In $100M Suit, a Moody Alleges Galveston Firm Used 'Parasitic Relationship' to Get Rich at His Family's Expense
Robert Moody Jr., a member of the prominent Moody family of Galveston, alleged longtime counsel Irwin "Buddy" Herz and his firm, Greer, Herz & Adams, ignored conflicts of interest in their work for the family.
May 26, 2020 at 06:21 PM
4 minute read
A member of Galveston's prominent Moody family has sued Greer, Herz & Adams, alleging that the boutique law firm represented the Moodys in too many different interests, making so much money off his family that it wouldn't exist in its current form without that work.
Robert Moody Jr., president of Moody Insurance Group, has sued the law firm as well as partner Irwin "Buddy" Herz, and his own brother, Ross Moody. Moody Jr.'s allegations raise questions about conflicts of interest that may arise when a firm or lawyer represents numerous related business entities and family members at the same time.
He is seeking more than $100 million in damages, and he is represented by Houston trial lawyer Anthony Buzbee.
"This is an egregious case of a trustee and lawyer taking advantage of his position to exponentially enrich himself, his law firm and his family," Moody Jr. alleged in a petition filed May 21 in state district court in Harris County. In a footnote, the suit referred to the ties between the firm and the family as a "parasitic relationship" that existed for more than 35 years.
Moody Jr. alleged in the petition that after his father, Robert Moody Sr., became ill, he executed a power of attorney, ceding control of his business interests to the Moody National Bank Trust Department, at the urging of Herz and Ross Moody.
But, Moody Jr. alleged, after his father stepped down from numerous business and charitable boards that control billions of dollars worth of Moody family interests, Herz and Ross Moody used that power of attorney as an opportunity to enrich themselves and their law firm.
"I've never seen anything like this," Buzbee said, when discussing Herz's broad representation of Moody interests.
"The roles that Buddy Herz and that law firm played? I can't imagine any large law firm or any trustee being so willing to engage [in so many roles] and put on so many hats," Buzbee, founder of Buzbee Law Firm, said in an interview Tuesday.
Herz did not immediately respond to requests for comment. Ross Moody did not respond to a call to the company he chairs, National Western Life Group in Austin, seeking comment.
In a 35-page petition, Moody Jr. alleged that Greer Herz "simply would not exist" in its present form without Moody Sr. and the "sprawling" Moody interests as clients. He alleged that members of the firm are routinely appointed to boards that manage Moody business interests, and most of the legal work is provided without a formal fee agreement that would include a waiver to the "innumerable conflicts of interest inherent in the multiple representations."
"The overwhelming number of conflicts of interest ignored by trustee Buddy Herz is shocking and legally reprehensible. Such disregard of his fiduciary obligations has made Buddy Herz very rich," Moody Jr. alleged in the petition.
According to the petition, Herz simultaneously is legal counsel to the testator of the Moody trust; legal counsel to multiple beneficiaries of the trust; general counsel to two major competing publicly traded corporate entities controlled directly or indirectly by the trust; and legal counsel to every corporate entity within the trust, among other Moody-related representations.
"The incestuous nature of Buddy Herz's relationship with the trust and the various Moody interests has made Herz and his law firm, GHA, millions and millions of dollars," Moody Jr. alleged.
The suit is seeking disgorgement of all fees paid to Greer Herz as counsel for any work involving interests of the Moody family, compensatory damages for multiple breaches of duty, punitive damages and attorney fees. Moody Jr. is also seeking an accounting of all fees earned by Greer Herz and Buddy Herz over the last 10 years related to any Moody representation.
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