Authorlee v. Tuboscope Vetco Intern., Inc.

• Decision Date: 28 August 2008
• Docket Number: No. 01-06-00719-CV.,01-06-00719-CV.
• Citation: 274 S.W.3d 111
• Parties: Anthony AUTHORLEE, Dexter Burnett, Robert Derousselle, John Henry Young, Jerome Stubblefield, and Floyd Moran, Appellants, v. TUBOSCOPE VETCO INTERNATIONAL, INC., AMF Incorporated, and Minstar, Inc., Appellees.
• Court: Texas Court of Appeals

274 S.W.3d 111

Anthony AUTHORLEE, Dexter Burnett, Robert Derousselle, John Henry Young, Jerome Stubblefield, and Floyd Moran, Appellants, v. TUBOSCOPE VETCO INTERNATIONAL, INC., AMF Incorporated, and Minstar, Inc., Appellees.

No. 01-06-00719-CV.

Court of Appeals of Texas, Houston (1st Dist.).

August 28, 2008.

Dissenting Opinion October 2, 2008.

Rehearing Overruled October 7, 2008.

William J. Skepnek, Skepnek, Fagan, Meyer & Davis, P.A., Lawrence, KS, Steven Smoot, Smoot Law Firm, P.C., Frank W. Mitchell, Frank W. Mitchell & Associates, LLP, Houston, for appellants.

Philip T. Bruns, Jeffrey C. Kubin, Laura Hanley Carlock, Gibbs & Bruns, L.L.P., Troy Ray Ford, Andrea Jean Irey Paterson, Beck, Redden & Secrest, L.L.P., Houston, for appellees.

Panel consists of Justices NUCHIA, KEYES, and HIGLEY.

OPINION

SAM NUCHIA, Justice.

In six issues, appellants, who were settling plaintiffs in the underlying lawsuit seek to overturn the trial court's denial of their motion for new trial. Appellants argue here, as they did in the trial court, that their agreed judgment should be set aside as "void as against public policy" because their trial lawyers did not tell them it was an aggregate settlement and because their trial lawyers, along with the appellees, committed fraud.

We affirm.

BACKGROUND

History

This is a dispute about the propriety of settlements in a mass tort case. Before the lawsuit at issue in this appeal, appellants' trial attorney, Shelton Smith, had represented other plaintiffs in silicosis cases against appellees, the "AMF defendants," establishing a course of conduct for negotiating and resolving these claims with Daniel Shank, counsel for the AMF defendants. This course of conduct included evaluating the merits of each plaintiff's case based on work history, medical diagnosis and impairment, and other factors that might have impacted the outcome at trial. In those prior 40 lawsuits, Smith had recovered about $40 million in settlements for his clients.

Initial Settlement Negotiations

Appellants were among 176 plaintiffs who sued Tuboscope Vetco International, Inc., AMF, Inc., and Minstar, Inc., along with other defendants, for injuries they alleged were caused by their occupational exposure to silica while working for AMF Tuboscope in Midland, Texas. In January 1999, appellants' trial attorneys, Shelton Smith and Scott Hooper, approached appellees with vague, initial settlement demands. In one letter, Smith wrote:

I am presently representing 55 former AMF Tuboscope sandblasters who suffer from silicosis or mixed dust pneumonoconiosis as a result of their employment at Tuboscope. Each of these 55 men has a serious occupational lung disease. . . .

As of this date, I have filed 25 lawsuits against AMF, Inc. The other 30 diagnosed cases are ready to be filed. There may be more. . . .

From January through May, Smith and Hooper had a series of conversations—in person, by telephone, and by mail—with Daniel Shank, counsel for the AMF Defendants. They spoke about factors that would be involved in any settlement. Shank proposed, on behalf of his clients and their insurers, that all of Smith's silicosis claims be settled at one time, using the term "global" in several communications. Shank wrote:

At this point in time, my client and its insurers are not interested in negotiating a settlement in individual cases on a case-by-case basis. Furthermore, my client and its [insurance] carriers are not interested in negotiating a resolution of cases on a subgroup basis. However, my client and its carriers are interested in a global settlement proposal. Accordingly, if you wish to resolve these cases, I would suggest that you proceed with preparing a global settlement proposal. . . . If the parties seem reasonably in contact with each other, then it may be appropriate for all parties to proceed with a global mediation. . . .

To the extent that my client and its insurers are not able to proceed with a global resolution of these matters, please be advised that my client and its insurers are not interested at this time in negotiating settlements on a piecemeal, case by case or subgroup basis. Rather, they would prefer pursuing a global approach without being distracted by piecemeal or subgroup negotiations.

Shank later testified that he and his clients were interested only in a global resolution to ensure that cases with similar liability and damages would settle for similar amounts. He said, "We were dealing with the strategy where he would hitch his wagon to a highly valued case and then later on we would be fighting about whether or not an apple is an apple or an apple is an orange."

Preparing for Mediation

The parties agreed to go to mediation in July. Before mediation, Shank suggested that they evaluate the first 21 cases to determine a method for resolving Smith's inventory of claims. Shank suggested this because he had more information on those 21 plaintiffs than on the other plaintiffs: they had deposed the plaintiffs, reviewed their medical records, and obtained "defense IMEs."¹ In addition, Smith sent Shank several boxes full of information about individual plaintiffs, including information on all the appellants. However, only some plaintiffs had complete case evaluations, including diagnosing medical reports and social security records verifying employment at AMF Tuboscope. For example, only summaries but no medical reports were available for Anthony Authorlee.

Smith also contacted his clients before mediation. In a June 30, 1999 letter, Smith told his clients, "There are very important events in July regarding your AMF Tuboscope case." He invited about half of the plaintiffs to a meeting to provide details about the upcoming mediation and stressed the importance of attending the meeting. With the invitation, Smith sent a report with questions and answers about the status of the litigation. In this report, Smith explained:

We have a mediation scheduled for the second week of July. This is a negotiation session where we will meet with attorneys and insurance representatives for AMF and discuss settlement possibilities for our AMF clients. Your case could potentially be discussed at this three day session.

To prepare for the possibility of discussing your case, we have computerized a large amount of information about you. Some of that information is printed on the Client Information Sheet. We need you to review that information right now.

. . .

We know you have questions. But with the AMF mediation a few days away and since we represent more than 300 AMF clients, we simply cannot provide our typical personalized service for the next two weeks. We need to focus all of our attention on preparing for this session with the AMF attorneys.

. . .

NO ONE ELSE EXCEPT YOU AND YOUR SPOUSE MAY ATTEND. THIS WILL BE A MEETING PROTECTED BY ATTORNEY-CLIENT PRIVILEGE, NO FRIENDS OR OTHER PERSONS MAY ATTEND.

. . .

A very detailed overview of the AMF cases will be presented. Shelton Smith is your lead attorney who has successfully pursued cases against AMF for 15 years. He will be reviewing the current situation and will be discussing details of your case. Shelton has settled more than 40 cases against AMF . . .

Because of space limitations, we are only meeting with about half our clients on July 10. Another meeting or meetings will be held this summer for the rest of our clients. ONLY THOSE CLIENTS WITH AN INVITATION LETTER SHOULD ATTEND THE MEETING.

. . .

Though it is possible that some of these cases could be resolved soon, nothing is certain. Anything could happen. It is possible that a reasonable solution involving your case may not be resolved for months or possibly even years.

. . .

The upcoming mediation will be the first time we have discussed the possibility of resolving all of our AMF cases with the AMF lawyers. But there is ABSOLUTELY NO GUARANTEE THAT ANY PROGRESS WILL BE MADE. We will know more in two weeks.

Mediation

According to Shank, several plaintiffs as well as representatives of appellees' lead insurance carriers attended the mediation. The attorneys spent the first few days trying to agree on what criteria to use to establish the value of each plaintiff's claim. For example, Smith had a matrix in which he had ranked the relative value of each plaintiff's claim based on factors like: (1) length of exposure to silica while working at the Tuboscope plant, (2) age, (3) marital status, (4) number and age of children, (5) severity of diagnosis and whether the diagnosis was made by a doctor that the AMF defendants respected, (6) prior drug use, and other factors that may have influenced a jury verdict at trial. On the other hand, appellees had their own matrix, and they wanted to focus on exposure dates, pulmonary function test results, and impairment ratings.

Smith would not agree to appellees' criteria. He later testified that most of his clients were not symptomatic, "[V]ery few of these men ever—ever had a complaint about a pulmonary problem. Very few, very few ever saw a doctor for one or had any kind of treatment." He testified that at least one appellant's case would have been "valueless" had he agreed to appellees' settlement criteria.²

Both Smith and Hooper stated that they did not discuss appellants' individual cases during the mediation. Smith testified that they discussed a few cases individually as a means of reality testing the effect of the criteria each side proposed. Smith testified that they did not discuss settling any particular plaintiff's case during the first few days of the mediation. Scott Hooper testified that he was not aware of any individual negotiation for Anthony Authorlee. Smith also said that at least twenty additional plaintiffs were added to the litigation after the mediation.

Shank also testified that he understood that they were discussing not just the 150 or so positively diagnosed plaintiffs and that there would be additional plaintiffs...