Though it's been more than five years since the Texas Court of Appeals upheld a trial judge's order for San Antonio attorneys Robert Kugle, Andrew Toscano and Robert "Trey" Wilson to pay nearly $1 million in sanctions for their role in bringing a fraudulent product liability lawsuit that sought to extort $2 billion from DaimlerChrysler in 1998, Wilson has made no payments toward his share of the sanctions, and both he and Toscano continue to practice law.
It appeared that the federal government was poised to bring criminal charges when the United States Attorney for the Western District of Texas asked state prosecutors not to pursue their own investigation, but no charges have been brought thus far. Kugle was disbarred and has fled the country with a fraudulently obtained fortune, but officials have taken no significant action against Toscano and Wilson who also engaged in what many believe to be felonious conduct -- including mail and wire fraud, perjury, subornation of perjury and obstruction of justice. Outrageously, the two continue to practice law.
Here is factual background on the case:
In June 1996, Kugle and his San Antonio law firm agreed to represent the Fabila family in a claim against their insurance company arising out of a rollover accident that had occurred earlier that month near Sabinas, in Coahuila, Mexico. Following the accident in which four children died, Mrs. Fabila told the investigating highway patrolman and a Red Cross ambulance driver that the accident occurred when her husband fell asleep at the wheel of their 1995 Dodge Neon.
Upon retaining Kugle's firm several days later, Mrs. Fabila again said the accident occurred when the "driver fell asleep and lost control of [the] vehicle," according to the firm's intake interview sheet. Subsequently, members of the Fabila family reportedly asked the investigating officer to change the location of the accident on the police record so as to avoid their insurance policy's exclusion for accidents occurring more than 25 miles outside the United States. The investigating officer refused to do so and the insurance company denied coverage.
In late 1997 DaimlerChrysler Corporation voluntarily recalled the Fabilas' Neon for repair of a steering column component known as the "decoupler," which is designed to make the column collapse away from the driver in a frontal collision. Mrs. Fabila received a copy of the recall notice and took it to the Kugle Law Firm. In May 1998 Kugle, Toscano and Wilson filed a products liability suit against DaimlerChrysler Corporation and its San Antonio dealer, North Star Dodge, in Bexar County, Texas. They had not inspected the Neon, which was still in a salvage yard in Mexico, before filing the suit.
The lawsuit was fraudulent from the start. On June 24, 1998, Wilson lied to DaimlerChrysler's attorney in their initial telephone conversation, concealing Mrs. Fabila's admissions about the true cause of the accident (i.e., her husband falling asleep at the wheel) and claiming it occurred when the Neon's wheels "popped off" and its axle broke. Two weeks later, Kugle, Toscano and Wilson inspected the Neon with their two experts, Stephen Garza and Thomas Persing, at the salvage yard in Mexico. Both experts told the attorneys that there was nothing wrong with the Neon's steering mechanism or the decoupler. Garza documented his findings in a memorandum and Persing provided photographs of the intact decoupler on July 6, 1998.
But by the time the Neon was made available for inspection by a DaimlerChrysler expert several weeks later, the decoupler had been separated. The trial court found that in the intervening weeks, Kugle, Toscano and Wilson had conspired to either separate the intact decoupler or to replace it with a failed component.
The tactics of these attorneys included, among other things, filing false affidavits and attempting to bribe the Mexican police officers to "forget" Mrs. Fabila's initial admissions. The fraud was ultimately exposed when Stephen Garza's inspection memorandum was anonymously mailed to defendants' counsel's office. Confronted with the memorandum, the attorneys insisted it was a "forgery." But the court ordered them to produce Thomas Persing's photographs and deposition, and then dismissed their $2 billion lawsuit with prejudice.
Every step of the way, Kugle, Toscano and Wilson lied about and sought to cover up their wrongdoing. But eventually, equating their fraud to a poker bet, Wilson admitted that they were "running a bluff and had their hand called." (A March 21, 2006 Detroit News story offers additional information and is posted at: http://www.detnews.com/apps/pbcs.dll/article?AID=/20060321/AUTO01/603210388/1148/BIZ.)
The American Tort Reform Association believes the State Bar of Texas (800-204-2222) should appropriately sanction Toscano and Wilson, and that law enforcement authorities should consider criminal prosecutions. If the two escape serious punishment, other ethically-challenged members of the plaintiffs' bar could conclude they risk only a slap on the wrist for serious violations of the law, and the civil justice system in Texas will remain vulnerable to them.
© 2007 American Tort Reform Association