Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision Because the trial court abused its discretion in denying Andersen leave to join the third parties, and Andersen has no adequate remedy at law, mandamus relief is appropriate. FACTS:In August 1999, Ken Lay, president and CEO of Enron Corp., visited Brenham. The purpose of his visit was to speak to the Washington County Chamber of Commerce at its annual dinner and tout Enron as a savvy investment. This visit was widely publicized in and around Brenham, by the newspapers and radio. The plaintiffs, all potential investors in Enron, either attended the meeting and heard Lay tell what a great investment Enron would be for them individually, for their trusts and for their employee pension plans, or heard about the meeting later. Plaintiffs claim Lay’s statements to the group were backed up by Enron’s quarterly and annual reports, which indicated that Enron was rock-solid and highly profitable. After investing, the plaintiffs alleged they would review press releases touting Enron’s financial strength and its expected increases in profits. Lay had told the plaintiffs and others that they would make lots of money if they invested in Enron. In late 2001, Enron filed for bankruptcy. Many of Enron’s top executives and some officers were accused of wrongdoing. Daily news reports indicated that the Department of Justice was investigating various Enron officials and investigating the accuracy of Enron’s financial reports. Ultimately, several Enron officials were indicted. The plaintiffs felt they had been betrayed. They sued Ken Lay and two other Enron executives, Andrew Fastow and Jeffrey Skilling, and Arthur Andersen and five of its partners. Andersen claimed it was misled like the plaintiffs. It tried to join other defendants, namely financial institutions, it claimed were at least partly, if not totally, responsible for Enron’s demise. These financial institutions, it claimed, enabled Enron to engage in inappropriate financial deals that masked its economic troubles; without these institutions, the plaintiffs’ suit could not be litigated fairly. But the plaintiffs claimed that the financial institutions were irrelevant to the suit. They claimed the suit was based on 1. Ken Lay’s misrepresentations made that August evening in Brenham; 2. Enron’s quarterly and annual financial reports prepared by Andersen; and 3. press releases and other public announcements Enron made concerning its financial strength. They claimed the financial institutions did not misrepresent anything to them the day Ken Lay visited and that their causes of action and petition did not implicate the financial institutions. The trial court agreed with the plaintiffs and in April 2003 denied Anderson leave to join the third parties. In July 2003, the trial court also entered a scheduling order that denied joinder of third parties. In this mandamus, Andersen asks this court to hold that the financial institutions are potentially responsible third parties who must be joined and to set aside the two orders denying joinder. Finally, Andersen asks the court to hold that it has no adequate remedy by appeal. HOLDING:Conditionally granted. Andersen contends that the trial court abused its discretion by denying leave because the third parties are “responsible third parties” under Chapter 33 of the Texas Civil Practice Remedies Code, and, thus, Andersen has the right to have the entire case, including issues of proportionate responsibility and contribution, tried at one time. The plaintiffs respond that the third parties are not “responsible third parties” under Chapter 33, but even if they are, the trial court had complete discretion to deny joinder. Chapter 33 grants defendants the ability to join “responsible third parties” to a suit. A “responsible third party” is defined as any person to whom all of the following apply: 1. the court in which the action was filed could exercise jurisdiction over the person; 2. the person could have been, but was not, sued by the claimant; and 3. the person is or may be liable to the plaintiff for all or a part of the damages claimed against the named defendant or defendants. �33.011(6)(A). Here, the third parties satisfy part 1 of the definition because the trial court could exercise jurisdiction over them. They have apparently generally appeared in the severed suit because they removed it to federal court. Andersen has shown that the third-party defendants are implicated in the plaintiffs’ pleadings to such an extent that the plaintiffs could have sued each third party, and that each third party “may” be liable to the plaintiffs for all or a part of the “damages claimed” against Andersen and the other defendants. Thus, Andersen has met its burden to show that the third parties are “responsible third parties” under Chapter 33. The decision to deny leave to join third parties amounted to a clear and prejudicial error of law. The court cannot state with certainty that Andersen will have an adequate remedy in a separate suit against the third parties. Even if Andersen could prosecute a separate suit against the third parties, it is the opportunity to have one jury apportion liability among all responsible third parties that Andersen seeks. OPINION:Fowler, J.; Fowler, Edelman, and Seymore, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.