The Houston [1st] Court of Appeals has reversed and remanded a trial court order granting summary judgment in favor of two plaintiff’s attorneys accused of running cases in Louisiana, Arkansas, and Mississippi. A business owned by one of the attorney’s wives, which provides loans for funeral expenses in exchange for retaining her husband, is also a defendant in the suit, as is her relative who serves as the intermediary. Mark Kentrell Cheatham, Sr., Luella Miller, Mark Cheatham, Jr. and Intervenor Lacy Reese v. Michael A. Pohl, Law Offices of Michael Pohl, PLLC, Robert Ammons, The Ammons Law Firm, LLP, Donalda Pohl, Edgar Jaimes, and Helping Hands Financing, LLC (No. 01-20-00046-CV) arose from a suit filed by two sets of wrongful death claimants, one from Louisiana and the other from Arkansas, against their Texas attorneys for civil barratry. They allege that the attorneys financed a case running scheme in which Mississippi case runners would visit hospital rooms, funeral homes, and other locations where grieving families could be signed up for representation. The plaintiffs seek disgorgement of fees paid to the attorneys out of the settlement of their respective cases in Louisiana and Arkansas, as well as civil damages, penalties, and attorney’s fees.
Texas law prescribes three different approaches to barratry. First, §38.12, Penal Code, makes barratry a criminal offense. Second, §82.065, Government Code, authorizes claimants to rescind agreements with attorneys obtained in violation of §38.12 or Rule 7.03, Texas Disciplinary Rules of Professional Conduct, which prohibits a lawyer from paying a nonlawyer to run cases. Third, and the one at issue in this case, involves a 2011 statute that authorizes a private cause of action for barratry (§82.0651, Government Code). The court of appeals’ analysis turns on an interpretation of this statute against the defendants’ argument that it does not apply to activities outside of Texas.
Noting that no court of appeals has previously determined whether §82.0651 has extraterritorial effect, the court declined to be the first. Instead, it found that the statute applies because the barratrous conduct occurred in Texas, even though the clients were solicited in other states. The court found that the plaintiffs offered sufficient evidence of the following to defeat summary judgment: (1) the attorneys were licensed in Texas; (2) they directed and coordinated the scheme from their Houston offices; (3) Pohl, his wife, and her company directly funded the solicitation efforts; (4) Pohl directed case runners to solicit clients, including offering money from his firm and his wife’s business; (5) Ammons associated himself with the solicitation effort and participated in phone conversations with runners (including one from inside of a victim’s hospital room).
In response to the trial court’s finding that the plaintiffs’ claims were barred by limitations, the court of appeals found that the plaintiffs’ rescission and disgorgement claims under §82.0651(b) sound in contract and are thus governed by a four-year statute of limitations, whereas §82.0651(a) and (c) prescribe tort remedies (damages and attorney’s fees) and are thus governed by a two-year limitations period (the statute does not specify either way). The defendants also argued that res judicata barred the plaintiffs’ claims because the Louisiana court that approved a settlement of the Cheatham suit had already determined that no improper solicitation occurred. The court of appeals was not amused by the fact that one of the lawyers told the Texas trial court in which the barratry claims were pending that the Louisiana proceeding was entirely separate and did not involve the barratry claims. Additionally, the Cheathams withdrew their opposition to the settlement in Louisiana based on that representation and their own assertion that they would seek a remedy for barratry under Texas law in a Texas court.
One would have hoped that barratry could be relegated to the bad old days of personal injury practice, but apparently that is not the case. In any event, we will be interested to see whether the defendants fight it out in the trial court or decide to settle and make it go away. We also wonder if disciplinary action might be forthcoming, as it should be if these allegations are true.