Appeals court upholds 40 percent legal fees in rollover settlement

By Steve Korris | Sep 12, 2011

Montgomery County District Judge Michael Mayes improperly slashed $277,403 from legal fees that Orange County District Judge Patrick Clark awarded in a wrongful death suit, Ninth District appellate judges decided on Aug. 25.

Chief Justice Steve McKeithen and Justice Hollis Horton upheld Clark's approval of fees for the firm of Stewart, Cox and Hatcher and the firm of Turner and Associates.

The firms represented the family of Oscar Flores, who died in the rollover of a Ford vehicle with Firestone tires.

Clark and Mayes shared the case through an unusual arrangement, with Clark acting as trial judge and Mayes as pretrial judge.

Mayes chafed for seven years at Clark's approval of a settlement between the victim's family and Firestone.

Horton wrote that "it appears the pretrial judge believed that the Firestone settlement required his approval."

Last year, Mayes approved a settlement between the family and Ford but reached back to adjust fees Clark awarded in the Firestone settlement in 2003.

On appeal, McKeithen and Horton found no one but Mayes objected to the fees.

They found no one claimed the fees weren't properly laid before Clark and that no one asked Mayes to disregard any terms of the Firestone settlement in considering Ford's proposal.

Horton wrote that he wouldn't divest Clark of subject matter jurisdiction in a case in which he was given constitutional and statutory authority to act.

"Given the finality accorded to court approved settlements, and in the absence of pleadings of avoidance as well as sufficient evidence to prove a ground to avoid the effect of the court approved settlement, the pretrial judge was required to honor the regular judge's approval of the Firestone settlement," Horton wrote.

Dissenting Justice David Gaultney wrote, "The settlement with Firestone should have been submitted to the pretrial judge for approval."

Mayes wasn't bound by Clark's order, Gaultney wrote, stating that "The pretrial judge acts in place of the regular judge."

The family sued Ford, Firestone, North American Tire and Arrow Ford in 2001 in Orange County district court.

Firestone settled for about $3 million, with the family's lawyers collecting 40 percent.

Clark approved the settlement, finding it in the best interest of four minor plaintiffs.

When Ford and the family settled, they brought the agreement to Mayes.

He approved it, but reduced legal fees in both settlements from 40 percent of gross proceeds to a third of net proceeds.

He earmarked the $277,403 difference for a trust fund of a minor plaintiff who suffered injuries in the accident.

His action didn't impress McKeithen and Horton because he didn't contradict Clark's declaration that the Firestone settlement was in the best interest of minor plaintiffs.

Horton wrote that in the absence of fraud, Texas rules of civil procedure makes court approved settlements forever binding and conclusive.

He wrote that Mayes didn't find collusion, neglect, mistake or breach of fiduciary duty.

Jerry White and Martin Siegel represented the law firms.

John Milutin acted as guardian ad litem for the minor plaintiff with the trust fund.

Clark changed jobs in May, and serves as Orange County court at law judge.

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