Justice cites 'egregious attempts to distort the judicial process'
June 25, 2014 -- Mark A. Cantu, a McAllen attorney who apparently lost his shirt in a Laredo wrongful death case, got some much needed relief from the San Antonio Court of Appeals.
An appellate tribunal ruled today that the honorable Monica Z. Notzon of the 111th District Court in Webb County erred when she granted summary judgment for the McAllen firm of Guerra & Moore, and attorneys Carlos Guerra, J. Michael Moore, and David Lumber.
This is a fight over attorneys' fees, but it has its origin in the September 2004 fiery explosion of a natural gas water heater in a Laredo home. Santa Magdalena Gonzalez, a young girl, died from the explosion and her older brother suffered burns.
Guerra & Moore initially represented the family in its wrongful death suit, but Cantu's firm took over and his firm filed the original petition in 2005. A year later, some Cantu associates left and formed Romero, Gonzalez & Benavides (RG&B). They took the wrongful death case with them and Cantu sued for his fee.
RG&B obtained a $4 million settlement. Then Cantu, RG&B and a third law firm agreed in 2007 to a three-way split of the 40 percent fee, $1.6 million. The money was held in the court registry but before Cantu could withdraw his share Guerra & Moore sued him for libel and tortious interference.
Cantu countered by suing RG&B for common-law fraud, breach of fiduciary duty, negligent supervision, civil conspiracy, unjust enrichment and conversion. He also counter-sued Guerra & Moore for conspiracy.
RG&B made its own counterclaim against Cantu for breach of the settlement agreement and fraud.
A jury trial took place over April-May of 2008, but the judge granted a directed verdict against Cantu on his conspiracy claim against Guerra & Moore.
"The deceased girl's father and brother received a $4 million judgment," Fourth Court Justice Patricia O. Alvarez recounted in the Wednesday opinion. "The jury awarded Guerra & Moore damages of $1.6 million."
Cantu appealed on grounds there was insufficient evidence to find he interfered with a prospective contract between the father and Guerra & Moore. The San Antonio Court of Appeals affirmed that judgment in 2009.
In August 2012, Cantu came back with a bill of review. He claimed new evidence entitled him to a do-over. He alleged his former associates and the family conspired to defraud him, "by paying key witnesses to perjure themselves in their testimony regarding claims over attorney's fees."
Notzon heard both sides and ruled against Cantu, dismissing his petition. He appealed to the San Antonio appellate court.
The opposing lawyers claimed Cantu's petition failed on four points. First, he alleged only intrinsic fraud. Second, his complaints were already litigated. Third, he wasn't entitled to a remedy because he came with unclean hands. And the conspiracy claim had a fatal defect because it was barred by res judicata; the appellees later abandoned this fourth defense and the justices didn't consider it.
The first defense hinges on the difference between an extrinsic fraud versus an intrinsic fraud. An extrinsic fraud involves denial of an opportunity to fully litigate at trial all the rights or defenses one could assert.
Intrinsic fraud relates to the merits of the issues presented. It is presumed each side will guard against adverse findings over issues known to both sides. This can't be raised later in a bill of review because intrinsic fraud doesn't prevent the petitioner from raising a defense at trial.
To determine a difference, Alvarez turned to Cantu's alleged new evidence. Javier Fuentes, who is not otherwise identified in the opinion, swore by affidavit that RG&B offered him a percentage of their fees if he could get the plaintiff family to terminate Cantu and retain them.
RG&B paid Fuentes several thousand dollars cash "to help him convince the plaintiffs' family to testify falsely against Cantu, and he convinced them to do so," Alvarez recounted.
Cantu swore that after he learned of this from Fuentes in September 2011 he investigated further and got statements from several alleged conspirators.
"All confirmed the conspiracy with specificity," Alvarez noted.
In addition to payments for perjured testimony, the opposing attorneys implied or told the family the wrongful death suit settlement could be at risk if the Gonzalez family didn't assist, the opinion states. Part of the conspiracy also involved RG&B paying Guerra & Moore part of its fee.
Because Cantu knew none of this until three years after the trial, he wasn't able to present this evidence in his defense.
Both sides raised Tice v. City of Pasadena, a 1989 Texas Supreme Court case where the city failed to overcome final judgment in a negligence wrongful death in an auto accident because its so-called evidence was too vague and the allegation the city raised was argued at trial.
Alvarez concluded Cantu's evidence was extrinsic and the details were sufficiently specific to overcome the Tice test.
"Cantu's summary judgment evidence alleges egregious attempts to distort the judicial process--e.g., that appellees conspired with Fuentes to bribe the parties to perjure themselves, that RG&B agreed to a kickback to appellees, and that RG&B--potentially under appellee's direction--coerced or unduly influence Zacarias Gonzalez into believing his family's settlement would be at risk if he did not cooperate." Alvarez summarized.
"The affidavits include specific allegations of participants, time, place, manner, circumstances, and nature of the conspiracy."
Appellate courts are very reluctant to overturn final judgments, as Alvarez went to lengths to explain.
"A court must balance the need for finality of judgment with the need to prevent distortions of the judicial process that undermine confidence in the ability to discover the fraudulent conduct through the regular adversarial process," she stated.
She concluded the facts in this case had undermined the judicial process.
"We hold that Cantu's summary judgment evidence raises a genuine issue of material fact on whether appellees committed extrinsic fraud," Alvarez said.
She quickly dispatched the appellees' second and third defenses, reversed Notzon's judgment and remanded the case back to her court.
Justices Marialyn Barnard and Catherine Stone also sat on Alvarez's panel.
David Lumber of Guerra Law Group in McAllen, and Adriana Benavides-Maddox in Laredo represented the appellees.
David M. Gunn and Joe Redden Jr. at Beck, Redden & Secrest in Houston represented Cantu, as did Marcos Rosales of McAllen and Manuel R. Flores of Laredo.