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Zuniga v. Wooster Ladder Co.

Although the appellee underwent extensive corporate reorganization, divesting itself of all assets of any value, so that it's parent corporation could enter into a consent judgment and although this effort has not resulted in the finality the parties intended in reaching a settlement, the element of demonstrable harm has not been met.

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Dissenting Opinion by: Paul W. Green, Justice

REVERSED AND REMANDED

This is an accelerated appeal of the granting of a temporary injunction. It is also the third lawsuit and second appeal to arise over the circumstances surrounding Manuel Zuniga, Jr.’s fall in 1987 from a ladder. The underlying personal injury suit filed by Manuel and Mary Zuniga and their four children alleged that Bauer Corporation defectively manufactured and labeled the ladder. Bauer’s insurer became insolvent, and Bauer feared a large judgment would put it into bankruptcy. Issues of legal malpractice on the part of the law firm representing Bauer surfaced, and after settling with a co-defendant, the Zunigas’ lawyers offered to settle with Bauer if Bauer would assign its malpractice cause of action against its legal team. See Zuniga v. Groce, Locke & Hebdon, 878 S.W.2d 313, 314 (Tex. App.-San Antonio 1994, writ ref’d). A consent judgment for $25 million was entered in favor of Mr. and Mrs. Zuniga against “defendant Bauer Corporation.” *fn2 The Zunigas did not give Bauer a covenant not to execute as part of the settlement. Instead, the Zunigas and their lawyers agreed that Bauer could transfer all its assets (except the malpractice cause of action) to a new corporation, and the Zunigas waived their rights to the new entity’s assets and released all claims against all the individuals connected with Bauer. The parties also agreed that the asset transfer was not a fraudulent transfer under the Uniform Fraudulent Transfer Act. Id. at 318.

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