A Houston federal judge has dismissed a lawsuit filed by the former chief financial officer of Corpus Christi trial firm Hilliard Martinez Gonzalez.
The CFO, Charles Duff, had sued to collect a $500,000 bonus and $800,000 in deferred compensation he alleges the firm promised him but never paid. He claimed the money stemmed from settlements the firm secured in litigation with General Motors.
Duff filed the complaint in January against the well-known plaintiff’s firm and two of its partners, Robert Hilliard and Catherine Tobin.
In a May 2 ruling, Chief U.S. District Judge Lee Rosenthal of the Southern District of Texas dismissed with prejudice claims Duff brought under federal ERISA law, and dismissed without prejudice claims brought under Texas state law. Rosenthal wrote that she dismissed the state-law claims—which include breach of contract, fraud, breach of fiduciary duty, promissory estoppel and unjust enrichment—without prejudice “so they might proceed in the state court.”
Duff’s lawyer, Alfonso Kennard Jr, of Kennard Richard in Houston, said his client will file suit in state district court on the state-law claims. Because of that, he said the dismissal is “not a big deal” to his client’s case.
“It really doesn’t change all that much. The underlying claims still exist, continue to exist, it’s just a matter of figuring out where we will play,” Kennard said.
Defense attorney Fields Alexander, a partner at Beck Redden in Houston, said, “The judge’s opinion was well-reasoned and correct.” He declined further comment.
As described in Rosenthal’s opinion, Duff was hired as Hilliard Martinez’s CFO in August 2010. In April 2015, Duff alleges, Hilliard agreed to pay him a bonus of “half a million” for his contributions and service from money the firm expected to received from litigation it settled with GM.
The opinion does not identify the GM litigation, but Hilliard is one of three co-lead counsel for plaintiffs in multidistrict litigation filed against GM over allegedly defective ignitions.
Duff alleges that in June 2015, he and Hilliard signed a deferred compensation agreement that called for the firm make four $200,000 payments into an account. He also claims the firm agreed to pay him a bonus linked to the GM settlement money.
After Hilliard did not give him a bonus in December 2016 or in January 2017, Duff alleges he brought the issue to Catherine [Tobin] Hilliard’s attention, and she said she and Robert Hilliard wanted to pay a substantial bonus, but it would have to be after the GM settlement funds came in. Duff alleges she also acknowledged he would receive $500,000.
By the spring of 2017, Duff alleges, the firm had collected most of the GM settlement funds, and to “insulate the collected settlement funds from creditors or from bankruptcy” he asked Hilliard agreed to loan him 90 percent of his deferred compensation balance. Duff alleges Hilliard agreed to do so, but did not. The firm also did not pay him a $500,000 bonus, but instead gave him $5,000.
Duff alleges that after he retained counsel to enforce the deferred compensation agreement, he was terminated in November 2017.
In dismissing the claims, Rosenthal found that the agreement for deferred compensation underlying Duff’s ERISA claim is not an ERISA plan. Because she dismissed the federal ERISA claim, Rosenthal declined to exercise supplemental jurisdiction on the state-law claims.