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Austin litigators won an appeal in an attorney fee dispute with clients alleging lawyers failed to advise about a potential claim against a Big Law firm because of close relationships between attorneys at the two firms.

The ruling Wednesday from Austin's Third Court of Appeals means that Howry, Breen & Herman will keep a nearly $200,000 judgment in the fee dispute, and that the clients have again lost their breach of fiduciary duty counterclaim against the law firm.

Appellants' attorney, Dennis Hunsberger, a partner in The Law Office of Dennis Hunsberger, said he's planning to sit with his client to talk about challenging the ruling.

"We're pretty disappointed. We did a lot of work on this, and I feel they overlooked a lot of the Supreme Court case law we sent to them," said Hunsberger, who cited 1999′s Texas Supreme Court ruling in Burrow v. Arce, which was a breach of fiduciary duty case that touched on proving damages.

The Third Court case, Dollahite v. Howry, Breen & Herman, is one of at least four pieces of litigation that all arose from a plan by a group of investors to build and operate a road-racing and off-road motorsports complex, according to the Dec. 11 ruling.

Another one of those lawsuits was against Big Law firm Jackson Walker, which settled in 2014 with the appellants—William Dollahite, Interest Partners, Driveway Austin GP, Driveway Austin LLC and Driveway Austin L.P.

Randy Howry, a partner in Howry, Breen & Herman, didn't return a call or email seeking comment before deadline. Jackson Walker spokesman Ben Alexander declined to comment.

The opinion explains the background of the case. In the beginning, the racing and motorsports investors had hired Jackson Walker to draft their partnership agreement. They'd formed Driveway Austin and made Driveway Austin GP the general partner. It would take unanimous agreement to remove Driveway Austin GP as the general partner. However, Jackson Walker had also drafted one provision in the agreement, which allowed the limited partners to amend the agreement by a simple majority vote.

The partners did amend the agreement a few years later: They altered the part that required a unanimous vote to change the general partner. Next, they tried changing the general partner to Turbo Partners.

This is when the first litigation ensued in 2010 between Turbo Partners and Driveway Austin GP. The appellants hired Howry Breen in that case, and one other piece of litigation.

But when the partners decided to sue Jackson Walker, Howry Breen said it would not be their lawyer. They hired a different attorney to sue the Big Law firm, and they settled that case in 2014.

The next dispute came in 2017 when Howry Breen sued the appellants over $198,248 in unpaid fees for representation in the two previous lawsuits.

The appellants launched a counterclaim and affirmative defense for breach of fiduciary duty.

"Appellants allege that [Howry, Breen & Herman] had a conflict of interest in representing appellants based on Howry's friendships with some attorneys at Jackson Walker and that Howry injured appellants by failing to tell them they had a claim against Jackson Walker based on its drafting of the agreement," said the opinion, authored by Justice Gisela Triana and joined by Justices Melissa Goodwin and Thomas Baker.

The trial court tossed the counterclaim because the appellants brought it outside of the four-year statute of limitations. On appeal, the Third Court affirmed that finding.

The opinion explained that the appellants first raised the counterclaim in July 2018, even though they had sued Jackson Walker in April 2014 and settled the case the following month.

"Thus, the evidence conclusively established that appellants were aware of their claim against Jackson Walker and [Howry, Breen & Herman's] alleged failure to advise them of that claim more than four years before bringing this claim against [Howry, Breen & Herman]," the opinion said.

Using the breach of fiduciary duty claim as an affirmative defense also failed, the Third Court ruled, because the appellants did not have evidence that the alleged breach of fiduciary duty caused damages to them.

"[Howry, Breen & Herman's] refusal to sue Jackson Walker is the sole basis of appellants' affirmative defense of breach of fiduciary duty," said the opinion. "The evidence showed that appellants sued Jackson Walker and recovered a settlement, thereby avoiding any alleged damages that would have resulted from not bringing that action."