Court Reverses Trial Court, Finding No Personal Jurisdiction Over Third-Party Defendant

In this case involving corporate infighting, the defendant filed a third-party claim against Troy Brown.  Mr. Brown filed a special appearance asserting that the court did not have personal jurisdiction, which the trial court denied.  Mr. Brown appealed.

The Court of Appeals reversed, determining that Brown did not have minimum contacts with Texas such that he was subject to personal jurisdiction here.  The Court specifically found that several emails Brown sent to people in Texas did not “constitute a contact demonstrating purposeful availment.”

Brown v. Pennington

Court Affirms Sanctions Award

In this post-judgment litigation, the plaintiff sought to collect on a judgment against the defendant.  During the course of the litigation, the plaintiff filed pleadings and made assertions that the defendant felt were false.  Consequently, the defendant successfully moved for sanctions under Chapter 10 of the Texas Civil Practice and Remedies Code.

The plaintiff appealed and raised nearly every possible argument for overturning the sanctions award, but the Court of Appeals rejected them all, affirming the award.

Powell v. Penhollow, Inc.

Court of Appeals Orders Foreclosure to Enforce Unpaid HOA Fees

Homeowner Sheila Larry failed to pay her HOA fees.  Eventually, the HOA took legal action to collect the unpaid dues.  Like most HOA fees, they were secured by a contractual lien on Ms. Larry’s property.  The HOA successfully moved for summary judgment, but the trial court refused to order foreclosure of the lien, and the HOA appealed.

Reversing the trial court, the Dallas Court of Appeals reasoned that the “purchase of property within a deed restricted subdivision carries with it the obligation to pay association fees,” and “the remedy of foreclosure is an inherent characteristic of that property right” — even if it may seem harsh.

Gateway Estates HOA v. Larry

Security Interest in Investment Account Trumps Judgment Lien

Wells Fargo obtained a judgment against Charles Paschall and then sought to collect by garnishing an investment account Paschall held at U.S. Trust. U.S. Trust opposed the garnishment, asserting that the funds it held were subject to a properly perfected security interest held by Inwood National Bank. Inwood then intervened to protect its lien interest in the account. The trial court ultimately ruled that Wells Fargo’s judgment lien trumped Inwood’s security interest and awarded the funds to Wells.

Inwood appealed. The issue before the Dallas Court of Appeals was whether Inwood lost its priority over Wells Fargo by executing a new promissory note with Paschall several months after Wells Fargo recorded its judgment lien. Under Texas law, if this new obligation were considered an “advance” as opposed to a renewal or extension of an existing indebtedness, then Inwood would lose its priority. Relying on several cases interpreting the UCC, the Court determined that the new promissory note was not an advance, reversed the trial court’s ruling, and held that Wells Fargo was not entitled to garnish the funds.

Inwood Nat’l Bank v. Wells Fargo Bank, N.A.

Mandamus Granted to Overturn Vacatur of Default Judgment

Under Rule 329b of the Texas Rules of Civil Procedure, the trial court loses its plenary power over a default judgment thirty days after it is signed.  An exception to this 30 day rule is when a party fails to receive notice within 20 days of the signing of the judgment.  In this case, the defendant sought to have a default judgment set aside, alleging that he did not receive notice of the judgment until the 98th day after it was rendered.  The trial court granted his motion and vacated the default judgment.

The Court of Appeals, however, granted the defendant’s mandamus petition, because under Rule 306a(4), “a party who does not have actual knowledge of an order of dismissal within 90 days of the date it is signed cannot move for reinstatement.”

In re Intergas Capital Recovery LLC

Good Primer on Installment Contract Damages

In this simple breach of contract case, the defendant agreed to pay the plaintiff approximately $8,000 through installment payments of $75 per month.  After paying $2,500, the defendant stopped making the monthly payments and the plaintiff brought this lawsuit.  After a trial, a jury awarded the plaintiff the remaining balance on the contract–just over $5,500.

The Dallas Court of Appeals affirmed the jury’s findings, but remitted the damages award to $1,200 because there was no acceleration provision in the contract and the evidence only established that the defendant had failed to make a total of sixteen payments.  The Court reasoned that absent an acceleration clause or a repudiation, the defendant was only entitled to recover the past due payments under the installment agreement, not the entire remaining balance. Consequently, the Court ordered a remittitur.

Eoff v. Central Mut. Ins. Co.

Forcible Detainer Judgment Affirmed — Court Did Not Err by Admitting Notices as Business Records

The plaintiffs defaulted on their mortgage and were then removed from the house via a forcible detainer action filed in Collin County.  They appealed, arguing that the trial court erred by admitting as a business record several notices of eviction sent to them in the mail.  The plaintiffs’ primary argument was that the witness who laid the foundation through an affidavit was not qualified.  The Dallas Court of Appeals disagreed, noting that “Rule 803(6) does not . . . require a witness laying the predicate for introduction of a business record to be the creator of the document or even an employee of the company keeping the record.” All that is required is that he/she have personal knowledge of the facts contained within the business record.

Singha v. FNMA

Court Upholds Defamation Verdict and Default Judgment

In a case involving a dispute among members of the Obowu Union DFW, the plaintiff sued the other members for defamation after he was suspended.  The Union filed a plea in intervention but the plaintiff never filed an answer and the Union moved for default judgment, which the trial court granted.  The case went to trial and a jury returned a verdict in the plaintiff’s favor on his defamation claim for over $200,000.

The defendants appealed the defamation verdict, which the Court of Appeals affirmed, and the plaintiff also appealed the default judgment.  The Court affirmed the default judgment, rejecting the plaintiff’s argument that the trial court should have granted him a new trial because the intervenors failed to serve a copy of the motion for default judgment on him.  Specifically, the Court noted that “after a defendant has been served with citation and the petition, the plaintiff has no legal duty to notify the defendant before taking a default judgment . . . .”

Iroh v. Igwe

Court Overturns Death Penalty Sanction

The defendant in this private jet interior decoration case pleaded a series of affirmative defenses.  After the defendant’s counsel objected to requests for production asking for documents related to these affirmative defenses and then instructed its corporate representative not to answer depositions questions about them, the trial court struck the affirmative defenses in their entirety as a sanction.  The defendant later lost at trial and appealed the trial court’s sanction.

The Court of Appeals reversed, holding that striking the defendant’s affirmative defenses amounted to a “death penalty” sanction that went too far.  Because the trial court had not adequately considered other remedies (such as assessing deposition costs or awarding attorneys’ fees), the sanction was unwarranted.  The Court explained that “case determinative sanctions may be imposed in the first instance only in exceptional cases when they are clearly justified and it is fully apparent that no lesser sanctions would promote compliance with the rules.”

Associated Air Ctr. LP v. Tary Network Ltd.

No Standing in Partnership Dispute

In this partnership dispute, two individual limited partners sued their fellow individual partner (who also signed the limited partnership agreement on behalf of the general partner entity) for, among other things, breach of contract and breach of fiduciary duty.  The jury returned a verdict in favor of the two limited partners, but the trial court granted a JNOV, dismissing those claims for lack of standing.  The Court of Appeals affirmed because “a limited partner does not have standing to sue for injuries to the partnership that merely diminish the value of that partner’s interest” and the plaintiffs’ claims were based solely on their fellow partner’s duties as a partner.

Hodges v. Rajpal