BEAUMONT – A Texas appeals court has thrown out an appeal related to a long-standing legal malpractice case against prominent trial lawyer Brent Coon, whose former clients alleged he had mishandled their case related to an oil spill by BP.
On Aug. 8 and in a per curiam opinion, Court of Appeals for the Ninth District of Texas at Beaumont justices Scott Golemon, Leanne Johnson and Kent Chambers decided to dismiss the appeal of Alabaster, Inc. and John Sheffield, lodged against Coon, his firm and fellow firm attorney Eric Newell.
The suit was first filed in April 2017 and the subject events began when Alabaster, a bioremediation cleaning products manufacture, hired Coon and his firm to handle its breach of contract and business disparagement claims against BP relating to the 2010 Deepwater Horizon oil spill.
However, the claims allegedly got “lost in the shuffle” with Coon’s “thousands of other” oil spill clients.
After Coon realized the mistake and missed the statute of limitations, he and the firm “fraudulently” induced the company to settle its suit for “pennies on the dollar” and agree to a release, the suit stated.
Coon valued Alabaster’s claim at $250,000,000 – actual damages the company was seeking.
A year after this suit was filed, Coon filed a motion to compel arbitration, stating that the agreement between his firm and Alabaster contains a mandatory arbitration clause.
Court records show the motion was granted. On Sept. 25, 2019, Alabaster filed a motion to reconsider, stating that Texas law renders unconscionable contracts unenforceable and that the cost of arbitration in this case was too excessive.
“Unlike the plaintiffs, defendants have the good fortune of being able to cover the cost of arbitration,” the motion stated. “Defendants have obtained over ‘one billion in verdicts and settlements.’ If defendants’ position is truly that arbitration is the proper forum for this dispute, defendants should be willing to stipulate to pay the costs of arbitration.”
Coon responded to the motion two weeks later, arguing that the cost to arbitrate should be less than $20,000 – a cost that is split between the parties.
Meanwhile, the litigation continued on for most of the next four years, during which the trial court granted a motion from Coon and Newell to compel arbitration and after a dismissal, the case later made its way to the Ninth District Court of Appeals.
UPDATE
In Coon and Newell’s appellee brief dated Oct. 9, 2023, they argued “the trial court properly granted [the firm’s] motion to compel arbitration because Texas Law favors arbitration, and it is appropriate here.”
“A valid arbitration agreement was presented to the trial court, and it was admissible. Alternatively, challenges to the admissibility of the document were waived. There was a meeting of the minds as to whether or not the contract (originally) covered potential breach of contract and defamation claims. John Sheffield’s claims are all derived from the claims of Alabaster, or he received a direct benefit from the contract under the doctrine of estoppel. Either analysis is sufficient to bind John Sheffield’s alleged claims under the arbitration agreement. The arbitration agreement is not unconscionable because the appellant had the money to arbitrate and chose not to use it to do so. Additionally, the cost of the arbitration is reasonable in light of the value of the alleged claims. Appellees did not waive their right to arbitration,” the appellee brief stated.
“There is a split between Texas courts as to whether or not a malpractice claim is a personal injury claim under the Texas Arbitration Act. This Court should adopt the majority position, because it is supported by legislative intent and find that malpractice claims are not personal injury claims under the TAA. Moreover, the UNDERLYING claim here was not a personal injury claim, but rather, an economic damage claim arising out of a business issue. Additionally, there was a meeting of the minds as the terms of the arbitration, and the arbitration should be enforced. Finally, the dismissal for want of prosecution was proper, because the appellees refused to move forward with arbitration as directed by the trial court several times over several years, by two different trial judges.”
In a Nov. 28, 2023 reply brief from the appellants, they argued that Coon’s firm “failed to establish a valid arbitration agreement.”
“The trial court erred when it compelled appellants to arbitration (or abused its discretion by refusing to reconsider its order compelling arbitration) because BCA failed to authenticate the purported arbitration agreement and never presented a properly authenticated arbitration agreement governing the claims in this case, and all parties,” the appellants’ brief stated, in part.
Moreover, the brief stated that the opposition failed to authenticate the arbitration agreement.
“BCA relies on a purported verification of Eric Newell wherein he ‘confirms’ that the facts stated in the motion ‘are within his knowledge and true and correct.’ Newell’s effort to authenticate the purported arbitration agreement fails for several reasons. First, ‘an affidavit which does not positively and unqualifiedly represent the facts as disclosed in the affidavit to be true and within the affiant’s personal knowledge is legally insufficient.’ In other words, an affidavit cannot be based on mere knowledge; it must be based on personal knowledge. Thus, Newell’s affidavit, based only on his knowledge and not his personal knowledge is legally insufficient. Second, ‘an affidavit showing no basis for personal knowledge is legally insufficient.’ Here, Newell fails to state how he has knowledge that the facts stated in the motion are true and correct. ‘Affidavits demonstrating personal knowledge often state the affiant's knowledge is acquired through not only the person’s position, but also through his specifically described job duties,” according to the appellants’ brief.
“Newell fails to do that here, rendering his verification legally insufficient. Third, Newell’s conclusory verification does not authenticate the purported arbitration agreement. ‘To satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is.’ This can be accomplished by testimony from a witness ‘that an item is what it is claimed to be.’ However, simply stating that facts contained within a motion are true and correct, like Newell does here, is insufficient to meet this standard. Because Newell’s purported verification is legally insufficient and does not authenticate the arbitration agreement, there is no material distinction between this case and Constant v. Gillespie. Accordingly, appellants’ objection could be raised for the first time on appeal.”
The Court of Appeals for the Ninth District of Texas at Beaumont issued a final dismissal of the case on Aug. 8, subsequent to a previous order remanding the case to the trial court for any final orders at that lower level.
“On June 20, 2024, we abated this appeal and remanded the case to the trial court to give the trial court the opportunity to issue such further orders or judgments necessary to clarify its April 6, 2023 Order or to create a final, appealable order in this case. The Court order further stated: ‘Unless a final, appealable order or judgment is included in a supplemental clerk’s record and filed with the clerk of this court on or before July 22, 2024, the appeal will be reinstated and dismissed for want of jurisdiction.’ To date, we have not received a supplemental clerk’s record. No party requested additional time to obtain a final judgment or severance order,” the Ninth District ruled.
“The appeal is hereby reinstated. Generally, an appeal may be taken only from final judgments and interlocutory orders specifically made appealable by statute. To be final, a judgment must dispose of all issues and parties in a case. As we explained in our Order of June 20, 2024, the trial court’s Order of April 6, 2023, which granted Coon’s motion to dismiss the plaintiffs’ claims against the defendants, failed to dispose of the defendants’ counterclaims for attorney’s fees and sanctions. The appeal is dismissed for lack of jurisdiction.”
Court of Appeals, Ninth District of Texas at Beaumont case 09-23-00134-CV
172nd District Court, Jefferson County, Texas case E199958
From the Southeast Texas Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com