Malpractice lawsuit against Texas lawyer over research intellectual property may proceed

A malpractice claim against a Texas attorney who allegedly worked with a client to steal his business partner’s intellectual property may be pursued after a Texas appeals court rules the statute of limitations only began ‘at the end of the client’s bankruptcy appeals.

White Nile Software Inc., a search engine startup, sued attorney Jeffrey Travis years after he withheld his malpractice claims following several legal battles between two business partners who founded the company, Steven Thrasher and Edward Mandel.

Thrasher alleged that Mandel and Travis conspired to relieve him of his intellectual property as the White Nile company deteriorated in 2006. Travis, who was hired by Mandel to represent him against Thrasher, allegedly developed a strategy to induce Thrasher to file litigation blocking White Nile, which would allow the company’s intellectual property to be transferred to another entity solely owned by Mandel.

In 2011, the trial court approved a settlement between White Nile, Thrasher and Jason Coleman, who alleged that he was co-inventor and co-owner of Thrasher’s search engine. In this settlement, White Nile retained its malpractice claims, the Texas Fifth District Court of Appeals said.

White Nile was barred from pursuing the malpractice claim because Mandel filed for bankruptcy and the issue of who controlled the company was in dispute. During the trial, the court found that he was not a co-inventor of Thrasher’s intellectual property. Appeals were not exhausted until October 1, 2018, when the United States Supreme Court declined to review the case.

White Nile filed its lawsuit against Travis in November 2018, arguing allegations of professional negligence, breach of fiduciary duty and conspiracy.

The court held that the two-year statute of limitations was suspended until Thrasher and Coleman were able to gain control of White Nile and had the power to assert the company’s malpractice claims.

The question of who controlled the company was not resolved until the bankruptcy court ruled that Mandel was not a co-inventor and therefore had no stock in the company. At that time, which was October 2018, after appeals exhausted, Thrasher and Coleman were “on the front lines” of pursuing malpractice suits, the court said.

Judge Bonnie Lee Goldstein delivered the opinion. Judges Ken Molberg and Erin Nowell joined.

Holmgren Johnson Mitchell Madden LLP represented White Nile. Cobb Martinez Woodward PLLC represented Travis.

The deal is White Nile Software, Inc. vs. TravisText. App., 5th Dist., No. 05-20-00354-CV, 8/29/22.

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