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Responsible Third Party Update

[email protected] and I recently presented a CLE update on Shifting Liability, which focused on the Responsible Third Party laws that were created in the 2003 Texas Legislature. A copy of the paper can be found on our website, www.abrahamwatkins.com. But one really interesting case just came out of the San Antonio Court of Appeals that is sure to draw some attention.

In Flack v. Hanke, the plaintiff (Flack, the owner of a furniture store) originally sued Hanke, a CPA (who was hired to create an employee stock ownership plan). The case settled between the two and as a part of the settlement, Hanke was required to designate two law firms and several lawyers (who also did work for Flack) as "Responsible Third Parties", even though the time period allowed under the statute of limitations to file suit had lapsed. In accordance with the terms of the settlement agreement, after the designation as RTP's, Flack sued the attorneys and law firms into the suit as defendants. Once that was done, the case against Hanke was dismissed and the only remaining defendants were the attorneys and the law firms.

The newest defendants took offense to the fact they were sued after the statute of limitations had run and filed both a Motion for Summary Judgment and a Motion to Strike the Designation of Responsible Third Parties. The trial court granted the motions, but on appeal the San Antonio Court of Appeals reversed and remanded the case following the letter of the law. Chapter 33 of the Texas Civil Practice and Remedies Code controls the Responsible Third Party law in the state of Texas, and the court noted, "

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