Fleming v. Kinney ex rel. Shelton
395 S.W.3d 917
Tex. App.2013Background
- Fleming & Associates represented 8,051 fen-phen clients in a nationwide settlement with Wyeth totaling $339 million.
- Fleming funded a large echocardiogram screening program—cost over $20 million—to establish FDA-positive readings for clients to pursue claims.
- Settlement packets for all clients disclosed deductions for expenses, including non-client echocardiograms; over 95% of clients consented.
- Kinney sued Fleming in 2008, alleging breach of fiduciary duty by allocating non-client echocardiogram costs to clients’ recoveries.
- The trial court permitted a jury verdict on breach of fiduciary duty, awarding damages for unreasonable expenses and disgorgement of some attorney’s fees; Fleming appeals challenging five aspects including the economic loss rule and expert testimony.
- The substitute opinion holds that the economic loss rule does not bar fiduciary-duty claims in this attorney-fee context and that Hardwick’s expert testimony was improperly admitted; the court reverses and remands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Economic loss rule applicability | Fleming | Fleming argues contract-based damages only; rule bars tort claims | Not barred; fiduciary claims survive despite fee agreement |
| Admission of expert testimony | Former clients | Hardwick qualified but content issues | Error admitted; reversed on this basis |
| Jury question on fiduciary duty | Questions correctly framed | Issues misposed | Not addressed due to reversal on expert testimony |
| Fee forfeiture order | Disgorgement appropriate | Forfeiture errs as improper remedy | Not addressed; summary decision reversed on other grounds |
Key Cases Cited
- Anglo-Dutch Petroleum Int’l, Inc. v. Greenberg Peden, P.C., 352 S.W.3d 445 (Tex.2011) (attorney fiduciary duties; overlay of ethical duties in fee disputes)
- Greenberg Traurig of N.Y., P.C. v. Moody, 161 S.W.3d 56 (Tex.App.-Houston [14th Dist.] 2004) (expert testimony on attorney duties; improper testifying about law)
- Belt v. Oppenheimer, Blend, Harrison & Tate, Inc., 192 S.W.3d 780 (Tex.2006) (economic losses in malpractice; damages limited to property loss when purely economic)
- Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407 (Tex.2011) (economic loss rule scope in various contexts)
- Douglas v. Delp, 987 S.W.2d 879 (Tex.1999) (economic losses in legal malpractice; recovery limited to property damage)
- Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41 (Tex.1998) (limits on applying economic loss rule to fraud claims)
- Anglo-Dutch Petroleum Int’l, Inc. v. Greenberg Peden, P.C., 352 S.W.3d 445 (Tex.2011) (fiduciary duties in fee negotiations; overlay of ethics)