Nguyen v. Watts

• Decision Date: 28 May 2020
• Docket Number: NO. 01-18-00421-CV,01-18-00421-CV
• Citation: 605 S.W.3d 761
• Parties: Thim T. NGUYEN, et al., Appellants v. Mikal C. WATTS; Francisco Guerra IV ; John Hunter Craft; David Watts; Watts Guerra, LLP; Watts Guerra & Craft, LLP; Robert C. Hilliard ; Robert C. Hilliard LLP ; and Hilliard Munoz Gonzales, LLP, Appellees
• Court: Texas Court of Appeals

605 S.W.3d 761

Thim T. NGUYEN, et al., Appellants

v.Mikal C. WATTS; Francisco Guerra IV ; John Hunter Craft; David Watts; Watts Guerra, LLP; Watts Guerra & Craft, LLP; Robert C. Hilliard ; Robert C. Hilliard LLP ; and Hilliard Munoz Gonzales, LLP, Appellees

NO. 01-18-00421-CV

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

Opinion issued May 28, 2020

Rehearing Denied July 28, 2020

Kevin Dubose, Houston, Texas 77008, Lance Christopher Kassab, David Eric Kassab, Houston, Texas 77004, Minh Tam Tammy Tran, Houston, Texas 77002, for Appellants.

Mikal C. Watts, Michael J. Murray, Travis C. Headley, Watts Guerra, LLP, San Antonio, Texas 78257, David J. Beck, Fields Alexander, Michael E. Richardson, Joel T. Towner, Kyle Lawrence, Houston, Texas 77010, for Appellees.

Panel consists of Chief Justice Radack and Justices Landau and Hightower.

Richard Hightower, Justice

This appeal arises from a suit brought by Appellants—439 individuals¹ —against numerous attorneys and their law firms, including (1) Appellees Mikal C. Watts, Francisco Guerra IV, John Hunter Craft, David Watts, Watts Guerra, LLP, and Watts Guerra & Craft, LLP (collectively, "Watts Appellees") and (2) Appellees Robert C. Hilliard, Robert C. Hilliard, LLP, and Hilliard Munoz Gonzales, LLP (collectively, "Hilliard Appellees"), alleging violations of the civil barratry statute, see TEX. GOV'T CODE § 82.0651(c), and derivative claims of conspiracy and aiding and abetting. Appellants also sued the Watts Appellees for unjust enrichment and invasion of privacy by misappropriation of name and likeness.

The Watts Appellees and Hilliard Appellees—as well as other settling defendants that are not parties to this appeal—filed traditional motions for summary judgment. Among the grounds for summary judgment, Appellees asserted that (1) certain conduct alleged by Appellants to constitute civil barratry did not violate the civil barratry statute and (2) the statute of limitations barred Appellants' barratry claims. The Watts Appellees also challenged the propriety of the unjust enrichment claim and asserted that the invasion-of-privacy-by-misappropriation claim, conspiracy claim, and aiding and abetting claim were barred by limitations. In a series of orders, the trial court granted summary judgment, disposing of all Appellants' claims against the Watts and Hilliard Appellees. On appeal, Appellants raise four issues challenging the summary judgment against them.

We affirm in part, reverse in part, and remand for further proceedings.

Background

The Deepwater Horizon Explosion

British Petroleum ("BP") leased its offshore drilling rig, the Deepwater Horizon , to drill the Macondo Well off the coast of Louisiana. In re Deepwater Horizon , 739 F.3d 790, 795 (5th Cir. 2014). On April 20, 2010, the Deepwater Horizon exploded after the well blew out. Id. at 795–96. "After the initial explosion and during the ensuing fire, the vessel sank, causing millions of barrels of oil to spill into the Gulf of Mexico." Id. at 796. The oil contaminated the shores and estuaries of the Gulf Coast states, "inflicting billions of dollars in property and environmental damage and spawning a litigation frenzy." In re Deepwater Horizon , 745 F.3d 157, 161 (5th Cir. 2014).

Conduct Related to the BP Litigation

In June 2010, Mikal Watts and his firm Watts Guerra & Craft, LLP ("WGC") entered into a joint venture agreement with attorney Robert Hilliard to share costs and fees in the representation of clients against BP relating to the oil spill. Hilliard financed his contribution, in part, with funds from Duncan Litigation Investments. Another attorney, John Cracken, also agreed to contribute funding.

Appellants allege that Watts and WGC engaged non-lawyer case recruiters ("case recruiters") to sign up clients who had agreed to be represented by Watts and his firm in the BP litigation. Appellants alleged that Watts, and the other parties funding the joint venture, paid the case recruiters $250 for each client they signed up to be represented by WGC.

Appellants contend that the case recruiters ultimately provided WGC with the names and personal information of over 40,000 individuals who had ostensibly agreed to be represented by WGC in the BP litigation. These individuals purportedly worked in the Gulf Coast fishing industry and had been economically damaged by the oil spill. Appellants contend that in exchange for providing the list of purported clients, Watts paid the case recruiters over $10 million. In 2010 and 2011, WGC filed claims against BP on behalf of the individuals through BP's settlement clearinghouse, the Gulf Coast Claims Facility.

All claims relating to the oil spill were consolidated into a federal multi-district litigation proceeding in the Eastern District of Louisiana. The federal court appointed Watts to the Plaintiffs' Steering Committee ("the PSC") after he stated in his PSC application that he "represented[ed] over 40,000 plaintiffs" in the BP litigation.

In 2012, BP agreed to settle the oil-spill claims. It established the Seafood Compensation Program to compensate those who earned a living in the Gulf Coast's seafood industry and had suffered economic losses as a result of the oil spill. To be part of the settlement, a claimant was required to make a formal written "presentment" to BP. In mid-January 2013, Watts and his firm, WGC, submitted "presentment forms" on behalf of over 40,000 claimants, including Appellants. Watts signed the presentment forms representing himself to be the claimants' attorney and indicated in the forms that the claimants worked in the commercial fishing industry and had been adversely affected by the oil spill.

BP suspected that the claims made by Watts and his firm on behalf of the 40,000 plus claimants were not legitimate. An investigation showed that BP's suspicions were correct. The investigation revealed that the case recruiters had manufactured a claimant list containing false claimants. The case recruiters had used the phone book to identify individuals with Vietnamese surnames. After identifying a qualifying name, the case recruiters had then listed the person as a fisherman-claimant even though the individual had not given permission to be identified as a claimant and had not agreed to be represented by WGC.

Some of the listed claimants were not commercial fishermen who had suffered economic injury as a result of the oil spill. And some of the social security numbers listed for the claimants were false or stolen. The listed claimants—including Appellants—had not authorized Watts or WGC to represent them or to file claims on their behalf, including the presentment forms filed by Watts in January 2013.

Bexar County Class Action

On May 14, 2014, five of the Appellants² in this case filed a class action in Bexar County against Watts and his firm, Watts Guerra, LLP, the successor firm of WGC.³ The class action initially asserted a claim for invasion of privacy by misappropriation of name and likeness. The class-action petition alleged that Watts had obtained his position on the PSC by stating in his application to the federal court that he and his firm "represented over 40,000 clients injured by the Deepwater Horizon Oil Spill" when they "did not actually represent the individuals and/or entities they claimed to represent."

On August 29, 2014, the class action was certified to include "[a]ll persons or entities who [Watts and Watts Guerra, LLP] claimed to represent in the BP Litigation but who [Watts and Watts Guerra, LLP] did not actually represent in the BP Litigation." A later, amended petition added claims for civil barratry pursuant to Government Code Subsection 82.0651(c).

Criminal Charges

In September 2015, Watts and the case recruiters (as well as others) were indicted in federal court in Mississippi on 95 counts of fraud and conspiracy. The indictment alleged that Watts and his co-conspirators—the case recruiters—had submitted the names of over 40,000 claimants in the BP litigation even though they knew (1) that the claimants had not consented to be represented by WGC, (2) that false social security numbers, addresses, and false birthdates were used to identify some of the claimants, and (3) that some of the claimants did not work in the fishing industry.

Watts defended against the charges by asserting that he had been scammed by the case recruiters. He claimed that he had believed that the claimant list and the supporting documentation provided by the case recruiters were legitimate. Two of the case recruiters were found guilty, but Watts was acquitted of all charges.

Filing of the Instant Suit and Appellants' Pleadings

In March 2016, a single plaintiff, Thim T. Nguyen, filed the instant suit against Hilliard and Cracken—the two attorneys who had agreed to provide funding for the BP litigation—for misappropriation of identity based on the filing of the BP claims.⁴ The Second Amended Petition, filed in August 2016, added more plaintiffs. It also named Francisco Guerra, IV, John Hunter Craft, and Duncan Litigation Investments as new defendants. The plaintiffs alleged that, when Watts and WGC filed the presentment forms on behalf of over 44,000 claimants, the defendants knew that Watts and WGC did not represent the claimants. Based on these allegations, the plaintiffs asserted only a cause of action for civil barratry under Government Code Subsection 82.0651(c).

The Third Amended Petition, filed in September 2016, named 389 plaintiffs and added Mikal Watts, WGC, and David Watts as defendants. Duncan Litigation Investments's principle, Max Duncan, was also added. The plaintiffs pled that the statutes of limitations did not bar their claims because the discovery rule tolled the limitations periods. The defendants answered the suit, generally denying the claims and raising affirmative defenses, including limitations.

The Sixth Amended Petition, filed in May 2017, named 440 plaintiffs. It added claims for invasion of privacy by misappropriation of name and likeness and...