The court affirmed the trial court’s judgment declaring Wilhoite’s quitclaim deed void and awarding Sims damages and attorney’s fees. The parties are sisters that each inherited a half interest in their grandfather’s house. In 2007, Sims signed a quitclaim deed transferring the interest in the property to Wilhoite for no consideration. Sims testified they agreed that after the house was sold, they would share the money from the sale equally; Wilhoite testified that Sims gifted her interest. Sims performed repairs on the house in 2008 and moved into the house in 2010 and performed maintenance. Sims testified that Wilhoite agreed to put those costs towards Sims’s interest in the house. In 2011, Wilhoite attempted to evict Sims for unpaid rent. Sims filed suit in district court seeking a declaratory judgment that the quitclaim deed was voidable and claims for statutory fraud and breach of contract. The jury found that Sims did not gift the property, that Wilhoite committed statutory fraud, and that Wilhoite breached her agreement to reimburse Sims for one-half of her repair and maintenance expenses.

The court first held that Wilhoite did not have adverse possession of the house by mere color of title through the quitclaim deed, and therefore the court was correct in refusing to apply a three-year limitations period. Second, neither agreement – to share in the proceeds from sale or reimburse for expenses – were contracts for the sale of real estate, so both were outside of the statue of frauds. Next, the court held that the declaratory judgment was proper, despite Sims’ failure to pursue a trespass to try title action, because the it merely canceled the deed and made no determination of title to the property. Finally, Sims’ counsel’s statement that her son was “protecting us in Afghanistan” was not an incurable argument. Thus, the court affirmed.

Wilhoite v. Sims, No. 05-12-00228-CV

The court affirmed a denial of the Dallas County Hospital District’s plea to the jurisdiction requesting dismissal of a breach of contract claim on the basis of governmental immunity, but reversed the decision with regards to a quantum meruit claim. The District entered into a written lease and purchase contract with Hospira for certain medical equipment and supplies. Several months after the end of the lease term, Hospira invoiced the District for the remaining amounts due under the lease. After unsuccessful attempts to recover the shortfall, Hospira sued the District asserting that immunity from suit had been waived by section 271.152 of the local government code. The District argued that its immunity from suit had not been waived under section 271.152 because it was not a local government entity as defined in section 271.151. The trial court denied the District’s plea to the jurisdiction, and the District filed an interlocutory appeal.

On appeal, the court noted that section 271.152 waives governmental immunity from suit for breach of contract claims against local governmental entities, defined as “a political subdivision of this state, other than a county or a unit of state government” and including a “special-purpose district.” The District contended that it is excluded from this definition because it is a “unit of state government” pursuant to the government code, but that code specifically excludes special purpose districts from the definition. Thus, the District could not assert immunity from the breach of contract claim. The court also held, however, that section 271.152 did not waive immunity from suit for Hopsira’s alternative claim based on quantum meruit. The statute expressly applied only to breach of contract.

Dallas County Hospital District v. Hospira Worldwide, Inc., No. 05-12-00902-CV

The court affirmed a judgment in favor of FNMA in this forcible detainer action. After Henning defaulted on a promissory note, FNMA purchased the property in foreclosure and demanded that Henning vacate. FNMA filed a forcible detainer proceeding and received a judgment awarding it possession.

After losing on appeal to the county court at law, Henning appealed to the district court arguing that the lower courts lacked jurisdiction because this was a suit over title to land. The court noted that a forcible detainer action only determines immediate right to possession. Further, a separate lawsuit to determine title does not deprive a court of jurisdiction over a forcible detainer action unless determining who has the right to immediate possession necessarily requires resolution of the title dispute. Because it was not necessary for the trial court to determine whether the foreclosure was valid and to resolve the title dispute before awarding possession to FNMA, it had jurisdiction.

Henning v. Federal National Mortgage Association, No. 05-12-00726-CV

The court reversed a judgment in favor the Texas Historical Commission and the City of Dallas related to demolition of a historical building and rendered a take nothing judgment for TWE. In March 2006, the City granted TWE a permit to demolish an historical Railway freight station in the West End of Dallas. The City later determined that the permit was improperly issued and revoked it. The City contended that they told TWE of the revocation and placed notice at the property. TWE proceeded with demolition. The City and THC sued TWE under the Local Government Code for demolishing a historic building without proper municipal approval and for fraud. The jury found against TWE on all claims, but the trial court granted TWE’s motion to disregard, in part, and awarded only civil penalties and damages under the Government Code.

The Government Code provides a cause of action for a city against someone who adversely affects a historic structure, but only if the City has already filed a verified listing of historic structures with the county clerk. The Code goes on to provide a cause of action for the THC if the city fails to pursue the cause of action under that same section. On appeal, the court held that the THC’s cause of action also required that the City file the required listing, which was not done, and therefore the THC’s action failed. Also, the statutes under which the City sought civil penalties did not specifically provide civil penalties. One allowed the City to adopt such penalties, which it never did, and the second addressed the enforcement of health and safety ordinance, not historical structure zoning. Thus, the trial court erred by assessing penalties against TWE.

TWE v. City of Dallas and Texas Historical Commission, No. 05-11-00582-CV

The Court affirmed a summary judgment in favor of Frost Bank on counterclaims related to a loan default. TAM failed to pay off a loan it received from Frost by the maturity date stated in the written loan agreement. Frost setoff part of the amount due with money from TAM’s operating account and sued for the remainder. TAM counterclaimed, alleging that Frost had orally extended the maturity date in a meeting with TAM’s representative and that Frost’s wrongful setoff caused TAM significant damage. Frost moved for, and TAM failed to challenge, traditional summary judgment on its breach of contract claims, which the court granted based primarily on the written loan agreement. It then granted no-evidence summary judgments dismissing TAM’s counterclaims related to the alleged oral extension. TAM appealed, challenging the trial court’s judgment on TAM’s counterclaims for breach of contract, promissory estoppel, negligent misrepresentation, fraud, conversion, and wrongful setoff.

On appeal, the court held that because TAM did not challenge the traditional summary judgment on Frost’s breach of contract claim, the trial court’s judgment as to the enforceability of the written agreement between TAM and Frost was binding. Thus, TAM’s corresponding counterclaims for breach of contract, negligent misrepresentation, and fraud, which were based on the alleged oral extension, failed due to the written agreement’s enforceability. The court agreed that there was no evidence that TAM relied on the alleged oral extension in its decision to deposit more money into the operating account, so TAM’s promissory estoppel claim also failed. And because TAM’s conversion and wrongful setoff claims required that TAM be entitled to possession of the funds in the operating account, and thus relied on the success of at least one of TAM’s other failed counterclaims, those claims likewise failed.

Trevino & Associates Mechanical v. Frost National Bank, No. 05-11-00650-CV

The court affirmed a summary judgment in favor of Citibank in a suit to recover a credit card debt. Citibank sued Aymett, alleging breach of contract and account stated, and moved for summary judgment. Citibank supported its motion with account statements and excerpts from Aymett’s deposition, in which Aymett admitted using the credit card and making payments for some time and agreed that he has no dispute as to the amount claimed to be due and owing on the account. The trial court granted summary judgment and Aymett appealed.

On appeal, Aymett complained that Citibank did not present a copy of a written contract and that there was no evidence he actually received any of the account statements mailed to him. The court held that a claim for account stated does not require a written contract, but only an agreement to pay an amount owed. Additionally, the summary judgment evidence demonstrated that Citibank mailed, to the same address for Aymett each time, monthly statements and that Aymett responded to the statements by making regular monthly payments until he finally stopped paying. Finally, the trial court did not err in granting summary judgment on an implied contract just because Citibank claimed an express contract based upon the same transaction, as there was no determination that Citibank was entitled to recover on both an express and an implied contract.

Aymett v. Citibank, No. 05-11-00451-CV

The court reversed a trial court’s judgment in favor of PlainsCapital Bank for damages and attorney’s fees resulting from Martin’s loan default based on Chapter 51 of the Property Code. In 2008 Martin defaulted and the Bank foreclosed upon and purchased the underlying property at auction for $539,000. Martin owed the Bank nearly $800,000. In 2009, over a year later, the Bank sold the property for $599,000 and sued Martin for the deficiency. Martin sought a damages offset under Property Code § 51.003 based on the value of the property, introducing expert testimony at trial that the property’s fair market value at the time of foreclosure was $850,000. The Bank argued that § 51.003 did not apply because it was not seeking to apply the foreclosure sale price as a credit but instead what the Bank actually received from the property: the 2009 sales price. The trial court agreed, holding § 51.003 inapplicable and crediting Martin $599,000 toward the deficiency.

On appeal, the court held that § 51.003 applies, regardless of the lender’s requested measure of damages, when (1) §51.002 foreclosure sale occurs, (2) the foreclosure sale price is less than the debt, and (3) an action is brought to recover the “deficiency,” or the amount owed on the debt after application of the collateral’s value. The court noted that the lender may not receive the benefit of a § 51.002 foreclosure sale but then “opt out” of § 51.003’s offset to the borrower. Additionally, the price received in the 2009 sale was legally insufficient evidence under § 51.003 because the Bank failed to link that price to the property’s value on the date of foreclosure. The court refused to render judgment based on Martin’s evidence, however, noting that the Bank refuted this value with its own expert testimony but indicating that the 2009 sales price was not evidence of the property’s fair market value at foreclosure.

It should be noted that the court did not hold that a later sales price of property can never be evidence of its fair market value. Rather, it is important for the lender to tie the actual sales price closely to § 51.003’s definition of fair market value, including a showing how it reflects the property’s value on the date of foreclosure.

Martin v. PlainsCapital Bank, No. 05-10-00235-CV

The court withdrew its previous opinion in this case, which dismissed the appeal for want of jurisdiction, and entered a new opinion affirming the trial court’s judgment denying Whitehead’s motion to vacate entry of a foreign judgment against him. The previous opinion held that Whitehead could not maintain a restricted appeal because he had participated in the hearing on the motion to vacate, despite not participating in the proceedings in Indiana that resulted in the underlying judgment. The new opinion holds that Whitehead’s lack of participation in the Indiana proceedings meets the relevant requirement to maintain a restricted appeal. The court affirmed the entry of the Indiana judgment, however, because there was no error by the Texas trial court. The certification of the Indiana judgment was accomplished by the stamped “certified copy” on the final page, meeting the authentication requirements of Texas Rule of Evidence 902.

Whitehead v. Bulldog Battery Corporation, No. 05-12-00449-CV (Memorandum Opinion on Rehearing)

The court reversed a county court’s judgment in favor of a resident in a forcible detainer action and rendered judgment of possession in favor of the bank. After acquiring the property at a foreclosure sale and attempting to remove Mr. Carman, OneWest file a forcible detainer action. At trial OneWest provided the deed of trust, the substitute trustee’s deed, and notices to vacate the property that were served on Carman. The trial court found that OneWest did not have the right to possess, but noted that it could go through the process again with the correct paperwork. On appeal, the court held that OneWest had a claim to immediate possession of the property based on the deed of trust, which stated that Carman would become a tenant-at-sufferance in the case of a foreclosure and that OneWest could remove Carman from the property. This served as an independent basis on which the trial court should have determined that OneWest was entitled to immediate possession of the property.

OneWest Bank v. Carman, No. 05-12-00100-CV

The court granted a writ of mandamus to preventing an administrative judge from granting a rehearing of her recusal order. Relator Amos filed a motion to recuse the trial judge presiding in her criminal case, and the administrative judge assigned to hear the motion orally found “the appearance of impropriety, the appearance of prejudice . . . sufficient” to justify recusal. The administrative judge ordered recusal and transferred the case to a new judge. The trial judge filed a motion for reconsideration challenging the merits and arguing that she had not received notice of the hearing and the opportunity to present or challenge evidence. The administrative judge granted the motion for reconsideration and set a new hearing on the motion to recuse. Amos filed a petition for writ of mandamus seeking relief.

The court held that once a judge refers a motion to recuse to another judge, the challenged judge can take no further action, especially to influence the outcome of the matter. Moreover, once the administrative judge decided the motion and transferred the case to a new judge, she no longer had authority over the matter. Finally, the trial judge had no due process interested in presiding over the particular case. Thus, the motion for reconsideration was improper and any action on that motion was contrary to settled law. Mandamus was an appropriate remedy to prevent waste of judicial resources and interference with the new court’s jurisdiction over the case.

In Re Amos, No. 05-12-01500-CV

The court affirmed a take-nothing summary judgment in favor of DCAD in a property tax dispute. The property owner challenged the appraisal value of his property as both unequal and excessive. DCAD filed a no-evidence motion for summary judgment arguing that the appraised value was neither excessive nor unequal. In responsive briefing, the owner stated that its property manager and tax representative would testify that the appraisal values do not reflect the accurate market values, and attached an affidavit from him verifying the truth of statements in the response. The trial court granted summary judgment.

On appeal, the court held that the owner’s evidence failed because an affidavit in which a party attempts to verify the truth and correctness of all “allegations and facts” in a response to a motion for summary judgment is not competent summary judgment evidence. Moreover, the response did not state what the property manager believed the market value actually was or whether he would testify that the appraisal value was excessive or unequal. Therefore, the owner did not raise a fact issue and summary judgment was proper.

WOL+MED v. DCAD, No. 05-12-00011-CV

The court affirmed a summary judgment against the Poynors in their negligence suit. When shopping for a new car at a BMW dealership, the salesperson, Homer, took them for a test drive and negligently crashed the vehicle. The Poynors sued the North American BMW distributor and BMW’s U.S. holding company for various claims of negligence, including one claim for vicarious liability, contending that BMW was vicariously liable for the dealership’s negligence due to its agency relationship with the dealership. The trial court granted BMW’s summary judgment and the Poynors appealed.

On appeal, the court first noted that the contract between BMW and the dealership specifically disclaimed an agency relationship. The same contract, however, required the dealership to maintain certain standards that the Poynors argues amounted to “control” sufficient to create an agency relationship. Looking to the activity that caused the injury, the court observed that the contract did not provide BMW control over the test drive and, while BMW required the dealership to train its salespeople, BMW was not directly responsible for Homer’s training or supervision. Thus, BMW was entitled to summary judgment on these claims. Finding that BMW also owed no direct duty to train or supervise Homer, the court affirmed the judgment.

Poyner v. BMW, No. 05-10-00724-CV

The court affirmed a judgment for the plaintiff in a car wreck case over complaints of improper jury arguments. Nguyen crashed her car into Myers car, and Myers sued. Nguyen did not contest liability at trial, but disputed the amount Myers’s claimed damages. The parties agreed in limine that Myers be precluded from mentioning Nguyen’s liability insurance. At trial, one of Myers’s chiropractors testified that Nguyen’s expert, Dr. Timberlake, was “hired by insurance companies to make judgment on patients he’s never seen before . . . .” Nguyen objected to this testimony as an interjection of insurance, which was overruled, and moved for a mistrial, which was denied. Later in closing, Myers’s counsel stated that Timberlake was “paid by them” and was “their hired gun.” The jury awarded Myers his requested damages and Nguyen filed a motion for new trial based on the court’s denial of mistrial, which was not granted.

On appeal, the court held that any error caused by the interjection of insurance did not rise to the level of “harmful error,” and the testimony was not an “incurable statement,” because the jury’s verdict could not have turned on the one isolated mention of insurance. Furthermore, Nguyen failed to preserve her arguments that Myers’s counsel’s statements were incurable jury arguments because she failed to object to them, request a limiting instruction, or assert that argument in her motion for new trial.

Nguyen v. Myers, No. 05-11-01510-CV

The court dismissed for lack of jurisdiction a restricted appeal from the entry of a foreign judgment. Bulldog received a judgment against Whitehead in Indiana after failing to answer a request for admissions or to appear at trial. Bulldog filed the Indiana judgment in a Texas district court pursuant to the Uniform Enforcement of Foreign Judgments Act and Whitehead moved to vacate. The court held a hearing at which both parties were represented by counsel and denied Whitehead’s motion on February 7, 2012. Whitehead filed a notice of restricted Appeal on April 4, 2012. The court of appeals dismissed the appeal for lack of jurisdiction because Whitehead fully participated in the hearing on his motion to vacate in the Texas court and because he failed to file his notice of appeal within 30 days after the judgment was signed.

Whitehead v. Bulldog Battery Corporation, No. 05-12-00449-CV

UPDATE: The court has withdrawn this opinion on rehearing.

The court reversed and remanded for a new trial a judgment for the plaintiff on its fraudulent transfer claims. MacArthur Ranch sued the owners of a nail salon for missed rent payments under their commercial lease. Just before summary judgment, the owners conveyed two assets to the two Hos, a parent and brother of the owners. MacArthur Ranch then filed a fraudulent transfer suit against the Hos under the Texas Uniform Fraudulent Transfer Act. The trial court found that the transfers were fraudulent and awarded damages and ordered execution on the transferred assets.

On appeal, the Hos argued that the evidence was factually and legally insufficient to support the finding of fraudulent transfers. But the court held that there was sufficient evidence that the transfers were intended to “hinder, delay, or defraud” MacArthur Ranch because they were made to insiders, without consideration, and before a substantial judgment, and thus were fraudulent. The court held, however, that the amount of MacArthur Ranch’s damages was not supported by the evidence because the expert testimony of MacArthur Ranch’s property manager was conclusory as to the fair market value of the assets. The manager provided no testimony as to how she reached those values, merely answering “yes” to counsels leading questions regarding those values. Because the record showed that the value of the assets was undetermined, but greater than zero, and liability was contested, the court remanded for a new trial.

Ho v. MacArthur Ranch, LLC, No. 05-11-00967-CV

The court reversed and remanded a forcible-detainer and unpaid rent default judgment. The tenants moved from the landlord’s property prior to the action, which the landlord won in the justice court. The tenants appealed to the county court, but failed to appear for trial and court granted the landlord all of its requested relief. In a motion for new trial and attached affidavits, the tenants asserted that they received no notice of the trial setting. Despite the fact that the tenants had included the new, correct address in their pleading, the court sent their notice to their old address at the landlord’s apartment complex. The tenants failed to set a hearing on the motion, however, which was then overruled by operation of law.

On appeal, the court held that the tenants established lack of notice of the trial setting, and thus that the default judgment on the landlord’s action for unpaid rent and attorney’s fees should be set aside and the case remanded for trial. The court also held that the landlord’s forcible-detainer action was moot because possession was already relinquished.

Batie v. Cimarron, No. 05-11-00024-CV

The court vacated and reversed and rendered the trial court’s judgment in a forcible-detainer action awarding the Plaintiff possession of the property, damages, and attorney’s fees. The Daftarys commercial real estate lease with HSM expired in 2008, and they sought to exercise a three-year renewal option. The parties did not execute a written extension, but the Daftarys continued paying rent for over a year beginning in July 2008. In December 2009, HSM requested that the Daftarys either execute a new long-term lease or vacate, and when the Daftarys refused filed this forcible-detainer action. On the morning of trial, the Daftarys relinquished the keys to the property and tendered possession of the space to the court and then argued that the case was moot because it no longer presented an issue about which party was entitled to possession. The trial court proceeded to a bench trial, awarding HSM possession, damages for the rental difference, and attorney’s fees.

On appeal, the court held that the issue of possession was moot, but that HSM’s claims for damages and attorney’s fees incurred defending possession presented live controversies. HSM failed to show sufficient evidence of damages, however, because they only presented evidence that the property’s rental value had increased in July 2008, and presented no evidence of value in December 2009 when their right to possession accrued. And because the trial court lacked jurisdiction to consider the possession issue and erred by awarding HSM’s damages, HSM was no longer the prevailing party and could not collect attorney’s fees.

Daftary v. Prestonwood Market Square, No. 05-11-00673-CV

The court affirmed a summary judgment reviving a default judgment entered against Bartz in 1989. Randall brought this action to revive it in 2010, providing affidavit evidence purportedly showing that she procured a writ of execution to be served on Bartz at his last known address in 1999, thereby extending the time to revive and enforce the judgment until 2011. The court granted Randall’s motion for summary judgment, reviving the default judgment.

On appeal, Bartz argued that Randall failed to show that her revival action was timely. The court noted that Randall had the burden to show that a writ was prepared and issued by the court clerk and delivered to the proper officer for execution within the 10-year statutory time period. The evidence showed that Randall had a writ issued just inside of 10 years after the judgment and that the judgment thus became dormant in 2009, ten years after the writ issued. Randall’s action to revive the judgment was then filed less than two years after the judgment became dormant, so the action was timely. Finally, when the writ was returned due to a bad address Bartz supplied, Randall had no obligation under the statute extending the life of the judgment to ensure actual service.

Bartz v. Randall, No. 05-11-00836-CV

The court affirmed the dismissal of an action for lack of subject matter jurisdiction based upon the ecclesiastical abstention doctrine. Jennison, a former Episcopal Priest, sued Prasifka, an Episcopal Church parishioner, for slander, tortious interference with a contractual relationship, and wrongful discharge, stemming from complaints she made to a church official in response to a request by the church in connection with internal church disciplinary proceedings against Jennison. The proceedings resulted in his discharge from the priesthood. Prasifka filed, and the court granted, a motion to dismiss because the action involved church matters outside of the court’s jurisdiction.

On appeal, the court noted that the ecclesiastical abstention doctrine removes most issues related to a church’s ministerial employment decisions from the jurisdiction of the civil courts. In this case, Prasifka’s defamatory statements were made entirely in connection with church disciplinary proceedings. These statements and Jennison’s claims were inextricably intertwined with the church’s investigation and thus closely related to internal matters of church governance and discipline. Further, a causation determination would require an analysis of the church’s disciplinary decision-making process. Thus, the ecclesiastical abstention doctrine applied and the district court lacked jurisdiction.

Jennison v. Prasifka,   05-11-01253-CV

The court affirmed a judgment in a forcible detainer action awarding possession of a property purchased at a foreclosure sale to the buyer. The owners of a property defaulted on their promissory note, and the property was sold to FHLMC in foreclosure. FHLMC notified the former owners to vacate twice, the first in three and the second in ninety days, and eventually filed a petition for forcible detainer. After the former owners failed to object to FHLMC’s evidence or present any evidence of their own, FHLMC was awarded judgment. The former owners appealed arguing that the petition insufficiently identified the property and that the notice to vacate was insufficient. The court rejected both arguments, holding that the petition was sufficiently identified the property by including the address of the property and that the evidence of the notices to vacate was sufficient to support the judgment.

Caro v. FHLMC, No. 05-11-01023-CV

The court dismissed an appeal from post-judgment orders following foreclosure proceedings for lack of jurisdiction. After trial, the trial court entered one order denying Knoles’s efforts to avoid a writ of execution and prohibiting him from challenging the writ going forward and a second order sanctioning Knoles’s counsel for actions related to the writ. In a letter brief to the court of appeals, Knoles argued that the orders were appealable final judgments because they adjudicated a new set of facts and followed a conventional trial on the merits. The court rejected this argument, holding that the orders were issued to aid in the enforcement of the underlying unappealed judgment and that Knoles has no standing to appeal the order imposing sanctions against his counsel. Thus, the court had no jurisdiction over the appeal.

Knoles v. Wells Fargo Bank, N.A., 05-12-00473-CV

The court affirmed a judgment in favor of AT&T against an attorney for breaches of a 2008 and a 2009 agreement for Yellow Pages advertising. Thornton entered into the agreements with AT&T but only made partial payments on the 2008 contract and none on the 2009 one. The trial court entered judgment in favor of AT&T after a half-day bench trial. On appeal, Thornton challenged the legal sufficiency of the evidence of a valid contract, breach, and any award based on quantum meruit. The court held that AT&T’s evidence at trial, including four contract documents with Thornton’s signature and evidence that Thornton began making partial payments according to the 2008 contract, was sufficient to support the finding of a contract. Further, the evidence showing that AT&T  produced advertisements of Thornton’s law practice as stated in the contracts, and the Thornton no making payments according to those contracts was sufficient to show support the finding of breach and damages. Thus, the judgment was upheld.

Thornton v. AT&T Advertising, No. 05-11-00767-CV

The plaintiffs were involved in a minor car accident in a parking lot. Benning parked the vehicle and began to exit it as planned, but was then assaulted with a pistol by the other driver. The assailant fled the scene and was not apprehended, but was later involved in a convenient store robbery. Benning sued Home State and Safeco for failure to pay benefits. The insurers filed a motion for partial summary judgment on all claims relating to injuries arising from the events after the collision, which was denied, and the parties filed an agreed motion for interlocutory appeal.

On appeal, the court noted that the insurance policy awards benefits for damages arising out of the use of an uninsured motor vehicle. Benning argued that the assault would not have occurred but for the vehicle collision. But the court held that the assault involved the vehicle only incidentally, as Benning would have parked and exited the vehicle in the same way whether or not the collision occurred. And despite carjacking-related cases from other jurisdictions permitting recovery, there was no evidence that the assailant meant to steal the car. Thus, the court reversed the summary judgment denial.

Home State County Mutual Insurance Company and Safeco v. Benning, No. 05-12-00246-CV

Hood worked for ISC as both an employee and an independent contractor “registered representative” working to bring in new clients on commission. Hood regularly downloaded ISC client information onto personal storage. ISC fired Hood, who solicited 800 of ISC clients at his new place of business. Many of those clients Hood brought to ISC and was entitled to solicit; other he did not. ISC sued and sought a temporary injunction. Both side submitted a list of client files taken from Hood’s hard drive, but disagreed about which clients were not Hood’s and thus ISC proprietary information. The court accepted Hood’s list, ordering him to destroy or return all of the files he designated as belonging to ISC, or preserve them and refrain from accessing them. ISC appealed the denial of a temporary injunction based on ISC’s list.

On appeal, the court first held that Hood’s download of client lists, prohibited by ISC for registered representatives, could constitute a violation of the Penal Code’s offense for accessing a computer without the consent of the owner. The court next held that some of the data Hood retained contained sensitive information about the clients that exposed ISC to FINRA violations, and that this information was unnecessary to Hood’s solicitations. Thus, the injunction should have extended to both information about clients that Hood did not bring to ISC and the social security numbers and account information of all ISC clients.

ISC Group, Inc. v. Hood, No. 05-12-00568-CV

The court reversed the trial court’s judgment against Wells Fargo for wrongful foreclosure and breach of contract. When Robinson defaulted on his home equity note, Wells Fargo accelerated the note and filed an application for expedited foreclosure. The court authorized the foreclosure on a certain date, but Wells Fargo proceeded one month late. Robinson sued, contending Well Fargo was not authorized to foreclose on the property because it had not complied with the specific date in the court’s order. The trial court agreed and awarded damages for the difference between the value of the property at foreclosure and the unpaid balance of the note.

On appeal, Wells Fargo challenged the causal connection between the alleged breaches and Robinson’s damages, arguing that the later date of the sale did not cause prejudice or harm. The court agreed that Wells Fargo violated the deed of trust by conducting the foreclosure sale on a different date, but noted that the correct remedy would be to set aside the sale and resulting deed. Because the property at issue was not sold for an inadequate price and Robinson was not otherwise harmed by the delay in the foreclosure sale, there was no injury.

Wells Fargo Bank, N.A. as Trustee v. Robinson, No. 05-11-00700-CV

The court affirmed summary judgment in a mortgage foreclosure case against Givens, the mortgagor. Givens defaulted on a Note and Deed of Trust. The lender, MidFirst, noticed Givens of the default through its servicer, Midland. Midland eventually noticed the Note’s acceleration and foreclosure sale through its legal counsel, BD, and filed this notice with the Dallas County Clerk. Givens was provided with a reinstatement opportunity but did not tender the required funds by the deadline, and the property was sold in foreclosure. Givens sued Midland, MidFirst, and BD asserting various claims. The court granted summary judgment for the defendants on each claim.

On appeal, Givens first argued that because the Deed of Trust provides that either the lender or trustee shall give notice of the foreclosure sale, notice from BD was inadequate. The court rejected this argument because the evidence conclusively established that BD acted as legal counsel for Midland, who in turn acted as mortgage servicer for MidFirst, and such notice is adequate under Texas law. The court next rejected Givens’s argument that the recording of notice of the foreclosure sale was inadequate, holding that a party need not record such notice in the permanent deed records, but may do so with the county clerk. Finally, the court held that Givens’s was given adequate opportunity to reinstate the loan.

Givens v. Midland Mortgage Co, et al., 05-11-00524-CV

The court affirmed the trial court’s judgment in this commercial real estate lawsuit. Jarvis provided a loan through its loan servicer, NAC, to CAS for the purchase of an apartment complex. The loan documentation identified NAC as the “servicer” and the lender as Jarvis “c/o” NAC. CAS made monthly loan payments directly to NAC, who then disbursed them to Jarvis. CAS later sold the property to K&E through Stewart Title. Stewart Title paid the loan payoff amount directly to NAC for payment to Jarvis, as NAC had done for two other loan payoff transactions to Jarvis in the past. But in this case, NAC did not provide the funds to Jarvis and instead purported to continue making CAS’s monthly payments without notifying Jarvis of the sale. When NAC stopped making those payments, evidently due to insolvency, Jarvis learned of the property sale and sought to foreclose on the property.

K&E filed a declaratory action asserting that the loan was paid off and seeking to prevent foreclosure. Jarvis filed a third-party petition against CAS, Stewart Title asserting negligence and breach of contract claims against Stewart Title for making the loan payment to NAC instead of directly to Jarvis. Jarvis also sought a declaration that the loan was not discharged and sought to quiet title. At trial, Jarvis moved to exclude evidence of the other loans serviced by NAC in which NAC received the payoff amount and disbursed it to Jarvis, which was denied. Based on this evidence, the trial court found that Jarvis and NAC established a procedure where NAC received payoff funds and disbursed them to Jarvis and that NAC had actual and apparent authority to accept the payoff amount here. It entered judgment for K&E, declaring that the loan was fully paid, enjoining Jarvis from attempting to foreclose on the party, and awarding K&E attorney’s fees. The court also granted K&E and Stewart Title summary judgment on Jarvis’s negligence and breach of contract claims and severed out Jarvis’s claims against CAS.

On appeal, Jarvis argued that the trial court erred by denying its motion to exclude because the loan documents dictated the relationship between the parties, and thus the parol evidence rule precluded the evidence of Jarvis and NAC’s other course of dealings. The court held that the loan documents indicated that NAC had authority to act for Jarvis, but the scope of that authority was unclear. Thus, parol evidence showing the scope of NAC’s authority to accept loan payoff amounts and not contradicting the terms of the documents was not barred. Additionally, the evidence was sufficient to show that NAC had implied actual authority to accept the loan payoff. This holding also disposed of Jarvis’s claims against Stewart Title, whose transfer of funds to NAC constituted payment to Jarvis rather than a breach of any duty to Jarvis, and Jarvis’s declaratory action because its lien and deed of trust on the property was discharged. Finally, K&E’s attorney’s fees recovery was warranted because the UDJA permits a declaratory action brought to invalidate a real estate note, as well as any lien securing the note.

Jarvis v. K&E RE One, LLC, et al., 05-11-00341-CV

The court affirmed the dismissal of a condemnation case in which the defendant failed to appear at trial. The City petitioned for condemnation and special commissioners made an award to McKinney for the taking. McKinney filed an objection, but when the case was called for trial McKinney’s attorney withdrew and another person, Boles, attempted to file a motion for continuance on behalf of McKinney, who was absent. Boles stated that he had “power of attorney” to represent McKinney, though he was not, in fact, a licensed attorney. The court refused to consider the motion and dismissed the case due to McKinney’s absence. On pro se appeal, the court held that the trial court did not abuse its discretion because McKinney presented no evidence that he was not negligent for failing to find representation to replace his original attorney, and the could determine that such a failure was his own fault.

W.A. McKinney v. City of Cedar Hill, No. 05-12-00368-CV

Van Peterson entered into a contract with ADT to provide commercial alarm services to his jewelry store. Allegedly, an unidentified man wearing an ADT uniform and driving an ADT van came to the jewelry store and sold Van Peterson a device for its alarm system, but instead of installing the device, the man disabled the alarm. Van Peterson’s store was burgled soon after. Van Peterson brought various tort, fraud and DTPA claims against ADT. ADT filed a traditional motion for summary judgment on the tort claims, arguing that Van Peterson waived liability for these claims in the contract, and a no-evidence motion on the other claims. The trial court eventually denied the motions but permitted an interlocutory appeal under former section 51.014(d) of the Texas Civil Practice and Remedies Code.

On appeal, the court first held that ADT could not raise issues first advanced in its reply in support of its no-evidence motion for summary judgment. The court reversed the trial court’s denial of summary judgment on the tort claims because the parties’ contract included a limitation-of-liability provision as to those claims. Such waivers are not invalidated by the DTPA, which only limits waivers of DTPA claims. Finally, the court held that ADT could not challenge on appeal Van Peterson’s subrogated insurer’s pursuit of a DTPA claim because only Van Peterson was a party to the litigation and any opinion as to the insurer would be advisory.

ADT Security Services, Inc. v. Van Peterson Fine Jewelers, No. 05-11-01468-CV

The court dismissed an agreed interlocutory appeal from the trial court’s denial of competing motions for summary judgment related to a home foreclosure for want of jurisdiction. The Guzmans obtained a home mortgage on which the Bank eventually foreclosed. The Guzmans sued for wrongful foreclosure and breach of contract and argued that the Bank lacked standing to foreclose on the property or enforce the original note. Both sides moved for summary judgment, and the trial court denied the competing motions on the basis that the parties failed to satisfy their burdens for summary judgment. In agreement on the facts and the relevant legal issues, the parties filed a joint motion to appeal from interlocutory order under section 51.014(d) of the Civil Practice and Remedies Code contending that the “issues raised in [the] dispositive motions involve controlling questions of law as to which there is a substantial ground for difference of opinion, and obtaining a ruling on those issues of law from the appeals court will materially advance the outcome of this case.”

In its jurisdictional analysis, however, the court of appeals emphasized the fact that the trial court did not substantively rule on the controlling legal issues presented in the agreed interlocutory appeal. Instead, it submitted the issues to the appellate court for an advisory opinion – contrary to the purpose of section 51.014(d) – and thus the court had no jurisdiction over the appeal under that section.

Bank of New York Mellon v. Guzman, 05-12-00417-CV

The court affirmed a summary judgment in favor of the bank in a foreclosure case dealing with the waiver statutory offset rights contained in Chapter 51 of the Texas Property Code. A builder entered construction loan agreement secured by four properties and signed a personal guaranty of the loan, eventually defaulting. The bank foreclosed on and sold the properties and sued the builder for the deficiency. The builder invoked Chapter 51, asking the court to determine the fair market value of the properties for the deficiency calculation rather than the foreclosure sale price. Town North moved for summary judgment arguing that the guaranty included a waiver of his right to claim any deductions or offsets from the amount guaranteed including any right to seek a reduction in the deficiency under section 51.003, which the trial court granted and then entered a judgment on the deficiency.

On appeal, the court cited its opinion in Interstate 35/Chisam Road, L.P. v. Moayedi, No. 05-11-00209-CV, 2012 WL 3125148 (Tex. App.—Dallas Aug. 2, 2012, no pet.) holding that the rights provided by section 51.003 are subject to waiver. It also cited King v. Park Cities Bank, No. 05-11- 00593-CV, 2012 WL 3144881, at *3 (Tex. App.—Dallas Aug. 3, 2012, no pet. h.) to reject the builder’s argument that language in the guaranty waiving “any defenses given to guarantors at law or in equity other than actual payment and performance of the indebtedness” did not encompass a waiver of section 51.003’s right of offset despite the guaranty’s later reference to a “claim of setoff.” Thus, the court held that the builder waived his rights under section 51.003.

Smith v. Town North Bank, 05-11-00520-CV

The court affirmed a judgment in a construction contract dispute between two subcontractors. The general contractor of a shopping center project, Mycon, subcontracted with Bulldog to fabricate the steel and erect the steel-reinforced concrete panels around the center’s trash dumpsters. Bulldog subcontracted Top Flight to erect the panels. Top flight testified that Mycon directed the concrete pouring to take place well outside of the range that Top Flight had instructed. Top Flight then requested a $7,500 change order from Bulldog for the extra erection cost, which Mycon refused. Under pressure from Mycon, Bulldog eventually installed the panels themselves, without notifying Top Flight, and then invoiced and eventually sued Top Flight for the cost of installation. Top Flight counterclaimed for the 10% retainage amount left on the contract. Finding that Bulldog did not notify Top Flight to complete installation of the panels breached the subcontract by preventing Top Flight’s performance, the trial court rendered judgment for Top Flight for its retainage, interest, and attorney’s fees.

On appeal, Bulldog did not challenge the trial court’s finding that Top Flight was never notified to complete the installation of the dumpster panels despite the extra cost, and without allowing Top Flight an opportunity to perform, Bulldog undertook to install the dumpster panels using its own employees. The court held the fact that Bulldog prevented Top Flight from performing under the contract, which supported the conclusion that Top Flight did not breach the contract and that Bulldog did.

Bulldog Ironworks, LLC v. Top Flight Steel, Inc., 05-10-01360-CV

The court issued a memorandum opinion clarifying the appellate timetable after the filing of a foreign judgment in a Texas court. Appellee received a judgment in a New York court and filed it in the Texas trial court on September 29, 2011. Appellant filed a notice of appeal on June 20, 2012. The court questioned whether the notice of appeal was untimely. In her jurisdictional brief, appellant argued that the deadlines for post-judgment motions set forth in Tex. R. Civ. P. 329b run from the date the judgment was signed in the New York court, and thus contended that she never had an opportunity to contest the foreign judgment because the deadlines to do so had expired before appellee filed the foreign judgment in the Texas court.

The court held that Rule 329b applies only to Texas judgments. Under Tex. R. App. P. 26.1(a)(1), the ninety day deadline for the appellant to filed her notice of appeal ran from the date that the appellee filed the foreign judgment in the Texas court. Thus, she had filed her notice of appeal more than five months past the deadline, and the court dismissed the appeal for want of jurisdiction.

Watel v. Dunmann Realty, LLC, No. 05-12-00938-CV

The court affirmed a judgment in favor of a hauling company on its breach of contract claim against subcontractors on a city construction project. The parties disputed whether a contract was formed to haul dirt and concrete debris from the project for $40 an hour or for $40 a load, and both presented competing evidence and witnesses that testified to their contended contractual rate. After a bench trial, the trial court found that Mejia offered to use his trucks and drivers to haul dirt and concrete debris from the project on behalf of appellants for $40 an hour, that Mejia communicated that offer to De Los Santos, and that De Los Santos accepted the offer. It then rendered judgment in favor of Mejia for $11,794 plus attorney’s fees.

On appeal, Appellants challenged the legal sufficiency of the evidence supporting the trial court’s judgment, and the central challenge was to the evidence supporting the finding that the parties formed a contract at the hourly rate. Appellants also argued that the conflict in the evidence about whether they would pay $40 a load or $40 an hour made the contract ambiguous. The court held that the dispute did not present an issue of contract ambiguity but instead an issue of fact about the actual terms of the contract. Because the evidence was sufficient to support both $40 a load and $40 an hour, the resolution of the conflict turned on the credibility and demeanor of the witnesses – a finding that an appellate court will not disturb.

De Los Santos v. Mejia, No. 05-10-01662-CV

The court reversed a judgment awarding an law firm lost profits in an action against a litigation services company. Elrod, a litigation law firm, hired A-Legal to perform support services related to E-Discovery. Two days later, Elrod pulled the job when A-Legal doubled the price it previously quoted. Both parties sued each other for breach of contract. Elrod claimed damages from lost revenue and lost business opportunities due to the time its attorney’s and staff lost dealing with A-Legal’s breach. Elrod presented evidence of lost revenue, which it valued at $20,000, but the only specific evidence relating to a worker’s time lost dealing with the breach came from one attorney, Nassar. Nassar testified that her hourly rate is $325 and that she spent about eighty hours in total “dealing with the situation.” Elrod made no attempt to establish what expenses would have been attributable to Nassar’s billable hours or whether the firm lost any specific business or billing during that time. The trial court entered a judgment awarding $20,000 lost profits plus attorney’s fees.

On appeal, the court noted that the only calculation that can be made from Elrod’s evidence is potential gross revenue brought in by Nassar, not net profits, because Elrod presented no evidence to show any expenses related to that revenue or that she actually billed less time because of the breach than she would have otherwise. Thus, the evidence was legally insufficient to show lost profits, the only measure of damages presented, and the court reversed and rendered a take nothing judgment.

A-Delta Overnight Legal Reproduction Services Corp. v. David W. Elrod, PLLC, No. 05-11-00708-CV

The Texas Supreme Court will be down to eight justices again at the end of this month, as Justice Dale Wainwright announced his resignation from the court last week.  Justice Wainwright served on the court for almost a decade.  He authored a number of important opinions during that time, including Texas Department of Parks and Wildlife v. Miranda and Severance v. Patterson.  I had the honor of serving as his law clerk during the 2009-10 term, where I was able to see the strength of his convictions and his passion for the law first-hand.  We wish him well in his future endeavors.

The court affirmed the trial court’s summary judgment dismissing a plaintiff’s claims against his former employer for breach of the employment contract. Twin Lakes Golf Course hired Holloway to move from Illinois and serve as its head pro for three years. After further negotiations in July 2008, Twin Lakes and Holloway orally agreed to an employment term lasting one year with an agreement to extend for another three years based on his performance. Holloway started working on August 5, 2008, and soon after Twin Lakes presented a written contract, dated July 23, containing the terms of the agreement. Holloway signed the document but Twin Lakes never did. Holloway was fired eight weeks later and he sued for breach of contract and fraudulent inducement. The trial court granted summary judgment in favor of Twin Lakes.

On appeal, the court determined that the agreement was not enforceable because, as an agreement that could not be performed within one year, it fell within the statute of frauds. The court noted that the contract was negotiated in July 2008 and the document that Holloway signed was dated July 23. Thus, the agreement was made in July 2008 and performance was to end in August 2009 – over one year. Additionally, Holloway’s employment was to last from August 5, 2008 to August 5, 2009 – one year and one day. The court also held that Holloway’s affidavit testimony stating that the agreement could be performed within one year was conclusory. Finally, his partial performance did not remove the agreement from the statute of frauds because he was compensated. Thus, the agreement was unenforceable and Holloway’s claims failed as a matter of law.

Holloway v. Dekkers and Twin Lakes Golf Course, Inc., 05-10-01132-CV

Another installment in the court’s recent spate of shareholder oppression opinions finds the court reversing a judgment in favor of the minority shareholder. Martin and Shagrithaya started a software company named ARGO in 1980 with $1000. Martin and Shagrithaya retained 53% and 47% interests in ARGO respectively and were the sole board members, but Martin had the right to appoint a tiebreaker. There was no express agreement as to employment or compensation, which was determined on a year to year basis. For 25 years, they received equal compensation. By 2008, ARGO was valued at $152 million.

In the early 2000s, tensions arose as Martin became unhappy with what he saw as Shagrithaya’s refusal to take on executive responsibilities. In 2006, Martin unilaterally cut Shagrithaya’s annual compensation from $1 million to $300,000. Soon after, Martin and ARGO’s management began to isolate Shagrithaya. Around this time, the IRS performed an audit of ARGO and found assess it over $7 million in retained earnings tax. ARGO contested this assessment and won. Shagrithaya was not informed of the assessment or contest.

After an independent appraisal of ARGO, Martin offered Shagrithaya $66 million for his shares, representing their values less a 35% minority holder discount. Shagrithaya refused, arguing that there should be no discount because ARGO is not a third-party. Shagrithaya demanded an audit of ARGO and proposed an alternative plan to restore his previous salary, explore a sale of ARGO, and issue an $85 million dividend. ARGO allowed the audit, which uncovered that Martin had misappropriated ARGO funds to his personal use. Martin reimbursed ARGO the amount appropriated plus some amount more. In a final board meeting in December 2008, Martin appointed ARGO president Engebos as the third board member. They voted in favor of Martin’s plans regarding compensation, executive positions, and a$25 million dividend.

After losing the vote on all three issues, Shagrithaya resigned and filed a suit for shareholder oppression and other torts. At trial, Shagrithaya advanced the theory that Martin schemed to withhold compensation and dividends to ARGO so that ARGO could purchase Shagrithaya’s shares at a minority discount and force Shagrithaya out of the company. The jury found in Shagrithaya’s favor, and the trial court entered a judgment awarding Shagrithaya back compensation and ordering ARGO to issue an $85 million dividend.

On appeal, Martin and ARGO challenged the legal and factual sufficiency of the evidence supporting the jury’s finding of suppression. The court reviewed eleven of Martin and AGRO’s actions that the jury found to be oppressive to determine whether they (1) substantially defeated Shagrithaya’s objectively reasonable expectations central to his decision to join the venture or (2) constituted “burdensome, harsh, or wrongful conduct; a lack of probity and fair dealing in the company’s affairs to the prejudice of [Shagrithaya]; or a visible departure from the standards of fair dealing and a violation of fair play.”

ACTS 1 and 7: Martin reduced Shagrithaya’s annual compensation by 70 percent and forced him to report to ARGO’s president, Engebos, without the approval of the Board of Directors or shareholders. The court held that it was not reasonable for Shagrithaya to expect to maintain a level of compensation equal to Martin’s indefinitely without an employment contract. Additionally, the absence of board approval was later corrected at the December 2008 board meeting and the board retroactively cured the discrepancy in Shagrithaya’s actual past compensation. Though Shagrithaya voted against the reduction, the court noted that the inability to control board decisions is inherent in the position of a minority shareholder, citing Patton v. Nicholas. Finally, it did not prejudice Shagrithaya’s rights as a board member because these issues were purely employment matters.

ACT 2: ARGO maintained Martin’s compensation at $1 million without board approval. Shagrithaya argued that this constituted a de facto dividend to Martin, but the court found no evidence of such. And again, the boards retroactively approved and cured this action.

ACTS 3-4: Martin schemed to buy out Shagrithaya retaining earnings and refusing to pay dividends. The court held that these actions alone did not constitute oppression. The dividend were equally suppressed for Martin, and some dividends were issued and shared accordingly with Shagrithaya. Further, there was no evidence that these actions reduced Shagrithaya’s share value. The court noted that Shagrithaya had no specific expectation of dividends, and shareholders have not general expectation of dividends.

ACTS 5 and 11: Martin did not disclose the IRS assessment or ARGO’s engagement of a law firm to challenge it. The court held that because the assessment was reversed, there was no harm to Shagrithaya’s interests, and the legal representation benefited ARGO by securing the reversal.

ACT 6: Martin offered Shagrithaya $66 million for his shares at a minority discount and forced him to accept by withholding dividends. The court held that because Shagrithaya was never forced to relinquish ownership – his intent to sell was voluntary – the fair market value of his minority shares, including the discount, was the proper valuation. Using the shares’ enterprise value in the sale would only be required if ARGO or Martin were forced to purchase them. Further, the mere purchase offer, without other financial pressure, was not oppressive.

ACTS 8-10: Martin’s misappropriation of ARGO assets for his personal use. Martin’s repayment remedied any harm to Shagrithaya prior to trial.

The jury also found for Shagrithaya on his claims for fraud, breach of implied agreement, and breach of fiduciary duty. The fraud claim related to Martin’s failure to disclose his buyout scheme. The court held that his failure to disclose did not harm Shagrithaya because Shagrithaya could not force a dividend and possible sale of shares at that time were to speculative. Shagrithaya’s alleged Martin breached an implied agreement to continue their practice of equal compensation. The court held that this practice was not sufficient to establish an agreement, and in any case the terms of any agreement were too indefinite. Finally, Martin’s retaining of earnings, misuse of funds, and sale of ARGO’s assets did not cause Shagrithaya harm even if it breached his fiduciary duties.

ARGO Data Resource Corporation and Max Martin v. Balkrishna Shagrithaya, 05-10-00690-CV

The court affirmed a take-nothing summary judgment on fraud and promissory estoppel claims arising out of the purchase of land. Mavex purchased property, which was subject to subject to a easement, for the construction of a condominium complex. The parties to the easement amended it to allow for the condominium and the use of an adjacent parking deck subject to approval of the construction plans. Metzler, one of the easement holders, later refused to approve the condominium plans due to a dispute over the correct allocation of parking spaces for the exclusive use of the condominium tower as Mavex’s plans specified. Mavex sued Metzler and its predecessors-in-interest. Mavex alleged that before and after they entered into the purchase agreement for the property, the defendants assured Mavex that the plans were acceptable and that they relied on this approval of the condominium plans. The trial court granted summary judgment against Mavex.

On appeal, the court held that Mavex presented no evidence to support their promissory estoppel and fraud claims because Mavex’s affidavit evidence merely provided conclusory allegations that the appellees made assurances Mavex relied on, but did not identify with any specificity when the statements were made nor what actions appellants took in reliance on them. The court further held that, at any rate, the alleged statements were insufficient to support Mavex’s claims, and affirmed the summary judgment.

Mavex Management Corporation v. Hines Dallas Hotel Limited Partnership, et al, 05-09-01281-CV

In this certificate of merit case, the court affirmed the trial court’s denial of the defendant-architect’s motion to dismiss. After walking into a very clean glass wall in the lobby of a condominium complex, Zion sued the owners of the building and added claims against the architect, MSM, for negligently designing the wall. He included with his petition a certificate of merit, which was an affidavit authored by architect James R. Drebelbis, as required by § 150.002 of the Texas Civil Practice and Remedies Code. MSM filed a motion to dismiss, arguing the affidavit did not meet the requirements of § 150.002. The trial court denied MSM’s motion to dismiss.

On appeal, the court first held that a certificate of merit need not demonstrate the affiant’s practice in the same sub-specialty as the defendant. Drebelbis’s affidavit, which stated he was knowledgeable in the area of architecture, was therefore sufficient. Next, the court held that the certificate of merit need not state the applicable standard of care to satisfy the statute’s requirement that it allege a negligent action, error, or omission. Finally, the court held that the affidavit included a sufficient factual basis for Zion’s claims, as opposed to merely conclusory opinions, to meet the requirements of § 150.002. Thus, the affidavit was sufficient and the court affirmed the trial court’s order.

Morrison Seifert Murphy, Inc. v. Buck Zion, 05-11-00621-CV

The court reversed the dismissal of a claim against an engineering consultant in an opinion dealing with the “certificate of merit” requirement in section 150.002 of the Texas Civil Practice and Remedies Code. Though there was no written contract between JJW and Strand, JJW originally asserted claims against Strand for breach of contract and negligence arising from a cracked foundation Strand designed. JJW later dropped its negligence claims and asserted only the contract action against Strand in its third amended petition, claiming that it entered an oral or implied contract with Strand to perform a “pre-pour” inspection of the foundation. JJW alleged that Strand breached this contract by failing to measure the depth of the concrete slab. Strand moved to dismiss the action because JJW failed to file a certificate of merit with its petition. JJW responded that the applicable 2005 version of section 150.002 does not apply to a claim for breach of contract. The trial court dismissed the claim.

On appeal, the court first held that it would consider the live pleadings at the time of the trial court’s ruling on the motion to dismiss to determine whether and how section 150.002 applied to the plaintiff’s claims. Examining the third amended petition, the court agreed with the majority of the Texas courts of appeals and held that the 2005 version of section 150.002 requires a certificate for negligence claims only and not for non-negligence claims. In doing so, the court rejected the approach recently taken by an en banc panel of the Austin court of appeals. The court noted, however, that it still must determine whether JJW’s contract claim was truly based on Strand’s alleged contractual obligations to JJW or was merely a negligence claim recast as breach of contract.

To determine the nature of the claim, the court looked to the source of the duty owed and the nature of the remedy sought. The court held that because JJW alleged that Strand had an express or implied contractual obligation to measure the depth of the slab – independent from its duty to exercise a professional degree of care, skill, and competence in performing the pre-pour inspection – the duty arose from the contract. The court also held that the remedy – consequential damages for the diminution in value of the residence and the loss of use and other damages due to necessary repairs – was based in contract because those damages are “consequences of the alleged failure to perform a pre-pour inspection.” Thus, the court concluded that the nature of the claim was, indeed, contractual.

JJW Development, LLC v. Ramer Concrete, Inc. and Strand Systems Engineering, Inc., 05-10-01359-CV

In a memorandum opinion, the court affirmed the trial court’s judgment in a forcible detainer action. Felix Hornsby executed a promissory note secured by a deed of trust covering the property at issue. After he defaulted on the note, U.S. Bank bought the property at foreclosure sale and conveyed it to the Secretary of Veteran Affairs. The SVA brought this forcible detainer action against Hornsby, and the trial court rendered judgment in favor of the SVA. On appeal, Hornsby argued that the SVA had to show it was entitled to enforce the terms of the deed of trust in order to establish a landlord-tenant relationship between them, but failed to do so. The court held that SVA presented sufficient evidence to show its superior right to possession of the property and that Hornsby’s challenge to the chain of title could not be properly adjudicated in a forcible detainer action.

Hornsby v. Secretary of Veterans Affairs, No. 05-11-01075-CV

In a memorandum opinion, the court affirmed a trial court’s judgment in a declaratory action regarding the validity of a warranty deed. Knight brought the underlying action to declare the deed, which evidenced the transfer of his ownership in property to Minter, a forgery. The trial court concluded that Knight had indeed signed the deed transferring ownership of the Property to Minter. On appeal, Knight argued that the trial court erred by denying his motion for new trial based on “newly discovered evidence,” including evidence that the notary who witnessed Minter’s warranty deed had been indicted for fraud and entered a plea agreement, as well as the affidavit of a mortgage loan underwriter stating the transaction required a sales contract. The court rejected Knight’s argument because he failed to establish that he lacked actual knowledge of the notary’s criminal history and exercised appropriate diligence before trial in relation to the expert testimony he obtained after trial.

Knight v. Minter, No. 05-11-00829-CV

In this memorandum opinion, the court reaffirmed some basic litigation procedures. The plaintiff was fired by his law firm employer and sued alleging 37 separate claims. The trial court granted summary judgment, and Cruz appealed the first time. The court of appeals affirmed on every claim but two and remanded. The trial court severed those claims and Cruz appealed a second time. On appeal, the court first determined that on remand, the trial court only had jurisdiction to consider issues regarding the two claims included in the scope of the remand as stated in the court of appeals’ mandate. Thus, Cruz’s issues related to claims outside the trial court’s jurisdiction were rejected. Because of the court’s limited jurisdiction, issues that Cruz failed to preserve prior to the first appeal were not reopened by the mandate and the trial court did not err by limiting discovery to the remaining matters over which it had jurisdiction. Finally, the trial court did not err by severing Cruz’s remaining claims and requiring him to replead under Texas Rules of Civil Procedure 41 and 68.

Cruz v. Schell, Beene & Vaughn, L.L.P., et al., 05-01-00565-CV

The court affirmed summary judgment in favor of the defendant on a breach of fiduciary duty claim. Balestri was a lawyer who left his practice to become CFO of an internet company. Balestri’s friend Kiger later contacted Balestri to ask about certain industry contacts that Kiger believed could help him to implement a new business idea. Kiger’s business never materialized. Balestri subsequently invested in a business in the same industry, and Kiger sued for breach of fiduciary duty. Kiger alleged that Balestri acted as his attorney and then revealed his confidential and trade secret information to the new business. The trial court granted both traditional and no evidence summary judgment against Kiger. The court of appeals affirmed, holding that despite Kiger’s contention that an implied attorney-client relationship existed between him and Balestri, no evidence of such a relationship existed in the record. Additionally, even if Kiger believed that such a relationship formed, one party’s subjective beliefs are not evidence of an implied attorney-client relationship.

Kiger v. Balestri, 05-10-01308-CV

The court reversed a summary judgment in favor of a guarantor on his Property Code Chapter 51 offset defense against a creditor. Moayedi guaranteed a loan made by I-35 to Villages. I-35 sued Moayedi based upon his guaranty to recover the balance remaining on Villages’s promissory note after a Property Code section 51.003 foreclosure sale. Moayedi contended that he was entitled to offset the deficiency by the difference between the fair market value and the sale price pursuant to section 51.003(c). I-35 replied that Moayedi waived “any defense” in the guaranty, including the right of offset. After considering competing summary judgment motions, the trial court granted Moayedi’s and held that the right of offset pursuant to section 51.003(c) could not be waived by the general terms in the guaranty agreement.

The court of appeals reversed. First, it engaged in a thorough analysis of waiver and section 51.003(c)’s offset provision. It held that a section 51.003(c) offset is indeed a “defense” as the term was used in the guaranty. Next, the court analyzed the contract language and held that “any defense” included the section 51.003(c) offset defense. The court then looked at the guaranty as a whole, finding four other provisions supporting such a broad waiver. Finally, the court rejected the argument that a waiver of section 51.003(c) rights violates public policy, citing Texas’s strong policy in favor of freedom of contract and other courts that have held that Chapter 51 rights of offset may be contractually waived. Thus, the court reversed and rendered judgment in favor of I-35.

Interstate 35/Chisam Road, L.P. and Malachi Development Corporation v. Moayedi, No. 05-11-00209-CV

In a memorandum opinion the court reversed as insufficient a summary judgment award to a neighborhood association against a delinquent property owner. Gashaye’s property is subject to a covenant to pay assessments to Candlewood, which Gashaye failed to do. Candlewood sought foreclosure of the lien securing Gashaye’s obligation and attorney’s fees, presenting evidence proving $1545 in unpaid assessments and late fees and $2500 in attorney’s fees. The trial court awarded Candlewood $50. The court reversed, holding that the award of $50 under these circumstances was so contrary to the overwhelming weight of the evidence that it was clearly wrong and unjust. The court noted that attorney’s fees are recoverable on a breach of a homeowner’s association covenant, but remanded for the determination of a proper damages and attorney’s fees award.

Candlewood Creek Neighborhood Association, Inc.v. Gashaye, No. 05-11-00380-CV

by Chris Patton

Citibank sued a credit card account holder for breach of contract and account stated to collect the balance due on a cardholder’s credit card account.  In the trial court, Citibank moved for summary judgment, which the trial court granted in its favor.  On appeal, the defendant challenged the trial court’s decision on a number of grounds.  However, because the defendant, who was proceeding pro se, repeatedly cited to exhibits and other evidence that were not in the record, the court refused to address the issues related to breach of contract raised by the defendant.  The court also refused to address the issues related to account stated claim.  Because Citibank moved for summary judgment  on the alternative grounds of breach of contract and account stated, and because the trial court did not specify the grounds on which summary judgment was granted, the court found that it need not resolve the issues related to the suit on account claim.  Because “even if we resolved it in [Defendant’s] favor our decision would not change the outcome of this appeal.”

Burruss v. Citibank, No. 05-10-01376-CV

The court reversed and rendered judgment in a breach of contract action related to a letter of intent (“LOI”) to acquire the stock of a corporation. Corilant and FFSS executed an LOI for Corilant’s acquisition of FFSS’s stock. The LOI provided for future “Definitive Agreements” memorializing the precise terms and conditions of the sale. FFSS scuttled the deal before executing the Definitive Agreements. Corilant sued for breach of the LOI and a jury awarded it $1.8 million.

On appeal, the court held that the LOI was not an enforceable contract because the essential terms of two of its provisions were uncertain. First, the LOI provided for structured earn-out payments to Corilant but failed to sufficiently characterize the payments. The evidence showed the parties’ lack of mutual understanding with respect to this provision. Second, the LOI provided that FFSS’s Chairman would continue to be involved in management of the company but failed to specify the terms of his employment. This provision also specifically contemplated a future management agreement, which was actually drafted but never executed. Finally, the court rejected Corilant’s argument that enforceability of uncertain terms is a factual determination. In doing so it distinguished an earlier case in which parties disputed whether an LOI was intended to be the final expression of a contract, which neither Corilant nor FFSS argued.

Fiduciary Financial Services of The Southwest v. Corilant Financial, No. 05-10-00471-CV

The court issued a significant ruling related to the remedy for shareholder oppression, holding that the equitable relief of a “fair value” buy-out was not precluded by a provision in an Agreement mandating a “book value” buy-out. Joubran, the sole shareholder of a cardiac perfusion company, hired Hughes, sold him 10% of the corporation’s outstanding shares, and entered into an Agreement requiring Joubran to purchase Hughes’s stock at book value upon the severance of his employment. Years later a dispute arose, Hughes was terminated, and Hughes sued Joubran for shareholder oppression. The trial court held that that Joubran engaged in shareholder oppression and awarded Hughes what the jury found to be the fair value of his shares in the company.

On appeal, Joubran argued that the trial court should have calculated the value of the shares based on their book value as required in the Agreement because a party to a contract generally cannot recover equitable relief inconsistent with that contract. But the court held that the trial court had the equitable power to order a buy-out at fair value because the book value of Hughes’s shares was reduced by Joubran’s oppressive conduct and, additionally, Hughes was not suing for breach of contract. This holding squares with the court’s recent decision in Ritchie v. Rupe that the “enterprise value” method for determining stock’s fair value, i.e. determining the pro rata value of each share without any discount based on the stock’s minority status or marketability, is appropriate in shareholder oppression suits when the oppressive conduct of the majority forces a minority shareholder to relinquish his ownership position. 339 S.W.3d 275, 289 (Tex. App.—Dallas 2011, pet. filed)

As a secondary issue, the court addressed whether a shareholder that exercises dominating control over a corporation owes a formal fiduciary duty to the minority shareholders. In its verdict, the jury found that no informal fiduciary duty existed between the shareholders, but nonetheless found that Joubran breached a fiduciary duty to Hughes and awarded Hughes almost $2 million in actual and exemplary damages. The trial court declined to render judgment in favor of Hughes, who argued on appeal that the trial court should have disregarded the first jury finding because, under the circumstances, Joubran owed Hughes a formal fiduciary duty. The court disagreed, citing numerous Texas cases to the contrary and noting that the Texas Supreme Court expressly declined to recognize such a duty in Willis v. Donnelly, 199 S.W.3d 262, 276 (Tex. 2006).

Cardiac Perfusion Services, Inc. v. Hughes, No. 05-10-00286-CV

The court reversed a no-summary judgment against the employees of a lawn service company. The employees alleged that the lawn service issued them worthless paychecks for two months. The employer filed a no-evidence motion for summary judgment that neither referred to the facts alleged nor specified in what way the evidence failed to support the claims. The employees responded, attaching affidavit evidence and wage statements. The employers objected to the evidence as hearsay, but the court ruled that objection was waived because they failed to obtain a ruling from the trial court on their objection. The court also held that the affidavits and wage statements were sufficient evidence to defeat summary judgment because they indicated at least an implied employment contract that the employer breached, damaging the employees.

Gaspar, et al., v. Lawnpro Inc., No. 05-11-00861-CV

In a consolidated appeal, the court affirmed a district court’s summary judgment and a  county court at law’s forcible retainer judgment related to the foreclosure sale of the property. The court held that Texas Property Code Section 51.002(b)(2), which requires notice of a foreclosure sale to be filed “in the office of the county clerk of each county in which the property is located,” does not require notice to be recorded in the permanent deed records. The court also rejected the argument in the forcible retainer lawsuit that the mortgage servicer had no authority to sell the property because the only issue in a forcible retainer action is the right to actual possession – not the merits of the title.

Montgomery v. Aurora Loan Services, LLC, No. 09-11836

In a simple breach of guarantee case, the court of appeals issued a memorandum opinion affirming a summary judgment in favor of a creditor against a debtor on the debtor’s personal guaranty of an open account for his business.  The debtor raised several issues, contending that (1) the court erred by failing to grant his motion for continuance of the summary judgment hearing; (2) the summary judgment affidavit evidence was conclusory; (3) the motion failed to identify evidence in the record to support summary judgment; (4) the motion for summary judgment did not specifically seek attorney’s fees; and (5) both the guaranty and underlying contract were unenforceable and lacked consideration.  The court overruled each issue, holding that the motion for summary judgment was sufficiently specific to support the award, that it was supported by adequate evidence proving the creditor’s claims, and that the court’s refusal to continue the hearing was not an abuse of discretion.

Long v. Motheral Printing Company, No. 05-10-01128-CV

In a construction contract case, the court has reversed summary judgment in favor of an electrician subcontractor against a retail property leaseholder. The subcontractor alleged that he had performed 80% of the work at the property when the general contractor’s check bounced, and the subcontractor sued the property leaseholder for the difference. The district court granted summary judgment in favor of the subcontractor. The court of appeals reversed and remanded, holding that (1) a fact issue existed as to the proper amount of retainage the leaseholder was to retain and (2) the court erroneously awarded the subcontractor certain amounts under the Texas “Fund Trapping” statute that the leasehold had paid to replacement contractors.

Jewelry Manufacturer’s Exchange, Inc. v. Tafoya, No. 05-11-00065-CV