Posted May 30, 2012 08:11 pm CDT
A divided federal appellate court has upheld a $420,000 jury verdict against two lawyers who were found to have withheld critical information from the opposing party in complex asbestos litigation in state court in Mississippi.
The two lawyers, Thomas W. Brock and William Guy, represented nearly 170 individuals in the underlying state-court case against Illinois Central Railroad Co. The plaintiffs, who were former employees of the Canadian National Railway Co. subsidiary, contended that they had been sickened by job-related asbestos exposure, according to the Clarion-Ledger.
A procedure was developed for conducting settlement discussions of the state-court cases in stages, with the plaintiff lawyers providing information about their clients to the defendant railroad in the form of sworn answers to individual questionnaires, explains the New Orleans-based 5th U.S. Circuit Court of Appeals in its opinion (PDF).
However, Brock and Guy omitted critical information concerning two of their clients, Illinois Central contended, and a federal district court jury agreed, awarding the railroad $420,000 in 2010 on the company’s claims of fraud and breach of the duty of good faith and fair dealing.
That amount is exactly double the $210,000 total settlement the company paid to the two plaintiffs years earlier in the state-court case. Had it known that the two plaintiffs had previously been involved in other asbestos litigation prior to the case in which Brock and Guy represented them, Illinois Central said, it would have nixed the settlement and relied on a statute of limitations defense.
A dissenting federal appeals judge said the $420,000 award against the two lawyers should not be upheld, because Illinois Central failed to exercise due diligence in timely investigating its potential fraud claim against Brock and Guy after the company should have been aware that such investigation was needed.