Opinion ID: 895280
Heading Depth: 1
Heading Rank: 2

Heading: Under Central Texas' bankruptcy reorganization, claimants had two choices: guaranteed payment under the Apportionment Plan or contingent recovery under the Litigation Plan.

Text: The Apportionment and Litigation Plans do, in some ways, bear the marks of a settlement. Central Texas tendered money to the bankruptcy court to satisfy claims against it, and it was released from liability. At the time of submission, however, money had not been paid or promised to a claimant, as required under the statute, TEX. CIV. PRAC. & REM CODE § 33.011, but rather deposited into a court registrythe ultimate distribution of which remained uncertain. Central Texas' insurers deposited the $5 million policy limits into the bankruptcy court's registry to set aside costs for the multiple bus crash claimants. Central Texas pledged to pay an additional $7,000 per year for five years, making the total amount available to such claimants around $5,035,000. Claimants were given two options regarding disbursement: (1) they could join the Apportionment Plan, in which a mediator would delegate a percentage of liability to each defendant, after which participating claimants could either immediately collect funds, or receive an apportionment in future litigation; or (2) claimants could join the Litigation Plan, in which participants chose a special judge, decided on the form of a proceeding, and ultimately reasserted their claims. As the bankruptcy judge noted, recovery under the Litigation Plan was contingent on proof that the defendants' negligence was a proximate cause of [the claimants'] injuries and/or damages. And then they had to prove, if they met that burden, the extent of the damages. Based on the evidence presented, the special judge would make new liability determinations, assign amounts owed, and, if enough funds remained, allot those funds accordingly. Hinton chose the Litigation Plan. The bankruptcy judge summarized the plans as follows: One, it allowed the people that wanted their money now to take it. Those people who disagreed with their claim agreed that other people could take money, which diminished the pool. That's a huge agreement. And number two, it provided that, among themselves, they could re-challenge their numbers, and when it was all done, re-look at their percentage, and they'd only get a percentage of what was left.... They did agree among themselves that, no matterthat they would start with the number they originally had been given in the apportionment plan.... And they agreed that, no matter what the new evidence showed, they wouldn't increase their claim by more than ten percent.... ... So, among themselves, they could go up or down some, but it wouldn't be more than ten percent up; there was no limit on down. (Emphasis added.) To further complicate matters, the bankruptcy judge recognized that other potential parties later appeared to be entitled to recover some of the [remaining] two and half million, and that it may turn[] out, for a number of reasons, that the litigation plan claimants are not entitled to it. As to this potential outcome, the judge noted that Litigation Plan claimants could be left in the cold: [T]he initial apportionment agreement, and the information available to whoever would look at that, has grown greatly. And, so, it's certainly possible that the information provided to the special judge could result in one or more or all of the parties here, the litigation fund claimants, having their claims adjusted. It's possible some could be adjusted to zero, just factually, just based on that information. Consequently, Hinton, as a litigation fund claimant, could not count on recovering any of the money set aside by Central Texas. The Court's observation that Plaintiffs had the option of requesting disbursement of their proportionate shares of the Fund, 329 S.W.3d at 503, mistakenly lumps members of the Apportionment Plan with members of the Litigation Plan. Hinton, a member of the latter group, elected to try his claims in lieu of immediate receipt of his share of the insurance funds. It is true that the order approving the Apportionment Plan stipulated that [t]he parties may agree at any time to approve full or partial distribution of the Litigation Funds to any or all participants. Any agreement to distribute funds, however, must be agreed to in writing by all participants remaining in the Litigation Plan at the time the agreement is entered. At the time the jury question was submitted, however, no party had attempted to enter into any such agreement, and even if any of them had, there was no guarantee that every other participant in the Litigation Plan would have agreed to such a distribution in writing. The parties rejected this option by refusing to enter into the Apportionment Plan in the first instance. In fact, the above provision more likely referred to those parties who had not yet decided whether to join the Litigation Plan, and therefore had an option to join the Apportionment Plan before re-litigating their claims under the Litigation Plan. The preceding provision in the order approving the Apportionment Plan supports this interpretation, since it mandates that [e]ach participant in the Litigation Plan agrees that any recovery from the Litigation Fund will necessitate that the claimant prove by a preponderance of the evidence ... that the negligence of [the defendants] was a proximate cause of the participant's injuries and/or damages; and ... the amount of damages suffered by the claimant as a result of that negligence. (Emphasis added.) The Apportionment Plan gave parties an opportunity to collect full or partial distribution of the funds. By rejecting this option, Hinton and others explicitly chose to re-litigate their claims. As the Court concedes, the Litigation Plan did not set a floor on each claimant's possible individual recovery. 329 S.W.3d at 505.