Elabor v. Smith
Supreme Court of TX - 1992
- P suffered serious injuries in a car accident. She was cared for by a group of doctors, including D Elabor.
- P entered into a "Mary Carter" settlement agreement with group of doctors but not with Elabor.
- The agreement provided that group would pay her $425k, remain as Ds in the case, and be paid back all or part of the settlement money paid to P out of the recovery against the remaining D Elabor.
- Jury awarded P $2.25M, 88% fault to Elabor, 12% to other Ds. Judgment against Elabor for $1.8M
- Trial court entered judgment against D Elabor.
- TX COA affirmed.
- TX Supreme Court reversed, remanded for new trial.
- Are Mary Carter agreements allowed?
- Mary Carter agreements are not allowed in the state of TX.
- The Mary Carter agreement created a strange conflict in the case and messed up the adversarial process.
- The Ds in the agreement were basically on Ps side and wanted P to get a large judgment against D Elabor.
- The Ds in the agreement helped P with preemptory challenges, cross-examination, and discovery.
- These agreements do not promote settlement; they almost always go to trial against the non-settling D.
- There is a sham of adversity between P and Ds.
- The trial court helped Elabor in many ways, including giving him more challenges, letting him present evidence last, and instructing the jury on the agreement among the other Ds and P.
- The jury should be smart enough to realize what's going on and make appropriate judgment.
- Some states allow Mary Carter agreements, some allow them as long as they are not secret, and some have found them void as against public policy.