A South Texas lawmaker must pay nearly $3 million for not disclosing a significant conflict of interest in a divorce case in which he was an attorney, a federal district judge has ruled.
The hefty tab that state Rep. Sergio Muñoz Jr. must pay stems from a suit filed at Law Funder, a firm that helps clients fund lawsuits and provides clients cash advances in hopes for a payday in the courtroom.
Law Funder hired Muñoz, a Democrat from Palmview, to handle a divorce case in Hidalgo County, but Muñoz didn’t disclose to the company that he had a business relationship with the judge in the case, company officials said in the suit.
In July 2012, a hearing was heard before state senior District Judge Dick Alcala, of San Antonio, where the court ruled to disqualify Contreras from hearing the divorce case “because of the corporate association with defendant Sergio Muñoz Jr., that was in existence when they were lawyers together and continued through the time Muñoz appeared for Law Funder,” court documents further read.
Alcala also disqualified Contreras “because Judge Contreras arguably had an interest in the subject matter of the litigation and the court resolved that doubt in favor of disqualification,” according to court documents. Alcala then entered an order disqualifying Contreras.
Law Funder “sustained a significant amount of damages,” which eventually led to Law Funder retaining the representation of McAllen attorney Francisco Tinoco, who then filed suit in federal court against Muñoz and his law offices for legal malpractice, court documents read.
In all. Muñoz must pay $2.9 million.
Muñoz denied committing malpractice, but a federal district judge ruled against him in February, saying any responsible person in Muñoz’s position “would know that failing to disclose or withdraw from the conflict in question could lead to disqualification of [the judge in the divorce case], nullification of his orders, and the consequent waste of [Law Funder’s] time and paid attorney’s fees.”
Federal District Judge Micaela Alvarez seemed to be frustrated with Muñoz in his ruling, citing his “refusal to cooperate in the discovery process” as a reason for delays in the federal case.
Muñoz gave conflicting answers about the suit when talking to reporters.
The state representative did not return multiple calls from the McAllen-based Monitor reporter. Instead, he went over the reporter’s head to the executive editor and called the suit a “private matter.”
Muñoz did speak to the Texas Tribune, where he told a reporter the case was “political” and that he plans to appeal.
Trent Seibert can be reached at [email protected] or at 832-258-6119.