in Re Employee Funding of America, LLC

CourtCourt of Appeals of Texas
DecidedApril 5, 2022
Docket13-21-00420-CV
StatusPublished

This text of in Re Employee Funding of America, LLC (in Re Employee Funding of America, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
in Re Employee Funding of America, LLC, (Tex. Ct. App. 2022).

Opinion

NUMBER 13-21-00420-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI – EDINBURG

IN RE EMPLOYEE FUNDING OF AMERICA, LLC

On Petition for Writ of Mandamus.

MEMORANDUM OPINION

Before Justices Hinojosa, Tijerina, and Silva Memorandum Opinion by Justice Tijerina1

Relator Employee Funding of America, LLC (Employee Funding), filed a petition

for writ of mandamus raising numerous issues including, inter alia, the contentions that

the trial court erred by sealing the record in the underlying case and by failing to rule on

1 See TEX. R. APP. P. 52.8(d) (“When denying relief, the court may hand down an opinion but is not

required to do so. When granting relief, the court must hand down an opinion as in any other case.”); id. R. 47.1 (“The court of appeals must hand down a written opinion that is as brief as practicable but that addresses every issue raised and necessary to final disposition of the appeal.”); id. R. 47.4 (explaining the differences between opinions and memorandum opinions). Employee Funding’s pending motions. 2 We conditionally grant the petition for writ of

mandamus in part and deny it in part.

I. BACKGROUND

Real parties in interest Martin Phipps, acting individually and on behalf of Martin

Phipps PLLC and Phipps Anderson Deacon LLP; and Clayton Clark, acting individually

and on behalf of Clark, Love & Hutson; and Peter Flowers, acting individually and on

behalf of Meyers & Flowers, initiated the underlying proceeding in the 23rd District Court

of Wharton County, Texas. They sought to administer the distribution of attorney’s fees

and expenses through the establishment of a qualified settlement fund (QSF) relating to

a multi-district litigation case (the Syngenta MDL) regarding genetically modified corn

products in the United States District Court for the District of Kansas, as provided in a

joint venture agreement between the real parties in interest.

The trial court entered an order approving the QSF, appointed ARCHER Systems,

LLC (ARCHER) as fund administrator, and appointed attorney Gregory Gowan as a

special master. In January 2021, Employee Funding, which had a security interest in the

attorney’s fees payable to Martin Phipps and the Phipps entities in the Syngenta MDL,

became aware that a QSF had been established and began communicating with

ARCHER to obtain information about the fund. In February, Phipps notified ARCHER that

he had assigned his rights to the Syngenta MDL funds in the QSF to Employee Funding.

On March 10, 2021, the trial court issued an order distributing the QSF to the real

parties. Employee Funding received $2.5 million in fees as a result of that order, although

2This original proceeding arises from trial court cause number CV52583 in the 23rd District Court of Wharton County, Texas, and the respondent is the Honorable Ben Hardin. See TEX. R. APP. P. 52.2.

2 it had expected a greater sum comprising approximately one-third of the common benefit

fees, less deducted expenses. Employee Funding requested ARCHER and Gowen to

provide information regarding the distribution but failed to receive any information from

either regarding the division of fees and costs.

On May 17, 2021, Employee Funding intervened in the underlying trial court

proceeding asserting its interest in the case through a credit agreement with Phipps.

Employee Funding sought access to the case file; however, the clerk’s office denied

Employee Funding any access to that file pursuant to instructions from Gowen. Gowen

asserted that the trial court had entered an order providing that no one could access the

court file without a court order.

After further efforts to obtain access to the file were unsuccessful, on May 21, 2021,

Employee Funding filed a “Motion to Modify Standing Order to Allow Access to Case File.”

In June 2021, counsel for real parties allegedly agreed to provide access to the file, but

ultimately reneged. On June 4, 2021, the Syngenta MDL court issued an order allocating

$60.4 million in fees for individually retained private attorneys. On June 7, 2021,

Employee Funding filed an “Emergency Motion to Stay Disbursement of Funds,”

requesting the trial court to stay any further distribution of proceeds from the QSF until

Employee Funding was allowed to examine the case file and determine whether previous

and impending distributions were made in compliance with the parties’ contracts.

The trial court set a hearing on Employee Funding’s motions to be held on June

14, 2021. On June 9, 2021, the parties filed an agreed order which granted, in part,

Employee Funding’s motion for access to the case file; however, the trial court did not

sign that order. Beginning on June 25, 2021, Employee Funding asked for a hearing date

3 on its motions. A hearing was ultimately scheduled to be held on August 4, 2021;

however, that hearing was passed because counsel for other parties had conflicting

schedules. On August 2, 2021, the trial court notified the parties that it would set these

motions to be heard by submission due to continued difficulty in scheduling. On October

13, 2021, Employee Funding emailed the court coordinator to request the status of the

pending motions, to ask if there was anything further required to obtain rulings, and to

request the court to rule on its motions. Nevertheless, the trial court did not thereafter

issue rulings on these motions.

This original proceeding ensued on December 1, 2021. By petition for writ of

mandamus, Employee Funding raises eight issues:

1. Did the trial court improperly seal or otherwise improperly deny public access to the court’s file in this case? Did the trial court improperly seal the file without a written, publicly available motion and order, as Texas Rule of Civil Procedure 76a requires?

2. Did the trial court improperly prevent Relator—a party to the case— from accessing the court’s file? Can a party be denied access to a court’s file?

3. Did the trial court improperly appoint a special master and thereby abuse its discretion? Under Texas Rule of Civil Procedure 171, was the court required to: (1) find the case presented exceptional circumstances before appointing a special master and (2) sign a written order appointing the special master and make the order available to the parties?

4. Did the trial court abuse its discretion in failing to rule on Employee Funding’s request for access to the pleadings and all other matters on file with the district court in this case since Employee Funding intervened as a holder of a security interest in part of the funds deposited with the court?

5. The Clark/Phipps/Flowers group executed a joint venture agreement by which they agreed that their award of Syngenta common benefit fees would be split by them one-third each. The Wharton County District Court’s distribution order reveals that common benefit fees 4 were not split between Clark, Phipps, and Flowers in accordance with their agreement. Did the trial court abuse its discretion in awarding a different division of common benefit fees than directed in the lawyers’ joint venture agreement?

6. The Syngenta MDL Court awarded the Clark/Phipps/Flowers group $38,120,902.25 as total common benefit fees and only $7,143,837.45 for total common benefit expenses. But the Wharton County District Court awarded the Clark/Phipps/Flowers group only $20,766,740.67 as total common benefit fees and $20,508,241.80 for total common benefit expenses.

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