## Facts

- A Dallas law partnership employed Warren C. Lyon as a partner during the relevant period.
- In 1969, Lyon represented Betty L. Cook in a divorce and prepared wills for Cook and Isabelle Griffin; legal fees for these matters were billed and paid to the law firm.
- During the attorney-client relationship, Cook told Lyon that she, Griffin, and Winifred Baker expected about $60,000 from an estate-related property sale and sought advice on investing the funds in Texas real estate.
- Lyon suggested he could assist and recommended investment opportunities, including an interest in a fast-food franchise venture (“Texas Yummers”) in which Lyon had a personal financial interest.
- Plaintiffs alleged they invested approximately $60,343.25 at Lyon’s urging and that Lyon misapplied funds and failed to disclose conflicts of interest.
- Plaintiffs sued the law firm for actual and exemplary damages, alleging Lyon’s fraud and breaches of fiduciary duty committed through misuse of the attorney-client relationship.
- The law firm obtained summary judgment on the ground that the partnership was not liable for Lyon’s conduct; the court of civil appeals affirmed.

## Issues

1. Whether the law firm conclusively established, as a matter of law, that it was not vicariously liable for Lyon’s alleged fraud and fiduciary breaches under partnership law.
2. Whether the summary-judgment record raised fact issues that Lyon acted in the ordinary course of the partnership’s business or with apparent authority in dealing with the plaintiffs.

## Decision

- The Texas Supreme Court reversed the summary judgment and remanded for trial.
- The court held the law firm did not conclusively negate partnership liability for Lyon’s alleged conduct.
- The record created fact issues on whether Lyon’s dealings were within the ordinary course of the firm’s business or within his apparent authority as a partner-attorney.
- The court did not decide whether Lyon committed fraud or breached fiduciary duties; it held those matters required factfinding.

## Legal Principles

- A partnership may be liable for a partner’s wrongful acts committed in the ordinary course of the partnership’s business or while the partner is apparently carrying on the partnership’s business in the usual way.
- On summary judgment, the movant must conclusively prove entitlement to judgment as a matter of law; doubts and reasonable inferences are resolved against the movant.
- A law firm may face vicarious liability when a partner’s alleged misconduct arises from, and is intertwined with, an attorney-client relationship such that clients could reasonably view the partner as acting with the firm’s authority.

## Conclusion

Because the summary-judgment evidence showed Lyon’s investment solicitations and handling of client funds were intertwined with ongoing legal representation for which the firm billed and received fees, the law firm failed to conclusively establish that Lyon acted outside the ordinary course of partnership business or beyond apparent authority; the case was remanded for trial on liability.


Cook v. Brundidge, Fountain, Elliott & Churchill, 533 S.W.2d 751 (Tex. 1976)