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Ford Motor prevails at Texas Supreme Court, shreds fraudulent settlement

The Texas Supreme Court reversed a mid-level appellate court's decision to enforce a $3 million settlement that Ford Motor Co. alleged was obtained by fraud.

This was the Supreme Court's second look at a case that came out of Brownsville from a trial court judge who later became notorious for bribe-taking and is now serving time in Florida.

The June 20 unsigned opinion of the Supreme Court, Ford Motor v. Ezequiel Castillo, appears to have last been reported in the media in 2009 when a Houston Chronicle columnist noted that a Brownsville jury had reversed the settlement that was reached during the jury deliberations of a 2004 product liability trial.

In the original trial, Ezequiel Castillo and other occupants of a Ford Explorer sued the manufacturer for injuries sustained in a roll-over accident, asserting roof and stability design defects.

The behavior of Cynthia C. Cortez, a juror in the original trial, and McAllen plaintiff attorney Mark Cantu raised suspicions that led Ford to back out of the settlement.

The case was submitted to the jury on a Friday. Jurors were off over the weekend and returned Monday. On Tuesday, Cortez did not arrive, supposedly because of a sick child in the hospital. District Judge Abel Limas let the jury go home early as a result.

During that recess, Cantu pressed Ford managing counsel Pete Tassie for a settlement. Cantu started his demands at $15 million but was whittled down to $1.96 million. Still, Tassie would not go higher than $1.5 million. Cantu repeatedly stated his demand would go up to $3 million if the jury were to send a note about damages.

"Tassie, who had 10 years experience for Ford, including several prior dealings with Cantu, found Cantu's comment odd, not only as to its frequency, but also its specificity," the Supreme Court opinion states.

The next morning, however, the jury sent a note to the judge asking, "What is the maximum amount that can be awarded?"

Ford's attorneys immediately reacted and settled for $3 million. Afterward, the Ford attorneys polled all the jurors except Cortez. They were surprised to find the jury wasn't even discussing damages when the note was sent. Cortez repeatedly avoided being questioned about her actions.

Ford asserted fraudulent inducement in a second lawsuit and asked Judge Limas for permission to investigate the jury's deliberations. Limas denied the request and the Corpus Christi-Edinburg Court of Appeals upheld his decision in 2006. Ford convinced the Supreme Court to allow discovery and this led to the second trial.

"Several of the jurors testified that Cortez kept trying to bring up the damages issue on her own, and sent the note against their specific requests that she not do so," the Supreme Court said.

One juror recalled the morning of the settlement that Cortez came in "very happy, very upbeat" and told everyone, "This will be settled today."

Cortez's own testimony was, not surprisingly, chock full of memory lapses, the high court noted.

From Cortez's cell phone record, she was asked to explain a call to state Rep. Jim Solis. She said her husband probably made the call, but when other evidence proved that unlikely she speculated that the phone records belonged to some other Cynthia Cortez.

"Solis is currently serving a 47-month sentence in federal prison after confessing to his role in Judge Limas' extortion scheme, wherein Solis would operate as a middle man between Judge Limas and the attorneys trying cases in Limas' court," the Supreme Court noted in a footnote to the opinion.

The second jury found the settlement agreement forged during deliberations of the first jury was invalid because of fraudulent inducement and mutual mistake. The trial court entered a final judgment stating the Castillo plaintiffs should take nothing.

The Castillo plaintiffs appealed and the court of appeals concluded the evidence was legally insufficient to support the jury verdict.

In its analysis, the Supreme Court found the jury could reasonably infer from the evidence that Cortez caused the Tuesday recess to give Cantu more time to negotiate a settlement.

"On the brink of a Ford victory, Cortez precipitated a day-long recess because of some serious illness or injury to one of her two children. However, Cortez could not recall the illness or injury that kept her at the hospital all night. That same day, Cantu, who had refused to lower his settlement demand below $15 million during weeks of previous negotiations, became more agreeable, reducing his demand to less than $2 million in just a matter of hours."

The explanations for Cantu and Cortez's unusual and apparently coordinated conduct were lacking, the court said. Cantu even denied ever making a prediction about the note, "instead admitting that it would have been unreasonable to make such a statement," the court observed.

"Having found evidence that Cortez colluded with Cantu, who unquestionably knew that jury notes would be shown to Ford's attorneys, we necessarily find evidence of the third element--that Cortez sent the fraudulent note with the intent that Ford rely upon it."

Judge Limas' role in this fraud was not discussed. However, Limas was caught up in an FBI investigation involving numerous bribes in other cases. He became a key witness, testifying against other lawyers, admitting he took bribes in exchange for favorable rulings.

He began a six-year sentence in a Pensacola, Fla. federal prison last December.

David J. Schenck at Dykema Gossett in Dallas briefed the case on behalf of Ford Motor. Michael Eady at Thompson, Coe, Cousins & Irons in Austin also represented Ford Motor.

David Gunn at Beck Redden in Houston and Dale Kasofsky of McAllen represented the Castillos.

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