Andrews Kurth is the defendant in a $50 million legal malpractice suit that began on June 9 with voir dire in 189th District Judge Bill Burke’s court in Houston. The lawsuit involves a former client that is unhappy about the Houston-based firm’s representation of one of imprisoned financier R. Allen Stanford’s companies.
Thomas Ajamie, of Ajamie LLP of Houston, who represents legal-mal plaintiff Walton Houston Galleria Office, said Andrews Kurth “sided” with Stanford Group Holdings against Walton in a dispute, while representing both.
“Walton was a long-standing client of Andrews Kurth. And then, in the middle of a transaction, they decided they wanted to represent Stanford instead of us,” Ajamie said. “They threw us under the bus.”
Murray Fogler, a partner in Beck Redden in Houston who represents Andrews Kurth, said, “Andrews Kurth is not accused of mishandling any task for the plaintiff. They are not saying that we committed malpractice in the way we handled their matters. We are a scapegoat for the fact they regret doing business with Stanford.”
Walton used Andrews Kurth for lease transactions and litigation involving the Galleria Towers, an office building it owned. The plaintiff alleges in its 2011 petition that Andrews Kurth represented it in lease transactions with Stanford Group Holdings Inc. when Stanford was renewing a lease in Walton’s Galleria Tower II, However, Walton alleges in the petition, Andrews Kurth failed to disclose information it had learned about Stanford Group Holdings, including the fact that the company was under a government investigation. Walton alleges that Andrews Kurth “sought actively to defend Stanford” from the U.S. Securities and Exchange Commission inquiry.
“While Andrews Kurth was representing Walton in the lease negotiations, Andrews Kurth learned that Stanford was under a government investigation, was likely operating as a Ponzi scheme and was engaging in illegal activity,” Walton alleges in the petition.
Walton alleges that Andrews Kurth also agreed to represent Stanford Group Holdings against Walton in sale negotiations when Stanford Group Holdings sought to buy the Galleria Towers from Walton. And, after those talks broke down, Stanford Group Holdings sued Walton and placed a lis pendens on the buildings.
The plaintiff alleges that Andrews Kurth “aided Stanford in developing and prosecuting the lawsuit against Walton” while at the same time continued to represent Walton in connection with the Galleria Towers.
“Walton would not have entered into the original lease, the amendments or the purchase negotiations had Walton known at any point that Stanford was the subject of government investigations,” the plaintiff alleges in the petition in Walton Houston Galleria Office v. Andrews Kurth.
In June 2012 a federal judge in Houston sentenced R. Allen Stanford, the Houston financier, to 110 years in prison after a federal court jury found him guilty of 13 of 14 criminal counts against him. He was charged in connection with an alleged conspiracy to defraud investors who bought about $7 billion in CDs sold through Stanford International Bank.
Walton brings legal malpractice, breach of fiduciary duty, breach of contract and negligent misrepresentation causes of action against Andrews Kurth. It seeks about $50 million in actual damages and unspecified punitive damages.
Bob Jewell, Andrews Kurth managing partner, provided this statement:
“Andrews Kurth properly and diligently represented Walton in its Galleria leasing transactions. In fact, Walton does not complain about any of the services that the firm performed. Walton also gave Andrews Kurth written permission to represent Stanford in the purchase transaction. Lawyers are supposed to keep client confidences, not reveal them. Further, there was nothing that the lawyers representing Walton knew about Stanford that prevented those lawyers from adequately representing Walton.”
In the firm’s written statement, Jewell also said the suit is “ill-founded” and is Walton’s attempt to “blame someone other than themselves for the decision to do business with Stanford.”
In its first amended answer, filed on April 2, Andrews Kurth generally denies the allegations and alleges that Walton Houston Galleria’s claims are barred in whole or in part by limitations.
The firm alleges in the answer that the court already ruled that Andrews Kurth had “no duty to disclose” confidential information about Stanford Group Holdings or related Stanford companies to Walton.
Ajamie and Fogler estimate that the trial will last at least two weeks.
On June 2, Burke signed a motion granting Andrews Kurth’s motion to bifurcate the trial, so that the punitive damages phase, if needed, would proceed after the rest of the trial is concluded.