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Huber v. Taylor

July 20, 2010

RONALD L. HUBER; WILLIAM J. AIRGOOD; ANTHONY DEFABBO; JOHN DINIO; ERNEST GISHNOCK; JOHN BIDLENCSIK; HILMA MULLINS AND WILLIAM DEEM, INDIVIDUALLY AND ON BEHALF OF THOSE SIMILARLY SITUATED PLAINTIFFS,
v.
ROBERT G. TAYLOR, II; ROBERT G. TAYLOR, P.C.; R.G. TAYLOR II, P.C.; ESTATE OF ROBERT A. PRITCHARD; PRITCHARD LAW FIRM, PLLC; JOSEPH B. COX, JR.; JOSEPH B. COX, JR. LTD; AND COX AND COX, LLP DEFENDANTS.



The opinion of the court was delivered by: Lisa Pupo Lenihan United States Magistrate Judge

Magistrate Judge Lisa Pupo Lenihan

OPINION AND MEMORANDUM ORDER ON MOTION TO STRIKE AND DISMISS

I. HISTORY AND SCOPE OF CLAIM

As noted in this Court's January 25, 2010 Opinion: this 2002 action involves claims related to Defendants' representation of the eight (8) above-named Plaintiffs (the "Named Plaintiffs"), and of others similarly situated, in consolidated individual personal injury actions for exposure to asbestos, in the State Court of Mississippi (the "Mississippi Asbestos Exposure Consolidated Litigation" or "Mississippi AECL").

At present, and following many years of discovery and litigation before several different Judges in this Court, and multiple appeals to the Court of Appeals for the Third Circuit, the Named Plaintiffs surviving claims are, at bottom, that in representing them in the Mississippi AECL, Defendants

(a) breached their fiduciary duties of candor/disclosure and loyalty under Texas law by (i) covertly allocating settlement funds disproportionately/inequitably in favor of other asbestos litigation clients in other states (to maximize the Defendants' revenue from the cases) and (ii) imposing and receiving excessive expenses; but

(b) caused them no actual harm as they failed to show they would have achieved a better outcome in the underlying actions but for counsel's conduct.

See Opinion and Memorandum Order at 1-2.*fn1 The Third Circuit held that Plaintiffs retained a claim under Texas law, which does not require a showing of actual injury in a claim for breach of fiduciary duty when the remedy sought is disgorgement of attorneys' fees rather than damages for actual harm. See Huber I, 469 F.3d at 77 . It also held, on further remand, that Texas courts have permitted recovery of punitive damages based on an intentional breach of fiduciary duty, and Texas case law suggests that Texas may allow an award of punitive damages supported by relief in the form of disgorgement of fees.

As Plaintiff's proposed Third Amended Complaint exceeded, in numerous respects, the law of the case as defined by the Court of Appeals, this Court - in January - permitted a period of further revision and directed Plaintiffs that any further amendments were required to conform to the law of the case.Plaintiffs' Third Amended Complaint was filed on March 15, 2010 and they have failed to comply with the Court's direction. Presently pending is Defendants' Joint Motion to Strike and Dismiss Allegations and Claims.

This Court observes, again, that when one clears away - as one must - the sweeping rhetoric of Plaintiff's Complaints, Plaintiffs maintain, under the express law of the case as set forth by the Court of Appeals, a claim for breach of fiduciary duty under Texas law, by which they may be entitled, despite having incurred no actual injury, to disgorgement of all or some portion of the attorney fees paid by the Named Plaintiffs (or members of their putative class, if such class were to be certified). This claim may be made out by sufficient evidence that the Defendants, e.g., failed to adequately disclose their co-counsel arrangements and/or settlement information,*fn2 allocated settlement funds disproportionately owing to their own fee incentives,*fn3 and/or imposed excessive expenses. And with evidence sufficient to raise a question of intentional breach of fiduciary duty, Plaintiffs might also be entitled to punitive damages under Texas law.

Although the Court regrets Plaintiffs' failure to adhere to the Court's guidance and direction in revising their Third Amended Complaint, and finds significant merit to Defendant's Joint Motion, it concludes that it is - with some exception - not in the interests of judicial efficiency or the resolution of the issues between the parties to again parse through Plaintiff's rhetoric to strike every impertinent or immaterial sentence and phrase.*fn4 Rather, those interests will be better served by proceeding to further Motions practice, including Motions for Class Certification and Summary Judgment, in accordance with applicable procedural rules.

II. ANALYSIS

A. Language of the Third Amended Complaint Seeking Disgorgement of Fees Paid by Clients Not Members of the Putative Class; Constructive Trust

As well-briefed by the Defendants, Plaintiffs continue, despite two (2) express rulings by this Court to the contrary, to assert a claim for relief in the form of disgorgement of all fees paid to the Defendants in the Mississippi AECL "regardless of to whom [such] fees are ultimately allocated". See Memorandum of Law In Support at 6-7 (discussing Third Amended Complaint pargraphs 3, 62 and 63). This they cannot do. Plaintiffs cannot bring a claim for restitutionary relief on behalf of individuals whom they do not represent. See January 25, 2010 Opinion at 23 (citing April 27, 2007 Opinion at 24). Such allegations, as set forth in Paragraphs 3, 62 and 63 of the Third Amended Complaint, are impertinent and immaterial and, accordingly, will be stricken. See, e.g., River Road Devel. Corp. v. Carlson Corp - NE, 1990 WL 679085, *3 (E.D. Pa. May 23, 1990); Witmer v. Arthur J. Gallagher & Co., 2009 WL 2762379, *6 (M.D. Pa. Aug. 31, ...


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