A former client and his company sued Andrews Kurth on Oct. 10, alleging the Houston-based firm engaged in legal malpractice and breached a fiduciary duty when representing the plaintiffs in a family business dispute.
Harris County resident Scott D. Martin and SKM Partnership Ltd., a partnership of Scott and his wife, Kim Martin, allege in their petition that Andrews Kurth advised Martin to sign a settlement agreement. The agreement was intended to end a family business dispute, but, instead, that dispute ended in years of litigation and an appeals court opinion that the agreement was not enforceable, the plaintiffs continue.
In Scott D. Martin, et al. v. Andrews Kurth, filed in the 234th District Court in Harris County, Martin and SKM seek unspecified actual damages, interest, costs and fee forfeiture from Andrews Kurth.
In response to the allegations, Bob Jewell, managing partner of Andrews Kurth, provided this written statement:
“Scott Martin’s claim has no merit. Andrews Kurth represented him in a professional and competent manner more than 5 years ago, and he received an unquestionably positive result in connection with that representation. Mr. Martin currently owes Andrews Kurth over $2 million, and when he signed the promissory note for amounts owed in 2010, he did not express (nor did he have) any complaints about the services we provided. Mr. Martin is a sophisticated businessman who was intricately involved — and provided a significant amount of direction — in every step of the negotiation and litigation. This lawsuit is merely an attempt to avoid paying for the exceptional work performed by Andrews Kurth attorneys on his behalf.”
In response, plaintiffs’ attorney David Ayers, a partner in Werner Ayers in Houston, says Andrews Kurth has billed Scott Martin for some fees and expenses he hasn’t paid, but Ayers is unsure of the amount.
“He had paid them a significant amount, millions, in fact. They do claim he still owes them,” Ayers says.
Ayers says Martin was an “involved client,” but he relied on his lawyers.
Brother v. Brother
Martin and SKM allege in the petition that in January 2008, a business dispute between Martin and his brother, Ruben, had “deteriorated” to the point that litigation between them was “imminent.” At that time, the plaintiffs allege, Andrews Kurth had been representing Scott Martin and SKM for several months in connection with disputes over the direction and management of Martin Resource Management Corp. (MRMC), the Martin family business.
The plaintiffs allege Scott Martin and Ruben Martin’s mother, Margaret, attempted to mediate the dispute; after a series of discussions, a settlement document called “Margaret’s Settlement Proposal” was presented to Scott Martin and Andrews Kurth. They allege it only needed Scott Martin’s signature to go into effect.
However, the plaintiffs allege, Andrews Kurth advised Scott Martin that the proposal required changes, and Andrews Kurth “altered” the document and titled it the “Settlement Agreement.”
The plaintiffs allege that Scott Martin signed the document based on Andrews Kurth’s assurances it would settle the dispute with Ruben Martin and protect the interests of Scott Martin and SKM.
“Scott was assured by Defendant that Ruben Martin could be legally compelled to perform the obligations in the Settlement Agreement because it was an enforceable contract,” the plaintiffs allege in the petition. “These assurances proved to be incorrect.”
A few months after drafting the settlement agreement, the plaintiffs allege, Andrews Kurth filed suit against Ruben Martin to enforce it, but that was a “doomed effort” and the firm billed more than $3 million in fees and costs for that work.
“Although Scott [Martin] won some damages at trial, the Settlement Agreement was ultimately held to be unenforceable on appeal,” the plaintiffs allege in the petition. “The Texas appellate courts determined, based on a plain reading of the Settlement Agreement’s text, that it was no more than an unenforceable agreement to agree.”
Scott Martin and SKM allege in the petition that Andrews Kurth inserted terms into the settlement agreement that led to the appeals court opinion.
The plaintiffs allege that they subsequently were involved in “nearly a dozen” lawsuits stemming from the dispute.
“None of these lawsuits would have arisen if the Settlement Agreement accomplished what it was intended to do: settle the disputes between Scott and his brother,” the plaintiffs allege, adding that the litigation ended when Scott Martin and SKM agreed to sell their shares of MRMC back to the company.
The plaintiffs allege Andrews Kurth made a number of errors that were negligent, such as redrafting Margaret’s Settlement Proposal instead of advising Scott Martin to execute it, failing to draft an enforceable settlement agreement, and, among other things, “authoring an unprivileged, discoverable email that insinuated that Scott was plotting a ‘coup’ to oust Ruben Martin from any role in MRMC when that was never Scott’s intention.”
The plaintiffs seek damages that consist, in part, of legal expenses and fees incurred from 2007 through March 2008 that “would have been reimbursed under an enforceable contract,” and legal, expert and related litigation expenses from March 2008 through October 2012 “that would have been avoided had the Settlement Agreement been properly drafted.”
Ayers says damages could reach $200 million or more.
“The amount that actually came out of Mr. Martin’s pocket for expenses of various types is in the neighborhood of $30 million. The damage model is going to be a multiple of that,” he says.
Robert Killeen Jr., a director in Killeen & Stern in Houston, represented Ruben Martin in the appeal at issue. He says, “We represented Ruben Martin in a $120 million lawsuit brought by his younger brother, and Ruben prevailed.”
He declines comment on the suit against Andrews Kurth.