An octogenarian cancer survivor who is suing her former oncologist for allegedly duping her into investing more than $3 million in his medical device company will not have to sit for a deposition in a related action where the doctor’s insurer is trying to avoid paying to defend the claims.
A Fourth Court of Appeals panel made that ruling last week in a lawsuit brought by Barbara C. Barnett, 86, against Dr. David J. Friedman, who she has known since 2012 when she began receiving cancer treatments from him at Texas Oncology.
She is single, has no siblings and no children, according to court documents, and developed a close personal relationship with Friedman and his wife, Elizabeth, inviting them to vacation at her lake house and spending birthdays and holidays together.
In 2015, Elizabeth Friedman allegedly approached Barnett — who has described herself as an “inexperienced and unsophisticated investor”— with an invitation to invest in a company that intended to develop, manufacture and sell specialized medical tubing David Friedman invented. Elizabeth Friedman served as president, CEO and sole manager of the company, called SAFEN Medical Products.
Without consulting a lawyer or financial advisor, Barnett handed over more than $3 million to invest in the company.
And all was well until 2020, when Barnett hired a lawyer to prepare a will for her.
The lawyer noticed Barnett had sent SAFEN a check for $750,000 dated Sept. 15, 2020, and asked the company for documentation. In response the company sent an alleged note indicating that check was the first of two advances Barnett owed to SAFEN.
“Barnett denied executing the alleged note, and when Barnett’s counsel asked SAFEN to repay the $750,000, SAFEN refused,” the opinion reads. “Instead, SAFEN demanded that Barnett pay SAFEN the second $750,000 advance it claimed was due under the alleged note.”
So Barnett sued Friedman, his wife and her company in July 2021, alleging they had exploited their close relationship with her to dupe her into purchasing “millions of dollars in unregistered securities in Safen Medical Products, Inc. and Safen Medical Products, LLC, and [to make] significant loans to Safen Medical Products, LLC on terms which are commercially unreasonable.”
The lawsuit alleges breach of contract and fiduciary duty, fraud, fraudulent inducement and breach of the Texas Securities Act.
In September 2021, David Friedman’s attorney notified his employer, Texas Oncology, about the lawsuit and requested defense and coverage under the insurance policy issued to the medical facility by Texas Medical Liability Trust.
TMLT determined Barnett’s suit wasn’t for injuries she suffered as a result of David Friedman’s provision of medical care, but instead was based on alleged financial exploitation, and denied coverage.
David Friedman sued the insurer in June 2022, seeking a declaration that the claims against him are covered by the policy and that TMLT is obligated to cover his defense.
After filing suit, David Friedman moved to depose Barnett, which Barnett and TMLT separately opposed.
Bexar County District Judge Mary Lou Alvarez held a hearing on the deposition request in June 2023 and gave the greenlight to depose Barnett.
“I wanted her deposition … because I’m curious, and still remain curious,” she’s quoted as saying in the opinion.
The judge issued an order on Aug. 10 granting the motion to compel Barnett’s deposition.
On Aug. 21, TMLT filed a petition for writ of mandamus with the Fourth Court of Appeals arguing that when deciding whether the policy applies to cover the cost of defending the suit against David Friedman, the eight-corners rule applies — meaning the court can look only at Barnett’s lawsuit and the insurance policy to make the determination.
“What non-party Barbara Barnett has to say about her pleadings in the underlying lawsuit has no bearing on whether the four corners of her pleading alleged a claim that obligated the insurer to defend that lawsuit,” TMLT told the court.
In an opinion issued March 20, a three-justice panel of the Fourth Court of Appeals in San Antonio agreed with the insurer, writing that Barnett’s complaint describes how she met and befriended the Friedmans and how the couple allegedly exploited that close relationship to get her to purchase millions worth of unregistered securities.
“But Barnett’s petition does not allege any facts that Dr. Friedman’s medical care for her medical conditions caused her any injury or damage — either physical or financial,” the panel wrote. “Thus, Barnett’s alleged facts cannot support a claim that her financial injuries arose from Dr. Friedman’s medical care for her.”
Justices Patricia O. Alvarez, Luz Elena D. Chapa and Liza A. Rodriguez sat on the panel.
TMLT is represented by David M. Walsh IV, Leda Jungerman and Christina Gratke Nason of Kershaw Anderson King.
Friedman is represented by Sheldon E. Richie, Katherine J. Walters and Grover C. Peters III of Richie & Gueringer.
Barnett is represented by Diana M. Geis and Herbert S. Hill of Curt Stahl Geis.
The case number is 04-23-00779-CV.