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NEW YORK (CNN/Money) -
Daniel A. Speights suffered a blow in court last week. But Speights, one of the nation's leading plaintiffs attorneys specializing in asbestos property-damage claims, is by no means down for the count.
On October 31, a South Carolina judge disallowed about 500 claims in the bankruptcy of chemical giant W.R. Grace, finding that Speights had not followed proper procedures in filing claims on behalf of parties who didn't expressly authorize the lawyer to sue for them. Still, the judge set a hearing for December to determine whether Speights could resurrect the cases by bringing a new class action in the bankruptcy setting.
The judge also expunged 1,495 claims Speights brought for properties with no Grace product in them, which he had consented to drop ten days earlier.
In August, Speights admitted that of the 2,938 claims he had filed, 61 percent involved buildings that did not contain any Grace products; he was suing Grace solely on a conspiracy theory, he explained. He even acknowledged filing 400 claims for clients he could not identify. Grace then demanded that his firm, Speights & Runyan, prove its authority to bring 2,937 (or all but one) of the claims.
The Speights firm has asserted that it represents hundreds of claimants -- even though they "have not responded to requests for express authorization" -- on the basis of a nationwide class-action complaint that it filed against Grace in a South Carolina state court in 1992. The very substantial hitch in that argument is that the South Carolina court struck Speights's nationwide claims more than a decade ago, finding that South Carolina law barred them.
"I believe I not only had the authority," Speights argued at an August hearing, "I was told [by a legal ethics professor] that I had a fiduciary obligation to file claims on behalf of that... class." He argues that he would have eventually appealed the order striking his out-of-state claims if Grace hadn't first gone bankrupt.
Over the past 23 years, Daniel A. Speights is widely believed to have filed, tried and settled more asbestos property-damage cases than any other attorney in the U.S. Though the suits -- brought for building owners who seek reimbursement for the cost of removing asbestos from their properties -- get less public attention than personal-injury cases, they, too, can lead to some major-league payouts.
Acting as lead counsel for the property-damage claimants in the Johns Manville bankruptcy many years ago, Speights helped win almost $400 million for his clients -- a nice payday for the co-leader of a four-lawyer firm in sleepy Hampton, S.C. (pop. 2,795).
"There's absolutely no merit to these objections to our authority," said Speights when reached by FORTUNE in mid-October. He referred a reporter to his briefs and transcripts of his in-court arguments for the details of his rebuttals.
Speights' scattershot filing practices have not been confined to the Grace bankruptcy. This past March in Federal-Mogul's Chapter 11 proceeding, he voluntarily withdrew 1,228 of 2,915 claims after challenge; in April he pulled 132 of 300 from the U.S. Mineral bankruptcy; and in September 2003 he dropped 328 of 366 claims filed against Owens Corning.
Of course, in the twisted world of asbestos litigation, Speights's behavior makes a certain kind of sense. If your clients are trying to recover their fair share of the limited funds in a bankrupt company's estate, and they're competing with a host of personal-injury claims that may well be spurious, it must be tempting to look for your own competitive advantage -- and let the courts sort it out.
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For more on shenanigans in the long-running asbestos litigation drama, click here.
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