In Re Auer Corporation and Raymond Teague "Auer Hotel Construction" Litigation ( 2010 )

NO. 09-1076
IN RE AUER CORPORATION AND RAYMOND TEAGUE
ON REVIEW BY THE MULTIDISTRICT LITIGATION PANEL
JUSTICE STONE delivered the opinion for a unanimous Multidistrict Litigation Panel.
Auer Corporation and Raymond Teague have filed a joint motion asking this
panel to transfer 34 lawsuits pending in 11 different counties throughout Texas to a single
pretrial court for coordinated pretrial proceedings. For the reasons stated below, we deny
the motion.
PROCEDURAL BACKGROUND
Auer entered into contracts to construct seven hotels in seven different west Texas
towns with six different companies owned by Harish Patel.1 Teague is the president of
Auer and an investor in several of the hotels.
After Auer completed two of the hotels, a dispute arose between Auer, Teague,
Patel’s companies, and Patel, and both sides filed multiple lawsuits against each other. In
addition to contractual claims, the lawsuits also include claims for fraud, breach of
fiduciary duty, libel, and conspiracy. Several of the lawsuits between these parties were
transferred and all are pending in Montgomery County, Texas, with one exception.
Subsequently, several of the subcontractors involved in the various hotel construction
projects filed 30 additional lawsuits in ten different counties against Auer, Teague, and
Patel’s companies, in various combinations, to collect money owed to them. Auer and
Teague filed a motion to transfer all of the pending lawsuits to a single pretrial court.
1
The seven towns include Snyder, Stanton, Decatur, Perryton, Wheeler, Childress, and Borger.
DISCUSSION
This panel is authorized to transfer related cases that involve one or more
common questions of fact to a single pretrial judge if the transfer will: (1) serve the
convenience of the parties and witnesses; and (2) promote the just and efficient conduct
of the litigation. TEX. GOV’T CODE ANN. § 74.162 (Vernon 2005); TEX. R. JUD. ADMIN.
13.3(l), reprinted in TEX. GOV’T CODE ANN., tit. 2, subtit. F app. (Vernon Supp. 2009).
A. Are the cases related?
Under Rule 13.2(f), cases are “related” if they involve “one or more common
questions of fact.” TEX. R. JUD. ADMIN. 13.2(f). Auer and Teague contend the pending
lawsuits all involve the question of “what do the hotel owners owe those who built the
hotels?” Although the lawsuits all admittedly arise out of the construction of hotels
owned by the Patel companies, each of the claims by the subcontractors involve
individualized fact inquiries relating to the materials or services provided for a particular
hotel project and the amount owing for those materials and services. Many of the
subcontractors likely provided materials or services only for one of the seven hotel
projects. For example, Hufcor, Inc., which filed a lawsuit pending in Childress County,
Texas, supplied wooden door panels only for the hotel project in Childress, Texas.
Similarly, Borger Redi-Mix Concrete Co., Inc., which filed a lawsuit pending in
Hutchinson County, Texas, supplied concrete only for the hotel project in Borger, Texas.
Finally, Leo Concrete, LLC, which filed a lawsuit pending in Ochiltree County, Texas,
furnished concrete construction and labor materials only for the hotel project in Perryton,
Texas. Because the individual fact inquiries in the subcontractors’ cases preponderate
over whatever common issues there may be, we disagree that the lawsuits at issue in this
proceeding are “related” within the meaning of Rule 13. See In re Ad Valorem Tax
Litigation, 216 S.W.3d 83, 85-86 (Tex. Jud. Pan. Mult. Lit. 2006).
B. Would transfer further convenience and efficiency?
Even if Auer and Teague could establish that the lawsuits are in fact related, we
would nevertheless deny the motion because the transfer would not further convenience
and efficiency. As previously noted, many of the subcontractors’ claims arise from a
single hotel project and the amount in controversy is small. For example, Hufcor’s claim
is for $32,924.55, Borger Redi-Mix’s claim is for $38,222,00, and Leo Concrete’s claim
is for $35,338.00. These parties and their attorneys would “clearly be inconvenienced if
they [were required to] travel to one central court for pretrial matters instead of to their
[ten] local courthouses or to nearby conference rooms.” Id. at 86.
In addition, if the thirty lawsuits by the subcontractors were transferred to one
pre-trial court, subcontractors that were involved in only a single hotel project would
become embroiled in hearings and discovery related to six other hotel projects in which
they have no involvement. Instead of decreasing their litigation expense, the cost
incurred by the subcontactors in their efforts to collect the relatively small amounts owed
to them would significantly increase. “[T]o them there is a great difference between
pretrial hearings in their own county and hearings in a distant central county for all these
cases.”2 Id. “Attorneys for the [subcontractors] often [would] not know whether a
pretrial hearing [would] implicate their interests, and they [would] therefore have to
attend the distant hearing or risk being bound by the result.” Id. Indeed, if transfer were
2
We note that the cases at issue are pending in distant counties stretching from the Panhandle, North Texas,
the Hill Country, and East Texas. Establishing one convenient central county for pretrial hearings would
be problematic at best.
granted to a distant county, some subcontractors might be deterred from pursuing their
claims at all after weighing the potential expense of litigation against the comparatively
small amounts of the claims.3
Finally, the lawsuits between Auer, Teague, Patel’s companies, and Patel include
multiple tort claims and are much more contentious and complex than the more straight-
forward issue of what amount is owed to the various subcontractors. The potential
ability of the subcontractors to quickly resolve their claims is best exemplified by the
summary judgment one of the subcontractors, Hufcor, already has obtained in its favor.
Accordingly, Auer and Teague have not shown that consolidating the cases before
one judge for pretrial proceedings would be efficient or serve the convenience of the
parties and witnesses.
CONCLUSION
On this record, we conclude Auer and Teague have not shown the cases they seek
to transfer are “related,” or that it would serve the convenience of the parties, witnesses,
or lawyers to have the pretrial issues heard by a single, pretrial judge. The joint motion
to transfer is denied.
_________________________
Catherine Stone, Justice
OPINION DELIVERED: February 23, 2010
3
Auer relies on this panel’s decision in In re Digitek®, MDL No. 09-0408 (Tex. M.D.L. Panel Aug. 5,
2009), to support its assertion that any inconvenience will be “more or less evenly distributed” among the
various parties. Auer’s reliance on Digitek® is misplaced for two reasons. First, in Digitek®, unlike the
instant case, the claims were found to be related because they all related to one core fact - the claimants had
taken the same medication. By contrast, in the instant litigation, the cases with related common interests -
the suits between Auer, Teague, and the Patel companies - are already pending in Montgomery County,
with one exception. Second, the claims in Digitek® arose in twelve different counties, but most of those
counties were in the eastern part of the state. In this case, however, the various subcontractor cases are
pending in ten distant counties stretching across the state.