CAUSE NO.

2011-22533

WALTON HOUSTON GALLERIA IN THE DISTRICT COURT OF
OFFICE, L.P.

V. HARRIS COUNTY, TEXAS

ANDREWS KURTH, L.L.P. 189TH JUDICIAL DISTRICT


WALTON HOUSTON GALLERIA OFFICE, L.P.S
RESPONSE TO ANDREWS KURTHS AMENDED MOTION
FOR PARTIAL SUMMARY JUDGMENT FILED ON MAY_1, 2014

Walton Houston Galleria Office, L.P. makes this response to Andrews Kurths
Amended Motion for No-Evidence Partial Summary J udgment filed on May 1, 2014, and
would respectfully show the Court the following:
SUMMARY OF RESPONSE
Andrews Kurth ("AK")'s motion is a clever compilation of "straw man"
arguments. AK plainly does not understand Walton's theories of liability. For example,
AK says that Walton is not complaining about the conduct of AK while the firm
represented Walton. That is dead wrong.
With a long history of representing Walton in lease transactions and litigation
involving the Galleria Towers, AK sought a conflict waiver from Walton with absolute
knowledge that Stanford was adverse to Walton's interests. But AK's work for Walton
was so intertwined with Stanford that it never could have legitimately waived this
conflict. In essence, the conflict, as Walton's expert testified, is unwaivable.
AK's duties in representing Walton in its leases to Stanford were to protect
Walton from being forced to sell or to hold up a sale to another buyer. AK partner
5/22/2014 11:37:10 PM
Chris Daniel - District Clerk Harris County
Envelope No. 1345840
By: CANDICE ARNOLD
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Chanse McLeod went through laborious efforts to make sure Stanford's first lease
amendment with Stanford protected Walton against any attempted forced sale by
Stanford.
AK never should have sought a conflict waiver in the first place. However, when
AK sought the waiver, AK had a legal duty to disclose the nature of the conflict and
whatever information a reasonable client would want to know about Stanford, or not to
undertake Stanford's representation. A reasonable client would want to know whether the
company it is doing business with is suspected by the SEC of engaging in money
laundering. The evidence shows that AK partners, Spencer Barasch and Dennis Ryan,
were aware of the SEC investigation into Stanford's fraudulent practices. Whether other
individual lawyers at the firm knew about the SEC investigation is a "red herring"
because Walton hired the firm, and the firm's conflicts check covered all business done
by the firm in order to assess whether a conflict exists.
In compounding its malpractice, AK gave legal advice to Walton about the
Conflict Letter AK drafted for Walton to sign, assuring Walton that its concerns about the
conflict were "minor." AK knew that Walton was concerned about Stanfords financial
ability to pay the full cash purchase of $150 million. The letter of intent expressly
required Stanford to show the source of the $150 million before any agreement could be
reached on the sale.
Despite AK's knowledge of the SEC investigation, and despite knowing that
Walton doubted Stanfords financial capabilities and questioned the source of its funds,
AK never disclosed to Walton what the firm knew about Stanford. If AK believed it
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could not ethically disclose its knowledge of the SEC investigation into Stanford, it
should have refused to represent Stanford in the transaction with its client Walton. But
AK was so intent on getting Stanford's business that the firm was willing to violate its
legal duties to Walton. In fact, AK partner, Darren Inoff, on behalf of the firm, agreed to
represent Stanford against Walton even before the conflicts check was completed.
In addition to violating its legal obligations to Walton, and inducing Walton to
sign the Conflict Letter for an unwaivable conflict, AK agreed that it would not represent
Stanford in any dispute in the purchase transaction. AK blatantly violated its agreement,
and went beyond the bounds of the law by concocting a series of false emails to facilitate
a plan to force Walton to sell the Galleria Towers according to Stanford's demands.
Inoff, in concert with Mauricio Alvarado, the general counsel of Stanford, strategized to
manufacture a lawsuit based on false testimony. Inoff's emails, and the demand letter
prepared by Inoff for Alvarado's signature, alleging fraud and threatening a lawsuit
against Walton, evidence a strategy crafted early in the purchase and sale negotiations.
The Inoff emails also show that it was Inoff who led Alvarado through the intricacies of
setting up Walton for a bogus lawsuit when Walton never agreed to sign, nor did it sign, a
purchase and sale agreement. Moreover, Inoff did not stop after the lawsuit was filed.
He worked with Stanford's litigators, strategized with them, and was woodshedded by
them for his deposition.
In order to avoid liability for its misconduct, AK argues that nothing the firm did
matters because another law firm would have done the same thing. No law firm, no
matter how big or important, could violate its legal duties with impunity like AK did
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here. AK chose "big fees" over its legal obligation to not undertake representation of
Stanford against Walton in the purchase negotiations. To justify its decision to represent
Stanford, AK chose to get a conflict waiver from Walton based on half-truths and
deception.
Walton would never have signed the conflict waiver if it had known what AK
knew about the SEC's investigation into Stanford, or if Walton had known that Inoff
would maliciously and fraudulently assist Stanford in attempting to force a sale of
Waltons three office towers. Walton would have terminated purchase negotiations if
Inoff withdrew, as he was required to do, when he started trading secret emails with
Alvarado about litigation against Walton. There is legally sufficient evidence that AK
breached its contract and legal duties to Walton, and that AK's breach caused Walton to
suffer damages from Walton's inability to sell the Galleria Towers, subject to a lis
pendens, and in incurring costs in defending a trumped-up lawsuit.
STANDARD OF PROOF

Walton need only present more than a scintilla of evidence to raise a fact issue on
the elements at issue in AK's motion. See Tex. R. Civ. P. 166a(i); Notes & Comments to
Tex. R. Civ. P. 166a(i). To be more than a mere scintilla the evidence must rise to a
level that would enable reasonable and fair-minded people to differ in their conclusions.
Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997) (citing
Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex.1995)); Isbell v. Ryan, 983
S.W.2d 335, 338 (Tex. App. Houston [14th Dist.] 1998, no pet. h.).
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Walton is allowed to meet its burden by presenting circumstantial evidence that
is, reasonable inferences from the known circumstances. See Meza v. Service
Merchandise Co., 951 S.W.2d 149, 152 (Tex. App. Corpus Christi 1997, writ denied);
Guthrie v. Suiter, 934 S.W.2d 820, 831 (Tex. App. Houston [1st Dist.] 1996, no writ
h.); see also Lozano v. Lozano, 52 S.W.3d 141, 149 (Tex.2001) (Phillips, C.J ., concurring
and dissenting; plurality of five of seven justices). Circumstantial evidence is to be
viewed in light of all known circumstances, not in isolation, and is legally sufficient even
when more than one reasonable inference may be drawn from it. Id.
In support of its response Walton tenders an appendix of evidence and the
affidavits of Howard Brody, J ames McCormack, and Mark Flaum. Walton further
incorporates the affidavits and documents filed in its responses to prior motions for
summary judgment. Walton incorporates its Response to Andrews Kurth's Motion for
Partial Traditional and No-Evidence Summary J udgment filed on April 18, 2014 ("Apr.
18 Resp.") and Walton's Motion for Partial Summary J udgment filed on March 14, 2014
("Walton's MSJ "). Walton points to its Apr. 18 Response in support of its claims relating
to the Second Lease Amendment.
FACTUAL BACKGROUND

Andrews Kurth were Walton's lawyers for the Galleria Towers

Walton hired AK to handle all leasing transactions for tenants in Walton's three
Galleria office towers. Stanford was one of those tenants. On Walton's behalf AK
drafted three leases to Stanford: an original Lease, the First Amendment, and the Second
Amendment. Brody Affid., 3. Stanford wanted an opportunity to buy Galleria Tower II
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where it was leasing space and the First Amendment contained, at Stanford's request, a
right of first offer giving Stanford the right, under certain conditions, to buy Galleria
Tower II. Brody Affid., 3; App. 1-4.
AK prepared the three-page single-spaced right of first offer. (See First Lease
Amendment, Apr. 18 Resp., Exh. 13). Howard Brody voiced Walton's concerns as the
terms were being prepared. Brody explained that Walton was cautious about giving
Stanford this right. Walton wanted to make sure it would not be forced to sell the
building at a time or on terms unacceptable to Walton. Walton did not want Stanford to
stand in the way of a sale to someone else. See Brody Affid., 2. AK's scope of work
for Walton on the lease expressly encompassed protecting Walton from a forced sale or
hold-up by Stanford.
In May 2005 Stanford wanted to exercise the right of first offer. Walton turned to
AK for advice because Walton was not ready to sell. AK advised that Walton was not
required to let Stanford bid for the building at that time. Brody Affid., 4; App. 6-11.
Later in the summer Walton was ready to market the three Galleria Towers.
Walton again turned to AK for help. AK, at Walton's request, prepared a transmittal
letter sending the bid package to Stanford. Brody Affid., 5; App. 12, 24.
By September 2005, AK had advised Walton on a whole host of legal issues for
the Galleria Towers: leasing, summarizing all leases, advising on Walton's loan
agreement, and representing Walton in tenant litigation, among others. Specifically to
Stanford, AK prepared the three leases, prepared the right of first offer, and advised
Walton on its obligation (or lack of obligation) to allow Stanford to bid for the buildings.
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See Brody Affid., 6; App. 1-4, 13. In September 2005 AK was actively representing
Walton in a commission dispute with Stanford's leasing agent. Brody Affid., 6. AK also
was actively representing Walton in other matters involving the Galleria Towers. Brody
Affid., 3.
Andrews Kurth turned around and represented Stanford in the sale
transaction

Having received the bid package, Stanford wanted to make a run at buying all
three Galleria Towers. Walton hired Stephanie Silvers, a non-AK lawyer, to represent it
in the transaction. Walton notified Stanford that Silvers would be representing Walton.
App. 27, 40. Walton continued to use AK for leasing and litigation work.
Stanford wanted to hire AK for the purchase and sale negotiations. App. 29-30.
AK had been courting Stanford and was ready to plow ahead to get Stanford's
business. Stanford's general counsel Mauricio Alvarado called AK partner Darren Inoff
on Sept. 7 about possibly representing Stanford in the Galleria Towers transaction. Inoff
sent an email to all AK's real estate lawyers asking for the range of fees that AK could
charge Stanford. McLeod responded on the fees AK could expect to charge for the sale
of the Galleria buildings. App. 28.
Inoff met with Alvarado, and by Sept. 8 AK had signed up Stanford. App. 31, 34-
36, 41-45. But there was a problem: AK represented Walton.
Undeterred, Inoff immediately got to work and assigned a group of associates to
the Stanford purchase and sale. See App. 32-33. One of those associates, Mike Shaw,
had personally worked for Walton. Shaw had, among other things, reviewed and advised
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on one of Walton's sensitive loan documents. Brody Affid. 6. This did not matter to
AK partner Inoff.
Later that night Inoff decided that maybe he should do something about the
conflict. He contacted his partner, Chanse McLeod, and asked McLeod to get Walton to
waive the conflict. App. 38. That evening McLeod sent an email to Chip Colvill, the
Galleria Towers leasing agent, asking his help in getting Walton to sign a letter waiving
AK's conflict. App. 39. Colvill forwarded the email to Howard Brody. Brody responded
"ok." The next day Inoff sent the letter he wanted Walton to sign. Brody Affid., Exh. D.
Walton would not sign the letter. Howard Brody told the AK lawyers that they
needed to promise in the letter to not let any lawyer who personally worked for Walton
participate in the transaction for Stanford. See Brody Affid., Exh. D. That posed another
problem for AK: Mike Shaw already was hard at work for Stanford. This is exactly what
Walton did not want. Inoff and McLeod talked between themselves about how to smooth
this over with Walton. App. 80. They decided that McLeod would call Brody and
persuade him to let Shaw work for Stanford. App. 82.
Brody also wanted to make sure AK did not turn around and side against Walton
in a dispute. Brody Affid., 9. AK agreed but, as events of the next few weeks would
reveal, AK paid no heed to this promise.
Brody also asked about AK's relationship with Stanford. He was told that AK
either had not represented Stanford or the matters were of no consequence. Brody Affid.,
8. He certainly was not told that Stanford was under an SEC investigation. This is not
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surprising; Alvarado told Brody that the letter needed to contain "an affirmative
obligation not to disclose" Stanford's matters to lawyers representing Walton. App. 86.
The AK lawyers traded more calls and emails with Brody to get the letter signed.
The AK lawyers called Brody several times to talk about the Conflict Letter. Inoff
himself talked to Brody on Sept. 15, encouraging him to sign. App. 84. Without a doubt
the AK lawyers took it upon themselves to advise Walton on the conflict letter.
The letter was signed on Sept. 15. App. 87-89. With the conflict letter in hand,
Inoff charged forward.
Inoff knew the negotiations were to be non-binding

Back on Sept. 6, before Inoff became involved, Walton and Stanford had signed a
non-binding letter of intent to guide their purchase and sale negotiations. App. 25. The
letter was clear that Walton was not obligated to sell unless and until it signed a final
written agreement: "This letter is merely a nonbinding letter of intentNo party will be
bound to any terms or conditions until a final written Purchase and Sale Agreement has
been executed by the parties."
The letter of intent required three conditions of Stanford: a current audited
financial statement, real estate acquisition references, and the identity of the source of the
$150 million purchase price. App. 25. It soon became plain that Stanford could not meet
these conditions. In fact Stanford never met them and Inoff knew it.
Inoff saw a dispute brewing and charged ahead anyway

The negotiations moved ahead, with Walton and Stanford each proposing different
deal points for the lengthy draft contract. On Oct. 5 three weeks after AK signed the
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conflict letter Brody had a conversation with Mauricio Alvarado, Stanford's general
counsel and negotiator for the purchase and sale transaction. Alvarado, apparently
frustrated that Walton did not simply cave in to terms Stanford wanted, asked Inoff to
ghost-write an email to Brody. But this was not just any email; now Inoff was ratcheting
up with legal buzz words:
Howard, I wanted to send you this email to confirm in writing our recent
conversation and commitment to you that we are ready, willing and able to
sign the purchase and sale agreement (the "Agreement") consistent with the
terms and conditions that both parties have agreed to. As you will agree, all
of the relevant and material terms and conditions of the Agreement are not
at issue but you have just raised for the first time an ancillary issuesince
we have reached agreement on everything, I am confused as to why we
can't follow through with the mere formality of signing the Agreement.
(App. 90).

Alvarado sent the email (with a few tweaks) to Brody the next day. App. 91. In
the meantime, Stephanie Silvers circulated another draft of the purchase and sale
agreement, telling Inoff, "Please remember that Howard needs to be comfortable with
your source of equity funds to acquire the property before he can sign the contract."
App. 92 (emphasis added).
Walton already was concerned that Stanford did not have $150 million to buy the
buildings. The Letter of Intent required that Stanford prove it could pay $150 million in
cash before a purchase agreement was to be executed. Rather than reveal the source of
the funds which Inoff knew was required as a condition to Walton's agreeing to the
purchase Inoff helped Stanford escalate a fight. Inoff advised Alvarado to tell Silvers
that, contrary to Walton's understanding, the parties had a deal:
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Stephanie, The version of the Purchase Agreement that you sent to me late
last night does not comport with the agreement that we reached on
Wednesday, October 5, 2005 with respect to the relevant and material terms
and conditions of the Purchase Agreement, and in fact raises a number of
issues that were not even discussed Wednesday. Again, I am requesting
that you immediately forward an execution copy of the Purchase
Agreement consistent with the agreement reached Wednesday. Nothing
remains to be done but to complete the formality of executing the agreed
upon Purchase Agreement. (App. 94).

Alvarado sent Silvers a substantially similar email under his own signature. App.
98.
In reality Inoff knew that key deal terms remained unresolved. See App. 101.
This was a complex transaction in a landmark Houston property. Inoff knew that Walton
needed to address problems with the Galleria's condominium documents, and he knew
that Stanford had not agreed to major deal points that Walton needed. He acknowledged
as much to Alvarado on October 7 in a laundry list of "major issues." App. 101.
Inoff learned that Stanford planned to sue if Walton did not sell on Stanford's
terms

Later that day Inoff learned without a doubt that Stanford planned to sue if Walton
did not sell on Stanford's terms. App. 95-97. Inoff learned this because Alvarado gave
him a demand letter that Stanford intended to send to Walton. App. 95-97. The letter
accused Walton of fraud. The letter threatened that if Walton did not sign the contract,
Stanford would "vigorously pursue all of its legal remedies, including an injunction of
any future sale of the property, specific performance, actual and punitive damages, and
all litigation costs."
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If Inoff had any question in his mind of whether the negotiations moved from
productive to toxic, Stanford's October 7 draft letter was a stamp of certainty. At this
point there was "a dispute," and Stanford said there would be "litigation" among Stanford
and Walton arising out of the transaction. See App. 87. Inoff had promised Walton just
three weeks earlier in the Conflict Letter that AK would "not represent Stanford or
Walton in any disputes or litigation arising out of the Transaction." App. 87-89. It was
time for Inoff to comply with his promise.
Inoff did not bow out but instead set the stage for Stanford to sue Walton

But Inoff kept on going. Over the next two weeks he put on his public face for
Walton, continuing to exchange deal points. In private, Inoff a partner with Walton's
law firm kept working on Stanford's demand letter and ghost-writing scripted
statements that Stanford could use to support a specific performance claim against AK's
client Walton. App. 93, 94, 100, 104, 106, 107, 111-13, 12, 137-45.
Walton had no idea that its own law firm was helping Stanford set up claims.
Inoff's continued involvement assured Walton that the negotiations, notwithstanding
bumps in the road, were productive. Brody Affid., 12. Little did Walton know that
Inoff was pouring gasoline and giving Stanford the match.
Inoff poured more gasoline in a phone call on October 12. This call was supposed
to be on condominium issues. App. 12. Inoff knew that that the then-existing terms of
the Galleria complex's condominium arrangement posed an impediment to Walton's sale
of the buildings. Walton wanted to resolve the condominium and other issues before
signing a purchase and sale agreement (App. 107-08), but Stanford wanted to plow
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ahead. Silvers, Walton's transactional lawyer, was not on the call because the call was to
be limited to "condo issues." Taking advantage of this, Stanford - with Inoff backing
them up claimed that Howard Brody agreed to a deal. See App. 122.
Walton, on the other hand, made it clear there was no deal. See App. 107-08. The
condominium issue was not resolved. Stanford had not confirmed the source of its funds.
There were major gaps in the draft purchase and sale agreement. There was no draft
satisfactory to both parties. Brody Affid., 14.
Inoff knew this, but behind the scenes Inoff kept stoking the fire. Unbeknownst to
Walton, Inoff was trading more drafts of the demand letter. App. 111-13, 123, 137-45.
On October 24 Stanford finally sent the letter that Inoff had spent the past two weeks
polishing and revising. App. 147-49. Soon after that Stanford filed suit against Walton,
along with a notice of lis pendens. App. 171-86. The events Inoff put in motion in early
October would tie up Walton's buildings for years and cause Walton millions of dollars in
losses. See Brody Affid., 15-16.
ARGUMENT AND AUTHORITIES
AK cannot get summary judgment on breach of fiduciary duty because AK
has the burden of proving the Conflict Letter was fair to Walton

A lawyer has the burden of proving the fairness of transactions with its client.
Contracts between attorneys and their clients negotiated during the existence of the
attorney-client relationship are closely scrutinized. Anglo-Dutch Petro. Intl, Inc. v.
Greenberg Peden, P.C., 352 S.W.3d 445, 450 n.8 (Tex. 2011), quoting Keck, Mahin &
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Cate v. Natl Union Fire Ins. Co. of Pittsburgh, Pa., 20 S.W.3d 692, 699 (Tex. 2000).
AK accordingly has the burden of proving the Conflict Letter was fair to Walton.
AK cannot move for no-evidence summary judgment on its argument that it did
not breach its duties in connection with the Conflict Letter because this is an issue on
which AK has the burden of proof, Tex. R. Civ. P. 166a(i).
AK did not get a valid conflict waiver and never should have represented
Stanford in the purchase transaction

In any event, the Conflict Letter was invalid to waive the conflict. See
McCormack Affid.; Walton's MSJ . A waiver is not a mere formality; it requires a
lawyer to give serious thought to the effect on the firm's client. A waiver creates
ambiguity the client still trusts his lawyer, and the lawyer must figure out how to serve
two masters. Because a lawyer's fiduciary duty to a client covers contract negotiations
between them, such contracts are closely scrutinized. Part of the lawyer's duty is to
inform the client of all material facts. And so that this responsibility is not a mere and
meaningless formality, the lawyer must be clear. Anglo-Dutch Petro. Intl, Inc. v.
Greenberg Peden, P.C., 352 S.W.3d 445, 450 (Tex. 2011).
From the start AK disregarded the dangers inherent in its attempted waiver. Inoff
knew that Walton was the firm's client, but he did not even approach Walton about the
conflict of interest until after he signed up Stanford and after he put a team of lawyers to
work reviewing Walton's documents to report back to Stanford. Even then he was not
candid. When Howard Brody raised concerns about the waiver with Inoff and Chanse
McLeod who were, after all, Walton's lawyers, Inoff and McLeod plotted to find ways
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around Brody's concerns. AK argues that Walton had Stephanie Silvers advising it, but
AK was carrying the laboring oar on the Conflict Letter. McLeod and Inoff spoke freely
with Brody about the waiver; they called him without involving Silvers. This is how
lawyers behave with their clients, that is how McLeod and Inoff behaved, and that is how
Walton viewed their advice.
Moreover, AK had a conflict of interest that simply could not be waived.
McCormack Affid. AK represented Walton on the Stanford lease and right of first offer.
AK was paid to protect Walton from a forced sale to Stanford. When Stanford tried to
exercise its purchase offer, AK protected Walton from the risk of being forced to sell its
building when Walton was not ready. And when Walton later was interested in selling,
AK was involved as Waltons counsel in the process of opening the purchase
discussions with Stanford during August 2005. When AK requested the conflict waiver
AK was representing Walton in all tenant transactions, a lawsuit against a tenant, and a
dispute involving Stanford's own leasing agent. The firm's fiduciary duty extended to all
dealings within the scope of Walton's representation, specifically Walton's interest in the
Galleria Towers. See Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 159 (Tex.
2004).
The lack of meaningful disclosure to Walton also is fatal to the conflict waiver.
"As a fiduciary, an attorney is obligated to render a full and fair disclosure of facts
material to the client's representation." Willis v. Maverick, 760 S.W.2d 642, 645 (Tex.
1988, no pet. h.); Onyung v. Onyung, 2013 Tex. App. LEXIS 9190, 37, 2013 WL
3875548 (Tex. App. - Houston [1st Dist.] J uly 25, 2013). And, there was no benefit to
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Walton from the purported waiver. All the benefit flowed to Stanford and AK.
McCormack Affid.
Without a valid waiver, AK should not have been representing Stanford at all.
Everything the firm did against Walton including helping Stanford in the transaction
and setting up claims was a breach of the firm's fiduciary duty to Walton.
WITHOUT AK'S HELP, STANFORD COULD NOT HAVE
FILED OR MAINTAINED THE LAWSUIT AND LIS PENDENS

AK's presence in the transaction and its promises in the Conflict Letter led
Walton to believe these were friendly negotiations

AK told Walton that it would not represent Stanford if the transaction became
disputed and wrote this agreement this into the Conflict Letter. Brody, having worked
closely with McLeod for nearly two years, trusted AK and expected the firm to abide by
its contract. Walton went forward believing these were friendly, win/win negotiations.
Little did Walton know that AK was busy behind the scenes helping Stanford set
up a lawsuit that would tie up Walton's buildings. Inoff actively stoked a controversy:
Oct. 5 Inoff started a series of ghost-written emails claiming falsely that
Walton agreed to a deal.

Oct. 7 Inoff got the demand letter to review and polish. This letter was not
produced to Walton until May 2014.

Oct. 7 Inoff ghost-wrote an email saying that Howard Brody agreed to a deal on
Oct. 5.

Oct. 10 Inoff wrote arguments for Alvarado to make on why Brody supposedly
agreed to a deal.

Oct. 11 Brody sent a lengthy email explaining the open and unagreed deal points
and why there was not a deal. Alvarado disagreed with Brody, using points Inoff
supplied.
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Oct. 11 - Inoff himself responded directly to Brody saying that he believed an
agreement was reached "on all the relevant and material terms and conditions of
the purchase and sale agreement."

Oct. 11 Inoff worked on the demand letter against Walton.

Oct. 12 On a conference call intended to cover only condominium issues, and
without Stephanie Silvers on the line, Inoff went into other open issues and later
claimed Brody agreed to a deal. Inoff later said he did not realize until halfway
through the call that Silvers was not on the line, but he stayed on the call anyway.

Oct. 18 Inoff wrote to Silvers acknowledging that she was not on the Oct. 12 call
but asserted that "Mauricio and I certainly feel we had reached an agreement on
those issues."

Oct. 19 - Inoff told Alvarado that they should have another call without Silvers on
the line.

Oct. 24 Inoff spent more time re-writing the demand letter. Later that day the
demand letter was sent under Alvarado's signature.

When Walton should have been alerted to a breakdown in the negotiations,
Walton instead was reassured by AK's continued involvement. This was caused by AK's
false promise in the Conflict Letter.
Andrews Kurth's continued work for Stanford, once the dispute became
apparent, set the stage for Stanford's claims and Walton's injuries

The idea that a conflict waiver for the purpose of non-binding negotiations extends
to the lawyer's helping sue the client is, simply, absurd.
Negotiations naturally involve a give-and-take. But what Inoff did went miles
beyond a mere disagreement over deal points. Inoff was vicious. His emails to Alvarado
were replete with litigation buzz words. On October 5 Inoff started claiming to Walton
there was a deal, while to Alvarado he acknowledged major open issues. By October 7 at
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the latest Inoff was trading messages with Alvarado about a lawsuit against Walton.
There was no ambiguity in what Stanford wanted to do, and Inoff helped them get there.
Litigation was foreseeable to AK by October 7 at the latest. Flaum Affid. The
draft demand letter on October 7 should have been a big STOP sign to Inoff. The
purpose of a demand letter, after all, is to insist that the recipient either give in to the
demands or face a lawsuit. When Inoff saw that Stanford wanted to send a demand letter
accusing Walton of fraud and threatening to tie up Walton's buildings, it was foreseeable
that Stanford would sue. See DAndrea v. Epstein, Becker, Green, Wickliff & Hall, P.C.,
418 S.W.3d 791, 793 (Tex. App. Houston [14th] 2013, pet. denied) (finding genuine
issues of fact because harm to client was foreseeable); Flaum Affid.
At that point AK should have stopped representing Stanford in the negotiations. A
conflict of interest among clients may give rise to an attorney's duty to withdraw from a
representation. See Baptist Memorial Hosp. Sys. v. Bashara, 685 S.W.2d 352, 356 (Tex.
App. San Antonio 1984); Flaum Affid. Instead AK kept on going. Working behind the
scenes with Alvarado he coordinated a series of scripted statements that formed the basis
for Stanford's trumped-up claims. See Flaum Affid. Inoff twisted what his firm's client
Walton said into words that would support Stanford's claims. When a lawyer helps
prepare a demand letter against his firm's client, the result is foreseeable: the client will
get sued. That is exactly what happened here.
AK did not stop even after the lawsuit was filed. Inoff met and talked with
Stanford's litigators repeatedly. He did this while Walton was a client of AK and while
AK was advising Walton on other aspects of Stanford's leases. Inoff, with the knowledge
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and assistance of AK's general counsel Ross Rommel, worked hand in glove with
Stanford's lawyers. Inoff even met with Stanford's litigators to get woodshedded for his
deposition.
Proximate cause encompasses two sub-elements: cause in fact and foreseeability.
Cause in fact is established when the act or omission was a substantial factor in bringing
about the injuries, and without it, the harm would not have occurred. Transcontinental
Ins. Co. v. Crump, 330 S.W.3d 211, 222-23 (Tex. 2010). Foreseeability requires only
that the general danger, not the exact sequence of events that produced the harm, be
foreseeable. D'Andrea, 418 S.W.3d at 799, quoting Walker v. Harris, 924 S.W.2d 375,
377 (Tex. 1996).
Had a firm other than AK represented Stanford, Walton would not have had this
misplaced confidence in the lawyer for the other side. If AK had withdrawn on October
7 as it was required to do, Walton would have terminated the negotiations. Brody Affid.
The subsequent calls that supposedly supported Stanford's claims never would have
happened. This in itself would have changed the outcome. Walton would not have faced
a lawsuit where its own law firm wrote the facts to support Walton's opponent. Had
there been no calls, there would have been no claims or suit.
AK's premise that a different firm actually filed the lawsuit misses the point. Inoff
saw that Stanford planned to sue Walton. Without Inoff's work in setting up Stanford's
claims, Stanford never could have filed the suit with the lis pendens that tied up Walton's
buildings.
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Even if the conflicts letter were valid, Inoffs conduct after October 7 was beyond
anything that Walton agreed to waive.
1
Inoff was outside of the limits of the waiver
language when he did not withdraw after he knew there was a dispute. At that point, he
owed fiduciary duties to Walton. Everything he did from that point forward to position
Stanford against Walton was a per se breach of his fiduciary duty of loyalty to Walton.
The court in NRC, Inc. v. Huddleston imposed liability against a real estate agent
who helped set up bogus claims to property. 886 S.W.2d 526, 527-28, 530 (Tex. App.
Austin 1994, writ overruled). The jury found that the real estate agent breached her
fiduciary duty after she failed to deposit an escrow check from potential buyers and then
encouraged those same buyers to file a lis pendens on the property in question. The
buyers eventually dismissed their specific performance suit but did so without prejudice,
leaving a cloud on the title which the seller had to disclose to other potential buyers. The
other buyers decided to pass on the purchase. Id. at 527-28. The court of appeals
concluded that the seller produced enough evidence showing the agents actions were
both a producing and proximate cause to his damages, which included the inability to sell
the house and the eventual foreclosure on his mortgage. Id. at 530. The court also agreed
with the jury that the agent was motivated by trying to get a commission on the sale of
the house, putting her interests ahead of the interests of her beneficiary. Id. at 530.

1
The October 12 call was supposed to be about "condo issues." A lawyer following his
ethical duties would not have gone beyond the scope of the call when Walton's transactional
lawyer was not on the phone, and a lawyer observing his duties would not have claimed, as Inoff
did, that such a call resulted in a deal.

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This would not be the first time a court has found liability for an attorney's behind-
the-scenes aid. In Vinson & Elkins v. Moran, the Fourteenth Court of Appeals found
there was legally sufficient evidence that Vinson & Elkins breached its fiduciary duties to
its client (an estate) in a sales transaction, after the estates beneficiaries introduced
evidence supporting allegations that V&E failed to disclose the extent of its ties to other
parties in the sales transaction and evidence that V&E assisted an adverse party behind
the scenes in litigation to stop the sale. See 946 S.W.2d 381 at 405 and 412 (Tex. App.-
-Houston [14th Dist.] 1997, writ dism'd by agr.). The court noted that V&E sought a
waiver of conflicts from the Estate after disclosing only that [another party to the
transaction; was a firm client, but V&E disclosed no other conflicts. In reciting
evidence that supported the jurys findings that V&E breached fiduciary duties, the court
specifically cited expert testimony that the nature, extent, and concealment of the
conflicts of interest should have disqualified the [V&E] from representing the Estate at
all. Id. at 413.
Inoff, a Texas real estate lawyer, knew exactly what he was getting Walton
into

To file a lis pendens against real estate the filing party must allege a claim
involving specific performance or a like claim to the property. See Flaum Affid. The
statute of frauds requires that all contracts for the purchase and sale of real estate be in
writing. V.T.C.A., Bus. & C. 26.01. The courts have construed a very narrow
exception to the statute of frauds for sales of real estate in order to support a claim for
specific performance. If there is a definitive written agreement for the sale that the
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parties agreed to execute, and only the formality of execution is left open, the exception
may be met. See Flaum Affid.
Walton and Stanford never reached an agreement to sign a specific contract
embodying all material terms of the transaction. Brody Affid., 14. There was not even
an agreement to agree. Flaum Affid. Instead Walton and Stanford were still
exchanging drafts and deal terms at the several points in time when Stanford and Inoff
asserted Walton had agreed to a deal.
Cases involving promissory estoppel for the sale of real estate generally involve
small transactions. It is absurd for an experienced real estate practitioner to believe that a
sale of three major buildings for $150 million could be accomplished through an oral
agreement or an agreement to agree. See Flaum Affid.
Walton did not learn the extent of Inoff's fabrication until documents were
produced in this lawsuit

Walton did not know that Inoff was ghost-writing Alvarado's emails until the
Stanford Receiver produced these emails. Even in this case many of Inoff's documents
were not produced until recently. Although AK produced the email of October 7 where
Alvarado sent Inoff the draft demand letter, AK did not produce the letter itself. Walton
did not have a copy of the October 7 draft demand letter a key piece of evidence in this
case until the Stanford Receiver produced it in May 2014.
Inoff's surreptitious help to Stanford therefore compounded the hard to Walton.
During the Stanford litigation Walton did not have the documents it now has and was not
able to use them to dismiss the claims.
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WALTON HAS SHOWN CAUSATION FOR BREACH OF CONTRACT
For a breach of contract cause of action, the causation standard is that the injury
claimed as a result of breach is a natural, probable, and foreseeable consequence of the
defendants breach. Mead v. Johnson Grp., 615 S.W. 2d 685, 687 (Tex. 1981). This is
somewhat different from the standard for a malpractice or breach of fiduciary duty claim
and does not involve a "but for" analysis. Walton has more than a scintilla of evidence
under either standard.
In Helping Hands Home Care, Inc. v. Home Health of Tarrant Cnty., Inc. 393
S.W.3d 492, 510-11 (Tex. App. Dallas 2013, pet. denied), the court construed the
defendants alleged improper solicitation of their former employers customers through
the lenses of both breach of contract lens and tortiuous interference. In finding that the
defendants were liable under both causation standards, the court noted that under the
tortious interference theory, and its proximate cause causation standard, the plaintiff
would not have lost revenue but for the defendants tortious interference. Under the
breach of contract theory, the loss was the natural, probable, and foreseeable
consequence of the improper solicitation.
In Celadon Trucking Servs. Inc. v. Lugos Sec. Agency, 2005 WL 2401886, at *1
n. 3 (Tex. App. San Antonio 2005, no pet.) the Court held that there was sufficient
evidence for the plaintiff to defeat a summary judgment on both breach of contract and
negligence theories. The case involved claims that the plaintiff suffered the loss, through
theft, of one of its trucks because the defendant failed to properly secure the facility
where the truck was located. The court found that the defendant failed to properly
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examine the signature of the thief to determine that he was in fact authorized to enter the
yard and this failure generally led to the loss. In examining the breach of contract claim,
the court found more than a scintilla of evidence that damages of this nature were
contemplated or foreseeable as a consequence of Lugos actions. Id. at *4. With respect
to the tort cause of action the Court cited the but for proximate cause standard and held
that there is more than a scintilla of probative evidence sufficient to raise a genuine issue
of material fact on the issue of causation. Id. at *5.
THE FRACTURING DOCTRINE
DOES NOT APPLY TO WALTON'S CLAIMS

Andrews Kurth's express written promise is enforceable as a contract
Walton's contract claim is not an impermissible fracture. Walton is suing on an
express written contract that AK wrote. A lawyer's contract is as enforceable as anyone
else's. The cases where courts found contract claims to be a fracture involved implied
contracts, not an express written promise like the one in the Conflict Letter.
Walton's fiduciary duty claims are not claims for negligence and not
fractures

The elements of a breach of fiduciary duty claim are a) a fiduciary relationship
exits; b) the defendant breached its fiduciary duty to the plaintiff; and c) the breach
resulted in injury to the plaintiff or benefit to the defendant. Anderton v. Cawley, 3278
S.W.3d 38, 51 (Tex. App. Dallas 2012, pet. overruled). A lawyer is a fiduciary to his
client. A fiduciary breaches his duty if, for example, he engages in a an inequitable
transaction with his beneficiary, he does not make reasonable use of the confidence the
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beneficiary has placed in him, or he does not make full and complete disclosure of all
important information. Id. at 52.
A lawyer firm's fiduciary duties include the duties of candor, loyalty, utmost good
faith, and the avoidance of conflicts of interest. McCormack Affid. A firm that violates
these duties by, for example, engaging in an undisclosed conflict of interest, self-dealing,
deception, or misrepresentation breaches its fiduciary duty. See Trousdale v. Henry, 261
S.W.3d 221, 228 (Tex.App.-Houston [14th Dist.] 2008, pet. denied); Deutsch v. Hoover,
Bax & Slovacek, LLP, 97 S.W.3d 179, 189 (Tex. App. Houston [14
th
Dist.] 2002, pet.
overruled); Vinson & Elkins v. Moran, 946 S.W.2d 381, 412 (Tex. App.-Houston [14th
Dist.] 1997, writ dism'd by agr.).
A breach of fiduciary duty involves intentional misconduct. A law firm that
intentionally is disloyal or deceptive to its client breaches its fiduciary duty. AK
intentionally represented Stanford in the purchase and sale transaction. Inoff
intentionally worked on the Stanford demand letter and helped Stanford set up claims
against Walton. These facts do not merely sound in negligence.
The same misconduct may support more than one cause of action. "When cases
say that clients cannot divide or fracture their negligence claims against their attorneys
into other claims, this does not mean that clients can sue their attorneys only for
negligence." Deutsch, 97 S.W.3d at 189; see Jampole v. Matthews, 857 S.W.2d 57, 62
(Tex. App. Houston [1
st
Dist.] 1983, writ denied) (ruling that clients claim against the
lawyer for charging excessive fees was distinct from, and not a fracture of, malpractice
case). Walton is not required to elect between those claims until the jury returns a verdict.
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The Fourteenth Court properly allowed the Deutsch plaintiff to plead in the
alternative and rejected the law firms argument of fracturing:
Though Deutsch alleged the same facts in his petition for both his
negligence and breach-of-fiduciary-duty claims, this pleading practice is
not determinative. The procedural rules allow a claimant to plead in the
alterative. When, as in this case, the evidence raises a genuine issue of
material fact regarding alleged wrongful conduct that sounds in negligence
as well as alleged wrongful conduct that sounds in breach of fiduciary duty,
the trial court should charge the jury on both claims, regardless of any
alternative pleading.

97 S.W.3d at 190. Like the Deutsch client's claims, Walton's claims for breach of
fiduciary duty are not a fracture.
The Deutsch court emphasized that breach of these duties is a clear and serious
violation. The conflict-of-interest issues and the clients need for full disclosure before
consenting to continued representation shows that there was sufficient evidence on the
issue of whether the Law Firms alleged breaches of fiduciary duty were clear and serious
to warrant consideration by the trial court if the jury were to find breach of fiduciary
duty. 97 S.W.3d at 197. AK's breaches of fiduciary duty to Walton were, like the
Deutsch claims, clear and serious. The idea that a lawyer cannot help someone sue the
firm's client is fundamental to a lawyer's duties, making a breach of that most basic duty a
clear and serious violation.

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CONCLUSION
Walton need only submit more than a scintilla of evidence to defeat AK"s
summary judgment motion, and Walton certainly has done that. AK's clear violations of
undisputable standards of conduct, and its intentional breaches of loyalty and candor,
require that this case proceed to a jury trial.
Wherefore, premises considered, Walton Houston Galleria Office, L.P.
respectfully requests that the Court deny AK's No-Evidence Motion for Partial Summary
J udgment and for such other and further relief to which Walton may show itself justly
entitled.

Respectfully submitted,
AJ AMIE LLP


By: /s/ Dona Szak
Thomas R. Ajamie
Texas Bar No. 00952400
Dona Szak
Texas Bar No. 19597500
J ohn W. Clay
Texas Bar No. 00796366
Pennzoil Place South Tower
711 Louisiana, Ste. 2150
Houston, Texas 77002
Telephone: (713) 860-1600
Facsimile: (713) 860-1699

ATTORNEYS FOR WALTON
HOUSTON GALLERIA OFFICE, L.P.


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CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing Response to Andrews
Kurth's Amended No-Evidence Motion for Summary J udgment was forwarded on May
22, 2014, via the Court's electronic filing system and by certified mail, return receipt
requested, to the following counsel of record:

Murray Fogler, Esq.
Robin O'Neil, Esq.
Beck Redden LLP
1221 McKinney St., Ste. 4500
Houston, Texas 77010



/s/ Dona Szak
Dona Szak

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