In this week’s edition of Litigation Roundup, a team from Bracewell gets a win for the John M. O’Quinn Foundation in a 12-year dispute with the famed lawyer’s former companion, Texas attorneys are named to take the lead in a multidistrict litigation over contaminated infant formula and the Fifth Circuit affirms $51 million in fees and costs for the Stanford Ponzi case receiver.
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Harris County District Court
Real Estate Co. Sues Former Attorneys Over Adverse Ruling
McGlinchey Stafford and two lawyers who worked for the firm have been sued by former client EasyKnock, accused by the real estate company of providing shoddy legal work that has resulted in nearly 30 lawsuits against it.
According to the lawsuit, EasyKnock was sued over its “sell and stay” program, which it describes as a “sale-leaseback program that allows homeowners to sell their homes to EasyKnock and then enter into a lease with EasyKnock … to remain in the home.”
The company hired McGlinchey Stafford to represent it in the lawsuit but alleges that it failed to brief a key issue: whether the transaction is a true sale-leaseback or if the transaction is a disguised loan. That legal malpractice, EasyKnock alleges, resulted in an adverse judgment in that lawsuit and has opened the gate for a total of nearly 30 similar lawsuits to be filed against it.
Its damages will exceed $7 million, EasyKnock told the court.
Paul Kellogg, of counsel with the firm, and Matthew A. Knox, who is no longer with the firm, are also named as defendants in the lawsuit filed Sept. 7.
The cause number is 2022-56583.
Montgomery County District Court
Cigna Sued Over $3M COVID Clawback Attempt
Cigna Healthcare Group of Texas is facing a lawsuit from client Genesis Medical Group after the medical practice refused the insurer’s demand to pay back more than $3 million it received for testing and treating patients exposed to COVID-19.
During the pandemic, Genesis provided COVID testing to many employers in Houston who were continuing in-office operations, but according to the lawsuit Cigna demanded the funds back after alleging Genesis failed to establish there was an outbreak that made the testing necessary.
Genesis is asking the court for a declaration that it provided diagnostic testing according to then-existing Cigna and government guidance, a declaration that Cigna waited too long under state law to seek repayment and reimbursement of its attorney fees accrued pursuing this litigation.
The lawsuit was filed Aug. 26.
Genesis Medical Group is represented by Ashish Mahendru.
Counsel information for Cigna wasn’t available Monday.
The cause number is 22-08-11287.
Travis County District Court
Circuit of the Americas Sued Over Fatal Accident
The family of a man who was killed when the driver of the car he was in struck a swinging gate at the entrance to the Circuit of the Americas racetrack, causing the metal arm to pierce the windshield, has filed a lawsuit over the August 2021 fatal incident.
The lawsuit claiming negligence and gross negligence was filed on behalf of Kevin Nelson Sept. 1. Additional defendants include Custom Painting and Design, S3 Public Safety Consulting and the driver of the vehicle that crashed, James Gibbs.
The Nelson family is represented by Desiree Zornow of Catania & Catania. Counsel information for Circuit of the Americas and the other defendants wasn’t listed Monday.
The cause number is D-1-GN-22-004152.
Northern District of Illinois
Patrick Luff and Daniel Sciano Named to Infant Formula MDL Steering Committee
U.S. District Judge Matthew Kennelly has named a dozen plaintiff’s lawyers — including two from Texas — to the steering committee in the lawsuits against Abbott Laboratories over allegedly contaminated infant formula.
Judge Kennelly, who is overseeing the multidistrict litigation, named Dallas trial lawyer Patrick Luff of the Luff Law Firm and San Antonio plaintiff’s attorney Daniel J.T. Sciano of Tinsman & Sciano to the committee overseeing hundreds of lawsuits from several states.
Luff and Sciano, in lawsuits representing parents, claim that newborn babies given Similac and Enfamil cow’s milk-based infant formula are at a higher risk of having necrotizing enterocolitis or NEC, which is a gastrointestinal infection that can be deadly to babies.
Luff, on his firm website, claims that companies such as Abbott “have been aware of the evidence linking” this infant formula “with the development of NEC dating back over 30 years.”
“The companies deliberately remained silent on the high risk of developing NEC to keep its marketability unaltered,” he wrote.
The cause number for the MDL is 3037.
Central District of California
Jackson Walker Team Gets Nirvana Nevermind Album Art Suit Tossed
The Austin-based photographer who captured the iconic image of a naked infant for the cover of Nirvana’s 1991 album Nevermind has won dismissal of the lawsuit brought against him alleging the art was child pornography.
The infant who appeared in the photo, Spencer Elden, sued Kirk Weddle alleging the image constituted child pornography. The Jackson Walker team who represented Weddle argued that the photograph was protected speech and presented evidence that Elden’s parents received compensation from Weddle for the photograph.
U.S. District Judge Fernando Olguin tossed the suit Sept. 2. Elden plans to appeal the ruling to the Ninth Circuit.
Elden is represented by Robert Lewis, James Marsh and Margaret E. Mabie of Marsh Law Firm.
The cause number is 2:21-cv-06836.
Twelfth Court of Appeals
Defamation Suit Against Newspaper Tossed on Appeal
A three-justice panel recently determined that Henderson County District Judge Scott Williams got it wrong when he denied a motion to dismiss filed by Black-owned community newspaper The Dallas Weekly.
The newspaper appealed after Judge Williams denied its bid to dismiss the lawsuit brought by Dallas businessman Montgomery Bennett and his website, The Dallas Express, under the Texas anti-SLAPP law, the Texas Citizens Participation Act.
Bennett, who is in the hospitality industry and is a supporter of conservative political interests in Texas, filed suit against The Dallas Weekly after it published an article calling The Dallas Express “right-wing propaganda,” “fake news” and a “pay-to-play” website.
In an Aug. 30 ruling, the panel agreed with The Dallas Weekly that the suit should have been tossed based on the defenses of truth and opinion.
The Dallas Weekly is represented by Thomas S. Leatherbury, Angie Garcia and Ilana Gomez of Vinson & Elkins, Randee Williams Koeller and Sammy Calkins of the Southern Methodist University Dedman School of Law First Amendment Clinic, Richard Friedl of Susman Godfrey, Hayden Hanson of Lynn Pinker Hurst & Schwegmann and Marc Fuller of Jackson Walker.
The Dallas Express and Bennett are represented by Martin R. Bennett.
The cause number is 12-22-00044-CV.
Texas Supreme Court
Bracewell Gets Win for John M. O’Quinn Foundation
Earlier this month the state’s high court effectively brought an end to long-running litigation between the late John M. O’Quinn and Darla Lexington, his longtime companion, when it refused on Sept. 2 to accept an appeal in the case.
Lexington had sought to recover 50 percent of the estate, which was the sole beneficiary of O’Quinn’s nine-figure estate.
The Texas Supreme Court’s decision to pass on the appeal leaves in place a July 2021 ruling from a Houston appellate court that affirmed dismissal of all of Lexington’s claims.
“The John M. O’Quinn Foundation is pleased that the Texas Supreme Court brought an end to this long-running legal battle and honored Mr. O’Quinn’s final wish that his Foundation would continue his legacy of charitable giving,” said Bracewell attorney Christopher L. Dodson in a statement.
Lexington is represented by Larry Lee Thweatt Jr. and Joseph D. Terry of Terry & Thweatt and Lisa Bowlin Hobbs of Kuhn Hobbs.
The cause number is 22-0236.
Stanford Ponzi Receiver Gets $51M Award Affirmed
The court-appointed receiver in R. Allen Stanford’s Ponzi case got a ruling from a three-judge panel Sept. 7 affirming an award of about $51 million in attorney fees, costs and prejudgment interest in connection with a nearly $80 million fraudulent transfer judgment against Colorado billionaire Gary Magness.
Magness initially got a jury to clear him of any wrongdoing based on a good-faith defense. On appeal to the Fifth Circuit, a panel of the court certified a question to the Texas Supreme Court, asking whether the Texas Uniform Fraudulent Transfer Act contained an exception that would excuse Magness’ failure to diligently investigate when he knew of potential fraud in the transaction.
The Supreme Court answered in 2019 that there was no such exception and that transferees have a duty to conduct a diligent inquiry “irrespective of whether a hypothetical investigation would reveal fraudulent conduct.”
The Fifth Circuit then reversed the judgment in favor of Magness and rendered judgment for the receiver. Magness moved for rehearing en banc and also unsuccessfully appealed to the U.S. Supreme Court.
After entry of judgment in favor of the receiver, Magness again appealed, challenging the award of prejudgment interest, costs and attorney fees. The Fifth Circuit held that there was no error in the district court’s award.
Magness is represented by Paul D. Clement of Clement & Murphy.
The cause number is 21-10483.