WATT Dirty Politics were Employed

Demoted Miller Principal Wants
to be State Representative
Local DJ accuses Noyola of assault
By John Kelley
Danny Noyola Sr., alleged assailant of local radio host Roland
Garza and demoted Miller High School Principal, has filed to be
the candidate for the 33 rd Legislative District, formerly occupied
by Vilma Luna. Noyola, rumored to be handpicked by Luna
and local power broker, Mikal Watts, was demoted to Assistant
Principal at Moody High School over allegations of mismanagement
at Miller High School last year. In addition on August 3 rd ,
an assault complaint was filed with the Corpus Christi City
Police against Noyola for attacking local radio host, and former
mayoral candidate, Roland Garza in his radio booth during his
broadcast of his show “What’s Your Point?” on Magic 93.5 FM.
A Twisted Road in the Democratic Process
Local insiders believed as early as last December that Luna, who
has been a Democratic handmaiden to Tom Craddick, Majority
Leader of the State Republican Legislature, would resign to

page 14
accept a lucrative lobbying position. When Democrats
left the state in 2003 to thwart Tom Delay’s redistricting
plan to create a Republican Majority, Luna stayed behind.
She has been widely seen in Democratic circles as
more than willing to carry water for the Republicans in
order to get key committee appointments. When rumors
of her resignation circulated, Solomon Ortiz Jr. started
testing the water for a run to replace her. When she
decided to stay and run in the primary, Ortiz decided
not to run; oddly the Republicans didn’t put up a candidate
either.
Luna made the announcement on morning of July 5 th
that she was going to resign. Two to three days before
Danny Noyola Jr., Noyola operative Mike Chavez and
persons having a caller ID of the Watts Law firm contacted
all of the Democratic Precinct Chairmen and
asked them to attend a meeting at Las Espuelas Restaurant
at McArdle and Staples at noon on July 5 th to discuss
internal Democratic Party business. Noyola, Luna, and
Watts met with Democratic Party Chairman that same
morning before Luna’s announcement.
When the Precinct Chairs showed up at noon expecting
to discuss internal party business, most had not yet
heard of Luna’s resignation. They found a podium full
of microphones and all of the television station cameras
already in place. Danny Noyola Jr., with Hugo Berlanga
standing behind him announced that Luna had resigned
and went on to give a glowing recommendation for his
father to fill the position. Precinct chairs where handed
endorsements for Noyola Sr. to sign. Many said they felt
deceived and refused to sign. Others said they later
regretted signing before they found out anyone else was
in the race. Within hours the Watts Law firm invited all
of the Precinct Chairs to be their guests at Whataburger
field where they were encouraged to vote for Noyola.
In addition to Luna and Watts appearing to attempt to
handpick her successor, she gave the Republicans a gift
by resigning. Had she stated before the primary that she
would be moving out of the district before election day,
and therefore unable to serve, the Republicans would
have been unable to put up a candidate for the November
election. By resigning instead, not only did she deny
the Democratic voters a chance to select their candidate,
she gave the Republicans a chance to nominate a candidate
for the November election. Joe McCombs, former
Republican County Judge candidate announced that he
will run against Noyola soon after.
Both candidates will be nominated by the 43 sitting
Precinct Chairs of the Democratic and Republican precincts,
not the 90,000 voters in the District. With one
precinct chair open in the Democratic Party Precincts, as
few as twenty-two people will make the decision about
who will represent the party in the fall election.
Noyola had been demoted at the end of the school year
by Mary Kelley, interim superintendent of CCISD on the
recommendation of Scott Eliff, Asst. Superintendent
with the approval of the school board. These were facts
generally known in the community. So why would Luna
pick someone with obvious baggage that had still not
fully surfaced, but surely would by November? Some
observers have speculated that the support of Noyola by
Luna and Watts is an attempt to thwart the nomination
of Solomon Ortiz Jr. to the seat and put up Noyola as a
weaker candidate against McComb. Watts has supported
both Democratic and Republican candidates in
the past. It is almost a certainty that Ortiz would have
beat Noyola in a primary run. The apparent Republican
collaborator, Luna, accepted a high paying lobbying job
in Austin last week.
Miller High School Allegations Unresolved
Most of the concerns around Miller High School revolve
around allegations that Noyola was off campus and
unavailable much of the time, that he was inconsistent,
failed to follow through, changed the dress code on his
own in violation of board policy, failed to provide adequate
supervision to Assistant Principals who changed
grades and attendance in violation of state law, and
treated teachers with a lack of respect. We the People
talked to a number of teachers and administrators who
asked that their names not be used because they remain
in the system and were concerned about retaliation.
Some of those contacted stated they had been contacted
by Republican candidate, Joe McCombs, and that they
had shared the same information with him. All of the
allegations contained here were confirmed by other faculty
and staff members or documentation.
The overriding allegation was that Noyola was rarely
there and favored Asst. Principals Claude Axel and Dr.
Denise Hutchinson over principals who teachers and
staff saw as trying to do their jobs with little support. Dr.
Hutchinson was also said to be out of school frequently
with one Assistant Principal saying that they didn’t
think Dr. Hutchinson was there one complete week the
whole year. Axel was said to be repeatedly absent from
his area of responsibility on the second floor, and that no
one knew where he was nor did he respond to his radio
at times.
A repeated complaint from those interviewed was that
Mr. Noyola “was all talk, no action”. Noyola unilaterally
and in violation of board policy told students that as
long as they maintained a 92% attendance rate they
would be allowed to ignore the District dress code. Staff
said despite the lack of maintaining that attendance rate
the dress code was never reestablished. Miller had one
of the lower high school attendance rates in the district.
Discipline was said by all interviewees to deteriorate
with inconsistent handling of discipline problems, with
students preferring to see Hutchinson and/or Axel who
were said to have handed out minimal responses to
discipline violations. Faculty and staff who had been
there several years stated that faculty morale and student
behavior both declined dramatically under
Noyola’s leadership. Eight of twelve math teachers and
a number of other teachers left the district or asked for
transfers; most stating they would not continue to work
with Noyola as principal. Teachers must put in their
intention and requests for transfer before the end of the
year, which is when Noyola’s reassignment was made
public. What is very clear from interviewing teachers
and staff is that they had no respect for Noyola as a
principal and reported that many students felt the same.
Violations of State Law
Miller is a PEG school, meaning that its past performance
let parents transfer their children to other schools
for not meeting state standards. While TAKS scores did
increase in science and math, the interviewees all stated
it was due to extraordinary efforts on the part of math
and science departments despite conditions. With an
almost total turnover in the math department, continued
progress in that area is at risk.
A major part of the rules that give school a PEG rating
are attendance rates. Events surrounding one student in
particular seemed to bring the crisis to a head. One
student with a severe attendance problem can make the
difference in a school’s rating.
The student who was not named in a heavily redacted
set of emails obtained by WTP became the center of the
battle for Miller’s status and the cause of Mr. Noyola’s
eventual demotion. The student who was reported by
teachers to have attended only 3-5 classes for the entire
year, had both grades and attendance changed by Assistant
Principal, Dr. Denise Hutchinson. A series of emails
(found in a report to Carlos Cavazos, CCISD Police
Chief, that was obtained by WTP ) show discussions of
From front page DEMOTED PRINCIPAL
Continued on page 16
Noyola had been demoted at the end
of the school year by Mary Kelley,
interim superintendent of CCISD on
the recommendation of Scott Eliff,
Asst. Superintendent with the
approval of the school board. These
were facts generally known in the
community. So why would Luna pick
someone with obvious baggage that
had still not fully surfaced, but
surely would by November?

Hurt? Injured? Need a Lawyer? Too Bad!

Two years ago, rich and powerful Texans said lawsuits were ruining the state’s economy and needed to be fairer. Today, thanks to tort reform, they are fairer— for business. Ordinary people are out of luck.

by Mimi Swartz

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Till Death Do Us Part [March 2005]
Going Public [February 2005]
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LIKE A LOT OF OLD-FASHIONED TEXANS, Alvin Berry is the kind of man who bears the pain and indignities of life with good grace. At 73, Alvin has never been a rich man, but in his youth he managed to maneuver himself from the rolling plains of Central Texas to the industrialized eastern corner of the state, where he worked his way up to maintenance superintendent at a chemical plant in Texas City. After he retired, he moved to a small ranch near Izoro, in Lampasas County, on property inherited by his wife of almost fifty years, Carla Jean. Despite the twinkle in his eyes and his love of a good story, Alvin is not a frivolous man: He wears his snowy-white hair parted in the middle and brushed back, Depression-era-style, is an elder of his church, votes Republican, and, for most of his life, never dreamed of involving himself in something as crazy as a lawsuit.

But Alvin also has, in common with many Texans, a keenly developed sense of fairness, and something happened two years ago that struck him as just plain wrong. He had endured several surgeries: a hip replacement in 1999, which required additional surgery in 2000, and in 2002, a triple bypass, after which he experienced uncontrolled bleeding and heart failure; the doctors had to open him up again right on his hospital bed. Alvin made no complaint; as Carla Jean pointed out, those doctors had saved his life. But then, in 2003, Alvin got some lab tests with disturbing results. He’d been having kidney stones, and now his prostate-specific antigen test showed an elevated score. He didn’t like that; the nurse at the chemical plant had been a stickler for this test, so he knew that a high score could indicate cancer. His family doctor was worried enough to send him to a urologist, and that is when the trouble started. Don’t worry, Alvin recalls the doctor telling him. Kidney stones can elevate your PSA. Go home. Relax.

But five months later, in September, Alvin still had stones, and when he took Carla Jean in for her physical, he asked a nurse to check his PSA. It was up again, to 86 from 12.6. He called his urologist, who, a little more brusquely, told him not to worry. But Alvin couldn’t stop worrying. In November he got it checked again; now his level was 166. “ Then he got all excited,” Alvin says of his doctor, who immediately ordered a biopsy.

The news wasn’t good: Alvin had prostate cancer, and it had already spread to his bones in twenty places. Right away the doctor put him on daily medication and a $4,000 injection three times a year. The money wasn’t a big problem—Alvin had insurance—but he couldn’t help stewing about his predicament. “If he’d caught it earlier, it wouldn’t have been in my bones,” Alvin says. It bothered him too that the doctor hadn’t looked him in the eye when he’d delivered the bad news and that he’d never said he was sorry, even as he gave Alvin, at best, five years to live.

“I’ll tell you what upset me so much,” he says today. “Other than that, I was in pretty good health. We had a ranch out in the country, goats and cattle.” Because Alvin didn’t want his wife to be left alone in the middle of nowhere, they sold the house and part of the ranch and moved into a modest brick home atop a hill in Copperas Cove, outside Killeen. He tried to control his anger, but he felt his final years had been stolen from him: “That doctor thought he was right and the world was wrong. He didn’t give me the opportunity to make the decision of what to do with my life.”

Personally, Alvin had always been against lawsuits. He thought there were too many of them, and he didn’t think people should be able to win multimillion-dollar awards for situations they could have prevented, like the smokers who sued tobacco companies. Alvin had voted for Proposition 12 back in 2003, which amended the Texas constitution to limit noneconomic damages (usually pain and suffering) in medical malpractice cases to $250,000. “I think there are too many frivolous lawsuits,” he says. “But you ought to have the right to sue if you’ve been wronged.”

Alvin sure didn’t think what had happened to him was frivolous, and he didn’t want to give his doctor the chance to be so arrogantly dismissive of anyone else. So on a sunny Saturday in April 2004, he found himself in a Hillsboro coffee shop with a pretty auburn-haired lawyer named Kelly Reddell.

Kelly had good news and bad news. The good news was, in her opinion, that Alvin had definitely been the victim of malpractice. The bad news was that it would probably take up to two years to litigate, and if he won the case, Alvin would take home substantially less than the maximum of $250,000 the state of Texas had decided an injury like his could be worth. “Is this something you are ready to sign on for?” she asked.

Alvin was surprised that someone who seemed as sharp as Kelly could be so misinformed. He had paid attention to the campaign for Proposition 12, and supporters said that damages for the likes of pain and suffering were capped at $750,000, not $250,000. “I voted for it,” he said.

“You voted for it?” Kelly asked, eyeing him levelly.

“Yeah,” Alvin said. He was proud of it. A $750,000 cap struck him as more than fair.

His soon-to-be attorney gave him a sad, patient smile. That $750,000 cap he’d seen advertised on TV and in the papers, she explained, was available only when there were multiple defendants whom a plaintiff could sue for $250,000 each, such as a doctor and a couple of hospitals. Otherwise, the cap on noneconomic damages for a retired person with no income amounted to only $250,000. (Medical expenses are not subject to the cap.) Like a lot of lawyers in Texas, Kelly had been turning down plenty of once-good cases because the numbers just didn’t add up. She worked on a contingency basis, her fee usually around 40 percent of the award, which would amount to about $100,000. She also fronted all the expenses of the case: up to $5,000 a day for expert witnesses, money for travel, court costs. If this case worked like an average malpractice case, it would cost somewhere around $50,000 to get to trial and another $25,000 for the trial itself. That would leave Alvin about $75,000 after attorneys’ fees and expenses; other clients, with more-complicated cases, had recovered even less. And with the damages capped, there was little to no incentive for insurance companies to settle.

Once upon a time, the purpose of tort law was to make injured people whole. In Texas, victims of medical malpractice or corporate wrongdoing, no matter how poor or powerless, had some redress through the legal system. The Texas constitution plainly states that “all courts shall be open” and that every injured person “shall have remedy by due course of law.” But through the efforts of a small group of wealthy and politically influential businessmen and a legislature slavishly devoted to the organization they founded, Texans for Lawsuit Reform (TLR), those days are gone, and these rights may disappear across the nation as President Bush pushes his campaign against “greedy trial lawyers” and “frivolous lawsuits.”

Here is what can happen to you in Texas today, thanks to tort reformers and the Legislature: If you go to an emergency room with a heart attack and the ER doctor misreads your EKG, you must prove, in order to prevail in a lawsuit, that he was both “wantonly and willfully negligent.” If you took a drug that was later recalled after studies proved it could cause fatal complications, the manufacturer can escape liability for your serious injury or death if the instructions inside the package were approved by the FDA when you took the medicine. If your child is blinded at birth because of medical malpractice, there is a good chance that her only remedy is to receive a few hundred dollars a month for the rest of her life. If a driver hits your old Ford Pinto from behind and burns you beyond recognition, Ford will almost certainly be able to shift the blame from its defective product to the driver of the other car. If you live in an apartment complex that lays off security guards and fails to maintain its locks and you are raped as a result, the apartment owner can still avoid liability. All of the above presumes that you can find a lawyer to take your case; many can no longer afford to do so because tort reform has reduced your odds of winning. And should you by some slim chance win and the defendant appeals, your odds of ultimately prevailing on appeal are 12 percent as of 2004—the paltry rate at which the Texas Supreme Court, which has also been subject to the influence of the tort reformers, has found for the plaintiff in cases involving harm to persons or property, according to Court Watch, an Austin-based public-interests organization.

When Alvin Berry heard this news, he felt utterly betrayed. “I felt the whole thing had been misrepresented,” he says now. “We’d voted on something, and we really didn’t know what the facts were.” Alvin decided to go ahead with the suit. But what he’d really like to do, he says, is change his vote, the one that took away his right to a fair fight in court.

IT MIGHT SURPRISE ALVIN TO LEARN that the people who led the battle to take his rights away are very much like him: hardworking, churchgoing men of a certain age and experience who believe incontrovertibly that their determination to put an end to the spurious lawsuits supposedly clogging our courts is for the good of all. In fact, the words they like to attach to their efforts are terms like “civic virtue,” “level playing field,” and above all, “fairness.” I first met with the founders of TLR early this past summer in Leo Linbeck Jr.’s soaring home on one of the best streets in River Oaks, sitting down with four men who have created, in a little over ten years, not just the most powerful lobbying organization in Texas but also a social revolution in the way we treat our fellow Texans.

Central casting couldn’t have done better. In the sunny, expansive kitchen, which, complete with fireplace, resembled nothing so much as the breakfast room of a small-town country club, here was Linbeck, tall, grandfatherly, and though pale and pained from recent surgery, still chairman, at 73, of the holding company of his eponymous multimillion-dollar construction firm and other enterprises. Whenever he spoke—slowly, in soft, equitable tones—the other men, all middle-aged, listened raptly. Richard Weekley, the chairman of his family development company and vice chairman of Weekley Homes, coiled confidently in a corner, white-haired, tan, and assiduously fit. Richard Trabulsi, dark-eyed, with bountiful salt-and-pepper hair, chose his words with the precision and care befitting the corporate defense attorney he once was at Vinson and Elkins. Finally, there was Hugh Rice Kelly, the retired general counsel of Reliant Energy and the legal strategist and scholar of the group, a man whose stentorian voice, sharp intellect, and dry wit have long made him a respected presence in Houston.

As different in personality as the four men may be, all share two crucial characteristics: They are wealthy, and that wealth has been accumulated in businesses—from construction to alcohol—profoundly threatened by lawsuits. The existence of these lawsuits, in their minds, has less to do with corporate failings than with the greed of lawyers and what Linbeck describes as “the disengagement of the average citizen in the formulation of policy.”

“We all get busy in our lives,” he explained gravely, his long, tapered fingers splayed open in a gesture simultaneously apologetic and understanding. “For most of us, it’s a day-to-day tussle, living paycheck to paycheck, and esoteric issues like joint and several liability don’t really resonate. As a result, we tend not to be engaged. My concern was and is that issues like this need to be engaged by the average person.” Flaws in the civil justice system, he said, have a “perverse” effect on our lives without our even knowing it. People “didn’t understand why their wages were depressed. They didn’t understand why their job opportunities were fewer. They didn’t understand why the economy was not as robust as it would otherwise be. So I viewed this opportunity as one in which my personal bias and interest in civic virtue could be reflected in a tangible way.”

The other men in the kitchen nodded sagely at this cogent analysis, one that explained why the devastation brought about by what TLR likes to call “lawsuit abuse” had been allowed to persist and why Texas law needed to change. But outside this cozy scene, there are those who would strongly disagree. A 1994 Bureau of Labor Statistics report, for example, failed to uncover any decline in the Texas economy that could be attributed to frivolous lawsuits; Texas, in fact, led the nation in the number of new jobs created that year, when TLR was first becoming a force in Texas politics. That same year, Fortune magazine reported that, in the last quarter-century, Texas had enjoyed a 311 percent increase in Fortune 500 companies headquartered here. A national jury verdict survey found that the midpoint verdict for personal-injury cases in Texas was below the national average in every year from 1989 to 1993, including 45 percent below average in the last year of that period. In other words: What litigation crisis?

And why has the campaign against trial lawyers been so successful? Here’s how Republican political consultant Frank Luntz explained it a few years ago: “Unlike most complex issues, the problems in our civil justice system come with a ready-made villain: the lawyer. . . . It’s almost impossible to go too far when it comes to demonizing lawyers.”

Trabulsi put it another way: “A lot of people think we’re not nearly as aggressive as we should be in trying to reform a system that’s out of control.” People who suffer through the emotional and financial drain of lawsuits are very passionate about what they think the solution should be.

Leaning forward intently, he added, “We’re looking for fairness, balance, and restoration of litigation to its appropriate role in society,” he insisted. TLR isn’t trying to make sure the justice system favors defendants, as its critics have claimed. The four founders have all been involved in lawsuits; eliminating access, Trabulsi said, would be “bad public policy, and it would be against anybody’s own self-interest.”

The distant, high-pitched keening you might hear at this point in the story is the sound of some of Texas’s most successful plaintiff’s lawyers gnashing their teeth, rending their garments, and screaming in frustration. Mark Lanier, fresh from his $253.4 million verdict in the Vioxx case, still sees himself as an advocate for the common man, like many personal-injury lawyers. He has this to say about Linbeck and his three cohorts when I interview him later in his paper-strewn office in north Houston. “TLR includes what some might call a bunch of rich snots,” he sneers, the baby face that was so charming and affable during the jury selection phase of the trial contorted now with icy fury. “They’re entrepreneurial everywhere but the legal system. They don’t have a clue what it’s like to be stepped on by a rich snot.”

And there you have it, the two poles of a brutal debate that has been roiling Texas since the late eighties, one that has grown more intense and self-serving with time. “It will be difficult for you to find people in the middle,” TLR’s communications director Ken Hoagland suggested to me, and his was the voice of experience. Even the dean of the University of Texas law school, Bill Powers, declined to comment on the situation on or off the record. In the battle between trial lawyers and tort reformers, each side accuses the other of excessive greed and infinite mendacity; each side is convinced that only its side represents the truth. The middle ground is reserved for the all-too-human collateral damage of a bitter war involving big money and partisan politics, seemingly without end.

SYLVIA ANN FULLER’S LIFE ENDED just when she was finally able to savor it. The 68-year-old Tyler widow worked hard all her life, but the tight curls she wore reflected the unseen constraints on her psyche. She gave herself over to teddy bear and cookbook collections and lavished affection on her dachshund, but her ability to love her three grown children and two grandchildren was often eclipsed by inconsolable depressions. Then, in 2003, Sylvia sought treatment for the first time and, with the help of antidepressants, was reborn. A sunny day in August 2004 was one of the happiest of her life: She was picnicking with her whole family in Tyler State Park, the first time in two years they’d all been together.

But toward the end of the day, Sylvia started feeling ill, and early the next morning she felt bad enough to call her daughter, Karen Hindman, to ask for a ride to a local hospital. She had been vomiting all night and was frightened. Karen jumped in her car and drove the fifty miles from her home in Winnsboro to take her mother to a quiet emergency room that, she assumed, would give her mother the proper treatment.

Through serial workups, including two EKGs to measure her heart function, Sylvia could not stop vomiting, even with the help of medication. The doctor diagnosed food poisoning from the potato salad at the picnic and was not dissuaded when Karen noted that no one else who’d eaten it had fallen ill. He gave Sylvia morphine, to help her rest.

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Hurt? Injured? Need a Lawyer? Too Bad!

by Mimi Swartz

(page 2)

The next thing Karen knew, the nurses were saying her mother could go home. She didn’t see how. Sylvia was barely conscious from the drugs. “We will help you get her into the car,” they told her. “After that, you’re on your own.” Karen was reassured when her mother chatted a little during the ride. At home, she said she’d be fine alone; she just wanted to sleep.

But when Karen got back to her own house and tried to call her mother, there was no answer. After the night passed with no response, she returned to her mother’s house, in Tyler, and found her collapsed on the floor. She had been there for nine hours, too sick to reach the phone. As soon as Karen helped Sylvia up, thick, grainy blood started pouring out of her nose and mouth. Sylvia Fuller died before the paramedics could arrive.

Because there were many things that just didn’t seem right about that visit to the emergency room, Karen and her brother David Fuller began an investigation. They hired a private pathologist to go over their mother’s medical records, which showed that Sylvia’s cardiac enzymes had been irregular (a sign that often necessitates a hospital stay). Two EKGs revealed an irregular heart rate. No one had mentioned either finding to Karen or her mother at the hospital. In written notes, the ER doctor had suggested that the irregular heartbeat was a side effect of digitalis—a drug Sylvia wasn’t taking. Hospital records also stated that Sylvia had walked out of the emergency room on her own, when in fact she had been discharged, heavily medicated, in a wheelchair. Then David discovered that the pathologist who had conducted the autopsy for the hospital had a checkered history; he had left the Harris County medical examiner’s office under a cloud after jeopardizing at least fifteen homicide investigations because he was practicing without a Texas medical license.

Like Alvin Berry, Sylvia Ann Fuller’s children had never sued anyone before. But they also felt that their mother had been robbed of her life and didn’t want what had happened to her to happen to anyone else. “If the emergency room had been very crowded and they had been overwhelmed, I could even forgive them,” David told me. “But she was the only patient in there.” One employee had been watching TV, Karen had told him. So, with his sister, David began looking for a lawyer.

They saw the first one last December. He explained the realities: The facts of the case looked promising, but because their mother was retired, they would have a hard time getting any lawyer to take the case. It was, essentially, the same story Kelly Reddell had told Alvin Berry: Anyone who didn’t work—the elderly, homemakers, or children—was looking at a cap on noneconomic damages of $250,000. Trying such cases was simply not cost-effective for the lawyer or the client. (“It’s an assault on those who are the most vulnerable,” one plaintiff’s attorney told me. “It’s almost legal malpractice to take those cases.”)

David contacted about fifteen lawyers and was turned down by all of them. One letter explained why: “Unfortunately, many of your legal rights have been taken away by state laws proposed and lobbied for by insurance, HMO, and corporate interests,” the lawyer wrote. “You and your family deserve better from the Texas government.” The lawyer suggested that David contact a citizens’ advocacy group and state officials.

So that’s what he did. He described his mother’s experience in a letter to Governor Rick Perry and received a form letter from someone in the constituent services office. It described Texas’s great success in limiting frivolous lawsuits and reducing medical malpractice rates. “Please let us know if we may assist you in the future,” the letter ended.

The letter made him more determined than ever to find a lawyer. So far, he’s had no luck.

“I THINK IT’S IMPORTANT to set the stage for this discussion by talking about what the civil justice system in Texas was like in the eighties and early nineties,” Dick Trabulsi told me earnestly, during our first meeting. The past was a mirror image of today: Trial lawyers, most of whom were Democrats who were generous with their campaign contributions, had lots of loyal friends in key legislative positions, as well as in the governor’s office and throughout the judiciary, from the Texas Supreme Court down to local district courts. They were skilled in the art of “forum shopping”—filing their cases in friendly counties, particularly in South and East Texas—and styled themselves as defenders of the weak while using their money and power to bend the rules in their favor. “Legalized extortion” is the way former lieutenant governor Bill Ratliff—who, as a state senator, wrote most of the 2003 tort reform law—described the situation to me. “If a really mean trial lawyer had a case in the right courtroom, he would break you. Insurance companies would settle anything for higher and higher amounts rather than go to a stacked court.”

Because venue laws were so loose in Texas, a case with only the most tenuous connection to the state (or the county) could still be tried in that locale, regardless of where the alleged wrongdoing had occurred. (In a seminal case, workers at a Costa Rica banana plantation who claimed to have been injured by a pesticide manufactured by Dow Chemical and Shell Oil outside the state sued in Texas, where Shell was headquartered—and won.)

Public attitudes in those days were more sympathetic to consumers and injured people than to corporate defendants. Texas attorneys made hundreds of millions of dollars in cases involving everything from breast implants (in which the science was debatable) and tobacco (in the celebrated case in which five trial lawyers, including courtroom superstar John O’Quinn, received an arbitrated fee, paid by tobacco companies, of $3.3 billion) to asbestos (in which people who were not sick managed to routinely walk away with very tidy payouts of cash from their former employers). The turning point came in 1987, when famed Houston trial lawyer Joe Jamail allowed himself to be filmed by 60 Minutes as he cozied up to Texas Supreme Court justice Oscar Mauzy and bragged about his $25,000 campaign contributions soon after the court had allowed a $10.5 billion verdict Jamail had won for Pennzoil against Texaco to stand. (“Justice for Sale?” the segment was titled.) The New York Times said that the conduct of Texas’s courts was “reminiscent of what passes for justice in small countries run by colonels in mirrored sunglasses.”

Corporate America fought back, decrying a crisis in litigation. Republicans like Vice President Dan Quayle capitalized on the partisan aspects of the issue by attacking the mostly Democratic trial lawyers in speeches as elitists. Advocacy groups sprang up across the nation—the tobacco industry in one year gave $55 million to the American Tort Reform Association—while the conservative Manhattan Institute asserted, loudly but debatably, that abuses of our legal system were costing Americans $300 billion a year.

It was in this atmosphere, in 1993, that Dick Weekley decided he had had enough. As he would later write with Hugh Rice Kelly in TLR’s monograph, “Template for Reform,” “The Trials controlled the Legislature, and Austin mandarins dismissed attempts at meaningful reform as wishful thinking.” Weekley began to convene meetings of Houston businessmen and community leaders to discuss the problem, and the people who kept coming back were Leo Linbeck, Trabulsi, and Kelly. They formed Texans for Lawsuit Reform, styling themselves as outsiders, refusing to “go along to get along.” To defeat “the most powerful special-interest group in the country,” they knew that they had to match their opponents “in focus, funding, and tenacity.”

IT WAS PROBABLY NOT surprising that the Legislature initially viewed them with derision and contempt—“Dick Weekley is gonna feel like he was f—ed by a bull,” one lobbyist vowed—but they were undaunted. TLR’s chief lobbyist, a former Republican legislator from Houston named Mike Toomey, explained to the group that they would never effect change until they could break up the coalition of Democratic state senators who could prevent tort reform legislation from coming to the floor for a vote. So the group set to work, tattling on legislators who paid lip service to tort reform back home but in Austin remained beholden to the trial lawyers. They raised $600,000 for the 1994 elections and spent about $300,000 on three contests in which novice Republicans were trying to unseat veteran Democrats—and won them all. The new senators TLR helped to elect gave Republicans their first majority in the state Senate in more than a century. Suddenly, the trial lawyers weren’t laughing anymore.

There was a new governor too: George W. Bush, who had defeated Ann Richards, in 1994, by sticking to four issues, one of which was tort reform. (By the time he was reelected, in 1998, TLR and similar groups had given more than $4 million to his two campaigns.) Karl Rove told the Washington Post that once Bush took on the trial lawyers, “Business groups flocked to us.” Enron CEO Ken Lay, an early TLR member, warned the newly elected governor in a letter, “Let me finally say that I believe there are few, if any, issues more important to this state than reforming our tort system. It has become the laughing stock of the country and is certainly discouraging companies from moving offices and plants into Texas. Over time it will encourage many of us with large operations in Texas to entertain moving some of these to other states to attempt to reduce our exposure to what has become an extremely capricious legal system.” (Lay did not mention Enron’s long history of pipeline safety violations.) In February Bush responded by declaring tort reform an emergency issue, overriding a rule that prohibited lawmakers from taking up legislation during the first sixty days of a session.

Still, there were enough Democrats in high places that TLR didn’t get everything it wanted. Lieutenant Governor Bob Bullock, who presided over the Senate, forced TLR and other tort reform groups to sit down with the trial lawyers and negotiate a compromise, which they did, near the end of the 1995 session. Punitive damages were contained; instead of being calculated at four times actual damages, they were reduced to twice that amount, plus an amount equal to noneconomic damages (for pain and suffering), up to $750,000. (“Of course, the punitive damages are not what compensates somebody for their loss,” says Weekley. “It’s just pure money.”) The era of soaking the defendant with the deepest pockets came to an end; in the past, if a jury found that the defendant was more negligent than the plaintiff, that defendant could be held liable for the entire amount of a judgment. After 1995, a defendant was on the hook for only his share of the responsibility, a concept defined by TLR as “proportionate liability.” The effect of this was that if, say, an uninsured driver who rear-ended a poorly designed car was found to be 40 percent responsible for the resulting explosion, then the injured plaintiff would have to “eat” that 40 percent—the Legislature having chosen to protect the negligent automaker instead of the innocent victim. The rules covering where a case could be tried in Texas were tightened substantially; defendants could be sued only where negligence had occurred or where they were based. While plaintiff’s lawyers howled that victims would have a much harder time winning cases, it was hard to argue with reforms that probably corrected some of the worst abuses of the legal system.

Soon after the session, plaintiff’s attorney Mark Lanier found himself at a fund-raising lunch for a religious right organization, seated next to then—agriculture commissioner Rick Perry.

“What’s this next session gonna do to me?” Lanier asked.

“Hey, don’t worry,” Perry told him. “We’ve gone as far as we need to.”

That, of course, did not turn out to be accurate.

JUST BEFORE HE SIGNED the contract for his house, on New Year’s Day 2002, Brian Zaltsberg looked the KB Home salesman in the eye and gave him a stern warning. “Go ahead and lose the commission if there are going to be problems with the house,” he said. “Because your time will be better spent on someone else. If you screw me, I’m gonna come back on ya.”

The salesman for KB, one of the nation’s largest homebuilders, promised that the house would be just fine. So Brian and his fiancée, Stephanie, signed the contract and, thrilled, became first-time homeowners. They were just two young kids—27 and 23 years old, respectively—without much education or money to throw around. Brian, tall, wiry, and favoring gimme caps, was determined to finish college while he earned a living developing Web sites and repairing computers. Porcelain-skinned Stephanie had finished high school and was looking forward to life as a homemaker and a mom. Brian felt they had bought, for their hard-earned $140,000, a piece of the American dream. “Happy people,” Brian said of his envisioned future, when the three of us met at his favorite Mexican restaurant in Fort Worth. “Dream home and all that.” The 1,800-square-foot one-story brick house, in a sun-scorched suburb on the northwest side of the city, was far from lavish, but to the Zaltsbergs, it was paradise. “We were so damn excited,” Stephanie told me.

But the trouble started even before they moved in. Groundbreaking was delayed, and then construction was erratic. Brian would often find the site littered with trash and once pulled containers from fast-food restaurants from the half-finished walls. But those were small problems compared with the one that took place on moving day. The Zaltsbergs stored many of their belongings in the garage while they set up the house, and as night fell, so did a downpour. Brian stepped outside for a smoke and noticed that water was flowing from inside the garage out into the street. He ran inside and saw water cascading down the walls and pooling on the floor, soaking into everything they had stored there. The Zaltsbergs had paid an extra $2,000 for a drywalled garage; now the Sheetrock was damaged and everything within was ruined.

Every day after that seemed to bring new problems: KB repaired the roof flashing where the leak had occurred but refused to replace the Sheetrock; the attic door stuck, and some of the rafters in the attic had split. Brian could pry bricks out of their mortar on exterior walls, and shingles flipped up in the wind. He asked KB to schedule repairs so that workmen wouldn’t interrupt meetings with clients at his home, but they showed up unannounced. Eventually, Brian demanded a meeting with KB. He was stressed to the max; he wanted KB to buy the house back from him. “I don’t want to live there anymore,” he told them. KB refused. Then Brian threatened KB with the only weapon he had: He would exercise his First Amendment rights and put up a Web site he would call kbhomesucks.com. The representative laughed in his face and told him to go ahead.

2 of 3 Next >

Hurt? Injured? Need a Lawyer? Too Bad!

by Mimi Swartz

(page 3)

Why, you may wonder, didn’t Brian sue KB? Because his contract prohibited him from doing so. It required him to seek binding arbitration instead of redress in the civil courts. In fact, only a handful of lawyers in Texas are now representing people who try to sue homebuilders, because the cases are so hard to win and so expensive to try before arbitration panels. “I always thought it was your constitutional right to sue people,” Brian said. “But we couldn’t sue KB.” Like victims of medical malpractice, homeowners have seen their access to the courthouse curtailed.

Had Brian’s confrontation with KB taken place a couple years later, he would have run into another obstacle: During the tort reform frenzy of 2003 that TLR helped stir up, the Legislature, after intense lobbying and millions of dollars in contributions from homebuilder Bob Perry, created the Texas Residential Construction Commission (TRCC). Disgruntled homeowners were not allowed to go directly to court; first, they had to go to the TRCC, an agency heavily influenced by homebuilders, for a determination of whether their case had merit, a finding that would then be admissible in court. (TLR did not endorse or lobby for this bill.)

Brian didn’t want to go to arbitration. He couldn’t afford an attorney. Instead, he decided to make good on his initial threat: In January 2003 he launched kbhomesucks.com. Almost immediately, he was swamped with e-mails from people claiming to have been harmed by the company. They posted their complaints too, and Brian added links for finding help. He appeared in a few local news stories, and pretty soon he was getting between 1,200 and 2,000 hits a day on his Web site. Then one night he checked his e-mail and found one from a lawyer, asking for the person in charge of the site. Attached was a copy of a $20 million lawsuit filed against someone else who had tried to take on KB. “I took that as a threat,” Brian told me. Still, Brian contacted the lawyer and requested a meeting with KB’s director of customer service. Brian had stopped paying on the house by then; KB had agreed to buy it back if he would disable his Web site. For a moment, peace appeared to be at hand. But then Brian asked for $4,000 in moving expenses and for reimbursement of his down payment. KB said it would not exchange any cash with him until the house sold. That was a deal breaker for Brian, so, as he put it, “the deal broke.”

Three months later, Brian started getting anonymous, threatening e-mails, including ones that suggested that his wife was being unfaithful, which added to the stress at home. (Stephanie had a miscarriage that spring.) Eventually, Brian started protesting publicly in front of KB’s Fort Worth offices and was harassed by the police. He had the persistent feeling he was being watched.

Finally, in September 2004, Brian sued KB in state court for harassment. The company countersued in October, hitting him with what many lawyers call a “slap suit,” a lawsuit filed by a big company against a much smaller firm or individual to try to scare the other party off. Among the claims against Brian was an accusation of cyber squatting, for misusing the KB name. Since that time, Brian has found himself in a lawsuit many might call frivolous, especially since it involves a company worth hundreds of millions and an accused party worth very little.

In late August of this year, Brian finally got to arbitration; to KB’s dismay, he was allowed to keep kbhomesucks.com up and running. In a much bigger case settled around the same time, KB Home was fined $2 million by the Federal Trade Commission and, more important, was prohibited from requiring mandatory arbitration in its homeowners’ contracts. The ruling came too late for Brian and Stephanie, who by then had let the bank take their house. “This is hell on earth, that’s what it is,” Stephanie said.

THE YEARS BETWEEN 1995 and 2003 were frustrating for TLR. Many legislators in both parties lacked the stomach for another tort reform battle, feeling they had addressed the issue well enough. But not TLR. Thwarted in Austin, TLR’s leadership turned its attention to judicial races, investing around $1 million to defeat Elizabeth Ray, a Houston district judge, in a 2002 Republican primary runoff election for the Texas Supreme Court. Ray had a reputation for fairness in her courtroom and, like many judges, accepted campaign contributions from lawyers representing plaintiffs as well as from lawyers representing defendants. But in an exceptionally bitter race, TLR tarred her as a sham Republican and a friend of the plaintiff’s lawyers. Its candidate, Dale Wainwright, won. The lesson was that you didn’t cross TLR. (“Support from plaintiff’s lawyers is a campaign issue,” Trabulsi told me solemnly.)

But by 2003, TLR’s years in the wilderness were over. A Republican wave had swept through the state in the 2002 elections, and Republicans commanded substantial majorities in both houses of the Legislature and controlled every statewide elected office, including all seats on the Texas Supreme Court. Once a plaintiff’s paradise, the court in 2002 and 2003 was finding for plaintiffs in only 19 percent of its cases. TLR had friends in high places too, including Governor Perry and his chief of staff, Mike Toomey, a tort reform true believer who had taken a leave from a lucrative lobbying practice that included TLR as a client. At the beginning of the legislative session, there were two tort reform bills, one originated by doctors (and endorsed by TLR) that capped noneconomic damages in medical malpractice cases at $250,000 and another containing an assortment of protections for businesses, supported by TLR. In a clever strategic ploy, the House leadership combined the two bills, making it difficult for a lawmaker who supported one but not the other to vote no. Says Democratic state representative Craig Eiland, of Galveston, himself a trial lawyer: “Never have so many who needed so little gained so much.” The governor’s office cleared the way by maneuvering to remove the Texas Medical Association’s head lobbyist, who was deemed to be too friendly with the trial lawyers and had supported Perry’s opponent in the 2002 governor’s race. Once the lobbyist was dispatched, the TMA’s new leadership refused to engage with the trial lawyers at all.

The 1995 tort reforms had been forged during negotiations between lawyers on the two sides, but with Republicans in total control of the legislative process, compromise was a thing of the past. The sponsor of the tort reform bill, state representative Joe Nixon, of Houston, was also the chair of the committee where the bill would get its initial hearing. Nixon curtly informed the TTLA that there was “a new sheriff in town,” and things went downhill from there. “The concern was the train was going so fast no one could stop it,” Mark Lanier told me. When Lanier protested that the trial lawyers were being shut out, he found, coincidentally or not, a private investigator on his tail.

When the bill reached the House floor, hostility between Republicans and Democrats erupted in the first twenty minutes of what turned out to be a two-week marathon. Democrats filed hundreds of amendments to the bill; Republicans interposed parliamentary objections; Democrats protested adverse rulings by Speaker Tom Craddick; and on it went. Republicans voted as a bloc—the occasional stragglers were quickly whipped back into line by Craddick—and so, most of the time, did Democrats. Their pleas for exceptions to the cap fell on deaf ears. What if, for instance, an injury was proved to be intentional to a child or an elderly or disabled person—someone without significant economic damages? The answer was no exceptions; the cap would remain at $250,000. What about nursing home patients who were injured? Nope. What if the doctor was proven to be drunk? Still no. What about allowing the cap to rise with the consumer price index? After all, the $250,000 cap, which was chosen because a similar figure had been adopted in California in 1975, would be worth a little over $750,000 in 2003 dollars. No, no, no. Meanwhile, the TLR principals remained a constant presence in a corner of the House gallery, which inspired a Democratic state rep to christen their spot “The Owners’ Box.” (TLR spokesman Hoagland told me, with barely contained outrage, “My guys were there for civic virtue. We are not divorced from the legislative process.”)

The House passed the bill 99—45. The Dallas Morning News called it “Open Season on Plaintiffs.” It gave judges authority to return cases brought by out-of-state plaintiffs to their home courts; allowed challenges to forum shopping to be appealed at the time of trial, instead of after a lawsuit was over; made plaintiffs (but not defendants) responsible for court costs and attorneys’ fees if they turned down reasonable settlement offers and then lost at trial; and placed a limit on contingency fees, a device that is the only way people of limited means can get to the courthouse. Plaintiff’s lawyers front all expenses and get reimbursed (and paid a fee) only if the client wins. TLR wanted to fix the remaining problems held over from the eighties, but the limit on contingency fees and the medical malpractice cap also had the benefit of constraining the ability of trial lawyers to practice their profession.

The trial lawyers had some hope when then—state senator Ratliff, who was known for his evenhandedness, balked at the House version of the bill and set out to write his own. He nixed the limit on contingency fees and made defendants as well as plaintiffs subject to the penalties for turning down reasonable settlement offers. He also included language that allowed the $250,000 cap to be stretched to $500,000 and even $750,000 in rare situations. But enough of the reforms stayed intact for TLR to champion the bill and the TTLA to regard it as a disaster. Hartley Hampton, a former head of the TTLA, put it this way: “It was the session where the lobbyists basically acted like looters, and they got all of the candy that they were unable to get in an atmosphere of deliberation and negotiation in 1995. It was a piecemeal dismantling and sale of our civil justice system.”

TLR AND ITS TORT REFORM allies had to fight one more battle before the victory was secure. Back in the eighties, the Texas Supreme Court had struck down a 1977 law that capped damages for victims who were injured but did not die from medical negligence as “unreasonable and arbitrary.” They called the law “a speculative experiment to determine whether liability insurance rates will decrease.” But by 2003 that Democratic court, and the Democratic Texas it operated in, was long gone. A constitutional amendment allowing caps—if approved by the voters—would put to rest any doubt over the legality of the new $250,000 cap.

The fight over Proposition 12, as the constitutional amendment was called, presented the people of Texas with a Hobson’s choice: access to medical care versus access to the courts. On one side were doctors, insurance companies, and business interests, who claimed that physicians would leave the profession if malpractice insurance rates were not reduced; on the other were trial lawyers and consumer groups, who said that injured victims would have no recourse if the caps took effect. Each put harrowing statistics and shrewd emotional ploys to work, and each side spread around plenty of money—about $4 million came from the trial lawyers and their allies and $8 million from an agglomeration of pro-amendment groups, including TLR.

The amendment authorized a $250,000 cap on noneconomic damages in malpractice cases “and other actions,” three words that sent opponents of the proposition into a fury because they allowed the Legislature to cap damages not just on malpractice cases but on every personal-injury lawsuit, whether it involved drunk drivers or corporate polluters. Trabulsi suggested that no one in his right mind would take that possibility seriously, but retired U.S. district judge Finis Cowan, who had been a highly regarded defense lawyer at Baker Botts, strongly disagreed in a State Bar of Texas publication on the debate. “Clearly Prop 12 is not a medical malpractice reform,” he wrote, “but an amendment designed by special interests who have reasons for desiring to restrict access to courts and juries.”

Constitutional amendments are usually voted on in early November, but the Legislature moved the election to September to avoid the big turnout on a traditional election day, which probably would have defeated the amendment. As of June, polls showed that 62 percent of Texans favored letting legislators limit lawsuits, with just 28 percent opposed. Twenty years of lawyer bashing had taken its toll. To fight back, the lawyers hired the Dallas-based public relations and political consulting firm of Allyn and Company to run their campaign. The standard-bearer of the fight, however, was former Texas Supreme Court justice Deborah Hankinson, a plucky Republican and a Bush appointee who was willing to expend virtually all her political capital to defeat an amendment she saw as an affront to Texans’ most basic legal rights.

In the past, Hankinson had supported needed tort reform—and continues to do so—and accepted TLR contributions. But this amendment, she said, wasn’t designed to cut off bad—that is, frivolous—lawsuits; it was designed to cut off lawsuits by people with legitimate claims, by restricting access to the courthouse. (Meanwhile, special-interest groups had gained unprecedented control of the Legislature.) “This tort reform went too far,” she told me. “I don’t consider this to be reform. I view this as something that deprives people of their constitutional rights.”

Frantically, Hankinson enlisted a diverse coalition to fight the amendment, including members from the American Association of Retired Persons, Mothers Against Drunk Driving, the League of United Latin American Citizens, the Sierra Club, the Texas Federation of Teachers, and others. One group was missing in action: trial lawyers. “The biggest problem we face as lawyers when we try to get our message across on this issue is that the MESSENGER is KILLING the MESSAGE,” TTLA president John Eddie Williams wrote in a June e-mail to his members. “To make this program work we must vow to not communicate with the public. . . . NO LAWYERS—NO EXCEPTIONS.”

Within weeks, the arguments about court access began to have an effect. July polls showed that the two groups were almost dead even; the same was true in August, as political ads from both sides became more strident and more questionable. Particularly troubling were advertisements in print and on television that put the cap for noneconomic damages at $750,000. On election day, Prop 12 was defeated in every major city in Texas but still won, by a margin of one percent of the vote. The decisive votes came from South Texas and rural areas, where voters feared that lawsuits might leave them without doctors or hospitals. “If we’d had another week, we could have cleaned their clock,” Hankinson told me. Instead, Alvin Berry, Karen Hindman, David Fuller, and thousands like them have found their rights diminished when they needed them most.

ON MY LAST VISIT with TLR, U.S. senator Sam Brownback, of Kansas, was just leaving as I arrived. An old friend of Linbeck’s, he is just the kind of politician TLR likes: Republican, wealthy, with Christian right bona fides, and— in the words of Thomas Frank, the author of What’s the Matter With Kansas? —“a stalwart friend of the CEO class.” When he clapped Trabulsi on the shoulder to thank the group for all its hard work in Kansas, the four men beamed. “They brought back the small-aircraft industry,” Brownback assured me. “It was dead. Dead.”

After he left, I asked the quartet what, exactly, they had done in Kansas.

“Ah, nothing,” one of the members said. “He was speaking generically about tort reform.”

It might seem that after the sweeping 2003 reforms, there is little left for TLR to do. But the bogeyman of excessive litigation is always out there, and TLR is, in fact, laser-focused on the one Texas Supreme Court decision of the past few years that did not go its way. The case involves Ashley Dueñez, who was nine when, in 1997, a drunk driver, Roberto Ruiz, swerved across the centerline on a highway near Port Lavaca, crashed head-on into the Dueñez family car, and left her severely brain damaged, requiring around-the-clock care for the rest of her life. Ashley’s father, Xavier, a corrections officer, also suffered some brain damage and needed plastic surgery.

Ruiz had drunk one and a half cases of beer while chopping wood earlier in the day and then, stumbling and drooling, bought another twelve-pack at a convenience store before getting back into his truck and destroying the lives of the Dueñez family. The defense argued that the clerk who sold the beer was primarily responsible, not the convenience store chain, but last September the Supreme Court upheld a $35 million judgment for the Dueñez family against F.F.P Operating Partners, the owners of the convenience store. The 5—4 decision was based on anti—drunk driving laws passed years before the 1995 change in proportionate liability. (The majority relied on a law that reflected basic common sense: Too often a drunk driver can’t afford to make restitution to his victims; bar and liquor store employees have the opportunity to stop drunks from getting drunker and going on the road by simply refusing to serve them.)

But in April of this year, the court agreed to a rehearing, a highly unusual move, particularly because four of the original justices who had decided the case had left the court and been replaced by judges perceived to be even more defendant-friendly. One possible reason given for the turnaround was the half a dozen friend-of-the-court briefs supporting the motion for rehearing, including one from TLR, stressing the importance of proportionate liability. Justice Priscilla Owen, whom TLR had helped elect, had conceded in her dissent that “a provider of alcohol should be vicariously liable for a patron’s intoxication.” But she went on to say that she did not believe the Legislature meant what it said when it passed a law stating that a provider of alcohol was 100 percent liable for damages caused by an intoxicated patron who had been allowed to buy alcohol when he was clearly already drunk.

Mothers Against Drunk Driving, which believes that a company that profits from the illegal sale of alcohol should also bear the burden when injuries occur, had supported this law. Owen didn’t see it that way, and neither did TLR, especially Trabulsi, who opened himself to conflict-of-interest criticism as the owner of Richard’s Liquors and Fine Wines. As John Griffin, the attorney for the Dueñez family put it, “They are asking the court to take a Magic Marker and put a big black mark through the Legislature’s description of its own laws.” The assertion that legislators didn’t know what they were saying, he says, was “sophistry.”

There are other areas of the law that TLR would like to see “reformed.” Along with prohibiting contingency fees for lawyers hired by government agencies, TLR wants to restrict who can serve on juries, which, after all, are unpredictable. According to its latest press kit, the group is intent on “upgrading the qualifications required to serve on juries.” Explains Trabulsi: “We want to make sure that someone who is a claimant or defendant is tried in front of a jury of their peers. And we believe sometimes that doesn’t happen. We’re going to take a look at the whole realm of the jury system to try to make sure it operates as efficiently and as constructively and as fair as it possibly can.”

After surveying their handiwork, one can legitimately ask, fair for whom? While TLR and the governor’s office extol the return of insurance companies to the medical malpractice insurance business in Texas and a 6.35 percent drop in malpractice rates (less impressive when you realize that rates for the state’s major insurers went up more than 100 percent between 1999 and 2003), they have surprisingly little else to show for their labors. When I asked TLR for evidence of a tort-reform-fueled business boom, they handed me a five-year-old study.

Several recent studies, on the other hand, make you wonder whether there was ever a litigation crisis at all. Four law professors, including two from the University of Texas, Bernard Black and Charles Silver, found no link between lawsuits and rising insurance premiums. They studied resolved malpractice claims from 1988 to 2002, relying on data from the Texas Department of Insurance. The number of large claims—those with payouts of at least $25,000—had remained basically flat since 1988; jury verdicts in favor of plaintiffs in civil courts had likewise shown no change over the same period. Furthermore, malpractice claims made up less than one percent of total health care expenditures in Texas. In short, nothing changed much in fourteen years except that insurance company profits doubled. And the promised results of tort reform have not occurred: Malpractice insurance reductions have been less than 1.5 percent since 2003, and the hoped-for return of doctors to underserved areas has not taken place. A briefing paper released by the Economic Policy Institute, in Washington, in May 2005 further found no evidence that tort litigation was responsible for causing unemployment, dampening productivity, discouraging research, or driving up liability insurance rates. The institute found, in fact, that the number of lawsuits in the U.S. actually dropped 4 percent in the decade prior to the tort reform year of 2003.

The tort reform movement was born in an era when the pendulum had swung too far in the direction of plaintiffs, and reforms that restored fairness and integrity to the system were justified. But as so often is the case in politics, the wronged side overreached. Now the pendulum has swung too far in the opposite direction—so far that the Legislature has usurped the lawmaking powers of the courts, and meaningful access to justice has been eliminated for the likes of Alvin Berry, the children of Sylvia Ann Fuller, Brian and Stephanie Zaltsberg, and—if business and the tort reformers have their way—Ashley Dueñez. If lower awards limit the number of cases a good lawyer can afford to take, the remainder of cases will fall to less competent lawyers, who, if they take a case at all, will most likely win much lower settlements for their clients or, more likely, not win at all. When I suggest this to Trabulsi, he insists that attorneys can attend seminars to learn how to get around the caps. “And lose,” Mark Lanier adds.

Maybe that’s the point. With the courts closed and the Legislature supine, the good people of TLR will have remade the world in their image, one in which there is no recourse for wrongdoing, one in which the powerful simply get their way.

Brian Zaltsberg, for one, is going down fighting. As soon as he finishes college, he plans to attend law school.

<> 3 of 3

Jaime Capelo Deposition Page 1

VIDEO TECHNICIAN: Stand by.
The time is 10:54 a. m. , February 10th of the
year 004. We are recording.
JAIME CAPELO,
having been first duly sworn, testified as follows:
E X A M I N A T I O N
BY
MR. HARRIS:
Q What is your name, sir?
A Jaime Capelo.
Q And where do you live?
A I live at 353 Catalina, Corpus Christi, Texas.
Q Where were you born?
A I was born right here in Corpus Christi.
Q And what's the date of your birth?
A August 17th, 1962.
Q And can you just generally tell us where you went to
school.
A I was raised at 4130 Upriver Road and went to school
at Oak Park Elementary and then on to Driscoll Jr. High and
then Miller High School.
Q And what did your daddy do?
A My dad and my -- my dad's family were in the funeral
business. They operate -- owned and operated Angelus
Funeral Home for decades. My dad is still in the funeral
business at this time.
Q Well, let's talk about Miller High School. When
were you in Miller High School?
A I graduated in 1980. I started going to school
there in 1977.
Q And did you receive any honors while you were at
Miller High School?
A All sorts of academic honors and I graduated number
two in my class. Then I also had, you know, senior class
vice-president and other extra curricular activities that I
was involved in as well as the band.
Q Did you apply for any scholarships out of high
school?
A I did, quite a few. I applied for scholarships at
all the universities that I applied to which included all
the Ivy Leagues except for Harvard and included Rice and
Stanford and UT.
Q Were you admitted to all those schools?
A I was admitted to every single one and received very
nice financial aid and scholarship packages from each of the
universities.
Q Where did you enroll in college?
A I ended up deciding on Yale University because they
were a very good recruiter from Corpus who was an
upperclassman at Yale who convinced me and my parents that
it was a good place for me to go.
Q And what did you take at Yale?
A I started out as an engineering major and after a
couple of years of knocking my head against the wall I
switched to history and absolutely fell in love with history
and ended up majoring in history.
Q And when did you graduate?
A In 1984.
Q And what did you do after you graduated?
A I came back to Corpus Christi and was contemplating
going to history graduate school, contemplating going to law
school and started substitute teaching at some of the
different -- at some of our local schools and absolutely
liked being in the classroom. So I went out to CCSU and
earned my teaching certificate and then I was very fortunate
to get an opportunity to go back to Miller High School and
to teach at Miller High School under my old principal who
had been my principal when I was there as a student.
Q And did you teach at Miller?
A I did. I taught for about three years.
Q And what did you teach?
A I taught math. I taught the remedial math classes.
And that was the first testing that came out by the State
and I taught those students who were having trouble passing
it that -- and they needed to pass it to graduate. I helped
them get through that test.
Q And were you sponsor of any clubs or activities?
A I also was a sponsor of the Key Club and I had been
a member and president of the Key Club when I was a student
which is a service organize that is the student branch of
the Kiawanis Club. And so I got to work with the Key Club
and the Kiawanis Club together.
Q What caused you to decide to leave teaching?
A In -- in the process of -- of teaching and learning
about the bureaucracy of teaching, I was disappointed that I
didn't have the opportunity to do some of the things that I
would like to do with the students, like encouraging them to
go to Ivy League schools and helping them in that process.
And I -- and I wanted to be -- have a little more freedom
and be outside the classroom where more things were going on
in the community. And so that was the decision that I made
to -- to get out of teaching and go to law school.
Q And what law school did you go to?
A I went to UT Law School.
Q And when did you enroll in the University of Texas
Law School?
A I went in September of 1988.
Q And how long did you stay there?
A I graduated in three years, in May of 1991.
Q And after you got your law degree, what did you do?
A I practiced in Austin for about three years at
Scott, Douglass & Luton.
Q And did you work for Mr. McConnico during part of
that time?
A I did.
Q And what caused you to -- well, let me ask this; did
you decide to come back home?
A I did. Things didn't work out at Scott, Douglass &
Luton and Sandra and I made a decision that if we -- we were
talking about having children, that it would be best to have
our children closer to home and closer to our -- both of our
parents so we decided to come back to Corpus Christi.
Q And when did that -- when did that happen?
A In the summer of 1994.
Q And tell us how you started your practice.
A I looked around in Corpus for a while and trying to
figure out what to do and who to do it with and ended up
making the decision to partner with William Whittle, Arnold
Gonzales, Jr. and James Hada.
Q And what type of practice did you engage in?
A A pretty general practice, litigation. Mr. Whittle
did different sorts of transactional work. Mr. Gonzales had
different types of transaction and litigation as well and
Mr. Hada was primarily litigation.
LINDA SMILEY CONDIT, CSR, RPR

Q And when did you start your -- when did you and
Sandra start your family?
A In 1995 our first daughter was born.
Q Was there any medical problems associated with that
birth?
A Yes, there was. When Berkley was born she was -- we
were -- we were already packed and ready to leave the
hospital when -- and we were waiting for the neonatologist,
he was the final doctor to clear -- to give us clearance to
go home, he came in the room with a very distressed look on
his face and he told us that she had a staphylococcus R. S.
infection and that she was going to have to stay in the
hospital. She ended up staying for ten days at Bay Area and
we got to go home for one day and she had seizures and we
had to go right back to Driscoll and spend another ten days
there.
Q Did that cause you to develop any interest in the
medical field for children?
A It -- it -- it created an incredible appreciation
for doctors and nurses who took care of -- of my family and
take care of other people's families, especially in a time
when -- and I know my wife and I were going through it at
the time, where all the problems that -- that our daughter
was having we were blaming ourselves and we felt extremely
troubled by what had happened and why she was going through
this and all the pain that she had to go through as they
were poking her every day and all day long. So those --
those nurses and those doctors were really -- real heroes to
us.
Q And when did you have your next child?
A In December of 1996.
Q Did you have a similar problem with that child?
A We did have a similar problem and we actually got to
go home this time, but we weren't home but five or six hours
before the doctor called us, the neonatologist called us and
said that something had showed on the culture and that we
needed to come right back to the hospital. So by midnight
that day we were back at the hospital and she was -- and
they had hooked her up to some antibiotics and we spent ten
days in the hospital with her.
Q When did you decide to enter public service?
A In January of 1997 I decided to take my first shot
at running for office.
Q Can you tell us the circumstances surrounding that.
A It was something that I had talked about for several
months with different folks around the community. I had
never -- I had always been very interested in politics. My
grandmother had been very involved in politics and I
distinctly remember the election of 1976 when I was still in
junior high when it was the first large number of Hispanics
who were running for state offices, Senator Truan running
for Senate and Hugo Berlanga and Arnold Gonzales, Jr.
running. And it was the first time I'd gone to a political
rally and ever -- after that I'd always been involved
attending rallies or volunteering. And I never ever saw
myself in front of the -- in front of the campaigns as a
candidate, but when I got back to Corpus several folks
thought it would be a good idea and convinced me that it was
-- it would be a good idea. I was very nervous about it,
but once I started the process I knew that it was the right
thing, it felt like the right thing to do. And we had
tremendous success in the City Council campaign and I was
very pleased with the way it turned out.
Q Was that your first campaign, with the City Council?
A That was my first campaign.
Q And when did you take office as a City Councilman?
A I took office in April of 1997. I was the first
Hispanic majority ever on the Corpus Christi City Council.
Q And how long did you serve on that Corpus Christi
City Council?
A I served until December of 1997.
Q And then what happened in reference to your
political career in December of '97?
A December of '97 I resigned from the City Council in
order to run for State Representative. Representative Hugo
Berlanga had decided to retire and had decided not to run
again. He had approached me and asked if I would be
interested in running for his office. At first we were very
worried about it because we had just finished a campaign and
we had two young children and it would require time in
Austin, but after visiting with Representative Berlanga and
his wife, my wife and I both thought it was good idea and
decided to go forward with that.
Q And did you run for that office?
A I ran. There was a special election in May of 1998
in which I was successful.
Q And when did you take office?
A I took office in May of 1998. Within ten days or
two weeks after the election I was sworn in.
Q And have you served in the Legislature ever since
then?
A And I -- I have, yes.
Q Did you have any special interest as a legislator?
A I did. I was very fortunate to -- to land in the
Public Health Committee immediately upon being sworn in and
so I had the opportunity at the very first major legislation
that I worked on started in May of 1998 when the Public
Health Committee, along with the Senate Health Committee,
started working on the children's health insurance program.
We had our first meeting late in May of '98 so it was -- the
very first project had to deal with children's health which
was very dear to my heart.
Q Let's go back to your professional career because
you were also practicing law while you were in the
Legislature, is that not correct?
A That's correct.
Q When did you leave the Whittle firm?
A The Whittle firm dissolved on March 31st of 1997.
Q Well, that was during the campaign, wasn't it?
A That was right in the middle of the campaign, yes.
It was very crazy.
Q And after March of '97 what did you do from a
standpoint of practice, your legal practice?
A I rented some space from Evelyn Gonzales down the
street from where we were set-up and started up my own solo
practice.
Q And how long were you a solo practitioner there in
the offices of Evelyn Gonzales?
A Until about March of 1998.
Q March of '98?
A Right. Almost a full year.
Q And during that year did you have a relationship
with Rene Rodriguez?
A I did. I started a relationship with Rene Rodriguez
probably shortly after I came back to Corpus, I was first
introduced to him.
Q Can you describe that relationship to us.
A It was very friendly. In fact, Mr. Rodriguez was
the first contributor to my City Council campaign, my first
ever political contributor. That was important to me and
was the basis of -- of us starting our relationship was that
someone -- that he believed in me enough to -- to be that
first donor. After I got elected to City Council, trying to
maintain the City Council -- what I needed to do for City
Council as well as maintain a law practice, I had a very
difficult time and I often sought out work from Mr.
Rodriguez.
Q And when people came to you with cases and you
decided not to handle them, what was your practice?
A For the most part I -- the only thing I could handle
and did handle were family law and fender-bender type cases.
Anything else that was anymore complicated than that, I sent
them down do Mr. Rodriguez's office.
Q Well, did you send -- prepare any kind of formal
referral agreement or anything of that nature or did you
just say "Go see Rene Rodriguez"?
A I just referred them to Mr. Rodriguez.
Q Now, when did you start Capelo & Bargas?
A It was, I want to say March, 1998.
Q And how long did you associate with Mr. Bargas?
A Until May of 000 -- May of 000.
Q And during that period of time do you recall
referring any cases on to Rene Rodriguez?
A No. Absolutely not.
Q And Mr. Bargas and yourself engaged in full-time
practice of law during that period of time?
A That's correct.
Q Okay. Can you describe the circumstances
surrounding your firm' break-up.
A Mr. Bargas was arrested for attempted murder of his
former girlfriend. The evening that he was arrested he
called my home. In the early morning hours I went out to
the Sinton jail to visit with him. He made it clear to me
that I needed to get away from him, that we needed to
separate. He thought that it would be obviously in my best
interest to -- to separate and to end the partnership.
Q And did you follow that advice?
A I did follow that advice.
Q Did you buy him out?
A I did buy him out.
Q And was that buy-out evidenced by a written
agreement?
A Yes, it is.
Q What was the arrangement before you joined Capelo &
Bargas in reference to cases that were maybe handled or in
which you had an interest in prior to that firm being
formed?
A Anything that I -- that I had had before that was
mine, but anything that was still being worked on -- there
was a handful of little cases that I brought with me, we put
into the firm.
Q Now, after you left the law firm of Capelo & Bargas
did you go back to practicing by yourself?
A Yes, I did.
Q And about how long was that?
A May, June, July, August of 000.
Q About four months?
A Four months.
Q And where did you -- where did you practice during
that four months?
A At the same location that I'd been with Capelo &
Bargas. I assumed all the liabilities and responsibilities
of that firm when I bought it out.
Q After your visit with Mr. Bargas at the jail in
Sinton, was he able to carry on his practice at that time?
A He chose not to. Whether he was able to or not, I
-- I don't know, but he -- he definitely decided not to.
Q After that four months what -- what happened next?
A I joined the Chaves, Gonzales & Hoblit on September
1st of 000.
Q And what arrangement did you have with them?
A That I came in as a partner and promised to work
hard for them.
Q And what was the understanding that you had in
reference to any prior cases that you might have had prior
to joining that law firm?
A That any of the cases that I had prior to that were
my cases only.
Q And was that understanding with Doug Chaves?
A That's correct, Doug Chaves.
Q And was he the -- "the partner", if I may use that
term, senior partner?
A He was not only the senior partner, but he was the
managing partner at the time.
Q Now, do you recall being appointed an Ad Litem in
the Joseph Huerta case?
A That's correct.
Q Tell us the circumstances surrounding that
appointment, just when -- when were you first contacted in
reference to serving as an Ad Litem?
A I was appointed in August of 000, but I was
contacted months before by Mr. Mikal Watts who asked if I
would agree to be the Ad Litem for Tristan Huerta. I -- I
knew of Tristan Huerta. My daughters and him had attended a
few birthday parties together and I obviously thought it
would be a great idea to be his Ad Litem.
Q And after you agreed with Mr. Watts to be the Ad
Litem, what was the next event that took place in reference
to that particular matter?
A Mr. Watts submitted a motion to appoint an Ad Litem
Q All right.
A To the Judge.
Q And was there a mediation that you attended in
reference to the Ad Litem appointment?
A There was.
Q And was there a discussion with Mr. Watts in
reference to the fees that you would charge on that Ad
Litem?
A There was. In fact, Mr. Watts did the negotiating
of fees with Mr. Barger.
Q Were you present during that negotiation?
A I was present during part of it, yes.
Q Can you relate to us what happened during that part
of the negotiation in which you were present. By the way,
the mediator wasn't there during the negotiation, was he?
A No, the mediator was not present during the
negotiation.
Q Okay. So it was done outside the presence of the
mediator, but just tell us what happened.
A I was approached and asked if $50,000 would be
sufficient and if I would be happy with that and I told them
I would be very happy with that.
Q And did anybody complain?
A Nobody complained to me. No one asked me to see
anything, no.
Q Did Mr. Barger, did he act shocked?
A He did not act shocked.
Q How long ago was that?
A That would have been in November or December of
002.
Q Okay. So at the time that you attended the
negotiations, were you a member of the Chaves-Gonzales law
firm?
A I was.
Q At the time that you received the $50,000, were you
a member of the Chaves-Gonzales law firm?
A I was.
Q In reference to the fee you received, did you have
any discussion with the office manager for the Chaves-
Gonzales law firm?
A Yes, I ---
Q And what was his name by the way, just so we ---
A Ted Dlugosch.
Q All right. In reference to Mr. Dlugosch, would you
tell us what happened.
A It was either Ted Dlugosch or a head bookkeeper that
I gave them a check for the hours that I had spent at the
mediation and the hours at the final hearing, getting ready
for the final hearing.
Q Was that check based upon your hourly fee?
A Yes, it was.
Q And so for the time that you spent outside the firm
you paid the firm for that time?
A That's correct.
Q Was that check cashed?
A Yes, it was.
Q And how many years ago was that check cashed?
A That was in March of 003.
Q Now, did you run for office after March of 003 --
no, not -- the check was cashed in March of 003, the -- no,
the Ad Litem check?
A That's correct.
Q Okay. Okay. I'm -- thank you, I'm straightened
out.
Did anybody at the Chaves-Gonzales firm ever complain
about the arrangements that you made with either the
bookkeeper or the office manager concerning reimbursement of
the hours that you spent to the firm?
A No.
Q Were you ever questioned about any cases that you
had obtained prior to the time that you came with the firm?
A No.
Q Did other partners have the same arrangement when
they joined the firm to your knowledge?
A To my knowledge, yes.
Q Do you recall any of those partners?
A I'm not -- I'm not sure who was -- who was -- which
ones were brought up internally and which ones came from the
outside.
Q Okay. When lawyers set fees do they ever consider
the amount of money involved?
A Absolutely.
Q Was there substantial sums of money involved in this
particular case?
A This was a very substantial settlement.
Q Approximately how much was it?
A Ten million dollars.
Q Do lawyers consider the responsibility that a lawyer
has when he is handling a case such as this?
A Yes, very much so.
Q Did you feel a responsibility in reference to this
particular case?
A Absolutely. I took it very seriously.
Q Did you have a special interest in Tristan?
A Well, because I had known Tristan earlier and
because he had played and spent some time with my daughters,
absolutely.
Q Why is an attorney appointed as an Ad Litem in a
case such as this -- this particular case?
A Well, obviously there -- there stands to be a
natural conflict between the parent and the child, but in
particular in this case because Joseph Huerta had some
diminished capacity and there was concern about his ability
to -- to handle and oversee his own son's financial
considerations.
Q And was there an active participation in reference
to Tristan's and Joseph's activities by their father and
grandfather, Albert Huerta?
A That's exactly right. Mr. Albert Huerta took a
decidedly large role in -- in obviously Joseph's care as
well as Tristan's care.
Q And on -- in your opinion was the $50,000 a
reasonable and necessary fee for the work that you did on
the ---
A Well, not only ---
Q On the case?
A Not only in my opinion, but obviously in Mr. Watts'
opinion and Mr. Barger's opinion and their clients. Not
only did they all agree to it at the time, but -- at the
mediation, but then at the -- in the preparation of the
settlement documents they also agreed to it and then finally
at the final -- at the hearing with regards to approval of
the settlement agreement they agreed to it at that time as
well, never raised an issue with the Judge, never sought to
put that issue before the court.
Q Did you get to be the Ad Litem on all the cases that
were referred Ad Litems in front of Judge Huerta?
A No.
Q How many other cases were you an Ad Litem?
A I had one other Ad Litem from Ms. Huerta -- Judge
Huerta.
Q Was it a much smaller case?
A It was a much smaller case, yes.
Q Do you recall the Ad Litem fee in the small case?
A I recall it being five, $6,000 maybe.
Q Was that a fair and reasonable fee based on the
circumstances of that particular case?
A Yes, it was.
Q Just a second, let me ---
(Off the record discussion).
A Mr. Harris, I think I misspoke on the date on the Ad
Litem fee.
Q (By Mr. Harris)Well, we can -- we can check on it.
A Okay. I think it was '02, not '03.
Q But I'll check on it. And dates are hard for me and
I'm sure they are for anybody.
Did you ever notice a change in your law firm's attitude
towards you during the period of time you worked for Chaves
-- Chaves-Gonzales?
A Yes. During the tort reform issue in the
Legislature there was a decided concern about my
participation and sponsorship of tort reform.

MS. CONNELLY: May I ask you, please, to clarify
which firm you're referencing.

MR. HARRIS: Chaves-Gonzales. Is that sufficient?

MS. CONNELLY: Yes.

MR. HARRIS: Okay. Thank you.

MS. CONNELLY: That's fine.
Q (By Mr. Harris)Did you understand my question was
directed towards your ---
A Yes.
Q Relationship with ---
A I think you did say Chaves-Gonzales.
Q Chaves-Gonzalez. Thank you.
Did you receive any criticism because of your -- well,
let me first ask, what do you mean "tort reform"?Maybe you
better describe that for us.
A I was the joint author of House Bill 4 which is
widely considered one of the leading tort reform bills in
the nation. In particular, it has a very strong medical
malpractice reform section, Articles 10 and Article 11. And
I was very much instrumental in Article 10 and Article 11.
I felt strong that the lawsuit abuse in the medical
malpractice industry, especially in south Texas, was driving
many of our good doctors out of this community and making it
difficult for us to recruit new doctors to our community.
Q Did any of that feeling grow out of your
relationship with your children when they were sick?
A Absolutely. I mean, that's -- that's exactly why I
felt so strong about making sure that we had doctors here is
because I know how critical they were to my family's health
and what we went through, that if we continued down this
path, a day was going to come very shortly that those types
of doctors would not be here for us.
Q And did you receive any letters from lawyers
concerning their dissatisfaction with tort reform?
A I received a mountain of letters from lawyers who
were very upset about tort reform.
Q And any e-mails, did you receive any e-mails from
your partners?
A I received a considerable amount of e-mails from my
partners relaying the anger from the local Bar towards me
and towards the firm from my sponsorship of tort reform.

MS. CONNELLY: Can I clarify that those partners
were in Chaves-Gonzales firm?

MR. HARRIS: Well get through that. I'll be
putting in some documents.

MS. CONNELLY: Jim, can you just have the Witness
verify that verbally, that his response went as it
relates to the partners in the Chaves-Gonzales firm?

MR. HARRIS: Yeah, I'll be happy to do that for
you.
Q (By Mr. Harris)Who were some of the partners in
the Chaves-Gonzales firm that expressed concern about the
position that you were taking in reference to tort reform?
A Rudy Gonzales, Gary Ramirez, Doug Chaves. Many
others passed on their concerns based on what they had been
told by other members of the Bar.
Q Let me show you a letter dated March 18th, 003 that
bears the signature of Rene Rodriguez. Is this a letter
that you received in reference to your support of tort
reform?
A Yes. This is one of many letters that I received.
Q Let me show you a letter dated March 5th, 003
which appears on the letterhead of Hastings & Alfaro that's
addressed to you. Is this another letter that had to do
with tort reform?
A Yes. This is -- I think there's some pages missing.
This is a letter from Mr. Alfaro which was one of the more
angrier letters.

MR. HARRIS: Let me take a break for a minute, if
that's all right.
(Brief recess).

VIDEO TECHNICIAN: The time is 12:10 p. m. We're
back on the record.
Q (By Mr. Harris)Mr. Capelo, we had some concern
about the date of the receipt of the Ad Litem fee. During
the break have you been able to refresh your recollection as
to when that was?
A Yes. The Ad Litem fee in the Tristan Huerta matter
was received in March of 002 and the mediation took place
in November or December of 001, ---
Q Okay. And ---
A As did the -- as did the hearing take place in the
November, December, 001 time period as well.
Q And in reference to March of 002, were you in a
campaign at that time?
A I was. In fact, the March 002 primary, I had two
opponents, Mr. David Berlanga and Mr. Jerry Trevino.

MS. CONNELLY: Objection, nonresponsive.
Q (By Mr. Harris)And in reference to the support
that you were getting, were you -- did you receive support
from the individuals who had arranged the Ad Litem fee for
you?
A I did.

MS. CONNELLY: Objection, form.
A Mr. Barger, Mr. Watts, although towards the end of
the March primary Mr. Watts was no longer supporting my
candidacy.
LINDA SMILEY CONDIT, CSR, RPR


MS. CONNELLY: Objection, form.
Q (By Mr. Harris)And what was your understanding of
why he was no longer supporting your candidacy?
A Because I refused to endorse his mother in her
candidacy for Judge.
Q Now, let me properly identify Exhibit 1, is the Rene
Rodriguez letter to you dated March 18th, 003; is that
correct?
A That's correct.
Q And then you mention in reference to Exhibit ,
which is a letter dated March 5th, 003 to you from the --
from Mr. Dan Alfaro, I think we just had the front page; is
that the total letter that we have?
A Yes, this is the full letter.
Q Now, is there a particular segment of the Bar that
was more concerned about tort reform than other segments or
---
A I -- I think the litigation lawyers obviously were
the most concerned. Plaintiffs lawyers, in particular, but
some defense lawyers were also greatly concerned. In fact,
many of the defense lawyers were also, they just weren't as
visible with their -- with their concerns.

MS. CONNELLY: Objection, nonresponsive.
Q (By Mr. Harris)And what -- how did they express
those concerns?Did they articulate the reason for their
concern?
A The plaintiffs lawyers and some defense lawyers sent
letters, sent e-mails, brought -- came to visit me in my
office. But in addition to that, members of the local
plaintiffs Bar let my former partners know how troubling and
concerned they were and that the firm, as well as I and my
practice, would pay for supporting tort reform.

MS. CONNELLY: Object to form of the question.
Q (By Mr. Harris)Let me hand you what's dated March
7th, 003, a letter on the Watts Law firm. Is this
opposition to your support of the tort reform?

MS. CONNELLY: Jim, after -- after you have the
Witness identify those Exhibits, would you direct him
to pass those this way ---

MR. HARRIS: Sure.

MS. CONNELLY: So we can look them?

MR. HARRIS: Be happy to.

MS. CONNELLY: Thank you.
A Exhibit 3 is a letter from Doug Gwyther of the Watts
Law Firm and Exhibit 4 is a letter from Joseph Huerta of the
Huerta Law Firm ---
Q (By Mr. Harris)Let me -- excuse me.
A Both expressing vehement opposition to House Bill 4.
Q Let me hand you Deposition Exhibit Number 5, a
letter dated March 31st, 003 from the Edwards Law Firm.
Who signed that letter?
A William R. Edwards. Bill Edwards.
Q Let me show you Exhibit Number 6, a letter
purportedly signed by Jerry Guerra. It is addressed to his
colleagues dated January 16th, 004. Did you receive a copy
of that letter?
A Yes, this was -- this was a recent letter ---
Q Uh-huh?
A From Mr. Guerra with regards to the campaign and my
support of Prop 12.
Q Let me show you Exhibit Number 7. This is from
Suzanne Chauvin, if I am pronouncing that correct. Exhibit
7 appears to be dated March 1st, 003. Can you just read
that into the record, the statement from one of your
associates in the law firm.
A "As I was walking out of the settlement event this
evening I ran into Ray Maldonado of the Huerta Law Firm
making a speech against you to claimants as they were
walking in the doors. He was also handing out leaflets as
you know. He was telling the claimants that you were the
author of a Bill to get rid of class actions and to make it
hard for people who are hurt by big companies to recover.
His speech also included the fact that you are one of the
lawyers for Citgo and the flier says that you have made tens
of thousands of dollars from Citgo, but when the people hurt
have received nothing or words to that effect. I suspect
there will be more of this over the weekend".
Q Let me show you Deposition Exhibit Number 8, an
e-mail from Carlos Uresti to you. Did you receive that
e-mail on or about February 1st, 003?
A Yes.
Q Let me show you Exhibit 9, ask you if you received
this e-mail on or about April 3rd, 003?
A Yes.
Q Let me show you an e-mail addressed to Doug Chaves
and Jaime Capelo with copies to all the partners of your law
firm dated April nd, 003. Did you receive that e-mail?
A Yes.
Q Read the last paragraph there on the e-mail, if you
would, please.
A "Craig Sico advised me that you will have an
opponent and hinted that there is already enough money
committed by all of the plaintiffs' lawyers to ensure that
you become a lobbyist, not a representative. I am
paraphrasing, but the message was you continue to piss
everyone off. Don't shoot the messenger. Doug".
Q Now, let me hand you Exhibit Number 11, an e-mail
where you're one of the addresses from Doug Chaves. Did you
receive that e-mail?

MS. CONNELLY: Did you say that was Exhibit 7?
THE WITNESS:11.

MS. CONNELLY: Oh. 11.
A Yes.
Q (By Mr. Harris)Let me show you Deposition Exhibit
Number 12, another e-mail where it appears that you're one
of the addresses dated March 14th, 003. Did you receive
this e-mail?
A Yes.
Q Let me show you Exhibit Number 13, Exhibit dated
March 0th, 003. Did you receive this e-mail?
A Yes.
Q Let me show you Exhibit Number 14, an e-mail which
appears to be dated March 5th, 003. Did you receive this
e-mail, sir?
A Yes.
Q Let me show you Exhibit Number 16, an e-mail sent by
Mikal Watts. Did you receive that e-mail?
A Yes, I did. This was back during the March 002
primary campaign.
Q Could you read that into the record, please?
A Yes. "Montgomery passed along your e-mail to him
where you stated 'I understand that Mikal is moving to
support David Berlanga. I understand that began yesterday.
Is this true?'I have not agreed to support anyone but
Capelo, whom I have always supported. While I am extremely
pissed off at his lack of spine with respect to my mother, I
will refrain from doing anything until March 12th out of
respect for you and our relationship. You have my
commitment on this. I will not do anything for Berlanga or
against Capelo until my mother's election is over. However,
someone is going to have to come over and do some major
fence-mending that night to explain to me why I should keep
resisting Perry's invitation to take his head off. One of
the reasons Capelo is ahead in the polls is the fact that I
have thus far successfully talked Perry into keeping his
anti-Capelo campaign to $2,500. Trust me, but for my
efforts, Capelo would very easily have faced Berlanga with a
$300,000 war chest funded by Perry and myself which was
Perry's original idea. Hugo's people are calling me saying
Capelo's people were down at the radio station telling them
to pull my mother's spot off the air. While I assume it is
just bullshit from them, trying to get into my wallet, I can
assure you the opportunity to support Berlanga has already
presented itself in the last 18 hours and has thus far been
resisted by myself. Just so I can figure out how important
my efforts for Capelo have been, I would like to you to know
just how God-damned important the people who called and
bitched are. Who were they?I'm just curious, so I can
figure out my relative location on the Capelo totem pole.
Because, and only because, Capelo's legislative director is
named Bert Quintanilla, you have my word Berlanga is getting
no help from me through March 12th. However, I do expect to
hear from Capelo that night or the next morning to explain
this complete lack of judgment on his part. I know I will
be hearing from Perry and Berlanga before that time and
would like to have the full picture before I do anything.
Mikal".
Q Let me show you Exhibit 17. You had referred
previously in your deposition that there were pass-outs in
reference to a letter?
A Yes. This was the leaflet that was passed out
during February and March of 003 by the Huerta Law Firm,
not only to the -- some of the Citgo plaintiffs, but to --
in the malls and shopping centers, was placed on vehicles.
Q Now, continuing with Mr. Mikal Watts, let me show
you Exhibit Number 18 which is a -- purports to be an e-mail
to all the Watts Law Firm employees. Have you seen that
before today?
A Yes.
Q How does Mr. Watts characterize you on -- on -- in
that e-mail?
A Very simply as the enemy.
Q And what's the date of that?
A The date is March 9th at 8:53 a. m. which was just a
few hours after House Bill 4 and HJR 3 were passed off the
floor of the House of Representatives.
Q And was that immediately prior to the problems you
ran into in reference to the firm?
A That was just a few days before.
Q And here's an e-mail in Exhibit 15 dated March 18th,
003 that's addressed to you. Did you receive that?
A Yes.
Q Did you ever receive any oral criticism from lawyers
---
A Yes.
Q Concerning your position?
A Absolutely.
Q Now, Mr. Rudy Gonzales, did he ever express to you
that he didn't want the firm associated with tort reform?
A Yes, he did, by e-mail.
Q Can you describe that -- that conversation.
A He sent an e-mail that laid out that he didn't -- he
wanted to make sure that the firm's name was not associated
with sponsoring any type of tort reform.
Q Okay. Let's go back to the Spring of 002. What
was your relationship with Judge Sandra Watts at that point
in time?
A I had refused to endorse her. It was not accepted
very well by the Watts family.
Q What was your relationship with Barbara Black?
A I also refused to endorse Barbara in her race for
Senate and it was not received very well by the Canales
family.
Q Did your wife participate in any activities that
created any resentment?
A She did. She is close friends with Diana Martinez
and had endorsed Diana Martinez.
Q Back in the Spring of 002, what was your
relationship with Rene Rodriguez?
A We were still very close friends.
Q Now, was there a Democratic fundraiser in the Fall
of 002?
A There was.
Q And did Mr. Tony Canales publicly express his
displeasure with that fundraiser?
A He did. He caused quite a stir with chastising
local democrats for having Senator Hinojosa and Senator
Truan and someone else as a sponsor and referred to them as
the "three amigos".
Q Do you know why that resentment appeared?
A It appeared to be the resentment that had started in
the Senate campaign with members of the Corpus Christi
population supporting Chuy Hinojosa over his daughter.
Q And was that event around September 3rd, 002?
A As best as I can recall.
Q Is that the date that you became in possession of a
check signed by Rene Rodriguez?
A It was on or about that date, yes.
Q Tell us the circumstances surrounding your receipt
of that check.
A I was ---
Q And I'm talking about the hundred thousand dollar
check.
A I was at Mr. Rodriguez's office, I'm sure, visiting
about the campaign stuff. At the time my campaign -- we
were dealing with Robert Pate as our republican opponent and
Terry Shamsie, a close friend, was dealing with Joe McComb
as a republican opponent. When I was getting ready to
leave, Mr. Rodriguez said that he had something for me and
-- from an old med-mal case and handed me an envelope and I
---
Q And where did -- when did -- where did this take
place?
A It may have been -- I think it was in his office.
Q And did you open the envelope there?
A No, I did not.
Q What did you do with the envelope?
A I just stuck it in my pocket.
Q Do you recall anybody else being present when he
handed you that -- that envelope?
LINDA SMILEY CONDIT, CSR, RPR

A No, I do not.
Q After you stuck the envelope in your pocket, what
did you do?
A I left.
Q How long after you left did you open the envelope?
A When I got in my car.
Q And what did you see when you opened the envelope?
A I saw a $100,000 check.
Q Let me show you Exhibit Number 19. Is this the
check that you saw?
A Yes, it is.
Q Well, why didn't you open the envelope when you were
in the presence of Mr. Rene Rodriguez?
A As a habit, I never do. I receive contribution
checks from many people all the time and I have gotten in to
the habit of not opening up the envelopes in front of
people.
Q What did you think the check was for?
A Obviously I thought the check was for a case that
hit that -- that he owed me a referral fee.
Q Well, did you have a file on any cases that you have
ever referred to Mr. Capelo -- I mean to Mr. Rodriguez?
A No, I did not keep a file of any kind of referrals.
Q Why didn't you have a file?
A It was not my practice to have a referral file or to
LINDA SMILEY CONDIT, CSR, RPR

2
even have a referral agreement.
Q You didn't have a referral agreement?
A No, I did not.
Q Can you describe for us what a referral agreement
is.
A An agreement that I have sent a case over, a client
over to another attorney to -- for them to handle.
Q Do you understand that to have an enforceable
referral agreement it's supposed to be in writing?
A I understand that now.
Q Well, did you have a client list, some list that you
could check to see who got your referrals?
A No, I did not.
Q Well, what had been the custom and practice between
you and Rene in reference to the referrals?
A There was only a short period of time that I sent
anybody to his office, and that was when I was a solo
practitioner before I joined with Dario Bargas. And as of
-- what would happen is someone would come into my office or
I would talk to someone and if their case was anything more
complicated than a divorce or a fender-bender, I would tell
them to go and see Mr. Rodriguez and to tell them that I
sent them over there.
Q Do you ever even remember meeting William Boudreaux?
A No, I don't have any specific recollection of that.
Q Do you ever recall working on the Boudreaux file?
A I recall working on some files in Mr. Rodriguez's
office, but I couldn't tell you if -- if that was one of the
files.

MS. CONNELLY: Objection, nonresponsive.
Q (By Mr. Harris)Can you -- can you tell us the
circumstances where you worked on some files in Rene
Rodriguez's office.
A Yeah. I had become a solo practitioner right after
I'd -- the firm had -- Whittle law firm had dissolved. I
had just been elected to the City Council and I needed to
generate some income. And I had developed a relationship, a
friendship with Rene Rodriguez and I had asked him for -- to
give me any work that he could -- could afford to give me or
to let me help him on whatever files he could -- I could
help him with.
Q And what was the arrangement in reference to the
work that you did on those files?
A If I did some work on a file that panned out, that
he would send me a check.
Q Did you keep lists of those files you worked on?
A I did not.
Q Did you keep time records?
A I did not.
Q Do you recall the name of any of those files that
you worked on?
A No, I do not.
Q Now, how many years ago did this take place?
A 1997, so six, seven years now.
Q Well, why did you think that -- did you think this
money was for work or did you think this money was for a
referral?
A Well, when I saw a hundred thousand dollars, I
thought it was for a referral.
Q And why?
A Because it was a hundred thousand dollars. I
clearly would have remembered a case that I had put a
hundred thousand dollars' worth of work into.
Q So that was an assumption?
A Very much so, based on my practice with Mr.
Rodriguez.
Q Did anybody ever tell you that it was a mistake in
giving you that check?
A When Mr. Rodriguez and I had a -- our argument about
the check, he mentioned that it was a mistake and he
mentioned that I didn't work that much on the file.
Q Well, tell us -- tell us about the argument. How --
approximately how long was it after you got the check that
you got in this argument with Mr. -- Mr. Rodriguez?
A A week and a half. A week and a half after I had
received the check.
Q And where did the argument take place?
A In Mr. Rodriguez's office.
Q And who was present?
A I think that Judge Terry Shamsie was present and
another campaign worker, but I'm not sure that I recall his
name.
Q And tell us as best you can what Rene Rodriguez said
and what you said during this argument.
A I had gotten a call from Mr. Rodriguez before that
there was an issue about the check so I came over to visit
with him about it. I was extremely upset when I got there.
I was convinced that the issue had to do with the politics
surrounding the County Judge race and it didn't have
anything to do with the check or the case.
Q Well, tell me -- before we get any further, tell us
about why you were convinced it had to do with the issue
surrounding the County Judge's race.
A Some of the folks helping Judge Shamsie get elected
were very concerned that there were democrats that were
supporting Joe McComb. A fall-out from the Senate race in
the primary and the Canales family being some of the
democrats that were supporting McComb. My chief of staff
Bert Quintanilla and his wife, Judge Martha Huerta, Judge
Huerta was on the ballot in November as well against Tom
Greenwell, and some of the folks that were helping Judge
Shamsie believed that because Bert Quintanilla and Judge
Huerta maintained a friendship with the Canales family that
that was indicative of their support for -- of the democrats
for McComb cause. And I think at one point they believed
that if my friends were helping McComb, then I must be
helping McComb also. I was extremely upset that people that
I had been political allies now with my entire political
career were questioning my loyalty, and obviously my
friendship with Judge Shamsie was being questioned as well.

MS. CONNELLY: Objection, nonresponsive.
Q (By Mr. Harris)So you go and go to the office of
Rene Rodriguez, Judge -- well, Terry Shamsie. I'm going to
call him "Terry" because he wasn't Judge yet. Terry Shamsie
was there, there was somebody else you think that might have
been there?
A (Acknowledged affirmatively).
Q And you were there. Can you tell us what you said
and what Mr. Rene Rodriguez said at the point -- at this
time where you had your argument.

MS. CONNELLY: Objection, form.
A The best I can remember is when I told him -- when I
came in he told me that the check was a mistake, that I
didn't do that much work on it. I told him "This is
bullshit. This has nothing to do with the case. This is
all about politics and I can't believe that you're trying to
screw me". And he told me that he couldn't believe I was
trying to screw him. I think we used much stronger language
than that.
Q Uh-huh?
A It was probably the only fight I've ever had as an
adults, quite honestly, and it got ugly very fast and he
then told me to get out of his office and asked his --
somebody on his staff to -- to escort me out.
Q So he kicked you out of the office?
A He kicked me out of the office.
Q Had you cashed the check?
A No, I had not cashed the check at that time.
Q What happened next in reference to the check?
A I was extremely pissed off at Mr. Rodriguez and even
more convinced that it was completely unrelated to the case
and the check and I felt that if he was going to betray me
this way that I was going to make him go the -- go the full
distance and put a stop payment and stop the check. So
after thinking about it for a few days, I went and deposited
the check.
Q Well, do you recall whether Mr. Rodriguez during
this argument said he was going to stop payment?
A I believe he referred -- made a reference to that,
(Acknowledged affirmatively).
Q And at that point in time in your mind was it the
check for work done or was it for a referral fee?
A I thought it was for a referral fee.
Q Did Mr. Rodriguez demonstrate to you through any
kind of writings why it could not be a referral fee?
A No, there -- there -- it was -- the conversation
escalated quickly. There was -- it was not a -- there was
no discussion.
Q Did you believe Mr. Rodriguez when he said it was --
you didn't do that much work on the case?
A No, I didn't believe him.
Q Did you deposit the check?
A I did.
Q Before depositing the check did you talk to your
accountant, Rudy Sturgeon, about the check?
A I did.
Q Can you tell us that conversation.
A I basically asked him to help me figure out my taxes
so that I could take care of that, and I didn't want to
deposit the check until I knew how much I had to take care
of with regards to the I. R. S.
Q Did you owe some taxes at that time?
A I had -- I owed some estimated tax payments.
Q And did you make a calculation as to the tax monies
that -- or I shouldn't say "you", ---
A No.
Q Did Mr. Sturgeon make any calculation as to what he
recommended that you pay?
A That's correct; Mr. Sturgeon did, I did not.
Q And how much did you write a check for to the
I. R. S. ?
A It was approximately $82,000.
Q All right. And that was from the hundred thousand
dollar proceeds?
A That's correct.
Q When you took it to your accountant was there any
discussion as to what account that check should be deposited
in?
A There was. I asked him if he -- if he thought it
was best for me to put it into my PC account and he did.
Q And how was it -- since it was to you and not to
your PC, how ---
A (Acknowledged affirmatively).
Q How did -- how was that accommodated so that it
could go into the PC account?
A Well, he -- he also represents Mr. Rodriguez, or
represented Mr. Rodriguez, and I -- he said he would call
over there and see whether they would issue another check or
not.
Q Did you have any discussion with him later about any
calls that he might have had?
A He had a conversation with Mr. Rodriguez's office
and was told to just have me write in "PC" on the check.
Q And who wrote the word -- the letters "PC"?
A I did.
Q Now, was there a comma placed with all these zeros?
A I put the comma in there, also.
Q At the same time you put "PC" on it?
A At the same time.
Q And that was prior to the time that you endorsed the
check and -- or I don't know if you endorsed it, but
deposited it?
A That's correct.
Q Okay. Now, around October 10th did you get a letter
from Rene asking for the check back?
A I did, the day after I deposited it.
Q Did you think Rene was pulling your chain?
A I thought it was -- I -- I didn't think he really
did issue a stop payment.
Q And why did you think that he hadn't issued a stop
payment?
A You just have to know Rene to know that he's -- has
these types of temper tantrums.
Q Well, did you believe that the fact that the check
cleared that that was some evidence of the fact that he
LINDA SMILEY CONDIT, CSR, RPR

hadn't issued a stop payment?
A Well, it was -- it was probably ---

MR. CARRIGAN: I just object to leading, Jim.

MR. HARRIS: Sure.

MR. CARRIGAN: Thank you.
A It was probably two weeks -- ten days, two weeks
later that I contacted my bank to see whether or not the
check had cleared and it had, which confirmed my belief that
Mr. Rodriguez was pulling my chain on this issue.
Q (By Mr. Harris)Later did you receive a call from
Roland Guerra?
A I did. It was much later. It was after the
Thanksgiving holidays that I received a call from Roland
Guerra who was with LNB, Laredo National Bank.
Q And can you tell me who Roland Guerra was?
A At the time he was -- I understood him to be the
president of the Laredo National Bank.
Q And what did he ask you in that telephone call?
A He asked if we could meet, that he had something he
wanted to discuss with me. And I've known Roland since I
moved to town, so obvious I obviously said sure.
Q And where did you meet?
A We met at Taqueria Garibaldi within a couple of days
for breakfast.
Q And what did he tell you?
LINDA SMILEY CONDIT, CSR, RPR

2
A He told me that Mr. Rodriguez had issued a stop
payment and that the bank had failed to catch the check when
it was deposited and made the mistake of funding the -- the
check when they shouldn't have.
Q And what did you say in response to that statement
from Roland Guerra, the president of the bank?
A I was somewhat surprised and I asked him again "Are
you" -- "Are you sure that he confirmed" -- I mean, "Are you
sure he issued a stop payment", and he said "Yes". And he
also mentioned that Mr. Rodriguez was threatening to sue the
bank and he asked me what I would want -- what I wanted to
do, and I told him that I would return the money.
Q And why?Why did you say you would return the
money?
A I thought it was the right thing to do. I thought
that the bank had made the mistake, that the dispute between
Mr. Rodriguez and I would be resolved.
Q And tell me how you went about reimbursing the bank
for their mistake.
A I had some savings and the bank offered to loan me
the balance. And I want to say I put up 44,000 and the bank
loaned me 56,000.
Q Did you ever get ---

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