1

The court recounts the evidence in a light favorable to

plaintiffs, as the summary judgment nonmovants, and draws all

reasonable inferences in their favor. E.g., U.S. Bank Nat’l Ass’n

 IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

KARIN JACOBS, et al., §

 §

Plaintiffs, §

 § Civil Action No. 3:04-CV-1968-D

VS. §

 §

WILLIAM K. TAPSCOTT, JR., §

et al., §

 §

Defendants. §

MEMORANDUM OPINION

 AND ORDER 

In this action for negligence and related claims arising from

a lawyer and his law firm’s representation of plaintiffs in statecourt asbestos litigation, defendants move for summary judgment and

to strike the supplemental opinions of two expert witnesses whom

plaintiffs have designated. For the reasons that follow, the court

grants the summary judgment motion except as to two grounds of

plaintiffs’ breach of fiduciary duty claim and their fee forfeiture

claim, and it denies the motion to strike.

 I

Plaintiffs Karin Jacobs (“Karin”), Patria Jacobs (“Patria”),

and JoeAnn Frost (“JoeAnn”) sue defendants William K. Tapscott,

Jr., Esquire (“Tapscott”), and Baron & Budd, P.C. (“Baron & Budd”)

based on their representation of plaintiffs in asbestos-related

litigation arising from the death of Carl Bernard Jacobs (“Carl”).1

 

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v. Safeguard Ins. Co., 422 F.Supp.2d 698, 701 n.2 (N.D. Tex. 2006)

(Fitzwater, J.) (citing Clift v. Clift, 210 F.3d 268, 270 (5th Cir.

2000)).

- 2 -

Karin is Carl’s widow, and Patria and JoeAnn are his daughters.

Carl was employed in shipyards that exposed him to asbestos

products for most of his adulthood, and he was ultimately diagnosed

with mesothelioma. Before he died, Carl consulted an attorney in

New Orleans, Scott Bickford, Esquire (“Bickford”). Bickford’s law

firm, Martzell & Bickford, accepted his case on a one-third

contingency fee employment agreement if the case settled before

trial. Bickford later referred the case to Baron & Budd, a firm

that is nationally recognized for handling asbestos litigation.

Baron & Budd accepted the case based on 40% contingency fee

arrangements, evidenced by three employment agreements and powers

of attorney signed by Karin, Patria, and JoeAnn.

Defendants filed suit on behalf of plaintiffs and Carl’s

estate in state courts in Galveston (the “Jacobs Litigation”) and

Dallas counties against numerous asbestos defendants (“Asbestos

Defendants”). Before the June 1999 trial setting of the Jacobs

Litigation, defendants negotiated settlements with several Asbestos

Defendants and advised Karin, Patria, and JoeAnn that they had

reached cash settlements with all Asbestos Defendants for total

payments of $2.4 to $2.5 million and perhaps more. 

Plaintiffs became dissatisfied with defendants’ representation

of them. In sum, they complain that the settlement was not for an

 

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- 3 -

amount that they had agreed to accept when they retained Baron &

Budd, and their case was worth substantially more than what they

received in settlement; they were not informed of important details

of the settlement, including that it would not be paid entirely in

cash, that a settlement had not been reached with Pittsburgh

Corning Corporation (“Pittsburgh Corning”), that certain

defendants, such as Fibreboard Corporation (“Fibreboard”), were in

poor financial condition or bankrupt, that of the $200,000 that

Johns-Manville Trust (“Johns-Manville”) had agreed to pay to

settle, only $20,000 was payable immediately in cash, with

virtually no possibility of recovering the $180,000 balance; that

defendants did not obtain from the Asbestos Defendants written

confirmation or evidence of the settlements and did not protect

plaintiffs from the consequences of post-settlement bankruptcy; and

that defendants had renegotiated the settlement with Rapid American

Corporation (“Rapid American”), reducing the payment from $125,000

to $52,015.00.

Karin, Patria, and JoeAnn sue Tapscott and Baron & Budd on

theories of negligence, misrepresentation, breach of fiduciary

duty, breach of contract, fee forfeiture, and gross negligence.

They seek to recover actual damages, punitive or exemplary damages,

attorney’s fees, an accounting, fee forfeiture, and pre- and postjudgment interest. Tapscott and Baron & Budd move for summary

 

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2

Defendants also move for leave to file an appendix in support

of their summary judgment reply brief. See Dethrow v. Parkland

Health Hosp. Sys., 204 F.R.D. 102, 104 (N.D. Tex. 2001) (Fitzwater,

J.) (holding that party may not file summary judgment reply

appendix without first obtaining leave of court). The court denies

the motion as moot because, even considering the contents of the

reply appendix, the court would reach the same result as it does

today.

Plaintiffs object to portions of defendants’ summary judgment

evidence. See Ps. Br. 23. Because the court has not relied on any

of the evidence to which plaintiffs object, it overrules the

objections as moot.

- 4 -

judgment as to all of plaintiffs’ claims.2 They also move to

strike plaintiffs’ designation of supplemental opinions for two

expert witnesses.

II

Because defendants will not have the burden of proof as to

plaintiffs’ claims at trial, they can obtain summary judgment by

pointing the court to the absence of evidence to support an

essential element of each claim. See Celotex Corp. v. Catrett, 477

U.S. 317, 325 (1986). Once they do so, plaintiffs must go beyond

their pleadings and designate specific facts showing there is a

genuine issue for trial. See id. at 324; Little v. Liquid Air

Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam).

Summary judgment is mandatory if plaintiffs fail to meet this

burden. Little, 37 F.3d at 1076. An issue is genuine if the

evidence is such that a reasonable jury could return a verdict for

the nonmoving parties. Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 248 (1986). Plaintiffs’ failure to produce proof as to any

 

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- 5 -

essential element renders all other facts immaterial. Edgar v.

Gen. Elec. Co., 2002 WL 318331, at *4 (N.D. Tex. Feb. 27, 2002)

(Fitzwater, J.) (citing Celotex Corp., 477 U.S. at 323). 

III

Defendants move on several grounds for summary judgment

dismissing plaintiffs’ negligence claim. The court need only

consider, however, their contention that plaintiffs cannot prove

that defendants’ negligence damaged them.

Under Texas law, “[t]he elements of a negligence cause of

action are the existence of a legal duty, a breach of that duty,

and damages proximately caused by the breach.” IHS Cedars

Treatment Ctr. v. Mason, 143 S.W.3d 794, 798 (Tex. 2004). There

are similar requirements for a claim for legal malpractice. “To

recover on a claim for legal malpractice, a plaintiff must prove

that the attorney (1) owed the plaintiff a duty; (2) the attorney

breached that duty; (3) the breach proximately caused plaintiff’s

injuries; and (4) the plaintiff was damaged.” Williams v. Briscoe,

137 S.W.3d 120, 124 (Tex. App. 2004, no writ) (citing Greathouse v.

McConnell, 982 S.W.2d 165, 172 (Tex. App. 1998, pet. denied).

Moreover,

[w]hen a legal malpractice claim arises from

earlier litigation, the plaintiff also bears

the burden to prove he would have prevailed on

the underlying cause of action. In addition,

a plaintiff must prove the amount of damages

he would have recovered and collected in the

underlying case if it had been properly

prosecuted. Evidence that damages could have

 

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- 6 -

been collected is required because, even if an

attorney’s negligence prevented the entry of a

judgment in the client’s favor, the client

suffered no damage unless he could have

collected some part of that judgment. This

aspect of plaintiff’s burden is commonly

referred to as the “suit within a suit”

requirement. Thus, to prove that [defendant]

committed legal malpractice, appellants had to

prove that she failed to bring a medical

negligence claim against the dialysis clinic,

that the medical negligence claim would have

been successful, that it would have resulted

in damages, and that those damages would have

been collectible.

Id. (citations omitted).

At various points in their brief, defendants point to

plaintiffs’ inability to prove that defendants’ negligence caused

plaintiffs to suffer damages. See Ds. Br. 9 (no evidence that

plaintiffs could have collected more through trial or settlement

from solvent defendants, and, without such evidence, they cannot

show essential element of injury), 10 (no evidence that any solvent

defendant would have agreed to settle for more than it did and that

it had financial ability to fund greater settlement, or that

judgment could be collected from solvent defendant who would not

agree to greater settlement); 12 (no evidence of how much of

balances owed by Johns-Manville, Pittsburgh Corning, and Fibreboard

would not be collected from their bankruptcies); 14 (no evidence of

how much of Pittsburgh Corning settlement they will not receive).

In response, plaintiffs maintain that there are genuine issues of

material fact that preclude summary judgment, but they do not

 

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specifically address the issue of damages. Instead, they merely

list these three alleged acts or omissions that they contend are

breaches of duty: failing to settle with and to obtain a Tex. R.

Civ. P. 11 agreement from Pittsburgh Corning in June 1999; not

attempting to enforce Rule 11 agreements obtained from Rapid

American and Pittsburgh Corning; and releasing Pittsburgh Corning

without its first having paid the agreed consideration. See Ps.

Br. 22. As defendants point out in their reply brief, plaintiffs

have not responded to defendants’ argument that their negligence

claim fails as a matter of law absent evidence that they were

injured by defendants’ acts or omissions. See Ds. Reply Br. 13.

In fact, it appears from plaintiffs’ brief that to recover from

defendants in this suit, they rely primarily on allegations of

breach of fiduciary duty, a claim to which the court turns below.

Because plaintiffs have failed to adduce evidence that would permit

a reasonable trier of fact to find that defendants’ alleged

negligence damaged them, and because this failure renders all other

fact issues immaterial, the court grants summary judgment

dismissing plaintiffs’ negligence claim. 

IV

The court next considers plaintiffs’ misrepresentation claim.

Defendants move for summary judgment on several grounds, including

that plaintiffs cannot prove the essential element of injury.

Under Texas law, to prove fraud, plaintiffs must establish

 

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that defendants

(1) made a material representation, (2) that

was false when made, (3) [they] knew the

representation was false, or made it

recklessly without knowledge of its truth and

as a positive assertion, (4) [they] made the

representation with the intent that

[plaintiffs] should act upon it, and (5)

[plaintiffs] acted in reliance upon it and

suffered injury as a result. 

Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313

F.3d 305, 322 (5th Cir. 2002) (Fitzwater, J.) (citing Beijing

Metals & Minerals Imp./Exp. Corp. v. Am. Bus. Ctr. Inc., 993 F.2d

1178, 1185 (5th Cir. 1993) (applying Texas law)). Defendants have

pointed to the absence of evidence that plaintiffs suffered an

injury. See Ds. Br. 15. In response to defendants’ motion,

plaintiffs address one of defendants’ contentions, and they deny

that their misrepresentation claim is simply a fractured or split

negligence or legal malpractice claim. See Ps. Br. 11-12. They do

not, however, attempt to demonstrate that they were injured by an

alleged misrepresentation. Section VI of their brief mentions the

misrepresentation claim in its caption, but the body of the brief

does not discuss it, focusing instead on breach of fiduciary duty.

See id. at 14-21. Defendants note in reply that plaintiffs have

not responded to their arguments. See Ds. Reply Br. 4-5 (noting,

inter alia, that although misrepresentation claim is mentioned in

title, no argument is presented). Absent evidence that would

enable a reasonable trier of fact to find that defendants’ alleged

 

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3

Plaintiffs are limited to the grounds asserted in their

second amended complaint. They are not permitted to rely on a

ground of which defendants had no notice and thus could not have

fairly addressed in their motion. E.g., N. States Power Co. v.

Fed. Transit Admin., 358 F.3d 1050, 1057 (8th Cir. 2004) (stating

that “while we recognize that the pleading requirements under the

Federal Rules are relatively permissive, they do not entitle

parties to manufacture claims, which were not pled, late into the

litigation for the purpose of avoiding summary judgment.”).

- 9 -

misrepresentations injured plaintiffs, defendants are entitled to

summary judgment dismissing this claim. 

V

Defendants seek summary judgment dismissing plaintiffs’ breach

of contract claim on several grounds. The court need only address

their contention that the claim is impermissibly fractured, i.e.,

that it is essentially a claim for attorney negligence and legal

malpractice. Plaintiffs do not directly respond to this argument

except to posit the conclusory assertion that this and other claims

are not fractured. But the grounds on which they rely in their

second amended complaint to establish breach of contract belie this

assertion.3

 “[U]nder Texas law, a plaintiff cannot fracture a legal

malpractice claim into multiple causes of action.” Archer v. Med.

Protective Co., 197 S.W.3d 422, 427 (Tex. App. 2006, no writ h.)

(citing Aiken v. Hancock, 115 S.W.3d 26, 28 (Tex. App. 2003, pet.

denied)). Generally, Texas courts “frown on attempts to fracture

one cause of action into three or four.” Ross v. Arkwright Mut.

Ins. Co., 892 S.W.2d 119, 133-34 (Tex. App. 1994, no writ) (citing

 

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- 10 -

Sledge v. Alsup, 759 S.W.2d 1, 2 (Tex. App. 1988, no writ)). “If

a lawyer’s error or mistake is actionable, it should give rise to

a cause of action for legal malpractice with one set of issues

which inquire if the conduct or omission occurred, if that conduct

or omission was malpractice and if so, subsequent issues on

causation and damages.” Sledge, 759 S.W.2d at 2. “If the gist of

a client’s complaint is that the attorney did not exercise that

degree of care, skill, or diligence as attorneys of ordinary skill

and knowledge commonly possess, then that complaint should be

pursued as a negligence claim, rather than some other claim.”

Deutsch v. Hoover, Bax & Slovacek, 97 S.W.3d 179, 189 (Tex. App.

2002, no pet.) (citing Goffney v. Rabson, 56 S.W.3d 186, 190-94

(Tex. App. 2001, pet. denied)). “The rule against dividing or

fracturing a negligence claim prevents legal-malpractice plaintiffs

from opportunistically transforming a claim that sounds only in

negligence into other claims.” Id.

Plaintiffs’ breach of contract action is based on the

following alleged acts or omissions: defendants failed to inform or

to keep plaintiffs reasonably informed about the Jacobs Litigation,

and they made false and untrue statements concerning the settlement

to which they had agreed, thus preventing plaintiffs from making an

informed decision about whether to settle the case on the terms and

for the amounts negotiated, 2d Am. Compl. ¶ 85; defendants failed

to inform plaintiffs that, once they executed separate contingent

 

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fee agreements, defendants would not communicate with them about

settlements or settlement negotiations until after they legally

committed them to settle, despite plaintiffs’ written requests that

they be informed before executing any such documents on their

behalf, id.; defendants failed to evaluate the Jacobs Litigation

properly and intentionally undervalued it, id.; before settlement

negotiations were conducted and completed, defendants failed to

secure written confirmation from and executed by each plaintiff

clearly setting forth the amount of authority granted by each, id.;

defendants misrepresented or omitted material facts that prevented

plaintiffs from making an informed decision whether to settle on

the terms defendants negotiated, to go to trial, or to release nonsettling defendants, id. at ¶ 86; defendants failed to obtain a

writing that would legally bind each settling Asbestos Defendant in

the Jacobs Litigation and that could be judicially enforced against

any settling Asbestos Defendant who failed to settle, id. at ¶ 87;

and defendants failed to enforce written settlement agreements that

were not funded, id. An attorney’s alleged failure to keep his

client informed about the lawsuit in which he is representing the

client, false statements concerning settlement that prevent a

client from making an informed decision about settlement, failure

to inform a client that the attorney will not communicate about

settlement until after the client is legally committed to settle,

failure to properly evaluate a lawsuit, failure before settlement

 

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4The court does not suggest that plaintiffs’ assertions would

be deemed improperly fractured negligence claims if made, for

example, to support a fraud claim. But it is one thing to say that

a lawyer committed fraud rather than malpractice by making a false

statement to a client about a settlement; it is quite another to

say that the lawyer breached his contract, rather than committed

malpractice, by doing so.

- 12 -

negotiations are conducted and completed to secure written

confirmation from the client that clearly sets forth the amount of

authority granted the attorney, misrepresentation or omission of

material facts that prevent a client from making an informed

decision whether to settle, try the case, or release non-settling

defendants, failure to obtain a writing that would legally bind and

be enforceable against a settling defendant, and failure to enforce

an unfunded settlement agreement all relate to his failure to

exercise the degree of care, skill, or diligence that attorneys of

ordinary skill and knowledge commonly possess rather than to his

failure to perform his contract with the client.4

Accordingly, the court holds that defendants are entitled to

summary judgment dismissing plaintiffs’ breach of contract action

because it is a fractured claim.

VI

Defendants move for summary judgment dismissing plaintiffs’

breach of fiduciary duty claim, contending that it is fractured

because plaintiffs rely on the same acts and omissions to support

this cause of action as are alleged to establish negligence. In

reply to plaintiffs’ arguments——in which they maintain that their

 

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- 13 -

claim is not fractured and assert 13 grounds for proving breach of

fiduciary——defendants posit that plaintiffs are fracturing a legal

malpractice claim, that some of plaintiffs’ grounds are not pleaded

in their second amended complaint, and that plaintiffs cannot

recover on the remaining grounds as a matter of law.

A

The court has summarized above the Texas law of claim

fracturing as it applies to claims for negligence asserting legal

malpractice. See supra § V. A claim for negligence, instead of

some other claim, should be asserted if the gravamen of the

client’s complaint is that the attorney did not exercise the degree

of care, skill, or diligence that attorneys of ordinary skill and

knowledge commonly possess. See Deutsch, 97 S.W.3d at 189. “If,

however, the client’s complaint is more appropriately classified as

another claim, for example, . . . breach of fiduciary duty, . . .

then the client can assert a claim other than negligence.” Id. 

In response to defendants’ motion, plaintiffs identify 13

grounds for their breach of fiduciary duty claim: (1) improperly

using and exercising the powers of attorney in the employment

agreements with plaintiffs; (2) failing to recognize that a

conflict of interest existed or may have existed between JoeAnn, on

the one hand, and Karin and Patria on the other, continuing their

representation, and not recommending separate counsel; (3) not

confirming and making certain that all parties agreed to the amount

 

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- 14 -

of authority to settle; (4) failing to contact plaintiffs and

obtain their prior approval and consent to dismiss any parties in

the Jacobs Litigation; (5) submitting a claim on behalf of Karin

only with Johns-Manville, without informing plaintiffs and securing

Karin’s signature on the claim, resulting in a $20,000 payment to

Baron & Budd that was not disclosed to plaintiffs;(6) failing to

inform plaintiffs before settling with Johns-Manville that $180,000

of the $200,000 settlement was a worthless note that would never be

collected; (7) deliberately lying to plaintiffs and informing them

that the entire Jacobs Litigation had settled and failing to inform

them that Pittsburgh Corning had not settled; (8) failing to inform

plaintiffs that extended terms of payment had been granted to

Pittsburgh Corning; (9) failing to inform them that the Rapid

American settlement was contingent upon other events and

unilaterally negotiating a Rule 11 agreement; (10) failing to

inform them they had entered into a fee splitting agreement with

Bickford and Martzell & Bickford; (11) failing to prepare the case

for trial and having a trial lawyer present for the June 1, 1999

trial setting of the Jacobs Litigation; (12) not timely securing

Rule 11 agreement with Pittsburg Corning; and (13) entering into

aggregate settlements without informing or obtaining the informed

consent of plaintiffs.

The court concludes that grounds 2, 3, 4, 5, 6, 8, 9, 11, and

12 are claims for legal malpractice, not for breach of fiduciary

 

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5The court recognizes that a claim for breach of fiduciary can

be based on the attorney’s failure to disclose his own conflict of

interest without impermissibly fracturing a negligence claim. See

Deutsch, 97 S.W.3d at 190-91. Here, however, plaintiffs are

asserting a conflict among themselves, not with their lawyers.

- 15 -

duty. In ground 2, plaintiffs allege that defendants failed to

recognize a possible conflict of interest among the plaintiffs and

continued their representation without recommending separate

counsel. This is an assertion that defendants did not exercise the

degree of care, skill, or diligence that attorneys of ordinary

skill and knowledge commonly possess.5 The gist of grounds 3, 4,

5, 6, 8, and 9 is defendants’ purported failure to keep plaintiffs

adequately informed and to communicate with them regarding matters

relevant to the Jacobs Litigation and settlement, and thus they are

negligence claims. See Archer, 197 S.W.3d at 427 (holding claims

that attorney neglected matters, mis-evaluated case, and failed to

communicate with client “can be viewed as claims involving legal

malpractice”). Allegation 11 relates to defendants’ purported lack

of preparation for and attendance at trial. Ground 12 refers to

defendants’ purported failure to timely secure a Rule 11 agreement

with a settling defendant. Both are patently claims of attorney

conduct below the standard of care. 

 

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6Ground 5 is distinguishable from this allegation. Although

in ground 5 plaintiffs allege that defendants submitted a claim on

Karin’s behalf only with Johns-Manville, did not inform them or

obtain Karin’s signature, and received a $20,000 payment that they

did not disclose to plaintiffs, they do not aver that defendants

obtained the $20,000 payment in their self-interest as attorney’s

fees. In fact, plaintiffs otherwise complain that defendants

secured a settlement with Johns-Manville for $200,000, of which

$180,000 was a worthless note that would never be collected. In

other words, the $20,000 payment is allegedly the cash portion of

the Johns-Manville settlement, not an undisclosed payment of

attorney’s fees.

- 16 -

B

This leaves for consideration grounds 1, 7, 10, and 13.

Ground 1 refers to defendants’ purported improper use and exercise

of the powers of attorney contained in the employment agreements.

Plaintiffs contend that the powers of attorney did not grant

defendants the right to settle the Jacobs litigation without

consulting them. According to plaintiffs, by doing so, defendants

“gained the benefit of attorney’s fees improperly thereby and

avoided the necessity and expense of a jury trial.” Ps. Br. 17.

An attorney’s “pursuit of his own pecuniary interests over the

interests of his client . . . can be viewed as claims involving

breached fiduciary duties.” Archer, 197 S.W.3d at 427-28 (citing

Aiken, 115 S.W.3d at 28).6 Thus the claim is not improperly

fractured.

Ground 10——that defendants failed to inform plaintiffs that

they had entered into a fee splitting agreement with Bickford and

Martzell & Bickford——could arguably be deemed fractured because it

 

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- 17 -

allegedly involves a mere failure to communicate. Because the

claim alleges non-disclosure of an attorney’s fee arrangement, and

since the court is deciding below that the claim is barred for

other reasons, the court will assume arguendo that it is not a

fractured negligence claim. 

In ground 7, plaintiffs allege that defendants deliberately

lied to them and told them the entire Jacobs Litigation had

settled, without telling them that Pittsburgh Corning had not

settled. “The attorney-client relationship is highly fiduciary in

nature.” Judwin Props., Inc. v. Griggs & Harrison, 911 S.W.2d 498,

506 (Tex. App. 1995, no writ) (citing O’Dowd v. Johnson, 666 S.W.2d

619, 621 (Tex. App. 1984, writ ref’d n.r.e.)). “This relationship

carries the utmost good faith.” Id. (citing State v. Baker, 539

S.W.2d 367, 374 (Tex. Civ. App. 1976, writ ref’d n.r.e.)).

“Attorneys owe their clients a fiduciary duty of ‘most abundant

good faith,’ requiring absolute perfect candor, openness, and

honesty, and the absence of any concealment or deception.” Combs

v. Gent, 181 S.W.3d 378, 384 (Tex. App. 2005, no writ h.) (citing

Deutsch, 97 S.W.3d at 196). This predicate for breach of fiduciary

duty——an alleged deliberate lie rather than a mere failure to

communicate or inform——is not improperly fractured.

In ground 13, plaintiffs contend that defendants breached

their fiduciary duty by entering into aggregate settlements without

informing plaintiffs or obtaining their informed consent. This can

 

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be the basis of a claim for breach of fiduciary duty. See Arce v.

Burrow, 958 S.W.2d 239, 245 (Tex. App. 1997), aff’d as modified,

997 S.W.2d 229 (Tex. 1999). Consequently, it is not an improperly

fractured negligence action.

Accordingly, the court holds that all of plaintiffs’

predicates for breach of fiduciary duty are improperly fractured

from a negligence claim, except grounds 1, 7, 10, and 13.

C

In their reply brief, defendants challenge grounds 1, 7, 10,

and 13 on additional grounds.

1

As to ground 1, defendants reply that it is undisputed that

plaintiffs were satisfied with the total amount of the settlement

and were expecting to receive $1.5 million. They also assert that

plaintiffs have pointed to no evidence that they were injured by a

misuse of the powers because they have failed to identify evidence

that tends to prove that they could have collected more from

solvent defendants had they rejected the settlement. The court

disagrees. There is a genuine issue of material fact whether

plaintiffs were satisfied with the settlement. And “in the context

of the attorney-client relationship, proof of damages is not

required with a request for fee forfeiture in a breach of fiduciary

duty claim.” Spera v. Fleming, Hovencamp & Grayson, P.C., 25

S.W.3d 863, 873 (Tex. App. 2000, no pet.) (citing Arce, 958 S.W.2d

 

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7In their brief, defendants include in their concluding

statement the assertion that “Plaintiffs do not allege facts to

support a breach of fiduciary duty claim and are impermissibly

fracturing their negligence claims.” Ds. Br. 23. But in the next

sentence, they assert that “such claims should be dismissed as a

matter of law because they are subsumed in Plaintiffs’ negligence

claims.” Id. Accordingly, defendants’ single reference to

plaintiffs failure to “allege facts to support a breach of

fiduciary duty claim” did not place plaintiffs on notice that they

were required to do more than show that their claim was not

fractured.

- 19 -

at 251); Arce, 958 S.W.2d at 244-45 (“To be entitled to the remedy

of fee forfeiture, [plaintiffs] do not have to prove [defendants]

caused actual damage——proof of a breach is enough.”). 

2

As to ground 7, defendants maintain that Tapscott announced

the settlement based on advice from a person who was handling

settlements with Pittsburgh Corning and confirmed the settlement,

but Pittsburgh Corning’s counsel backed out of the settlement.

They also point to the absence of evidence that plaintiffs were

harmed, because Pittsburgh Corning again agreed to settle when the

case came up for trial in November 1999, an agreed judgment was

executed in January 2000, and plaintiffs cannot show that a

settlement reached in June 1999 would have been collected.

The court declines to consider these grounds for granting

summary judgment as to ground 7. When defendants moved for summary

judgment with respect to plaintiffs’ breach of fiduciary duty

claim, they did so only on the basis of claim fracturing.7

 It is

error to grant summary judgment on a ground not raised. E.g., John

 

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8Although the court could raise this ground sua sponte and

consider granting summary judgment after affording plaintiffs an

opportunity to respond, because ground 1 of this claim remains to

be tried, the court declines to do so.

- 20 -

Deere Co. v. Am. Nat’l Bank, Stafford, 809 F.2d 1190, 1192 (5th

Cir. 1987). And the court will not consider an argument raised for

the first time in a reply brief. E.g., Senior Unsecured Creditors’

Comm. of First RepublicBank Corp. v. FDIC, 749 F. Supp. 758, 772

(N.D. Tex. 1990) (Fitzwater, J.). Accordingly, the court declines

to grant summary judgment dismissing this component of plaintiffs’

breach of fiduciary duty claim.8

3

Defendants point out that grounds 10 and 13 are not alleged in

plaintiffs’ second amended complaint. This is not an argument that

defendants were obligated to raise in their motion, because

plaintiffs did not rely on these predicates as bases for relief

until they did so for the first time in opposing defendants’

summary judgment motion. Plaintiffs cannot avoid summary judgment,

however, based on unpleaded claims. See supra note 3. The court

therefore grants summary judgment dismissing grounds 10 and 13 of

plaintiffs’ breach of fiduciary duty claim.

Accordingly, the court grants in part and denies in part

defendants’ motion for summary judgment as to plaintiffs’ breach of

fiduciary duty claim.

 

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VII

Plaintiffs also assert a cause of action for gross negligence.

Defendants contend that plaintiffs cannot establish this claim.

See Ds. Br. 25. Under Texas law, gross negligence is defined as an

act or omission

(A) which when viewed objectively from the

standpoint of the actor at the time of its

occurrence involves an extreme degree of risk,

considering the probability and magnitude of

the potential harm to others; and (B) of which

the actor has actual, subjective awareness of

the risk involved, but nevertheless proceeds

with conscious indifference to the rights,

safety, or welfare of others.

Tex. Civ. Prac. & Rem. Code Ann. § 41.001(11) (Vernon Supp. 2006).

Plaintiffs have not responded to defendants’ argument.

Section VI of their brief mentions gross negligence in its caption,

but the body of the brief does not discuss it, focusing instead on

breach of fiduciary duty. See Ps. Br. 14-21. Defendants note in

reply that plaintiffs have not responded. See Ds. Reply Br. 4-5

(noting, inter alia, that although gross negligence is mentioned in

title, no argument is presented). Absent evidence that would

enable a reasonable trier of fact to find that defendants committed

acts or omissions that qualify as grossly negligent under

§ 41.001(11), defendants are entitled to summary judgment

dismissing this claim. 

 

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VIII

Plaintiffs also seek an accounting and allege a claim for fee

forfeiture. As with other claims addressed above, defendants have

pointed to the absence of evidence to support these actions, see

Ds. Br. 26-27, plaintiffs have mentioned them in the caption to

Section VI of their brief, see Ps. Br. 14, but the body of the

brief does not discuss accounting or fee forfeiture, focusing

instead on breach of fiduciary duty, see id. at 14-21. Defendants

note in reply that plaintiffs have not responded to their

arguments. See Ds. Reply Br. 4-5 (noting, inter alia, that

although accounting and fee forfeiture are mentioned in title, no

arguments are presented). The court concludes that they are

entitled to summary judgment as to plaintiffs’ request for an

accounting in the absence of evidence that would permit a

reasonable trier of fact to find in plaintiffs’ favor on these

claims.

Because the court has in part denied summary judgment as to

plaintiffs’ breach of fiduciary duty claim and has concluded that

the remedy of fee forfeiture is available even without a showing of

actual damages, the court denies the motion to that extent.

IX

Defendants move for summary judgment dismissing plaintiffs’

claim for attorney’s fees on the ground that fees are unavailable

other than for breach of contract, and that this basis should be

 

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9

Before § 41.003 was amended effective September 1, 2003,

Texas courts had held that, because breach of a fiduciary duty was

a tort, exemplary damages were recoverable for such a breach. See

Hawthorne v. Guenther, 917 S.W.2d 924, 936 (Tex. App. 1996, writ

denied) (citing Murphy v. Canion, 797 S.W.2d 944, 949 (Tex. App.

1990, no writ)). With exceptions not pertinent here, under the

version of Tex. Civ. Prac. & Rem. Code Ann. § 41.003 (Vernon Supp.

2006) that controls suits filed on or after its effective date,

exemplary damages can be awarded only if the claimant proves by

clear and convincing evidence that the harm for which the claimant

seeks exemplary damages resulted from fraud, malice, or gross

negligence. Even before 2003, however, Texas courts had held that

“participation in a breach of fiduciary duty can be the basis of an

award of exemplary damages where the jury finds the defendant acted

with fraud or malice.” Fid. Nat’l Title Ins. Co. v. Heart of Tex.

Title Co., 2000 WL 13037, at *8 (Tex. App. Jan. 6, 2000, pet.

denied). The court therefore assumes arguendo that proof of a

- 23 -

eliminated through summary judgment. Plaintiffs respond with the

conclusory assertion that they can recover attorney’s fees for

breach of contract or as an element of exemplary damages.

Defendants reply that the breach of contract claim should be

dismissed, that the only basis for punitive damages is plaintiffs’

claim for gross negligence, and that attorney’s fees cannot be

recovered as an element of punitive damages under Tex. Civ. Prac.

& Rem. Code Ann. § 41.001 et seq. 

Because the court has granted summary judgment dismissing

plaintiffs’ claim for breach of contract, that action cannot serve

as the basis to recover attorney’s fees. Moreover, under Texas

law, the factors to be considered in awarding exemplary damages are

prescribed by statute. See Tex. Civ. Prac. & Rem. Code Ann.

§ 41.011 (a) (Vernon 1997). Assuming arguendo that plaintiffs can

recover exemplary damages,9

 they have cited no authority that holds

 

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fraud-based breach of fiduciary claim would enable plaintiffs to

recover exemplary damages in this case.

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that the trier of fact can consider their attorney’s fees when

awarding exemplary damages, and the court has located a Texas case

that suggests that they cannot be considered under facts like those

here. See Hawkins v. Owens, 2000 WL 1199254, at *10 (Tex. App.

Aug. 24, 2000, pet. denied) (not designated for publication)

(holding that consideration of attorney’s fees as factor in fixing

exemplary damages was improper based on facts of case because they

could not be considered as factor in breach of contract case, and

that joining claims in tort with contract claims did not alter

fundamental rule that breach of contract could not support recovery

of exemplary damages on contract claim) (citing Grace Petroleum

Corp. v. Williamson, 906 S.W.2d 66, 69 (Tex. App. 1995, no writ)).

Accordingly, the court grants summary judgment dismissing

plaintiffs’ claim for attorney’s fees.

X

The court now considers defendants’ motion to strike expert

supplemental opinions.

A

After the court-ordered deadline for providing expert reports

and on the eve of the June 2, 2006 discovery deadline, plaintiffs

served a May 31, 2006 letter of Mark A. Hendrix, Esquire

(“Hendrix”) and a June 2, 2006 letter of Peter E. Ferraro, Esquire

 

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(“Ferraro”), experts whom plaintiffs had designated, that contained

supplemental opinions. Defendants contend these opinions address

matters not contained in the original reports of the witnesses and

are additional opinions rendered after Hendrix and Ferraro were

deposed on April 19, 2006. They also assert that Ferraro’s

supplement addresses matters that, in view of his deposition

testimony, are totally irrelevant. In particular, defendants posit

that, despite Hendrix’s deposition testimony that he was not

expressing an opinion on the general value of mesothelioma cases or

on the Jacobs Litigation, in his supplemental letter he opines that

no one at Baron & Budd evaluated the case as low as $1 million, if

such a valuation was made it was not reasonable, and a more

reasonable valuation of the case would be between $2.5 and $3

million. They cite Ferraro’s deposition testimony that, although

he valued the case at the low end of $3 million, there was no

negligence involved in settling the case or telling plaintiffs that

they had settled the case for $2.5 or $2.6 million. And they

complain that he now opines that a $1 million valuation was not

reasonable and a settlement in the range of approximately $3

million was reasonable. Defendants argue that the experts’

supplemental disclosures violate Fed. R. Civ. P. 26(a)(2)(B) and

(C) because they were not contained in the witnesses’ expert

reports, were made after the witnesses were deposed, and were not

disclosed until defendants were out of time to re-depose them.

 

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They move to strike the new opinions contained in the supplemental

letters.

Plaintiffs respond that the experts made minor additions and

supplements to their opinions, the supplementation was limited

solely to the valuation of the settlement as it applied to the

Jacobs Litigation, in the depositions of Hendrix and Ferraro the

subject of valuation was discussed and testimony was offered during

examination by defendants’ counsel, and Ferraro’s expert report

contains his opinion that the settlement value had a low-end range

of $3 million. They also argue that they moved to compel

defendants to produce the documents that relate to the verdicts and

settlements in mesothelioma cases that are referenced on the Baron

& Budd website. And they maintain that defendants are not

prejudiced by the supplementation because the attorneys have

discussed re-deposing the experts if changes or additions are made

to their opinions, they made allowance in their June 2, 2006 status

report for conducting supplemental depositions of experts,

plaintiffs do not oppose re-deposing the experts, other remaining

witnesses will opine concerning the value of the Jacobs Litigation,

and the supplemental depositions are neither irrelevant nor a

surprise.

 

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10The court has cited this exhibit rather than an appendix page

because plaintiffs did not submit the required evidence appendix in

briefing this motion. See N.D. Tex. Civ. R. 7.1(i)(1) (“A party

who relies on documentary (including an affidavit, declaration,

deposition, answer to interrogatory, or admission) or nondocumentary evidence to support or oppose a motion must include

such evidence in an appendix.”).

- 27 -

B

Although as the court explains below its assesses under the

same four factors whether to strike the supplemental opinions of

Ferraro and Hendrix, the reasons for applying these factors differ

as to each witness. This is because Ferraro included in his expert

report an opinion regarding the settlement value of the claims in

the Jacobs Litigation, but there is no indication in the record of,

and plaintiffs do not identify, the opinion that Hendrix expressed

in his original report that he purports to supplement in his

letter. The court therefore analyzes Ferraro’s supplemental

opinions under the supplementation standard and assesses Hendrix’s

opinions under the standard for undesignated experts.

1

In Ferraro’s original expert report, he stated that “[i]n my

opinion, the settlement value of the claims had a low end range

value of $3,000,000.00.” Ps. Resp. Ex. 4 at 10, ¶ 45.10 His June

2, 2006 letter supplements his opinion, stating that “[a] one

million dollar valuation . . . was not reasonable considering the

facts of the case” and the quality, caliber, and record of success

of Baron & Budd; “[t]he actual total settlement amount of the case

 

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11Defendants also failed to include their evidence in an

appendix. See supra note 10.

- 28 -

had it been recovered was more realistic”; and “the total

settlement in the range of three million dollars plus or minus was

reasonable.” Ds. Mot. Strike Ex. D.11 

Rule 26(a)(2)(B) provides that the disclosure of certain

expert witnesses must be accompanied by a written report that

contains, inter alia, “a complete statement of all opinions to be

expressed.” Rule 26(a)(2)(C) establishes the default deadlines and

sequence for making such disclosures when the court has not

otherwise directed or the parties have not otherwise stipulated.

Rule 26(e) addresses the duty to supplement or correct Rule 26(a)

disclosures and discovery responses. 

Rule 26(e)(1) requires that, with respect to

the retained expert, there is a duty to

supplement the expert’s opinion if there is a

material change in the opinion. This

obligation extends to both the report required

by Rule 26(a)(2)(B), as well as the expert’s

deposition testimony. 

Sullivan v. Glock, Inc., 175 F.R.D. 497, 502 (D. Md. 1997).

Ferraro’s June 2, 2006 letter qualifies as a supplementation of the

opinion disclosed in his initial report because supplementation

includes material changes to an expert’s opinion. 

“This supplementation must occur not later than the date of

the pretrial disclosures required by Rule 26(a)(3).” Id.; see

Sierra Club, Lone Star Chapter v. Cedar Point Oil Co., 73 F.3d 546,

 

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570 n.43 (5th Cir. 1996) (“Rule 26(e)(1) requires that

supplementation of expert disclosures be made by the time the

supplementing party’s ‘Pretrial Disclosures’ are due.” (citing

Rule 26(e)(1))). The court can by order impose an earlier

supplementation deadline. See, e.g., Sullivan, 175 F.R.D. at 506

(holding in context of retained expert witnesses that “[c]ounsel

must be prepared to provide full and meaningful disclosure and

discovery at the times required by the . . . pretrial scheduling

order.”). In this case the court imposed deadlines for designating

expert witnesses and a discovery deadline that it periodically

modified at the parties’ request. It intended that expert

disclosures and supplementations be made sufficiently in advance of

the court-imposed discovery deadline so that the parties could by

that deadline depose opposing experts on all opinions to be

expressed at trial. This intent is usually clear to parties

litigating in this court and is typically followed in practice.

But absent an explicit directive that required a party to

supplement expert opinions before the discovery cut-off, a party

could have concluded that the obligation to do so was controlled by

the deadline specified by Rule 26(e)(1): i.e., the deadline for

Rule 26(a)(3) pretrial disclosures. In an April 12, 2006 order,

which the court entered in response to the parties’ joint motion,

it set July 28, 2006 as the deadline for Rule 26(a)(3) disclosures.

Accordingly, under Rule 26(e)(1), the supplementation of Ferraro’s

 

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12In effect, the parties by agreement applied the 30-day

default disclosure proviso of Rule 26(a)(3). 

- 30 -

original expert report was not due until July 28, 2006. 

At the time the court filed the order, July 28 was 30 days in

advance of the then-existing trial setting.12 Courts have noted

that problems can arise from application of a rule that allows

supplementation of expert opinions so close to trial. For example,

in Tucker v. OHTSU Tire & Rubber Co., 49 F.Supp.2d 456 (D. Md.

1999), the court observed that

in light of the large window of time allowed

by [Rule 26(a)(2)(B), Rule 26(e)(1), and a

local rule] to supplement expert disclosures,

the Court should not automatically permit

testimony at trial as to the newly discovered

information if, considering the facts of the

case, it is convinced that doing so would be

unfair or cause undue delay or expense. 

Id. at 461. The court reasoned that 

[i]n making such a determination, the Court

should consider the following factors: (1) the

explanation for making the supplemental

disclosure at the time it is made; (2) the

importance of the supplemental information to

the proposed testimony of the expert, and the

expert’s importance to the litigation; (3)

potential prejudice to an opposing party; and

(4) the availability of a continuance to

mitigate any prejudice.

Id. As is clear from the discussion below concerning Hendrix,

these four factors are identical in concept, if not in language, to

the ones this court uses when it decides whether to exclude an

expert who was not properly designated. See Cont’l Cas. Co. v. St.

 

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13It can be inferred from plaintiffs’ response that Hendrix

offered some opinions, because they maintain that each expert

witness “made minor additions and supplements by way of a letter

supplementing their initial expert disclosures,” and they assert

that “the supplemental reports . . . is not the first time the

topic has been raised or covered.” Ps. Resp. 1. They do not,

however, specify what his initial opinion was, and, unlike

concerning Ferraro, they have not included a copy of Hendrix’s

initial expert witness report in response to defendants’ motion.

- 31 -

Paul Fire & Marine Ins. Co., 2006 WL 2506957, at *3 (N.D. Tex. Aug.

15, 2006) (Fitzwater, J.) (quoting Wright v. Blythe-Nelson, 2001 WL

804529, at *2 (N.D. Tex. July 10, 2001) (Fitzwater, J.)). The

Fifth Circuit applies similar factors when it performs a Rule

37(c)(1) harmless error analysis to determine whether the district

court has properly exercised its discretion in allowing expert

testimony when Rule 26(a) has been violated. See, e.g., Primrose

Operating Co. v. Nat’l Am. Ins. Co., 382 F.3d 546, 563-64 (5th Cir.

2004) (quoting Tex. A & M Research Found. v. Magna Transp., Inc.,

338 F.3d 394, 402 (5th Cir. 2003)). The court concludes that it

should use them to decide whether to strike plaintiffs’

supplementation of Ferraro’s opinion.

2

The record related to defendant’s motion to strike does not

disclose, and plaintiffs do not specify in their response, the

opinion in Hendrix’s initial report that he purported to supplement

through his May 31, 2006 letter.13 Accordingly, his so-called

supplemental opinion should be treated as an undisclosed opinion

and analyzed under the factors that the court would apply in

 

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deciding whether to permit the testimony of an expert who was not

properly designated. “The purpose of supplementary disclosures is

just that——to supplement. Such disclosures are not intended to

provide an extension of the expert designation and report

production deadline.” Metro Ford Truck Sales, Inc. v. Ford Motor

Co., 145 F.3d 320, 324 (5th Cir. 1998).

In deciding whether to exclude the testimony

of an expert witness whom a party did not

properly designate, the court’s discretion is

guided by considering the following factors:

“(1) the explanation for the failure to

identify the witness, (2) the importance of

the testimony, (3) the potential prejudice in

allowing the testimony, and (4) the

availability of a continuance to cure such

prejudice.”

Cont’l Cas., 2006 WL 2506957, at *3 (quoting Wright, 2001 WL

804529, at *2).

C

Because the court essentially evaluates under the same four

factors whether to allow the supplemental opinions of Ferraro and

Hendrix, it will address both witnesses together.

1

The court first considers plaintiffs’ explanation for their

failure. They do not offer an explicit explanation. Implicitly,

they maintain that the supplemental letters make minor additions

and changes to the witnesses’ opinions.

The only minor change, however, is Ferraro’s change of opinion

from his original report——that the settlement value of the claims

 

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had a low-end range value of $3 million——to the one in his

supplemental letter——that a settlement in the range of

approximately $3 million was reasonable. Otherwise, he is offering

new opinions. And as already noted, Hendrix is not shown to have

provided a specific relevant opinion in his original report.

2 

The court next addresses the importance of the testimony.

Although the opinions of Hendrix and Ferraro may have somewhat

diminished importance in view of the court’s summary judgment

ruling, the evidence appears to be important. For example, their

opinions could have probative value in establishing the validity of

plaintiffs’ breach of fiduciary duty claim based on the assertion

that defendants’ used the powers of attorney to gain the benefit of

attorney’s fees and to avoid the necessity and expense of a jury

trial. The value of the Jacobs Litigation in relation to the

amount of the settlement might reveal a motive to settle for less

than the worth of the case, in order to enhance the certainty of

obtaining attorney’s fees or to eliminate the expenses of a jury

trial.

3

The remaining two factors focus on prejudice: the prejudice to

defendants of allowing the evidence, and the possibility of curing

the prejudice through a continuance. See MGE UPS Sys., Inc. v.

Fakouri Elec. Eng’g, Inc., 2006 WL 680513, at *5 (N.D. Tex. Mar.

 

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- 34 -

14, 2006) (Means, J.) (“However, the issue is whether the failure

of the Fakouri defendants to properly designate the subject matter

of Rustrum’s testimony is harmful to MGE.”). The burden is on

plaintiffs to show that defendants will not be unduly prejudiced.

Cont’l Cas., 2006 WL 2506957, at *3 (citing Wright, 2001 WL 804529,

at *5). 

The court recognizes that a party can be unduly prejudiced by

the timing of expert opinion disclosures, whether through

supplementation or by designation of a previously undisclosed

expert. See, e.g., Sharpe v. United States, 230 F.R.D. 452, 462

(E.D. Va. 2005) (“To permit the plaintiff additional time to amend

her expert disclosures would work unjustifiable hardship upon the

defendant in attempting to complete discovery and prepare for trial

within the confines of the court’s scheduling order.” (citing

Tucker, 49 F.Supp.2d at 460)). Granting a continuance can also

cause undue prejudice to the opposing party, who itself may have

fully complied with the rules and is ready for its day in court.

Plaintiffs argue for five reasons that defendants will not suffer

undue prejudice. In their reply, defendants do not seriously

complain that they would incur undue prejudice if the court allows

the supplemental opinions but also permits defendants to re-depose

the witnesses. They seem to focus more on plaintiffs’ failure to

follow the rules, specific deficiencies in plaintiffs’ reasoning,

the prejudice that would be visited on them if they are not able to

 

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re-depose the witnesses, and prejudice to their pending summary

judgment motion. 

 As is apparent from the court’s decision today, the testimony

of these witnesses has not precluded defendants from obtaining

summary judgment on a basis on which they would have otherwise

prevailed. The supplemental opinions of these experts have not at

all impacted the court’s summary judgment ruling. Plaintiffs have

offered to allow defendants to re-depose the witnesses. And

although it does not appear that a continuance is ineluctable, one

would be available if needed to address any prejudice to defendants

from the timing of the depositions. The court assumes that if

defendants believe they need to re-depose Hendrix and Ferraro to

ameliorate prejudice, the depositions can be taken promptly by

agreement. Consequently, there is no showing that a continuance

would unduly prejudice defendants, other than as a function of

allowing the expert opinions at all. But this fact cannot be

sufficient to exclude their testimony, or courts would never allow

a party to cure a failure to disclose or supplement.

Considering the four factors, the court holds that the

opinions in the supplemental letters should not be stricken.

D

A primary premise of defendants’ motion is that these

witnesses have expressed opinions that are contrary to, or

inconsistent with, those given in their depositions. Under Rule

 

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26(e)(1), a Rule 26(a)(2)(B)-type expert must supplement his

deposition testimony if there is a material change in his opinion.

Sullivan, 175 F.R.D. at 502. Therefore, the court’s analysis of

the four factors largely applies to Ferraro’s supplemental opinions

given after his deposition. It also pertains to Hendrix’s opinions

that were not disclosed in his deposition or in a report.

Accordingly, the court’s decision does not change when the opinions

in the supplemental reports are compared to the witnesses’

deposition testimony. Of course, given the deposition testimony,

these two witnesses are virtually certain to face trenchant crossexamination that subjects them to impeachment at trial. 

* * *

Defendants’ July 11, 2006 motion for summary judgment is

granted in part and denied in part. Their June 16, 2006 motion to

strike expert supplemental opinions is denied. Defendants’ August

16, 2006 motion for leave to file supplemental appendix in support

of their reply brief is denied as moot.

SO ORDERED.

September 25, 2006.

_________________________________

SIDNEY A. FITZWATER

UNITED STATES DISTRICT JUDGE

 

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