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 

The question presented by defendants’ renewed motion for

judgment as a matter of law is whether the jury could reasonably

have found that defendants——an attorney and his law firm——breached

their fiduciary duties to plaintiffs by deliberately lying to them

and telling them that their entire asbestos lawsuit had settled,

without telling them that one defendant had not settled.

Concluding that it could not, the court grants the motion and

dismisses this case with prejudice.

I

The court assumes the parties’ familiarity with the

background facts and procedural history of this case set out in the

court’s prior opinion granting in part and denying in part

defendants’ motion for summary judgment. Jacobs v. Tapscott, 2006

WL 2728827, at *1-*2 (N.D. Tex. Sept. 25, 2006) (Fitzwater, J.).

It will therefore summarize the background facts and procedural

history as necessary to understand today’s decision. The court

 

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will also discuss the pertinent evidence adduced at trial, applying

the standard that governs the court’s review and assessment of the

trial evidence when deciding a renewed motion for judgment as a

matter of law.

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

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

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

Budd”), the law firm who employed him, based on their

representation of plaintiffs in asbestos-related litigation arising

from the death of Carl Bernard Jacobs (“Carl”) from mesothelioma.

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

Baron & Budd, a firm with a national reputation for handling

asbestos litigation, accepted plaintiffs’ case under a contingent

fee arrangement. Each plaintiff signed an employment agreement and

a power of attorney. Id. at *1. Baron & Budd filed suit on behalf

of plaintiffs and Carl’s estate in state court in Galveston, Texas

(the “Jacobs Litigation”) against numerous defendants (“Asbestos

Defendants”). Before the June 1, 1999 trial setting of the Jacobs

Litigation, Baron & Budd attorneys negotiated settlements with

several Asbestos Defendants. Tapscott, the Case Manager for the

Galveston docket, advised Karin and Patria that settlements had

been reached with all the Asbestos Defendants for $2.5 million, and

perhaps more.

Plaintiffs became dissatisfied with Baron & Budd’s

 

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representation. Id. They alleged that the settlement was not for

an amount they had agreed to accept when they retained the firm,

and that 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, a settlement had not been reached with Pittsburgh Corning

Corporation (“Pittsburgh Corning”), certain defendants were in poor

financial condition or bankrupt, and only a fraction of the sum

that one defendant had agreed to pay was payable immediately in

cash, with virtually no possibility of recovering the 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 bankruptcies;

and that defendants had renegotiated the settlement with one

defendant, substantially reducing the payment. Id. Plaintiffs

sued Tapscott and Baron & Budd on theories of negligence,

misrepresentation, breach of fiduciary duty, breach of contract,

fee forfeiture, and gross negligence. Id. at *2. 

Tapscott and Baron & Budd moved for summary judgment. The

court granted the motion in large part, but it denied it as to two

components of plaintiffs’ breach of fiduciary duty claim. It

concluded that defendants were not entitled to summary judgment

dismissing the claim that defendants had improperly used and

exercised the powers of attorney in the employment agreements with

 

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plaintiffs so as to improperly gain the benefit of attorney’s fees

and avoid the necessity and expense of a jury trial. Id. at *7.

And, as pertinent here, the court held that defendants were not

entitled to summary judgment dismissing the claim that they had

breached their fiduciary duties by deliberately lying to plaintiffs

and telling them that the entire Jacobs Litigation had settled,

without telling them that Pittsburgh Corning had not settled. Id.

Defendants moved for summary judgment dismissing plaintiffs’

breach of fiduciary duty claim on the ground that it was improperly

fractured. Id. at *5. In response to defendants’ motion,

plaintiffs identified 13 grounds for their breach of fiduciary duty

claim, one of which——ground 7——was that defendants breached their

fiduciary duty by “deliberately lying to plaintiffs and informing

them that the entire Jacobs Litigation had settled, without telling

them that Pittsburgh Corning had not settled.” Id. The court

denied defendants’ motion, concluding that this ground was not

fractured.

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.

This relationship carries the utmost good

faith. 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. This predicate for

breach of fiduciary duty——an alleged

deliberate lie rather than a mere failure to

 

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communicate or inform——is not improperly

fractured. 

Id. at *6 (citations and quotation marks omitted). 

The court also noted that, in their reply brief, defendants

challenged this claim on additional grounds. Id. at *7. They

argued, inter alia, that Tapscott announced the settlement based on

advice from a person who handled settlements with Pittsburgh

Corning and confirmed the settlement, but Pittsburgh Corning’s

counsel backed out of the settlement. Id. The court declined to

consider this or defendants’ other grounds for granting summary

judgment because when they “moved for summary judgment with respect

to plaintiffs’ breach of fiduciary duty claim, they did so only on

the basis of claim fracturing,” “[i]t is error to grant summary

judgment on a ground not raised,” “[a]nd the court will not

consider an argument raised for the first time in a reply brief.”

Id. In other words, the court did not reach the merits of

defendants’ contention that Tapscott could not have deliberately

lied when he informed plaintiffs that the case had settled because,

when he announced the settlement, he was doing so based on advice

that Pittsburgh Corning had settled, but Pittsburgh Corning’s

counsel later backed out.

The parties tried these two remaining breach of fiduciary duty

claims to a jury. The jury found in favor of defendants on the

claim that they had breached their fiduciary duties by improperly

using the powers of attorney. It found in plaintiffs’ favor on the

 

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1In their briefing and at the oral argument of this motion,

defendants have treated this claim as if asserted against Tapscott

alone. The court disagrees. Although the question the court asked

of the jury in its charge was framed specifically in terms of

whether Tapscott deliberately lied, this was because it was his

conduct that was at issue. The claim, however, was asserted

against both defendants. As the court notes above, “[i]n ground 7

[of their summary judgment response], plaintiffs allege[d] that

defendants deliberately lied to them and told them the entire

Jacobs Litigation had settled, without telling them that Pittsburgh

Corning had not settled.” Jacobs, 2006 WL 2728827, at *6 (emphasis

added).

2

Cf., e.g., Flowers v. S. Reg’l Physician Servs. Inc., 247

F.3d 229, 238 (5th Cir. 2001) (holding that if party fails to move

for judgment as a matter of law under Fed. R. Civ. P. 50(a) on an

issue at the conclusion of all the evidence, it waives both right

to file renewed post-verdict Rule 50(b) motion and also right to

challenge sufficiency of evidence on that issue on appeal).

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claim that Tapscott deliberately lied by telling plaintiffs the

entire Jacobs Litigation had settled, without telling them that

Pittsburgh Corning had not settled.1 

At each appropriate procedural stage during the trial,

defendants moved for judgment as a matter of law.2 They

maintained, in pertinent part, that apart from plaintiffs’

conclusory statements, which were not evidence, there was no

competent evidence that Tapscott deliberately lied. Ds. Mot. J.

Matter of Law 2. Defendants asserted: 

There is not a scintilla of evidence that when

Tapscott announced the settlement to

Plaintiffs[,] Pittsburgh Corning had not

agreed to settle or, more importantly, that

Tapscott actually knew a settlement had not

occurred. The undisputed evidence is that

Tapscott learned after he announced the

settlement to Plaintiffs that Pittsburgh

Corning “pulled” its offer, or reneged on the

 

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3During the oral argument of this motion, defendants asserted

that this case should never have gone to the jury. Although the

court’s decision today confirms that this contention is correct as

it relates to the claim at issue, it should be noted that the court

conformed to the preferred approach in this circuit when it

submitted the claim to the jury and effectively reserved its

ruling.

We remind the district court that the better

practice would have been to reserve ruling on

the motion for a directed verdict and let the

case go to the jury. “The primary reason we

encourage district courts to reserve judgment

on motions for directed verdict is that if the

court grants a judgment n.o.v., a retrial is

avoided if we reverse the j.n.o.v. because

there is a jury verdict that can be

reinstated.” McPhillamy v. Brown & Root,

Inc., 810 F.2d 529, 533 (5th Cir. 1987). “At

least nine other Circuits have endorsed this

practice.” Id. See, e.g., Holmgren v.

Massey-Ferguson, Inc., 516 F.2d 856, 859 n.2

(8th Cir. 1975) (“Once again we emphasize the

wisdom and expediency of reserving a ruling on

such motions [for directed verdicts] until the

jury has had the opportunity to weigh the

evidence.”).

Wiltz v. Mobil Oil Exploration & Producing N. Am., Inc., 938 F.2d

47, 50 (5th Cir. 1991) (brackets in original) (addressing motion

for directed verdict, now referred to as motion for judgment as a

matter of law).

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settlement.

Id. (emphasis in original). Defendants also argued that “there

must be some evidence that Tapscott had actual knowledge that

Pittsburgh Corning had not settled when he told Plaintiffs the

entire case was settled.” Id. The court denied the motions

without prejudice.3 

After the jury returned a verdict, the court advised counsel

 

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that it would consider the motion on post-trial briefing and defer

entry of judgment. See Fed. R. Civ. P. 50(b) (“If the court does

not grant a motion for judgment as a matter of law made under

subdivision (a), the court is considered to have submitted the

action to the jury subject to the court’s later deciding the legal

questions raised by the motion.”). The parties have submitted

additional briefing, and the court has heard oral argument.

II

A motion for judgment as a matter of law “challenges the legal

sufficiency of the evidence to support the verdict.” Hodges v.

Mack Trucks, Inc., 474 F.3d 188, 195 (5th Cir. 2006) (citing Ford

v. Cimarron Ins. Co., 230 F.3d 828, 830 (5th Cir. 2000)). 

Judgment as a matter of law is appropriate

with respect to an issue if there is no

legally sufficient evidentiary basis for a

reasonable jury to find for a party on that

issue. This occurs when the facts and

inferences point so strongly and

overwhelmingly in the movant’s favor that

reasonable jurors could not reach a contrary

verdict. In considering a Rule 50 motion, the

court must review all of the evidence in the

record, drawing all reasonable inferences in

favor of the nonmoving party; the court may

not make credibility determinations or weigh

the evidence, as those are jury functions. In

reviewing the record as a whole, the court

must disregard all evidence favorable to the

moving party that the jury is not required to

believe. That is, the court should give

credence to the evidence favoring the

nonmovant as well as that evidence supporting

the moving party that is uncontradicted and

unimpeached, at least to the extent that that

evidence comes from disinterested witnesses.

 

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Brennan’s Inc. v. Dickie Brennan & Co., 376 F.3d 356, 362 (5th Cir.

2004) (citations, brackets, and quotation marks omitted). The

“standard of review with respect to a jury verdict is especially

deferential.” Lubke v. City of Arlington, 455 F.3d 489, 494 (5th

Cir. 2006) (quoting Brown v. Bryan County, Okla., 219 F.3d 450, 456

(5th Cir. 2000)). “A jury verdict must stand unless there is a

lack of substantial evidence, in the light most favorable to the

successful party, to support the verdict.” Am. Home Assurance Co.

v. United Space Alliance, LLC, 378 F.3d 482, 487 (5th Cir. 2004)

(citing Liberty Mut. Ins. Co. v. Falgoust, 386 F.2d 248, 253 (5th

Cir. 1967)).

III

At the post-verdict stage, plaintiffs’ remaining claim is

based on the following two premises: First, Tapscott deliberately

lied to them and told them the entire Jacobs Litigation had

settled, without telling them that Pittsburgh Corning had not

settled. Second, Tapscott deliberately lied to plaintiffs by

telling them the entire case had settled and then concealing from

them the fact that the Pittsburgh Corning settlement had been

pulled, or failing to correct what he may have believed to be a

truthful statement when he told plaintiffs that the entire case had

settled. For reasons the court will explain, the evidence is

legally insufficient to support the first ground, and the second

exceeds the scope of the claim that survived summary judgment.

 

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4

For example, during closing argument, plaintiffs’ counsel

repeatedly acknowledged the credibility and reliability of the

testimony of Christina Mancuso (“Mancuso”), a Baron & Budd

attorney. See, e.g., Tr. 4:66 (applauding Mancuso for testifying

that she told Tapscott the case had not settled); 4:68 (asserting

that Mancuso had no reason to lie during her testimony); 4:71

(relying on Mancuso’s testimony regarding what everyone who should

have known about the Pittsburgh Corning settlement did know); 4:75

(asserting that Mancuso was credible and believable when she

testified that she told Tapscott on June 2, 1999 that the case had

not settled) & 4:76 (relying on the direct evidence of what Mancuso

said). Except as noted, see infra at note 6, the court has

generally treated her testimony that supports defendants as

uncontradicted and unimpeached.

5

Citations to “Tr.” are to the volume and page of the trial

transcript.

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A

The following recitation of the evidence is based on the

court’s review of all of the evidence in the record. The court has

drawn all reasonable inferences in plaintiffs’ favor, has not made

credibility determinations, and has not weighed the evidence. In

reviewing the record as a whole, the court has disregarded all

evidence favorable to defendants that the jury was not required to

believe. It has given credence to the evidence that favors

plaintiffs and that supports defendants and is uncontradicted and

unimpeached.4

Baron & Budd is a law firm that, at the time of the Jacobs

Litigation, had developed a reputation for competence in

representing individuals who had been exposed to and injured by

asbestos products and had developed diseases like mesothelioma.

Tr. 4:5-6.5 It allocated responsibilities for litigating asbestos

 

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cases among several lawyers with varying duties. Id. at 3:192-93

& 4:8-10. Tapscott was the Case Manager for suits pending in

Galveston County, Texas, and therefore was the Case Manager for the

Jacobs Litigation. Id. at 2:129. As Case Manager, Tapscott was

responsible for the case and for communicating with the clients.

Id. at 2:139 & 2:146. Another attorney, Rick Nemeroff

(“Nemeroff”), was the lawyer who would have represented plaintiffs

had the case been tried. Id. at 2:138. Baron & Budd sued numerous

Asbestos Defendants on plaintiffs’ behalf, including Pittsburgh

Corning. Id. at 2:170 & 2:171. Christina Mancuso (“Mancuso”) was

the Baron & Budd attorney who had responsibility for negotiating

settlements with Pittsburgh Corning. Id. at 2:76.

Baron & Budd settled asbestos cases like the Jacobs Litigation

using the following procedure. A lawyer such as Mancuso was

assigned to one or more defendants and negotiated a settlement with

a specific defendant based on authority that the client had given

Baron & Budd beforehand. Id. at 2:86-87. The firm attorney who

negotiated the settlement did not contact the client in advance for

specific approval of the settlement amount being negotiated. Id.

After a settlement was reached between the Baron & Budd attorney

and the defendant’s counsel, the Baron & Budd negotiating attorney

relayed the information to the Case Manager, who was responsible

for communicating with the client. Id. at 2:91. Baron & Budd then

sent the client a release and a cover letter advising her that the

 

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defendant had made a settlement offer. Id. at 2:95. The letter

did not state that a settlement had already been reached. Id. at

2:97. The correspondence informed the client that she could accept

or reject the settlement and could call the firm with any

questions. Id. at 2:90. Baron & Budd did not provide clients with

copies of letters it sent to defendants confirming the settlement

amounts. E.g., id. at 2:93. If the client did not want to accept

the settlement, she would inform Baron & Budd. Id. at 2:94. Baron

& Budd would then notify the defendant and go from there. Id. 

Baron & Budd had several clients with suits pending against

Pittsburgh Corning that were set for trial in various venues on

June 1, 1999. See Ps. Ex. (“PX”) 44. The Jacobs Litigation was

scheduled for trial on that date in Galveston. E.g., id. Baron &

Budd classified defendants according to settlement type.

Pittsburgh Corning was considered to be in the “trial” class,

meaning it was a large company that fought everything and would not

settle unless the case was set for trial and the parties were at

the courthouse door. Tr. 2:78.

Mancuso negotiated settlements of Pittsburgh Corning cases

with Cathy Mohan (“Mohan”), an attorney who represented Pittsburgh

Corning. See PX 44. Mancuso knew that the Jacobs Litigation was

set for trial on June 1 in Galveston. Tr. 2:83 & 2:107. On June

1 Mancuso and Mohan spoke by telephone and settled plaintiffs’ case

for $225,000. See id. at 2:82-83. She or a paralegal inserted

 

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6

Mancuso testified that she did not believe that Tapscott

lied when he told plaintiffs that the entire case had settled. Tr.

2:112. Although, as the court notes supra at note 4, plaintiffs

generally acknowledged the credibility and reliability of Mancuso’s

testimony, they impeached this testimony on the basis that she did

not have personal knowledge of what Tapscott said to plaintiffs.

Id. Accordingly, the court has not accepted this evidence as

uncontradicted and unimpeached and has not considered it in

deciding defendants’ motion.

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this amount into the Baron & Budd computer. Id. at 2:101. Based

on the Pittsburgh Corning settlement and all the other offers that

had been made in the case, Mancuso believed the entire case had

been settled. Id. at 2:107. When Tapscott was notified that

Pittsburgh Corning had offered $225,000, he believed the lawsuit

was completely settled. Id. at 2:170. 

Under Baron & Budd policy, Mancuso was to reach a settlement

and relay the information to the Case Manager, who in turn was to

inform the client. Id. at 2:93, 2:98 & 2:100. She reached a

settlement and relayed the information to Tapscott. Id. at 2:119

& 2:121. Based on her understanding at the time, she told Tapscott

that Pittsburgh Corning had agreed to pay $225,000. Id. at 2:107.

No one knew on June 1 that Pittsburgh Corning was going to pull the

offer on June 2, 1999. Id. at 2:112.6

Tapscott does not know whether he was in Galveston for the

June 1, 1999 trial setting and does not have a specific memory of

being there. Id. at 2:135 & 2:139. He has no specific

recollection because he traveled to Galveston more than 150 times

during the last ten years at Baron & Budd. Id. at 2:135. Tapscott

 

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7

The evidence is undisputed that the state court in Galveston

denied a motion for continuance in the Jacobs Litigation and that

the docket sheet does not reflect that the case was announced

settled. Tr. 2:84-85 & 113-15; DX20. The court has assumed in

deciding this motion that the jury could reasonably have found that

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has not reviewed PX 85, the Baron & Budd expense records for the

Jacobs Litigation, to determine whether there were expenses that

indicate he had gone to Galveston for trial on June 1 or sometime

immediately thereafter. Id. at 2:136-37. He has not looked at any

records to allow him to better determine whether he was there for

the trial setting. Id. at 2:137. Tapscott does not remember

specifically whether Nemeroff went to Galveston for the trial

setting. Id. at 2:139. He has no expense statement that shows he

went to Galveston. Id. at 2:140.

On June 2, 1999 Mancuso wrote Mohan a letter confirming the

settlements that had been reached in several cases. The letter

included a reference to the settlement for $225,000 of the Jacobs

Litigation. Id. at 2:77 & 85; PX 44. Mancuso thought the case had

settled, because she sent Mohan a letter attempting to confirm the

offer. Id. at 2:100. On that same day, however, probably during

the morning, Mohan called Mancuso and told her she was pulling the

settlement offer because the case had not been resolved as to all

defendants. Id. at 2:84-86 & 2:101. Pittsburgh Corning only

settled cases that were called to trial and that were resolved as

to all defendants, and plaintiffs’ case had been continued. Id. at

2:84-86 & 2:108.7

 

 

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a motion to continue the case was denied and that no announcement

was made to the state court that the case had settled. Even so,

this does not alter the court’s decision.

8Patria testified at one point that Tapscott spoke to her on

June 1, 1999. Tr. 3:10. Although if true this evidence would

defeat plaintiffs’ claim that Tapscott deliberately lied——because

Pittsburgh Corning did not pull the settlement until the following

day——the court must draw all reasonable inferences in plaintiffs’

favor and give credence to the evidence that favors plaintiffs.

There is other evidence that Tapscott spoke to Karin and Patria on

June 2, and Patria also testified that she did not know if Tapscott

called Karin on June 1. Id. Accordingly, for purposes of this

decision, the court assumes that June 2, 1999 is the date on which

Tapscott spoke to Karin and Patria. 

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As soon as she found this out from Mohan, Mancuso relayed to

Tapscott by telephone the fact that the offer had been pulled

because the case had not been resolved as to all defendants. Id.

at 2:101-02, 2:103 & 2:119. Tapscott does not remember receiving

a call from Mancuso on June 2 or obtaining that information on that

date, although he does not dispute Mancuso’s testimony. Id. at

2:140-41 & 2:143. 

On June 2 Tapscott called Karin and told her that Baron & Budd

had won her lawsuit for $2.5 million, even more. Id. at 1:134.8

He said the entire case had settled. Id. at 1:219 & 2:146.

Tapscott did not mention Pittsburgh Corning when he spoke to her

and did not tell her how much it had agreed to pay. Id. at 1:140-

41, 1:147 & 2:147. He did not specifically say anything about

Pittsburgh Corning’s not agreeing to settle the case. Id. at

1:147. Karin was never told that the settlement was for anything

other than cash. Id. at 1:144-45 & 1:191. After the call from

 

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9Patria did not suggest that she questioned Karin’s

credibility. She indicated that she wanted to get the information

about the settlement “straight from the horse’s mouth.” Tr. 2:225.

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Tapscott, she did not hear from him again. Id. at 1:135 & 1:160.

No one at Baron & Budd, including Tapscott, ever told Karin that

the sum of $225,000 was not agreed to and would not be paid before

the end of 1999. Id. at 1:189.

Karin immediately called Patria to tell her she had just heard

from Tapscott, that the amount of the settlement was $2.5 million,

and that she thought it was great to find out that the case had

settled. Id. at 1:134 & 2:225. Patria testified that she did not

know the exact date when Tapscott called Karin, id. at 3:10-11, but

the call came sometime in early June, right around Memorial Day

weekend, on the same date that Patria called Tapscott back, id. at

2:225 & 3:10-11. Because Patria did not believe Karin,9 she asked

for Tapscott’s cell phone number and spoke to him directly. Id. at

2:225. Tapscott told Patria the same thing he had relayed to

Karin: it was great news, the case had settled for $2.5 million,

but they would probably get more, and plaintiffs did not have to

come to Galveston for trial because all the companies had settled.

Id. at 2:225-26. Tapscott did not discuss individual defendants

with her or tell her what Pittsburgh Corning had agreed to pay.

Id. at 2:226. 

The Baron & Budd expense records for the Jacobs Litigation

show that Scott Morrison (“Morrison”) flew to and from Houston on

 

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June 7, 1999. PX 85. Morrison is a Case Manager who takes

depositions. Tr. 2:117. The travel expense form reflects travel

dates of June 6 and 7. Id. at 2:118; PX 85. 

JoeAnn wrote a letter to Tapscott dated June 14, 1999 that

referred to the entire case’s being settled. Tr. 2:164; PX 47. By

that date it was clear to the clients that the case had been fully

settled. Tr. 2:164. None of Tapscott’s handwritten notes on the

letter indicates that he had notified her that Pittsburgh Corning

had not settled. Id. at 2:165.

On August 2, 1999 the Jacobs Litigation was reset for trial in

November 1999. Id. at 2:123-24; DX20. In connection with that

setting, Mancuso and Mohan negotiated a settlement for $215,000.

Id. at 2:109 & 2:120. The agreed judgment filed in January 2000

required that Pittsburgh Corning make the payment by August 2000.

Id. at 2:120. Pittsburgh Corning filed for bankruptcy in April

2000, however, so plaintiffs did not recover the entire negotiated

amount. Id. at 1:180 & 2:109.

B

The court concludes that the evidence is legally insufficient

for a reasonable jury to have found that Tapscott deliberately lied

to plaintiffs and told them the entire Jacobs Litigation had

settled, without telling them that Pittsburgh Corning had not

settled. The jury could reasonably have found that Mancuso and

Mohan reached a settlement of plaintiffs’ claims against Pittsburgh

 

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10Karin testified that Tapscott called her from the steps of

the Galveston courthouse. Tr. 1:134. She did not state that

Tapscott told her he was on the courthouse steps at the time of the

call, or how she knew where he was. Even if the evidence is

sufficient for the jury to have reasonably found that Tapscott

misrepresented to Karin that he was on the courthouse steps at the

time of the call, this is not the basis for plaintiffs’ breach of

fiduciary duty claim, and it does not make legally sufficient the

evidence that the court holds is legally insufficient to support

the verdict.

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Corning on June 1, 1999 for the sum of $225,000; that Tapscott did

not announce the settlement to the state court in Galveston; that

on June 1 the state court denied a motion to continue the trial of

the Jacobs Litigation; and that the entire case did not go to trial

at that time, causing Pittsburgh Corning to pull its settlement.

It could also have reasonably found that, without disclosing that

Pittsburgh Corning had not settled, Tapscott told Karin and Patria

on June 2, 1999 that plaintiffs had won their lawsuit for $2.5

million, even more, that the entire case had settled, and that they

did not need to come to Galveston, and that Tapscott was not in

Galveston when he communicated with Karin10 and Patria. The jury

could likewise have reasonably found that, probably during the

morning of June 2, 1999, and as soon as Mancuso learned from Mohan

that Pittsburgh Corning had pulled the settlement, Mancuso notified

Tapscott. And it could reasonably have found that on June 6 and 7,

Baron & Budd attorney Morrison was working on the Jacobs

Litigation, and that in response to a June 14, 1999 letter from

JoeAnn, Tapscott failed to tell her that Pittsburgh Corning had not

 

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settled. But the evidence is legally insufficient for a reasonable

jury to have found that when Tapscott spoke to Karin and Patria, he

already knew that Pittsburgh Corning had pulled the settlement and

therefore deliberately lied by telling them the entire case had

settled, without disclosing that Pittsburgh Corning had not

settled. 

As noted supra at § I, defendants moved for judgment as a

matter of law on the ground that the record lacked a scintilla of

evidence that when Tapscott announced the settlement to plaintiffs,

he actually knew that the settlement with Pittsburgh Corning had

not occurred. They maintained that the evidence was undisputed

that Tapscott learned after he announced the settlement to

plaintiffs that Pittsburgh Corning had pulled its offer or reneged

on the settlement. And they challenged whether the record

contained some evidence that Tapscott had actual knowledge that

Pittsburgh Corning had not settled when he told plaintiffs the

entire case was settled. In order for the jury to have reasonably

found that when Tapscott spoke to Karin and Patria, he already knew

that Pittsburgh Corning had pulled the settlement, there must have

been sufficient evidence for the jury to have found that Tapscott

told Karin and Patria of the settlement after the point in time on

June 2, 1999 when Mancuso informed him that the settlement had been

pulled. But the trial record is devoid of substantial evidence

that this occurred. 

 

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11Although the following observation has not affected the

court’s reasoning——i.e., the court has not weighed the evidence——it

is possible that Mancuso prepared the letter herself. There are no

initials that indicate the letter was dictated to, or typed by, a

secretary, and Mancuso’s surname is misspelled in the signature

block. 

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Mancuso and Tapscott both believed on June 1 that the entire

case had settled. Mohan pulled the Pittsburgh Corning settlement

on June 2. Mancuso thought it probable that she spoke to Mohan the

morning of June 2 and that she called Tapscott as soon as she found

out. Mancuso also testified that she prepared PX 44——the letter to

Mohan that confirmed several Pittsburgh Corning settlements,

including the $225,000 settlement in the Jacobs Litigation——on June

2. She had to have had time to arrive at her office and prepare

and sign the letter before Mohan called her, because the letter

assumed that the Jacobs Litigation had been settled.11 Neither

Karin nor Patria testified regarding when on June 2 Tapscott spoke

to them, except to say that Karin’s call to Patria came immediately

after Karin spoke to Tapscott, and that Patria called Tapscott the

same day. See Tr. 1:134 (Karin testified that she “immediately”

called Patria after she spoke with Tapscott); id. at 2:225 (Patria

testified that when Karin called her, she said she had “just heard”

from Tapscott); and id. at 3:11 (Patria testified that the call

from Karin came on the same day Patria called Tapscott). Patria

did not specifically testify, however, to facts that would support

the reasonable inference that there was any significant time lapse

 

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12As reflected in one of the questions that plaintiffs’ counsel

asked defendants’ expert witness, plaintiffs recognized that the

sequence of when Tapscott learned that the settlement had failed

and of when he spoke to Karin and Patria was “very important.” Tr.

3:236. Yet as revealed in another question that plaintiffs’

counsel posed to the expert, the proof was insufficient to permit

a reasonable jury to find that Tapscott spoke to Karin and Patria

after he learned that the settlement had been pulled.

All right. Now, we also don’t know, apart

from what my clients said they thought the

date was, we don’t actually know the date that

Mr. Tapscott placed that call from a place he

couldn’t recall where he was situated.

Id. at 3:224 (emphasis added). 

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between her conversation with Karin and her call to Tapscott. See

id. at 2:225 & 3:11. And there is no other evidence in the record

that would have allowed the jury to find circumstantially that

Tapscott already knew about the failed settlement when he talked to

Karin and Patria. The jury was left to speculate or engage in

conjecture concerning when Tapscott spoke to Karin and Patria.

This is insufficient as a matter of law to support the verdict.

Because of the requirement that the verdict be

supported by substantial evidence, a verdict

may not rest on speculation and conjecture.

Similarly, the jury’s freedom to draw

inferences from the evidence does not extend

so far as to allow a wholly unreasonable

inference or one which amounts to mere

speculation and conjecture.

Nichols Constr. Corp. v. Cessna Aircraft Co., 808 F.2d 340, 346-47

(5th Cir. 1985) (emphasis in original) (footnotes, citations, and

quotation marks omitted).12

Plaintiffs argue in their brief that Tapscott did not review

 

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the Baron & Budd case file and therefore could not identify any

expense item that established “when he communicated with the

Plaintiffs about the case.” Ps. Br. 4. They assert that Tapscott

was unable to testify about “the specific date(s) that he spoke

with the Plaintiffs and informed them that their entire case had

settled.” Id. And they maintain that Tapscott and the Baron &

Budd witnesses “had no specific recollection of or documents

reflecting when the Plaintiffs[ ] were telephoned about the

settlement of the entire case.” Id. In closing argument, their

counsel urged that defendants’ witnesses had failed to use

available opportunities to review the relevant documents to see

whether they could “better clarify” when Tapscott “actually made

the phone call, when he actually contacted Karin Jacobs or when he

got the call from Patria Jacobs.” Tr. 4:92. But this was not

defendants’ obligation. It was plaintiffs’ burden to prove, at

least by circumstantial evidence, that Tapscott spoke to them after

Mancuso had already informed him that Pittsburgh Corning’s attorney

had pulled the settlement.

Plaintiffs also maintain that it is evidence of a deliberate

lie that, on being informed by Mancuso that Pittsburgh Corning had

not settled, Tapscott did not immediately correct what he may have

believed to be a truthful statement when he told plaintiffs that

the entire case had settled. First, this argument undercuts

plaintiffs’ theory that Tapscott already knew about the aborted

 

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13Patria and JoeAnn also offered subjective testimony that they

believed Baron & Budd and Tapscott had lied. See, e.g., Tr. 3:5 &

3:39-40. This evidence is legally insufficient for the same

reasons.

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settlement when he spoke to Karin and Patria. Second, this is a

concealment claim, which the court rejects for reasons explained

below. The argument rests on the premise that, although Tapscott

may not have deliberately lied at the time he spoke to Karin and

Patria, he did so by concealing the fact that the settlement with

Pittsburgh Corning had fallen through.

Nor is Karin’s testimony that Tapscott lied to her adequate to

provide legally sufficient evidence (although plaintiffs do not

rely on it in their brief). Karin testified that when Tapscott

talked to her and told her the entire case had settled, he was not

truthful, she was deliberately lied to, and he (and her lawyers)

had lied. Tr. 1:190, 1:214 & 1:219. This evidence is legally

insufficient to support the verdict because Karin was not

testifying based on personal knowledge of what Tapscott knew at the

time he was speaking with her. Her testimony that he lied was

based on information she said she learned after the fact, such as

in documents obtained later. Id. at 1:190. Her testimony that

Tapscott lied is insufficient of itself to support the verdict,

because it is not based on her personal knowledge of what Tapscott

knew when he spoke to her on June 2, 1999.13

The evidence that Baron & Budd attorney Morrison was in

 

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Houston on June 6 and 7, 1999, and that his expenses were charged

to the Jacobs Litigation, would permit the jury to find that the

entire case was not settled as of June 2 and that Morrison was

working on the case after Tapscott informed plaintiffs that the

entire case had settled. But it would not permit the jury to have

reasonably found that Tapscott knew when he spoke to Karin and

Patria that the entire case had not settled. Morrison’s work on

these dates is fully consistent with the premise that Tapscott

informed Karin and Patria of the settlement sometime on June 2——but

before Mancuso called him——and that work began anew on the case

once it was learned that the Pittsburgh Corning settlement had been

pulled.

Nor is Tapscott’s handwritten note on PX 47 sufficient

evidence of a deliberate lie. It is undisputed that JoeAnn wrote

a letter dated June 14, 1999 to Tapscott that referred in the

second paragraph to the entire case’s being settled, and that

Tapscott handwrote a response that addressed the time-frame when

plaintiffs could anticipate receipt of payments. Tr. 2:164; PX 47.

Plaintiffs contend in their brief that Tapscott informed JoeAnn

that the case had settled, without mentioning that Pittsburgh

Corning had not settled. During closing argument, plaintiffs’

counsel asserted that, in Tapscott’s handwritten response, he

“affirmatively represent[ed] that the case was settled.” Tr. 4:93.

But Tapscott did not affirmatively represent in his handwritten

 

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14For the same reason, plaintiffs’ similar assertion in their

brief is misplaced. See Ps. Br. 10 (asserting that “[Tapscott]

wrote to Plaintiff JoeAnn on June 14, 1999 informing in his own

handwriting that the case had settled without mention that

[Pittsburgh Corning] had not settled . . . .” (footnote omitted)).

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response that the entire case had settled. He responded

specifically to the fifth paragraph of JoeAnn’s letter (concerning

her stated understanding that the remaining settlement funds

typically took 30-60 days to disburse), not to the second (in which

JoeAnn thanked him for calling and telling her that all defendants

had settled).14 And while Tapscott did not disclose that the entire

case had not settled, or that the Pittsburgh Corning settlement had

fallen through, as the court explains below at § IV, plaintiffs did

not preserve a concealment claim for trial. 

In their brief, plaintiffs also contend that a February 7,

2000 letter from Tapscott to Patria, DX 140, in which he enclosed

Baron & Budd computer records that continued to show the case had

settled on June 1, 1999, establish that Tapscott and Baron & Budd

perpetrated a deliberate lie and/or omission. The court holds that

this evidence is insufficient, alone or in combination with other

proof, to support the verdict. First, this document was sent to

Patria and the other plaintiffs well after the events of June 2,

1999. Second, the fact that Baron & Budd’s internal computer

records continued to reflect a June 1, 1999 settlement date would

merely tend to corroborate defendants’ position that, on that date,

Mancuso and Tapscott thought the entire case had settled, not that

 

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Tapscott deliberately lied to plaintiffs. Third, as plaintiffs

recognize, the computer records also reflected that the settlement

was for $215,000. Tr. 3:176; DX 140. Other trial evidence

established that Mancuso and Mohan negotiated a settlement for

$215,000 in advance of the November 1999 trial setting. Tr. at

2:108-09 & 3:176. Therefore, the June 1, 1999 settlement date had

no direct relationship to the amount of the settlement shown. The

jury could not have reasonably found that internal computer

records, disclosed to plaintiffs eight months after Tapscott made

the representations in question, that contained multiple errors,

corroborated an intent by Tapscott to lie about the settlement

reached on June 1, 1999 and abrogated the next day. Nor can

plaintiffs rely on these records as proof of an omission——i.e., a

failure to correct a misrepresentation——because this is not a

concealment case.

Accordingly, the court holds that the evidence adduced at

trial, viewed under the controlling Rule 50(b) standard, is legally

insufficient to support the verdict.

IV

Plaintiffs’ second basis for establishing breach of fiduciary

duty is that Tapscott deliberately lied to plaintiffs by telling

them the entire case had settled and then concealing from them the

fact that the Pittsburgh Corning settlement had been pulled, or

failing to correct what he may have believed to be a truthful

 

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statement when he told plaintiffs that the entire case had settled.

A

At trial, plaintiffs’ counsel asserted during closing argument

that Tapscott deliberately lied by not correcting something he had

already told plaintiffs, Tr. 4:72; concealing the fact that the

case had been reset to November, id. at 4:75-76; deliberately

withholding information either by saying a deliberate lie or

deliberately concealing the information, id. at 4:93; and

deliberately leaving out the information Mancuso gave him when he

communicated in writing with JoeAnn in response to her June 14,

1999 letter, id. at 4:93-94. In their brief, plaintiffs argue that

once the information that Tapscott conveyed to plaintiffs was

determined to be wrong, he had a duty to correct it immediately.

And during oral argument of defendants’ motion, plaintiffs’ counsel

maintained that this is a concealment case. 

B

The court holds that plaintiffs’ second ground exceeds the

scope of the claim that survived summary judgment. Although

plaintiffs’ claim has a concealment component——that Tapscott did

not tell plaintiffs that Pittsburgh Corning had not settled——it

functioned as the predicate for the assertion that he had

deliberately lied by telling them the entire Jacobs Litigation had

settled. In other words, the reason the statement that the entire

Jacobs Litigation had settled was a deliberate lie was because

 

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Pittsburgh Corning had not settled. This is distinct, however,

from a claim that Tapscott breached his fiduciary duty by

concealing the truth from plaintiffs once he learned from Mancuso

that Pittsburgh Corning had pulled the settlement. And plaintiffs

did not preserve a concealment claim for trial.

Defendants moved for summary judgment as to all of plaintiffs’

claims. The two breach of fiduciary duty claims that were tried to

the jury were the ones that survived summary judgment. In response

to defendants’ summary judgment motion, plaintiffs made the

following pertinent assertion that the court in its opinion

categorized as ground 7:

The Defendants breached their fiduciary duty

to the Plaintiffs by deliberately lying to

them and informing them that the entire case

had settled in Galveston County, Texas when in

fact it had not entirely settled and failed to

inform the Plaintiffs that Pittsburg[h]

Corning Corporation had not settled.

Ps. July 31, 2006 Br. 20 (footnote omitted). In support of this

contention, plaintiffs cited three passages from Tapscott’s

deposition. Id. at 20 n.38 (citing Ps. App. 57). This testimony

all pertained to Tapscott’s recollection that he had told the state

court that the entire case had settled, his belief at the time that

the entire case had settled (and that he would not have made the

report had it not), and that if he called plaintiffs to tell them

the case had settled, he obtained his information from other Baron

& Budd attorneys who had responsibility for settling with those

 

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defendants. Ps. App. 57.

Earlier in plaintiffs’ brief, in the “Factual Background”

portion, they made the following assertion that is related to this

claim:

Tapscott informed the Plaintiffs that their

case had been settled as a result of the June

1, 1999 trial setting for $2,400,000.00 to

$2,500,000.00 and perhaps more. How much

more, if any was not communicated to the

Plaintiffs by the Defendants[.] At the time

settlement was announced to the Plaintiffs

nothing was done by the Defendants to

determine the financial condition of

Pittsburgh Corning Corporation in June or

November 1999 or whether any of the settling

defendants needed a pay out arrangement or to

obtain proof of funds.

Ps. July 31, 2006 Br. 10 (footnotes omitted). In support of this

assertion, plaintiffs cited three passages from Tapscott’s

deposition. Id. at 10 nn. 21 & 22 (citing Ps. App. 56, 63 & 76).

According to this testimony, Tapscott recalled telling Karin that

the case was settled, that he could not specifically recall calling

JoeAnn before June 14, 1999 to tell her the case had settled, or

having a specific conversation with JoeAnn, and that he did not

know Pittsburgh Corning’s financial condition in June or November

1999.

It is therefore clear that plaintiffs’ breach of fiduciary

claim based on Tapscott’s allegedly deliberate lie did not

encompass the concealment claim on which they now rely to uphold

the verdict.

 

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15Plaintiffs’ pertinent contested issues of fact state:

2. Did the Defendants misrepresent in June

1999 to Plaintiffs the extent of and

amount of the settlement with each of the

parties including Pittsburgh Corning

Corporation?

3. Did the Defendants deliberately lie in

June 1999 to Plaintiffs the extent of and

amount of the settlement with each of the

parties including Pittsburgh Corning

Corporation?

Jan. 31, 2007 Jt. Final Pre-Trial Order ¶ C(2)-(3).

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C

Defendants preserved in the Joint Pretrial Order the

contention that only two assertions for plaintiffs’ breach of

fiduciary duty claim survived summary judgment. See Jan. 31, 2007

Jt. Final Pre-Trial Order ¶ A(2). They contended, inter alia, that

the claim at issue here was limited in scope as follows: “Tapscott

deliberately lied to Plaintiffs in June 1999 about the entire

Jacobs case settling and a settlement being reached with Pittsburgh

Corning.” Id. And they objected to any claims based on failure to

communicate or inform, as opposed to deliberate lying. Id.

Moreover, the claims that plaintiffs listed in the Joint Pretrial

Order do not support the concealment claim that plaintiffs now

assert. See id. at ¶ A(1)(j)-(s). And their statement of

contested issues of fact plainly eliminates any concealment claim.

See id. at ¶ C(2)-(3).15

“‘Once the [pretrial] order is entered, it controls the scope

 

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and course of the trial.’” Valley Ranch Dev. Co. v. Fed. Deposit

Ins. Corp., 960 F.2d 550, 554 (5th Cir. 1992) (brackets in

original) (citing Rule 16). “If a claim or issue is omitted from

the order, it is waived.” Id. (quoting (quoting Flannery v.

Carroll, 676 F.2d 126, 129 (5th Cir. 1982)). Under the Joint

Pretrial Order, any concealment-based claim that plaintiffs seek to

litigate is precluded.

D

Finally, the court at the pretrial conference and during the

charge conference rejected plaintiffs’ attempts to broaden the

scope of this claim to include concealment. Tr. 4:54-55.

Plaintiffs objected during the pretrial conference and at the

charge conference to the court’s submitting to the jury only the

question whether Tapscott deliberately lied. Id. at 4:48. They

maintained that while Tapscott did deliberately lie, he also

engaged in acts of concealment that constituted a breach of

fiduciary duty. Id. at 4:48-49. The court held that its summary

judgment ruling limited plaintiffs’ claims to the ones they had

raised in opposition to defendants’ motion that presented genuine

issues of material fact. Id. at 4:54. It reasoned that “of the

two issues that were preserved that were successful in opposing

summary judgment, one ground was the ground that Mr. Tapscott had

deliberately lied to the plaintiffs, and it is in that sense that

the case is limited to that particular inquiry.” Id. at 4:54-55.

 

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The court concluded, as it does today, that the summary judgment

“motion and the response ha[d] the legal effect of narrowing the

allegations of the complaint.” Id. at 4:55.

Accordingly, the court holds that plaintiffs are precluded

from seeking to uphold the verdict based on a concealment claim

that exceeds the scope of the one that survived summary judgment.

* * *

For the reasons stated, defendants’ renewed motion for

judgment as a matter of law is granted, and the court enters

judgment dismissing plaintiffs’ claim that defendants breached

their fiduciary duty by deliberately lying to plaintiffs and

informing them that the entire Jacobs Litigation had settled,

without telling them that Pittsburgh Corning had not settled.

Plaintiffs’ March 20, 2007 motions for fee forfeiture and for

judgment on the verdict are denied. This case is dismissed with

prejudice by judgment filed today.

SO ORDERED.

April 12, 2007.

_________________________________

SIDNEY A. FITZWATER

UNITED STATES DISTRICT JUDGE

 

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