San Antonio's Fourth Court of Appeals has upheld sanctions against several South Texas attorneys for acting “intentionally and unethically” in attempting to avoid the jurisdiction of a Laredo state district court by filing an identical pleading in another jurisdiction where they eventually settled their case.

The dispute centers on a wrongful death action involving Samuel Morales Castillo, who was killed allegedly in a roadside accident caused by an FE Express truck driver.

Castillo's girlfriend, Maria Isabel Serna Contreras, retained Laredo attorney Ronald Rodriguez and filed a wrongful death action in a Webb County district court in Laredo on behalf of the two children she had with Castillo.

Castillo's wife, Paulina Navarro, retained three attorneys from the Corpus Christi law firm Liles Harris (now Liles White) who also filed a wrongful death case on behalf of their two children in Laredo. The two Laredo cases were consolidated at the request of two lawyers from Houston's Daw & Ray who were defending FE Express.

Attorneys for both Navarro and Contreras sent demand letters to the FE Express attorneys seeking the full limits of the trucking company's $1 million accident insurance policy.

The Liles lawyers later filed an identical wrongful death case in a Nueces County state district court in Corpus Christi. They also served FE Express' lawyers at Daw & Ray with a notice of a “friendly suit hearing” in Corpus Christi but did not notify Contreras' attorney of that case. The Liles lawyers later filed a notice of nonsuit in the Laredo court but did not mention the friendly suit they had pending in Corpus Christi. The Liles attorneys and Daw & Ray lawyers ultimately filed amended responses in the Laredo litigation announcing they had reached a $700,000 settlement agreement.

After Contreras received a copy of the settlement agreement, her attorney filed a motion for sanctions against the Liles lawyers and FE Express' attorneys, alleging they abused the discovery process by failing to produce a copy of their settlement agreement and engaged in conduct that affected the Laredo court's core functions to resolve the dispute.

The Liles lawyers responded by filing their own sanction motion against Contreras' attorney, alleging his sanctions motion was groundless and brought in bad faith.

The Laredo court dismissed the sanctions motion brought by the Liles lawyers. But it found the Liles attorneys had filed a nonsuit for an improper purpose, that FE Express' attorneys abused the discovery process by not producing the settlement agreement, and that both Liles attorneys and FE Express' lawyers had “conspired to intentionally and unethically avoid and interfere” with the Laredo court's jurisdiction.

The Laredo court ultimately sanctioned Liles Harris attorneys Kevin W. Liles, Brian K. Harris, and Stuart R. White for $50,000 and ordered them to pay Contreras' legal fees. The court also sanctioned FE Express attorneys James L. Ray and Kyle D. Giacco of Daw & Ray $25,000 and also ordered them to pay Contreras' legal fees. Lawyers from both firms appealed that decision to the Fourth Court of Appeals.

In its decision, the Fourth Court found that the trial court did not abuse its discretion by sanctioning the attorneys in the case. It noted that in a sanctions hearing, the Liles attorneys admitted they pursued the action in Nueces County “to avoid Rodriguez—counsel for Contreras—and any effort he might make to disrupt the settlement.” The attorneys also argued that Contreras had no authority or right to stop or interfere with their settlement even if it exhausted the insurance proceeds.

“The attorneys' decision to file suit in Nueces County to avoid Contreras' counsel suggests a belief by the attorneys that not only would her counsel lodge objections to any settlement that awarded the Navarro minors more than half of the available settlement funds, but those objections might have found favor with the Webb County trial court given its duty to protect all of the minors under its jurisdiction, thereby impairing any settlement agreement between Liles's clients and [Daw & Ray's] clients,” wrote Justice Marialyn Barnard.

“Thus, we hold the Webb County trial court could have concluded, in its discretion, complicity by the attorneys to keep the court in the dark regarding their settlement actions, thereby unilaterally divesting the trial court of its jurisdiction over the ability to protect all the minors under its authority,” Barnard wrote, affirming the trial court's sanctions in the case.

Rodriguez said he was pleased with the decision upholding the sanctions against his opposing counsel in the case.

“The Texas civil justice system sent a loud and clear message that lawyers who interfere with the exercise of its jurisdiction in the administration of justice and who violate the rule of law will not be tolerated,” he said. “I am honored to have contributed in protecting the rule of law, the judicial system and the people who we are entrusted to serve.''

Ryan Anderson, a San Antonio attorney who represents Liles, Harris and White, said his clients strongly disagreed with the Fourth Court's decision and are weighing their options, noting that the court concluded that his clients complied with Texas law but the trial court sanctioned them anyway.

“My clients intend to challenge the idea that an attorney can be sanctioned when his or her actions comply with well-settled Texas law, particularly where their actions resolve their clients' case in the most efficient manner available and in their respective clients' best interests,” Anderson said.

“The court of appeals' decision imposes a duty on attorneys not only to inform adverse parties of their strategy for resolving their clients' claims, but also to consider and treat competing claims to a fixed sum of money on the same level as their own clients, which is in direct contravention of the Texas Supreme Court's Soriano opinion,” Anderson said. “My clients, as experienced, well-respected attorneys, find it difficult to believe that the Texas Supreme Court would recognize such a duty.”

Mike Choyke, a Houston attorney who represents Ray and Giacco, did not return a call for comment. Ray and Giacco also did not return calls for comment.