    11
         Halliburton Co., 80 S.W.3d 566; In re First Merit Bank, N.A., 52 S.W.3d 749, 757 (Tex. 2001).
    12
         See Halliburton, 80 S.W.3d at 571.
    13
         Id.
    14
         First Merit Bank, N.A., 52 S.W.3d at 757.
    15
         Id.
    16
         RESTATEMENT (SECOND) OF CONTRACTS § 178 (2006).
    17
         Id.



                                                      9
election, because such contracts are against public policy.18 Similarly, a breach of the

attorney’s fiduciary duty can cause the attorney-client contract to be voidable at the

client’s option.19

         The burden of proving unconscionability is on the party opposing arbitration.20

III.     Discussion regarding unconscionability and public policy.

         A lawyer owes his or her client a high degree of care.21 This is because the lawyer-

client relationship is a fiduciary one,22 wherein the lawyer is the agent and the client the

principal.23 A duty of undivided loyalty is what distinguishes the fiduciary relationship




    18
         See TEX. GOV. CODE § 82.065 (contingent fee contract for legal services is voidable by client if it
is procured as result of conduct violating laws of this state or rules of State Bar of Texas regarding
barratry by attorneys or other persons.); Sanes v. Clark, 25 S.W.3d 800 (Tex. App.—Waco 2000, pet.
ref’d) (contract that authorized attorney to settle without consulting with client was voidable at client’s
option); Fleming v. Campbell, 537 S.W.2d 118 (Tex. App.—Houston [14th Dist.] 1976, writ ref’d) (oral
agreement to split a referral fee that was not disclosed to client was not enforceable). See also
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 6 (2001); and RESTATEMENT (SECOND) OF
CONTRACTS § 173, which states:
             § 173 When Abuse of a Fiduciary Relation Makes a Contract Voidable
             If a fiduciary makes a contact with his beneficiary relating to matters within the
         scope of the fiduciary relation, the contract is voidable by the beneficiary, unless (a) it is
         on fair terms, and (b) all parties beneficially interested manifest assent with full
         understanding of their legal rights and of all relevant facts that the fiduciary knows or
         should know.
    19
         RESTATEMENT (THIRD) OF AGENCY § 8.01, cmt. d (2006) (“Because it constitutes a material
breach of the contract by the agent, an agent’s breach of fiduciary duty may also privilege the principal to
terminate the principal’s relationship with the agent in advance of a time for termination in any contract
between them.”); Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) (attorney fee forfeiture where there is
finding of breach of fiduciary duty); Haase v. Herberger, 44 S.W.3d 267 (Tex. App.—Houston [14th
Dist.] 2001, no pet.) (attorney fee forfeiture).
    20
         First Metro Bank, 52 S.W.3d at 756.
    21
         RESTATEMENT (THIRD) OF AGENCY § 8.01.
    22
        Willis v. Maverick, 760 S.W.2d 642, 645 (Tex. 1988); Archer v. Griffin, 390 S.W.2d 735, 739
(Tex. 1964).
    23
         RESTATEMENT (THIRD) OF AGENCY § 1.01.


                                                      10
from other relationships.24 It is important to note that an agency relationship is not a

contractual relationship, and that a contractual relationship is not an agency relationship.

The lawyer and client, of course, may well also be parties to an ancillary compensation

contract, but the lawyer-client relationship first and foremost is a fiduciary one, not a

contractual one.25 Thus the contract that is incident to a fiduciary relationship is subject

to special rules.26

         An agent-fiduciary, that is an agent vested with discretion, owes the principal a

general duty of loyalty.27 The lawyer-agent is no exception. Incident to the general duty

of loyalty is the ongoing affirmative duty to furnish the client-principal with all material

information that is in the lawyer-agent’s possession and relevant to the agency, regardless

of whether the client-principal asks for the information.28 What constitutes material


    24
         RESTATEMENT (THIRD) OF AGENCY § 8.01 cmt. b.
    25
       See RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 34 cmt. b (confirming that
“[l]awyers . . . owe their clients greater duties than are owed under the general law of contracts”).
    26
         See, e.g., RESTATEMENT (SECOND) OF AGENCY § 390 cmt. e (1958) (providing that “[i]f . . . in
the case of attorney and client, the creation of the relation involves peculiar trust and confidence, with
reliance by the principal upon fair dealing by the agent, it may be found that a fiduciary relation exists
prior to the employment and, if so, the agent is under a duty to deal fairly with the principal in arranging
the terms of the employment”).
    27
        RESTATEMENT (THIRD) OF AGENCY § 8.01 (“An agent has a fiduciary duty to act loyally for the
principal’s benefit in all matters connected with the agency relationship.”).
    28
         RESTATEMENT (THIRD) OF AGENCY § 8.11, cmt. b (“An agent owes the principal a duty to
provide information to the principal that the agent knows or has reason to know the principal would wish
to have.”); Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex. App.—Houston [14th Dist.] 1997, pet.
dism’d agr.) (breach of fiduciary duty upheld where there was some evidence that firm failed to disclose
its conflicts of interest with client and then acted in firm’s own interest rather than in best interest of
estate it represented). See also TEX. R. PROF. COND. 1.03(a), reprinted in TEX. GOV’T CODE, Tit. 2,
Subtit. G, App. A (“A lawyer shall keep a client reasonably informed about the status of a matter and
promptly comply with reasonable requests for information.”); and cmt. 1 (“The client should have
sufficient information to participate intelligently in decisions concerning the objectives of the
representation and the means by which they are to be pursued, to the extent the client is willing and able
to do so.”); and cmt. 2 (“Adequacy of communication depends in part on the kind of advice or assistance
involved. For example, in negotiations where there is time to explain a proposal the lawyer should review


                                                    11
information? Material information is any information the client-principal would need to

have in order to adequately further and protect his interest, whether in the courts or non-

judicially,29 as well as to refine and adjust the scope of the agency on an ongoing basis.30

         When a lawyer and client are negotiating an attorney-client contract, fiduciary

duties arise because the mere consultation, without a formal attorney-client contract,

gives rise to the fiduciary relationship.31 Accordingly, the lawyer has a duty to disclose

material information regarding the pros and cons of the attorney-client contract that the

lawyer is proposing be signed.32 Because the fiduciary duty exists before the signing of


all important provisions with the client before proceeding to an agreement. In litigation a lawyer should
explain the general strategy and prospects of success and ordinarily should consult the client on tactics
that might injure or coerce others. On the other hand, a lawyer ordinarily cannot be expected to describe
trial or negotiation strategy in detail. Moreover, in certain situations practical exigency may require a
lawyer to act for a client without prior consultation. The guiding principle is that the lawyer should
reasonably fulfill client expectations for information consistent with the duty to act in the client’s best
interests, and the client’s overall requirements as to the character of representation.”).
    29
         Thus, “[I]f an agent has acted beyond the scope of the agent’s authority, the agent’s duty to the
principal may require the agent to inform the principal of the unauthorized action and the courses of
action reasonably open to the principal.” RESTATEMENT (THIRD) OF AGENCY § 8.11, cmt. b.
    30
         RESTATEMENT (THIRD) OF AGENCY § 8.11, cmt. b (“Information that the agent provides to the
principal may enable the principal to reconsider a course of action that the principal has previously
decided upon, leading the principal to revise or rescind prior instructions given to the agent and thereby
enabling the principal to shape how the agent’s actions may affect the principal’s legal relations with third
parties in light of developments reported by the agent.”).
    31
         RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 15 cmt. b.
    32
         RESTATEMENT (THIRD) OF AGENCY § 8.11 states:
            § 8.11 Duty to Provide Information.
                 An agent has a duty to use reasonable effort to provide the principal with facts
            that the agent knows, has reason to know, or should know when
                         (1)      subject to any manifestation by the principal, the agent knows or
                     has reason to know that the principal would wish to have the facts or the facts
                     are material to the agent’s duties to the principal; and
                         (2)      the facts can be provided to the principal without violating a
                     superior duty owed by the agent to another person.
    Comment c thereunder states: “[I]f the creation of the relationship between an agent and a principal
involves peculiar trust and confidence, and the prospective principal relies on the prospective agent to
deal fairly with the prospective principal, the prospective agent is subject to a duty to deal fairly in


                                                     12
the attorney-client contract, the contract formation is subject to the following rules:

         1.        Dealings between attorney and client regarding the terms of
                   the attorney-client contract require the utmost good faith.33
         2.        Dealings, intentions, and intendments between attorney and
                   client regarding the terms of the attorney-client contract are
                   subject to exacting scrutiny.34




arranging the terms of the agency relationship, as if the prospective agent were an agent dealing as a
adverse party with the principal, with the principal’s knowledge. See § 8.06. The duty to deal fairly may
require a prospective agent to furnish the prospective principal with information that is not otherwise
reasonably available to the prospective principal and that is material to the principal’s decision whether to
engage the agent.”
    RESTATEMENT (THIRD) OF AGENCY § 8.15 states:
               § 8.15 Principal’s Duty to Deal Fairly and in Good Faith.
                   A principal has a duty to deal with the agent fairly and in good faith, including a
               duty to provide the agent with information about risks of physical harm or pecuniary
               loss that the principal knows, has reason to know, or should know are present in the
               agent’s work but unknown to the agent.
             Comment c thereunder states: “Duty to provide information to agent. A principal’s general
duty to deal with an agent fairly and in good faith requires that the principal furnish information to the
agent, in particular, information about circumstances of which the agent is unaware that might subject the
agent to physical or pecuniary loss in acting on the principal’s behalf. The duty does not require the
principal to provide an agent with all information known to the principal about a product that the agent
sells on the principal’s behalf; the principal’s duty is limited to information material to the agent’s
professional reputation or risk of pecuniary loss to third parties with whom the agent deals on the
principal’s behalf.”)
               RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 20 states:
               § 20 A Lawyer’s Duty to Inform and Consult with a Client
                  (1) A lawyer must keep a client reasonably informed about the matter and must
              consult with a client to a reasonable extent concerning decisions to be made by the
              lawyer under §§ 21-23.
                  (2) A lawyer must promptly comply with a client’s reasonable requests for
              information.
                  (3) A lawyer must notify a client of decisions to be made by the client under §§
              21-23 and must explain a matter to the extent reasonably necessary to permit the client
              to make informed decisions regarding the representation.
    33
         See Judwin Properties v. Griggs & Harrison, 911 S.W.2d 498, 506 (Tex. App.—Houston [1st
Dist.] 1995, no writ).
    34
         See Archer, 390 S.W.2d at 739.


                                                       13
         3.     Conflicts of interest regarding the terms of the attorney-client
                contract must be disclosed and where necessary outside
                counsel consulted.35
         4.     Non-liability agreements contained in attorney-client
                contracts are prohibited unless outside counsel is obtained in
                advance.36
         5.     Referral fees regarding attorney-client contracts must be
                disclosed.37

         There is no doubt that arbitration provisions contained in attorney-client contracts

are enforceable in some circumstances,38 which is consistent with the “national policy

favoring [arbitration].”39 However, there are limits. In this regard, a recent Ethics

Opinion issued by the Professional Ethics Committee for the State Bar of Texas

concludes:

                It is permissible under the Texas Disciplinary Rules of
                Professional Conduct to include in an engagement agreement
                with a client a provision, the terms of which would be unfair
                to a typical client willing to agree to arbitration, requiring the
                binding arbitration of fee disputes and malpractice claims
                provided that (1) the client is aware of the significant
                advantages and disadvantages of arbitration and has sufficient
                information to permit the client to make an informed decision
                about whether to agree to the arbitration provision, and (2) the

    35
        See TEX. R. PROF. COND. 1.05(b)(2); 106(b) and (c) and cmt. 7 and 8; 1.07(a)(1) and cmt. 2 and
6; and 1.08(a), reprinted in TEX. GOV’T. CODE, Tit. 2, Subtit. G, App. A.
    36
        See TEX. R. PROF. COND. 1.08(g), reprinted in TEX. GOV’T. CODE, Tit. 2, Subtit. G, App. A (“A
lawyer shall not make an agreement prospectively limiting the lawyer’s liability to a client for malpractice
unless permitted by law and the client is independently represented in making the agreement, or settle a
claim for such liability with an unrepresented client or former client with out first advising that person in
writing that independent representation is appropriate in connection therewith.”).
    37
         TEX. R. PROF. COND. 1.04(f), reprinted in TEX. GOV’T. CODE, Tit. 2, Subtit. G, App. A.
    38
        Chambers, 242 S.W.3d at 31; In re John M. O’Quinn, P.C., 155 S.W.3d 195, 197 (Tex. App.—
Tyler 2003, orig. proceeding); Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105 S.W.3d
244, 248-249 (Tex. App.—Houston [14th Dist.] 2003, pet. denied).
    39
        Hall Street Assocs. v. Mallel, Inc., 128 S.Ct. 1396, 1402 (2008) (quoting Buckeye Check Cashing,
Inc., 546 U.S. at 443.


                                                     14
               arbitration provision does not limit the lawyer’s liability for
               malpractice.40

This Opinion is consistent with the above discussion; namely, when negotiating the terms

of a contract with a client, the lawyer has duty to disclose the fact that the proposed

contract contains an arbitration provision, to have a meaningful discussion regarding the

fact that the contract contains an arbitration provision, and to discuss the pros and cons of

an arbitration provision. This is consistent with the well-founded rule that an attorney-

agent has a duty to disclose material information to the client-principal so that the client-

principal can make an intelligent and informed decision about how to proceed.

        The undisputed facts impliedly found by the trial court in this case are that

appellee-client:

        • met with the defendants to discuss hiring them to represent her
          regarding her personal injury automobile accident;
        • was told by the defendants that they were qualified to handle cases like
          hers;
        • relied on the defendants counsel leading up to signing the contract;
        • relied on the representations of the defendants;
        • was not advised by independent counsel regarding the contract;
        • was not told by the defendants what the arbitration clause meant or that
          the effect of the clause would result in a waiver of a jury trial;
        • was not informed by the defendants of the “pros, cons, advantages or
          disadvantages, effects or ramifications” of the provision;
        • was not informed by the defendants of her rights and duties under the
          provision;
        • was unaware that the contract contained an arbitration provision; and
        • did not intend to agree to arbitration. (CR 50-51).

   40
        Op. Tex. Ethics Comm’n No. 586 (2008), reprinted in 72 TEX. BAR J. 128, 129 (Feb. 2009).


                                                 15
           Applying the legal sufficiency standard of review to the trial court’s denial of the

motion to compel arbitration as required,41 these factual circumstances show that a

fiduciary relationship arose before the signing of the attorney-client contract, which

imposed a duty upon the appellant-lawyer to disclose material information to the

appellee-client regarding the attorney-client contract and the arbitration provision

contained therein; that the defendant-lawyers did not disclose anything whatsoever to the

appellee-client regarding the arbitration provision; that the appellee-client did not know

that the arbitration provision was included in the attorney-client contract; that the

appellee-client had no idea what arbitration was or how it affected her rights regarding

contract.       Under these circumstances, the trial court’s implied conclusions that the

arbitration provision is unconscionable and against public policy should be affirmed as

founded upon legally sufficient evidence.

VI.        Conclusion.

           The standard of review in this case is legal sufficiency of the evidence. The trial

court implicitly found and concluded that the manner Letney was led into signing the

attorney-client contract that contained the arbitration provision was unconscionable. The

evidence in support of this implicit factual findings and conclusions of law was the

affidavit of Letney, and was unrebutted. Accordingly, the trial court’s order denying the

motion to compel arbitration should be affirmed and the court of appeals’ conditional

grant of writ of mandamus should be set aside.



      41
           TEX. R. APP. P. 28.1; Imlay, 150 S.W.3d at 867-68. Both quoted at footnote 1.


                                                     16
                                        Issue Two
                                        (restated)
                May parties contract to apply the Federal Arbitration Act
                (“FAA”) even if the contract does not affect interstate
                commerce?

I.        Parties may not contravene the FAA by contracting that the FAA applies
          even when the contract does not affect interstate commerce.

          Letney argued that the trial court’s order denying the motion to compel arbitration

should be denied because the attorney-client contract does not impact interstate

commerce. (CR 57-59).42 The majority opinion avoids the question of whether the

attorney-client contract impact’s interstate commerce by holding that Pham and Letney

chose the FAA as the controlling law. The majority opinion states in this regard:

                Here, the arbitration provision in question clearly specified
                arbitration under the FAA; accordingly, the trial court erred if
                it denied the motion to compel because the transaction in
                question had no impact on interstate commerce. Maj. Op., p.
                8.

This holding conflicts with Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995).

          In Dobson, the United States Supreme Court construed the FAA to extend as far as

the Commerce Clause will reach. Id. at 272-74. In reaching this conclusion, the Court

said that the words “evidencing a transaction involving commerce” from section 2 of the

FAA must turn out, in fact, to have involved interstate commerce, even if the parties did

not contemplate an interstate commerce connection. Id. at 276-81. In this case, the court


     42
        See 9 U.S.C. §§ 1-2 (2000) (The FAA covers any contract “evincing a transaction involving
commerce, “that is, “commerce among the several states or with foreign nations,” including territories
and the District of Columbia.); In re Nexion Health at Humble, Inc., 173 S.W.3d 67, 68-69 (Tex. 2005)
(per curiam); Palacios, 221 S.W.3d at 565; In re L&L Kempwood Assocs., 9 S.W. 125, 127 (Tex. 1999)
(per curiam).


                                                 17
of appeals’ opinion holds that parties may agree to apply the FAA even if the contract has

no impact on interstate commerce. This is in direct conflict with Dodson. The FAA does

not apply, even if the parties agree otherwise, unless the contract impacts interstate

commerce.

         Article I, Section 8 of the United States Constitution contains the Commerce

Clause, which states in relevant part:

                The Congress shall have Power . . . To regulate Commerce
                with foreign Nations, and among the several States, and with
                the Indian Tribes[.]

From this, the United States Supreme Court has made clear that there is a “national

interest in keeping interstate commerce free from interferences which seriously impede

it.”43 Similarly, Article VI, Section 2 of the United States Constitution contains the

Supremacy Clause, which states:

                This Constitution, and the Laws of the United States which
                shall be made in Pursuance thereof; and all Treaties made, or
                which shall be made, under the Authority of the United
                States, shall be the supreme Law of the Land; and the Judges
                in every State shall be bound thereby, any Thing in the
                Constitution or Laws of any State to the Contrary
                notwithstanding.

Regarding this provision, the United States Supreme Court said long ago that if laws of a

state “come into collision with an act of Congress . . . [they] must yield to the law of




    43
        Southern Pac. Co. v. Arizona, 325 U.S. 761, 795 (1945) (Douglas, J., dissenting) (“[T]he question
presented is whether the total effect of Arizona’s train-limit as a safety measure is so slight as not to
outweigh the national interest in keeping interstate commerce free from interferences which seriously
impede or burden it.”).


                                                   18
Congress[.]”44 The Federal Arbitration Act (FAA) invokes both of these constitutional

provisions, and the language of what the FAA covers provides:

                  “A written provision in any maritime transaction or a contract
                  evidencing a transaction involving commerce to settle by
                  arbitration a controversy thereafter arising out of such
                  contract or transaction, or the refusal to perform the whole or
                  any part thereof, or an agreement in writing to submit to
                  arbitration an existing contract, transaction, or refusal, shall
                  be valid, irrevocable, and enforceable, save upon such
                  grounds as exist at law or in equity for the revocation of any
                  contract.”45

The FAA is applicable in state courts and pre-emptive of state law because of the

Commerce and Supremacy Clauses.46

II.        The contract in this case does not affect interstate commerce.

           The words of the FAA, “involving commerce,” have been interpreted by the

United States Supreme Court so as to implement the intent of Congress to exercise its

commerce powers to the fullest extent.47 It has never been easy to determine exactly

what activity affects interstate commerce,48 or exactly what test should be applied to the


      44
           Gibbons v. Ogden, 14 U.S. 1, 210 (9 Wheat 1) (1824).
      45
           9 U.S.C. § 2 (2000) (emphasis added).
      46
        See Southerland Corp. v. Keating, 465 U.S. 1, 16 (1984) (“In creating a substantive rule
applicable in state as well as federal courts, Congress intended to foreclose state legislative attempts to
undercut the enforceability of arbitration agreements.”) (footnotes omitted) and at 17 (Stevens, J.,
concurring in part and dissenting in part) (“The Court holds that an arbitration clause that is enforceable
in an action in a federal court is equally enforceable if the action is brought in a state court. I agree with
that conclusion.”).
      47
        Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 115 (2001) (“The phrase ‘affecting commerce’
indicates Congress’ intent to regulate to the outer limits of its authority under the Commerce Clause.”);
Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 277 (1995).
      48
         See United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533, 550-51 (1944) (“The
precise boundary between national and state power over commerce has never yet been, and doubtless
never can be, delineated by a single abstract definition. The most widely accepted general description of
that part of commerce which is subject to federal power is that given in 1824 by Chief Justice Marshall . .


                                                     19
ever-tangled skein of human affairs in making the determination of whether a given

activity at issue affects interstate commerce.49 Regardless of the test though, it is clear

that a contract, taken alone, that does not have a substantial effect on interstate

commerce, may still be regulated, but only if the aggregate economic activity represents a

general practice that bears on interstate commerce in a substantial way.50 It is also

important to bear in mind that the fundamental purpose of the Commerce Clause is to

create an area of free trade among the states.51 In spite of the courts’ difficulties with

stating an abstract test, there are many opinions deciding what particular activities are

subject to federal regulation because they in fact affect interstate commerce.

         Prima Paint Corp. v. Flood & Conklin Mfg. Co. presents are good example of the

types of activities the United States Supreme Court believes affect interstate commerce—

the Court explained:

                 Prima Paint acquired a New Jersey paint business serving at
                 least 175 wholesale clients in a number of States, and secured
                 F & C’s assistance in arranging the transfer of manufacturing
                 and selling operations from New Jersey to Maryland. The
                 consulting agreement was inextricably tied to this interstate
                 transfer and to the continuing operations of an interstate
                 manufacturing and wholesaling business. There could not be
                 a clearer case of a contract evidencing a transaction in


. . ‘Commerce, undoubtedly, is traffic, but it is something more: it is intercourse. It describes the
commercial intercourse between nations, and parts of nations, in all its branches. . . .’”) (footnote and
citation omitted).
    49
        See United States v. Lopez, 514 U.S. 549 (1995) (The majority opinion as well as the two
concurring opinions and the three dissenting opinions struggled with the thorny question of what standard
should be applied to the determination of what activities affect interstate commerce.).
    50
         Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56-57 (2003).
    51
       McLeod v. J.E. Dilworth Co., 322 U.S. 327, 330-31 (1944) (“The very purpose of the Commerce
Clause was to create an area of free trade among the several States.”).


                                                    20
                interstate commerce.52

Other examples are found in other United States Supreme Court opinions,53 in Fifth

Circuit Court of Appeals opinions,54 and in Texas Supreme Court opinions.55 These

opinions, although not always articulating a coherent analytical standard, present clear

factual patterns that, in the courts’ view, affect interstate commerce and may therefore be

regulated by federal legislation. The facts and circumstances presented in these example

cases are not of the type or kind presented in this case.                   All of those cases were

commercial in nature in the sense that there was some direct and tangible manner by

which the activities impacted interstate commerce. Here, Letney is a resident of Harris

County, Texas. Pham is a resident of and has his law office in Harris County. The

    52
         388 U.S. 395, 401 (1967 (footnotes omitted).
    53
         See, e.g., South-Eastern Underwriters Ass’n, 322 U.S. at 549-50 (“It is interstate commerce
subject to regulation by Congress to carry lottery tickets from state to state. So also is it interstate
commerce to transport a woman from Louisiana to Texas in a common carrier; to carry across a state line
in a private automobile five quarts of whiskey for personal consumption; to drive a stolen automobile
from Iowa to South Dakota. Diseased cattle ranging between Georgia and Florida are in commerce, and
the transmission of an electrical impulse over a telegraph line between Alabama and Florida is intercourse
and subject to paramount federal regulation. Not only, then, may transactions be commerce though non-
commercial; they may be commerce though illegal and sporadic, and though they do not utilized common
carriers or concern the flow of anything more tangible than electrons and information.”) (citations
omitted).
    54
        See, e.g., Specialty Healthcare Mgmt, Inc. v. St Mary Parish Hosp., 220 F.3d 650, 654 n.13 (5th
Cir. 2000) (“Neither party has contended that their agreement did not relate to interstate commerce, and
we have no reason to say it did not: the agreement involved the staffing and management of a Louisiana
hospital by an out-of-state corporation.”).
    55
         See, e.g., In re Palacios, 221 S.W.3d 564, 565 (Tex. 2006) (“The arbitration agreement does not
indicate whether it is governed by the Federal or Texas Arbitration Act, and neither do the parties. But as
Palacios pleaded that she gave her realtor a power of attorney to purchase the duplex while she was in
Mexico, the transaction appears to involve foreign commerce, and thus implicates the FAA.”); In re
Nexion Health at Humble, Inc., 173 S.W.3d 67, 69 (Tex. 2005) (“evidence of Medicare payments made to
HHC on John’s behalf is sufficient to establish interstate commerce and the FAA’s application”); In re
L&L Kempwood Associates, L.P., 9 S.W.3d 125, 127 (Tex. 1999) (“The parties to the contract in the
instant case also reside in different states—Georgia and Texas—and the renovation work on Houston
apartments was to be done by a Texas business for Georgia owners. The contract here thus involves
interstate commerce.”).


                                                    21
subject matter of the attorney/client contract that contained the arbitration provision is

personal injury arising out of an auto accident that occurred in Harris County. The

contract was signed in Harris County and everything in the record indicates that the

contract was to be performed in Harris County.

        The power of the federal government to regulate commerce, though broad indeed,

has limits.56 In finding these limits, Citizen Bank makes clear that a contract, taken alone,

that does not have a substantial affect on interstate commerce may still be regulated by

federal legislation, but only if the aggregate economic activity would represent a general

practice that bears on interstate commerce in a substantial way. 539 U.S. at 56-57. For

example, if Congress wanted to regulate personal injury attorney/client contracts in

general, it would surely be able to do so under the Commerce Clause because the overall

“business” most certainly affects interstate commerce in a substantial way. Therefore a

federal statute subjecting all personal injury attorney/client contracts to regulation would

be binding on even those contracts that had no impact on interstate commerce, such as the

contact in this case. The FAA however is specifically designed to cover of all human

activity but only if (1) the parties agreed to arbitration, (2) the transaction specifically

involves interstate commerce, and (3) the contract is not barred by such grounds as exist

at law or in equity for the revocation of any contract. The FAA is not directed at any

given industry—the focus when the FAA was adopted was not on any particular

   56
        Maryland v. Wintz, 392 U.S. 183, 196-97 n.27 (1968) (“Neither here nor in Wichard [v. Filburn]
has the Court declared that Congress may use a relatively trivial impact on commerce as an excuse for
broad general regulation of state or private activities. The Court has said only that where a general
regulatory statute bears a substantial relation to commerce, the de minimus character of individual
instances arising under that statute is of no consequence.”).


                                                 22
industry’s impact on interstate commerce. Rather, the FAA uniquely allows parties and

courts to focus on the impact of a particular contract on interstate commerce.57

Therefore, the question is not whether the aggregate of all attorney/client personal injury

contracts have a substantial impact on interstate commerce, but rather whether this

contract involves interstate commerce.

         Here, the contract had no specific impact on interstate commerce. The record does

not reflect that, aside from the particulars of this contract, Pham’s practice ever left the

State of Texas. The record does reflect however that this particular contract involved a

case that was completely confined to Harris County, Texas. The implicit finding by the

trial court that the facts surrounding this contract do not affect interstate commerce

should be respected. In short, the court of appeals should have denied Pham’s petition

for writ of mandamus because the contract does not affect interstate commerce and

therefore the FAA is inapplicable.

                                       Issue Three
                                        (restated)
                Does a legal malpractice claim constitute a personal injury
                claim for purposes of section 171.002 of the Texas
                Arbitration Act (“TAA”)?

         The court of appeals concluded that the motion to compel in this case only seeks

arbitration pursuant to the FAA and therefore dismissed the appeal and considered the

merits of the petition for writ of mandamus. Op., 4-5. Strangely, the majority assumed

    57
         See Southern Pacific Co., 325 U.S. at 769-70 (“Congress has undoubted power to redefine the
distribution of power over interstate commerce. It may either permit the states to regulate commerce in a
manner which would otherwise not be permissible, or exclude state regulation even of matters of
peculiarly local concern which nevertheless affect interstate commerce.”) (citations omitted).


                                                   23
that section 171.002 of the TAA “can apply to an arbitration agreement selecting FAA

procedures” and then sided with the split of Texas court of appeals opinions holding that

legal malpractice claims do not constitute personal injury claims for purposes of section

171.002. Op., 6-7. Because of this assumption the issue arises of whether a legal

malpractice claim constitutes a personal injury claim for purposes of section 171.002 of

the TAA. The appellate opinions called upon to determine whether legal malpractice

claims are “personal injury” claims for purposes of Section 171.002 are mixed and

constitute a split in authority that has not been resolved by the Texas Supreme Court.



Pro:                                             Contra:

In re Godt, 28 S.W.3d 732, 738-39 (Tex. Taylor v. Wilson, 180 S.W.3d 627, 630-31
App.—Corpus Christi 2000, no pet.)       (Tex. App.—Houston [14th Dist.] 2005, pet.
                                         denied)
Henry v. Gonzalez, 18 S.W.3d 684, 692-93
(Tex. App.—San Antonio, pet. dis’d agr) Miller v. Brewer, 118 S.W.3d 896, 899
(Hardberger, C.J., dissenting)           (Tex. App.—Amarillo 2003, no pet.)

                                                 In re Hartigan, 107 S.W.3d 684, 690-91
                                                 (Tex. App.—San Antonio 2993, pet.
                                                 denied)


       An independent and separate legal impediment to enforcement of an arbitration

provision is Section 171.002 contained in the TAA, which provides that the TAA “does

not apply to . . . a claim for personal injury except . . . if: (1) the parties to the agreement

agree in writing to arbitrate; and (2) the agreement is signed by each party and each




                                              24
party’s attorney.”58 Section 171.002 applies only to personal injury claims. If a legal

malpractice claim is “personal injury” as that term is contemplated by Section 171.002,

then the arbitration provision in this case is not enforceable because independent counsel

was not obtained by Letney.

            Whether this provision is applicable to attorney-client contracts requires an

interpretation of whether the words “personal injury” includes a claim for legal

malpractice. As a general proposition, the appellate opinions describe legal malpractice

claims as “sounding in negligence” and “based on negligence principles.”59 One opinion

held that a legal malpractice claim is for “personal injury” when it applied to the pre-

judgment interest statute.60

            Here, the underlying case is a claim for personal injuries arising from an

automobile collision. In Taylor, the plaintiff’s “underlying claim was for economic

losses rather than for personal injury.” Id. at 628. Because the underlying claim here

was for personal injury, the holding in Taylor is inapplicable. This line of reasoning

seems to have been important to other appellate courts called upon to determine whether

legal malpractice claims are personal injury as contemplated by Section 171.002.61


    58
            TEX. CIV. PRAC. & REM. CODE § 171.002(a)(3) and (c)(1)-(2).
    59
            E.g. Willis, 760 S.W.2d at 644 (“A cause of action for legal malpractice is in the nature of a
tort[.]”)
    60
        Sample v. Freeman, 873 S.W.2d 470, 476-77 (Tex. App.—Beaumont 1994, writ denied) (in
applying the prejudgment interest statute the court held that a legal malpractice claim was a suit for
personal injuries where the defendant-lawyers in the underlying case failed to timely file a Jones act suit
for personal injuries sustained while aboard a ship).
    61
        See In re Hartigan, 107 S.W.3d 684 (Tex. App.—San Antonio 1993, pet. denied) (underlying
claim arose from representation in a divorce proceeding); Miller v. Brewer, 118 S.W.3d 896 (Tex. App.—
Amarillo 2003, no pet.) (underlying claim arose from representation in an employment discrimination


                                                     25
Accordingly, the trial court’s implied ruling is that the arbitration provision is barred by

Section 171.002 because the malpractice claim in this case is a personal injury claim.

This Court should adopt that reasoning.

                                          PRAYER

       The relator, Shelly Letney, requests that this Court grant a writ of mandamus

against the Fourteenth Court of Appeals commanding it to vacate its conditional writ of

mandamus as to the trial court’s order denying the motion to compel arbitration.

                                                   Respectfully submitted,


                                                   ______________________________
                                                   TIMOTHY A. HOOTMAN
                                                   SBN 09965450
                                                   2402 Pease St.
                                                   Houston, TX 77003
                                                   713.247.9548
                                                   713.583.9523 (fax)
                                                   E-mail: thootman2000@yahoo.com

                                                   LANCE CHRISTOPHER KASSAB
                                                   SBN 00794070
                                                   1420 Alabama
                                                   Houston, TX 77004
                                                   713.522.7400

                                                   ATTORNEYS    FOR               RELATOR,
                                                   SHELLY LETNEY




claim were economic damages were sought). See also Bennett v. Leas, No. 13-06-469-CV, 2008 Tex.
App. LEXIS 4817 (Tex. App.—Corpus Christi June 26, 2008).


                                              26
                            CERTIFICATE OF SERVICE

      On this day, I sent a copy of this brief by certified mail, return receipt requested, to

the following:

                    Mr. Kevin T. Cloves
                    Pham & Cloves, PLLC
                    10333 Harwin Dr., Suite 155
                    Houston, TX 77036

Dated: ___________
                                                  ___________________________
                                                  TIMOTHY A. HOOTMAN




                                             27

				
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