Appeals court wipes $2.6M judgment in case stemming from contamination litigation

Justices seated on Texas’ 14^th Court of Appeals recently wiped a $2.6 million award in favor of Southeast Texas Environmental.

In 2007, STE filed suit against two business associates, Ken Bigham and Tracy Hollister, in Harris County District Court, alleging Bigham was sabotaging contamination litigation brought by the company.

Court records show that in 1999 STE purchased a chemical waste facility in Galveston Bay (known as the Malone site) to convert hazardous waste into various products. However, the Environmental Protection Agency unexpectedly declared the site a Superfund site, removing STE’s authority and forcing the company to clean the area up at great expense.

According to the EPA, a Superfund site is an uncontrolled or abandoned place where hazardous waste is located, possibly affecting local ecosystems or people.

Deemed an “innocent landowner,” STE was permitted to sue companies that had previously dumped waste at the site, prompting the company, through Hollister’s recommendation, to execute a power of attorney agreement with Bigham to manage environmental litigation on its behalf, court records show.

STE’s primary owner, Jeff Pitsenbarger, believed Bigham was placing his own interests above the litigation and alleged Bigham made verbal threats to destroy STE’s status as an “innocent landowner” to force Pitsenbarger to settle one of the suits because he needed money, according to the lawsuit.

Following a jury trial, on Oct. 27, 2011, the trial court presiding over STE’s suit against Bigham and Hollister entered a modified judgment awarding STE $2.5 million in actual damages and $100,000 in exemplary damages.

Bigham and Hollister appealed, arguing the evidence did not support the jury’s findings, court records show.

On Feb. 5 the Fourteenth Court of Appeals issued a take-nothing judgment against STE, wiping the $2.6 million award.

Although justices found a jury could reasonably conclude Bigham violated his fiduciary duties to STE by threatening to undermine its position in the Malone litigation so Bigham could obtain a quick payment, they concluded “the evidence is legally insufficient to support the jury’s finding that STE sustained $2.5 million in damage as a result of appellants’ breach of fiduciary duties,” the opinion states.

Justices further found that because the evidence was insufficient to award actual damages, the court erred by awarding exemplary damages.

Justice John Donovan authored the opinion.

Judge Larry Weiman, 80^th District Court, presided over the trial.

The defendants are represented in part by Houston attorney James Martin Juranek Jr.

Houston attorney Gene Creely II represents STE.

Appeals case No. 14-12-00084-CV

Trial case No. 2007-55020