Quintero v. Jim Walter Homes, Inc.

Louis and Paula Quintero (the Quinteros) (plaintiffs) contracted with Jim Walter Homes, Inc. (Jim Walter) (defendant) to build a home. The Quinteros were dissatisfied with the home and retained attorney Hector Gonzalez to sue Jim Walter. Because Gonzalez had hundreds of similar cases against Jim Walter, Gonzalez, with the approval of the Quinteros, arranged for attorney Francis Gandy to litigate the case. On May 27, 1981, Gandy settled the Quinteros’ case for approximately $78,000. Before Gandy informed the Quinteros of the settlement, Gonzalez called the Quinteros to tell them that he had negotiated a $1,800,000 judgment for all 349 of his clients, and the Quinteros agreed to participate in the aggregate settlement. Under this agreement, the Quinteros would receive a settlement of approximately $13,000. On June 22, Gandy told the Quinteros that he had settled the case for them. The Quinteros then notified the court that they were opposed to the settlement and were firing Gonzalez. Despite knowing this, the attorneys for Jim Walter filed a consent-dismissal motion in the Quinteros’ case. The trial court granted the motion on August 18, 1981, and set aside the first settlement negotiated by Gandy. The Quinteros challenged the second settlement agreement, arguing that it must be set aside because Gonzalez had violated the Texas Code of Professional Responsibility by failing to provide the Quinteros with a breakdown of all the claims involved in the settlement and how the settlement proceeds would be divided among clients.