Liles v. Contreras

547 S.W.3d 280

Kevin W. LILES, Bryan K. Harris, Stuart R. White, James L. Ray, and Kyle D. Giacco, Appellants/Cross-Appellees

v.Maria Isabel Serna CONTRERAS, as Next Friend and Guardian of Samara Isabella Morales Serna and Samantha Isabel Morales Serna, Minor Children, Appellee/Cross-Appellants

No. 04-16-00636-CV

Court of Appeals of Texas, San Antonio.

Delivered and Filed: March 21, 2018

APPELLANT ATTORNEY: Ryan G. Anderson, Law Office of Ryan G. Anderson, 405 N. St. Mary's Street, Ste. 800, San Antonio, TX 78205, Martha L. Cigarroa De Llano, Person, Whitworth, Borchers & Morales, 602 E. Calton Road, Laredo, TX 78041, Jose I. Maldonado Jr., 602 E. Calton Road, 2nd Floor, Laredo, TX 78041, Michael Choyke, R. Russell Hollenbeck, Wright & Close & Barger, L.L.P., One Riverway, Suite 2200, Houston, TX 77056.

APPELLEE ATTORNEY: Ronald Rodriguez, Law Office of Ronald Rodriguez, 915 Victoria Street, Laredo, TX 78040, Eric J.R. Nichols, Amanda G. Taylor, Beck Redden, LLP, 515 Congress Avenue, Suite 1900, Austin, TX 78701, Kyle Lawrence, Beck Redden LLP, LyondellBasell Tower, Houston, TX 77010.

Sitting: Marialyn Barnard, Justice, Rebeca C. Martinez, Justice, Irene Rios, Justice

Opinion by: Marialyn Barnard, Justice

This is an appeal challenging a trial court’s order imposing sanctions on several attorneys for actions and omissions relating to the execution of a settlement agreement, and a cross appeal challenging the trial court’s refusal to permit review of documents submitted for in camera examination. We affirm the trial court’s sanctions order, but reject as moot the complaint regarding in camera inspection.

BACKGROUND

Samuel Morales Castillo was killed when an FE Express, LLC truck driven by Francisco Javier Bernal struck a vehicle, which then struck Castillo as he stood next to his vehicle on the side of the road. Castillo’s girlfriend, Maria Isabel Serna Contreras, as next friend and guardian of Samara Isabella Morales Serna and Samantha Isabel Morales Serna, Minor Children (collectively "Contreras"), filed a wrongful death action against FE Express and Bernal. Contreras was represented by attorney Ronald Rodriguez of the Law Offices of Ronald Rodriguez, P.C., a Laredo firm. This suit was assigned to the 341st District Court, Webb County, Texas. Castillo’s wife, Paulina Navarro Hernandez, individually and on behalf of her two minor children (collectively "Navarro"), also filed a wrongful death action against FE Express and Bernal. Navarro was represented by the Corpus Christi firm of Liles Harris, PLLC—specifically attorneys Kevin W. Liles, Brian K. Harris, and Stuart R. White (collectively "Liles"). The lawsuit filed by Liles on behalf of Navarro was assigned to the 111th District Court, Webb County, Texas. Thereafter, FE Express and Bernal, who were represented by James L. Ray and Kyle D. Giacco (collectively "R&G") of Daw & Ray, L.L.P., a Houston law firm, filed a motion to consolidate the two suits. The trial court granted the order, ordering Navarro’s suit consolidated into Contreras’s suit in the 341st District Court. It is undisputed that attorneys for both Navarro and Contreras sent demands to counsel for FE Express and Bernal, seeking the full limits of FE Express’s $1 million per accident insurance policy. In January 2015, FE Express’s insurer, who was willing to settle for policy limits, proposed mediation or arbitration to apportion the insurance proceeds between Navarro and Contreras. It does not appear any formal mediation or arbitration proceedings occurred.

On September 11, 2015, approximately nine months after the motion to consolidate was granted and while the wrongful death suits were still pending in Webb County, Liles, on behalf of Navarro, filed a wrongful death suit in Nueces County asserting the identical factual and legal allegations contained in the Webb County petition.¹ Liles served R&G with a copy of the petition, but did not notify counsel for Contreras of the new suit. In the Nueces County petition, Liles asserted venue was proper in Nueces County "under the general venue rule." Three days later, Liles, who represented that a settlement had been reached, asked the Nueces County trial court to appoint a guardian ad litem to protect the interest of the Navarro minor children. The trial court granted the motion and rendered an order appointing an ad litem. Thereafter, Liles served R&G—but not Contreras’s attorney—with a notice stating that "a Friendly Suit Hearing" had been set for October 1, 2015 in the Nueces County court, indicating a settlement had been reached between Navarro and FE Express and Bernal. Two amended hearing notices were filed September 24, 2015 and September 30, 2015—these too were served on R&G, but not on counsel for Contreras. The final notice set the friendly suit hearing for on October 12, 2015.

On October 6, 2015, several events took place. First, R&G, as stated in their appellate brief, "agreed to waive service" and filed an answer on behalf of their clients, FE Express and Bernal, to Navarro’s Nueces County suit. The answer was a Rule 92 general denial; R&G did not contest Liles’s venue allegation. See TEX. R. CIV. P. 92. Second, approximately two hours after R&G filed the answer in the Nueces County suit, Liles filed a notice of nonsuit in Webb County, dismissing Navarro’s claims against FE Express and Bernal without prejudice. There was no mention of the settlement or the friendly suit setting in the notice of nonsuit. Finally, R&G served Navarro and Contreras with FE Express and Bernal’s "First Amended Responses to All Plaintiffs' Request for Disclosure." In the amended response, FE Express and Bernal amended twelve responses—(a) through (l)—to the requests for disclosure. Included in the amendment, was the response to request (h), which sought disclosure of "[a]ny settlement agreements described in Rule 192.3(g)." FE Express and Bernal amended their original responses to advise they had reached a settlement agreement with Navarro in the amount of $700,000.00. The response noted the settlement had not been finalized and the settlement documents were being prepared for court approval. Accordingly, no actual settlement agreement was produced. The responses did not include any information about the Nueces County suit or the hearing set for October 12, 2015. The amended responses were served the day before the scheduled deposition of Paulina Navarro Hernandez.

The next day, October 7, 2015, Contreras took Navarro’s deposition. There was no mention during the deposition of the settlement or the hearing pending in Nueces County. Contreras’s attorney stated at the sanctions hearing that he received the amended responses to the request for disclosure regarding the settlement "late in the day" on October 6th as he was preparing for the deposition. As to the settlement, he "figured we would come back to this Court later and deal with that." (emphasis added)

The hearing on the Nueces County friendly suit was held on October 12, 2015, as set out in the final amended notice of hearing. At the hearing, there was no specific mention of the Webb County suit—or the fact that there were additional minors involved. The only hint of additional claimants arose when R&G asked Navarro if she understood there were "other claimants against our clients that are also seeking part of the proceeds of the insurance policy." Navarro replied that she was aware there were other claimants, but did not mention the other minors. When questioned by her own attorney, Navarro admitted a settlement agreement and release existed and she had met with Liles the night before the friendly suit hearing "and discussed and read the entire agreement." Thus, the record establishes the written settlement agreement existed as of October 11, 2015. However, no copy of the agreement was produced to Contreras until February 1, 2016, when her attorney specifically requested it. On the same date the hearing was held, the Nueces County trial court approved the settlement and signed an "Agreed Final Judgment" between Navarro and defendants FE Express and Bernal.

After Contreras received a copy of the actual settlement agreement, her attorney filed a motion for sanctions on her behalf. In the motion, Contreras alleged the Webb County trial court should impose sanctions: (1) under Chapter 10 of the Civil Practice and Remedies Code because Liles filed the October 6, 2015 notice of nonsuit for an improper purpose; (2) under Rule 215.3 because Liles and R&G abused the discovery process by failing to timely produce a copy of the actual settlement agreement; and (3) under its inherent power to impose sanctions because Liles and R&G engaged in abusive conduct that affected the court’s core functions and attacked the integrity of the judicial system.² As a consequence for this sanctionable conduct, Contreras requested the trial court to order the following relief: (1) order the settling parties and their attorneys deposit the $700,000.00 settlement funds into the court registry; (2) strike Navarro’s pleadings and render judgment that she and her children take nothing; (3) order Navarro’s three attorneys to each pay Contreras $250,000.00; (4) strike FE Express and Bernal’s answer and render a default judgment in the amount of $10 million in favor of Contreras; and (5) order the attorneys for FE Express and Bernal to each pay Contreras $250,000.00.

In response to the motion for sanctions filed on behalf of Contreras, Liles filed a motion for sanctions on behalf of his client. In this counter motion for sanctions, Navarro alleged the motion for sanctions filed by Contreras violated Rule 13 of the Texas Rules of Civil Procedure, which precludes the filing of pleadings that are groundless and brought in bad faith or groundless and brought to harass, and Chapter Ten of the Texas Civil Practice and Remedies Code, which precludes the filing of any pleading that is presented for an improper purpose. See TEX. CIV. PRAC. & REM. CODE ANN. §§...