Houston lawyer Randolph Michael Nacol II, a defendant in breach of contract lawsuits filed by a litigation-funding company and by former clients, has now sued two former associates with his firm and Reaud, Morgan & Quinn, alleging they owe him millions for taking his cases.

Nacol, also known as Michael Nacol, alleges in a lawsuit filed on Aug. 19 that Beaumont-based Reaud Morgan took a group of “18-Wheeler” suits from him, costing him at least $2 million in lost profits and additional damages because he had to close his firm. In another petition filed on the same day, Nacol alleges former associates Lori Brown and Jeff Musslewhite, now partners in Brown & Musslewhite in Houston, took a group of personal injury suits from his firm, costing him at least $5 million in lost profits plus other damages related to the closure of his firm.

Nacol alleges in both petitions that the defendants unlawfully interfered with his contracts.

Glen Morgan, a partner in Beaumont-based Reaud Morgan, did not return a telephone message about Randolph Michael Nacol II v. Read, Morgan & Quinn. (The petition spells the firm name as Read, Morgan & Quinn, but the name is Reaud, Morgan & Quinn.)

Jerry Young, a director in Coats Rose in Houston, who represents Brown and Musslewhite, says, “We deny the allegations. We know they are meritless.”

He says Brown and Musslewhite did not interfere with Nacol’s client contracts.

“There are currently some clients of the Brown & Musslewhite law firm that were clients of the Nacol Law firm that terminated Mr. Nacol with cause and subsequently engaged Brown & Musslewhite,” Young says.

In the petition he filed against Reaud Morgan in the 157th District Court, Nacol alleges that in 2012, Reaud Morgan “acted in a manner so as to steal, or take, a crucial ‘book of business’ or group of ’18-Wheeler’ cases.” He alleges the firm took at least nine suits valued at $6-to-7 million, and contacted the clients while they still had enforceable contracts with him. Nacol alleges he lost at least $2 million in profits from those cases and lost another $5 million due to the closing of his firm, Law Offices of Michael Nacol.

Nacol, now a solo practitioner, alleges that his “creditworthiness and Goodwill reputation” were damaged because of Reaud Morgan’s conduct. He brings tortious interference with contract, and damages to goodwill, reputation and credit-worthiness causes of action against the defendant.

In Randolph Michael Nacol II v. Lori Brown, et al., filed in the 215th District Court, Nacol alleges the defendants failed to perform duties and obligations for him under their employment contract and unlawfully interfered with his client contracts.

He alleges Brown and Musslewhite took about 30 personal injury cases from Law Offices of Michael Nacol in 2012 valued at between $4 million and $5 million.

“Defendants failed job duties and obligations set out in Defendants’ contract of employment with Plaintiff’s standards including: failure to work on client files, failure to manage the timing of Nacol Cases in line with Plaintiff’s standards set forth in Plaintiff’s work protocol, and failure to deliver accurate reporting to Plaintiff on Nacol Cases all causing the shutdown of the firm and the theft of cases by Defendants,” Nacol alleges in the petition.

He also alleges Brown and Musslewhite failed to do “specified work” on suits that were taken under their “oversight” by Reaud Morgan so the firm would maintain an interest in the cases to ensure Nacol recovered from them.

Nacol brings breach of contract; tortious interference with contract; and loss of goodwill, loss of business reputation, damages to credit-worthiness and fraud causes of action against Brown and Musslewhite. As an alternative to full fee compensation, Nacol brings a quantum meruit claim on the personal injury cases.

Nacol seeks actual damages from the defendants in both suits, along with costs and attorney fees.

Concurrent Litigation

While he filed the two petitions in Harris County, he has not yet filed answers in a number of suits filed against him in Harris County related to his practice.

Plaintiff Funding Holding Inc., also known as LawCash, a Brooklyn, N.Y. litigation-funding company, has filed eight lawsuits against Nacol alleging he breached contracts by failing to return its interest in settlements. Some of the petitions also name, among defendants, former clients of Nacol’s firm. [See "Lawyer Sued by Litigation-Funding Company, Former Clients," Texas Lawyer, Jan. 21, 2013, page 1.]

Five of the LawCash suits, which were filed from Sept. 19, 2012 through Jan. 11, 2013, are pending. LawCash non-suited a petition filed on Jan. 10, and judges signed default judgments against Nacol and his firm in two others.

On Jan. 18, 164th District Judge Alexandra Smoots-Hogan signed a default judgment in a suit filed on Nov. 13, 2012 ordering Nacol and his firm to pay LawCash $150,687 in actual damages, $301,374 in punitive damages, plus attorney fees, costs and interest.

On April 12, 80th District Judge Larry Weiman signed a final default judgment in a suit filed on Sept. 19, 2012, ordering Nacol and his firm to pay LawCash $1,275,733 in damages, along with interest and attorney fees.

When asked why he has not filed answers in the LawCash suits, Nacol says, “any involvement in the litigation will occur after the claims against Brown, Musslewhite, and Reaud Morgan is concluded.”

He notes that he did not file interventions in the PI and truck suits he alleges were taken from him by Reaud Morgan, Brown and Musslewhite because he did not want to harm the clients’ chances of settling their cases.

“I chose to wait to resolve any outstanding issues with other creditors to allow clients to go forward in their litigation . . . until I could bring proper causes of action,” Nacol says.