U.S. District Judge Micaela Alvarez of McAllen has hit a south Texas lawmaker with a $2.9 million legal malpractice judgment after determining the lawyer failed to disclose to a client that he had a corporate relationship with a state district judge who was presiding over their case.
Sergio Muñoz Jr., a Democratic state lawmaker from Palmview, was sued in federal court in 2014 by Law Funder, a New Jersey litigation funding company. Law Funder had previously hired Muñoz to represent them in a complicated divorce proceeding filed in Hidalgo County in which they claimed an interest in a Mexican law firm that was part of the case’s division of assets.
Law Funder alleged that Muñoz failed to tell them he had a previous corporate relationship with 449th District Judge Jesse Contreras in their former law practice of Contreras & Munoz. Over a year after retaining Muñoz, Contreras was disqualified from hearing the case after a senior district judge ruled he had a corporate association with Muñoz.
In their legal malpractice complaint against Muñoz and his now solo law firm, Law Funder alleged they never would have hired Muñoz if they previously known of his relationship with Contreras.
Alvarez granted a default judgment legal malpractice award against Sergio Muñoz Jr. in February after ruling he’d delayed the case by refusing to cooperate in the discovery process. Alvarez also ruled that Law Funder had presented enough evidence that Muñoz committed legal malpractice by failing to disclose his business relationship with Contreras.
“The existence of defendants’ corporate association with Judge Contreras thus created a duty for the defendants to be honest with plaintiff from the beginning about this relationship, so plaintiff could make an informed decision about whether or not to retain defendants as counsel of record,” Alvarez wrote in her order.
Alvarez also noted that Law Funder also had sufficiently plead actual damages that Muñoz’s business relationship with Contreras ultimately led to Contreras disqualification, reversing years of litigation that cost Law Funder over a million dollars.
Muñoz and his attorney Francisco J. Rodriguez of McAllen both did not return calls for comment.