Product Liability Advisory - August/September 2012: Texas Court Guards Against Guardian Ad Litem Fees

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[author: David Kent]

When a settlement is reached in personal injury cases involving claims brought on behalf of a minor or incapacitated plaintiff, courts normally appoint a guardian ad litem to review the terms of the settlement and ensure it is fair and in the best interests of the claimant. For such services, the ad litem is entitled to a fee, which usually is taxed against the settling defendant as a cost of court. In a pair of decisions earlier this year, the Texas Supreme Court held that the ad litem’s role is to advise the trial court about the fairness of the settlement, not to prosecute the case as a surrogate attorney for the plaintiff, and that any actions beyond those specified in the court’s order of appointment are non-compensable.

 

In Ford Motor Co. v. Chacon, 370 S.W.3d 359 (Tex. 2012), the trial court appointed a guardian ad litem to represent the interests of a minor child regarding a settlement reached with one of the defendants in the case. The ad litem performed his services, recommended to the court that it approve the settlement, and submitted a fee application for $11,000, which the court approved and taxed as costs. Being only a partial settlement, the case continued, and almost one year later resulted in settlement with another defendant.  Although the scope of the ad litem’s appointment had been limited to the first settlement, the ad litem had continued his involvement in the case during that year, which he justified as necessary to ensure the second defendant “was not let out of the case.” The ad litem attended mediation (which was successful), recommended that the court approve the settlement, and submitted a fee application for $16,000 - $20,000 for his work during that year, including an allowance for future work in obtaining approval of the settlement and handling investment of the settlement proceeds. Over objection of the settling defendant, the trial court awarded a fee of $17,000, which it taxed as costs.

 

The Texas Supreme Court reversed the fee award, holding it was an abuse of discretion to award fees for work performed without an order of appointment. Since the order of appointment referenced only the first settlement, the ad litem’s duties ended when the court approved that settlement. Anything the ad litem did after that point was voluntary and non-compensable, because it was without authority of the court.

 

This holding was consistent with that issued a few months earlier in Ford Motor Co. v. Garcia, 363 S.W.3d 573 (Tex. 2012), where the Texas Supreme Court reversed an ad litem fee award of $28,000 for work performed over a 10-day period because, among other things, it included charges for work that exceeded the proper scope of a guardian ad litem. The ad litem argued that the trial court’s order of appointment authorized his acting as an attorney ad litem, or independent counsel, for the incapacitated plaintiff. The court disagreed with that interpretation of the trial court’s order, but more importantly noted that no statute or rule would have authorized taxing the costs of such services to the settling defendant in any event. The only costs that could be taxed were those related to the guardian ad litem’s limited and specific duties of evaluating the fairness of the settlement. Anything beyond that was non-compensable.

 

Armed with this case authority, a settling defendant can object to a guardian ad litem’s intrusion into the conduct of the merits of the case and should be able to prevent an ad litem from acting as a surrogate plaintiff’s attorney. But a defendant’s failure to object to the conduct of the ad litem does not waive its right to object to the ad litem’s fee request. The Texas Supreme Court made clear it was the guardian ad litem’s burden to ensure both that his actions stayed within the scope of his appointment and that his fee request adequately documented this fact. This was not a matter for the settling defendant to monitor.