HOUSTON (Legal Newsline) - An investor who lost millions of dollars when lawyer Mikal Watts claimed to have put together 40,000 BP oil spill clients but instead ended up fighting criminal charges won't be able to blame his own attorneys for not recouping his money.
Houston federal judge George Hanks ruled Jan. 30 that the firm Baker Donelson represented Max Duncan, and not the entity he created to fund litigation that he thought included 40,000 Vietnamese individuals allegedly harmed by the 2010 Deepwater Horizon explosion and oil spill in the Gulf of Mexico.
Duncan invested nearly $6 million with attorney Robert Hilliard, who was investing in Watts' claims. He created Duncan Litigation Investments to make the payment, which he thought would entitle him to half of the attorneys fees obtained by Hilliard.
Instead, it became known that Watts' client list was a sham. It led to federal criminal charges that Watts defeated in 2016.
In March 2011, Duncan was forwarded an email exchange between Watts and a fellow investor regarding the discovery one of Watts' so-called clients had died five years earlier. The email said "Mikal, Fraud."
A New York Times article the following month noted about 50 complaints that lawyers had made claims on a person's behalf without his or her permission. Hilliard called the alleged 40,000 clients "ghosts in the wind" in an email he forwarded to Duncan in January 2011.
The client database included incorrect phone numbers and addresses. "(S)ome of the names came from a phone book, some of the fee contracts were duplicated, some of the clients claim they were duped into signing up with Watts, and others were either at sea or otherwise unavailable," Judge Hodges wrote.
Duncan hired Baker Donelson's Michael Dawkins two years later to represent him in any possible criminal proceedings against him. Though Duncan was the sole shareholder of his Duncan Litigation Investments LLC, it remained a "corporate entity legally separate and apart from Duncan DLI was never Dawkins' client," Hodges wrote.
Dawkins told Duncan that he needed a tolling agreement so he could sue to recover his investment. Duncan hired a Houston attorney to do that, but DLI was not a party to it.
Watts was able to defeat DLI's lawsuit on a statute of limitations defense because DLI wasn't a part of the tolling agreement. DLI's claims against Hilliard failed when it was determined to be illegal, as Duncan was not a lawyer and could not take part in the sharing of attorney fees.
DLI sued Baker Donelson because DLI was not included on the tolling agreement, but Hodges wrote DLI was not Baker Donelson's client at the time. Only Duncan himself was.
"Baker Donelson did not begin to represent DLI or owe it any legal duty until December 2014," Hodges wrote. "Any legal services performed by Baker Donelson before December 2014, whether in connection with the grand jury investigation or the tolling agreement were for Duncan individually.
"The fact that Dawkins may have been told that DLI paid an invoice for legal services provided to Duncan did not create a duty between Baker Donelson and DLI."