Fleming v. Curry
412 S.W.3d 723
| Tex. App. | 2013Background
- Fleming & Associates screened over 40,000 fen-phen claimants seeking opt-out eligibility for a nationwide class settlement and kept about 8,051 clients.
- Wyeth settled Fleming’s 8,051 clients for roughly $339 million, with a 95% opt-in requirement and individual settlement packets showing deductions for fees and expenses.
- Former clients sued Fleming for fraud, breach of contract, and breach of fiduciary duty, alleging improper pro rata deductions for echocardiogram program expenses and related costs.
- The trial court granted partial summary judgments against Fleming on liability but ordered disgorgement of 32% of fees; Curry and Alvarez were separately tried and adjudicated.
- The court of appeals reversed on several grounds, holding that (i) collateral estoppel could not sustain summary judgment, (ii) there were material factual questions about reasonableness and disclosure of expenses, and (iii) fee forfeiture depended on breach, which was not established.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can summary judgment be affirmed on collateral estoppel? | Plaintiffs | Fleming | No collateral estoppel applies; Kinney decision reversed. |
| Were the disputed expenses unreasonable or improper as a matter of law? | Plaintiffs | Fleming | Question of fact; not conclusive as a matter of law. |
| Did Fleming adequately disclose the expense allocations? | Plaintiffs | Fleming | Question of fact; disclosure not conclusively adequate. |
| Was fee forfeiture appropriate where breach, if any, was not established? | Plaintiffs | Fleming | Reversed; forfeiture not proper without breach finding. |
Key Cases Cited
- Kurtz v. Kurtz, 158 S.W.3d 12 (Tex. App.-Houston [14th Dist.] 2004) (contracts govern reasonableness of fees)
- Goffney v. Rabson, 56 S.W.3d 186 (Tex.App.-Houston [14th Dist.] 2001) (fiduciary duties require candor and avoidance of concealment)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (summary-judgment standard; record viewed in favor of nonmovant)
- Buck v. Palmer, 381 S.W.3d 525 (Tex. 2012) (unifed standard for fiduciary-duty relief and reasonableness)
- Kinney ex rel. Shelton v. Fleming, 95 S.W.3d 917 (Tex.App.-Houston [14th Dist.] 2018) (collateral estoppel context in fiduciary-duty case)
- Stephens County Museum, Inc., 517 S.W.2d 257 (Tex. 1974) (materiality and reasonableness in fiduciary disclosures)
- State v. Landry, 793 S.W.2d 281 (Tex.App.-Houston [14th Dist.] 1990) (expense reasonableness often fact-specific)
- Beck v. Law Offices of Edwin J. (Ted) Terry, Jr., P.C., 284 S.W.3d 416 (Tex.App.-Austin 2009) (equitable fee forfeiture doctrine)