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

Rational Interpretation Negates Malice in TCPA Appeal

Former GOP Senate candidate Chris Mapp sued the Dallas Morning News for defamation after it published an editorial stating Mapp had told the editorial board “that ranchers should be allowed to shoot on sight anyone illegally crossing the border on their land, referring to such people as ‘wetbacks,’ and called the president a ‘socialist son of a bitch.'” Mapp claimed that the “shoot on sight” comment had been taken out of context because he had actually said ranchers should be permitted to shoot when they were in “fear for their life” or in defense of property, the same as anybody else. The News filed a motion to dismiss under the TCPA, but the 30-day statutory period after the hearing passed without a ruling by the trial court. That caused the motion to be overruled by operation of law, and the newspaper perfected an interlocutory appeal. The trial court then issued an order granting the motion to dismiss, albeit outside the prescribed time period.

This raised two questions for the Dallas Court of Appeals: What was the effect of the late-issued dismissal order, and should the case have been dismissed on the merits in any event? As to the first question, the Court held that the untimely dismissal order was a nullity. On the merits, the Court held that Mapp (who was a public figure) had not met his prima facie burden of showing that the newspaper had published the allegedly defamatory statements with constitutional malice. Paraphrasing or deliberately altering another person’s words does not establish actual malice unless there is evidence the defendant misinterpreted the remarks on purpose or in circumstances so improbable that the mistake could only have been recklessly. The Court concluded that the newspaper’s paraphrase of the statements Mapp had made in his tape-recorded interview was a rational interpretation of what he had said, and Mapp had not submitted any evidence to contradict the reporter’s affidavit explaining his subjective intent. The Court of Appeals therefore concluded that the trial court had erred by allowing the motion to dismiss to be overruled by operation of law, rendered judgment that Mapp’s case be dismised, and remanded to the trial court for a determination of the DMN’s costs, fees, and other recoverable expenses.

The Dallas Morning News, Inc. v. Mapp, No. 05-14-00848-CV

It Turns Out You Can Execute Judgment on a Website

After obtaining a judgment against the guarantor of a $250,000 debt, plaintiff Elexis Rice sought a turnover order for certain intangible items of property, including internet domain names and website registrations using the name “cre8stone.” Cre8 International — which was not the judgment debtor — appeared in court to contest the turnover, contending that the domains were its own property. The trial court concluded otherwise, and the Court of Appeals affirmed that aspect of the turnover order. Although a trial court cannot ordinarily adjudicate third parties’ ownership rights in a turnover proceeding, the appearance of that third party in court rendered it subject to the trial court’s ruling on the matter. However, Cre8 managed to retain its email addresses and telephone number, as there was no evidence in the record showing that they were actually owed by the judgment debtor.

Cre8 Int’l, LLC v. Rice, No. 05-14-00377-CV

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Cancel That Account

A 1999 divorce decree required Molly Brizendine to pay a $14,477 debt the she and her ex-husband owed to Texans Credit Union. In 2013, Texans sued Richard Brizendine for the balance of the outstanding line of credit. The county court at law granted judgment for the ex-husband, but the Dallas Court of Appeals reversed and rendered. Although it was Molly who had continued to take advances on the line of credit long after the divorce was final, Richard was still liable for the debt because he had signed the original contract as a co-borrower. The Court held that it was “well-settled that a court in a divorce action has no power to disturb rights that creditors lawfully hold against the parties.”

Texans Credit Union v. Brizendine, No. 05-13-01422-CV

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.

Making Essential Terms Inessential

The owners of a company that owned and operated three ASI Gymnastics centers attempted to effectuate a business divorce via a Rule 11 agreement calling for the appointment of a panel of appraisers. A dispute ensued over how the appraisers were to do their work, and that led the parties back to the courthouse to sort out the terms and enforceability of the Rule 11. The trial court ruled that the agreement was valid, and the Court of Appeals affirmed. While the plaintiffs argued that the agreement lacked essential terms as to the interest rate and payment period for the buyout, the Court of Appeals held that the agreement itself (represented in a series of email exchanges between the attorneys) stated that those terms were not the “heart of the proposal,” and the rest of the terms were indeed agreed upon. (Notably, the buyout funds were actually tendered as a lump sum, rendering the interest rate and payment terms moot.) The Court also rejected the plaintiffs’ contention that the Rule 11 was unenforceable because it was not manually signed, ruling that they had not timely objected that the electronic signature blocks on the emails were invalid as signatures for a Rule 11 agreement. However, the Court reversed and rendered an award of attorney fees in favor of the defendants, concluding that the dispute was already before the trial court when the defendants filed a declaratory judgment counterclaim that they had validly complied with the Rule 11 agreement.

Crews v. DKASI Corp., No. 05-14-00544-CV

Dilapidated and Deteriorated, But Not Destroyed

By local ordinance, the City of Plano permits the owner of a billboard that pre-existed the city’s current territorial limits to repair the sign if it becomes “dilapidated and deteriorated.” The owners of one such sign near Highway 75 sued the city after their request to repair the sign after the sign and all but one of its five supporting beams were blown over in a storm. The city refused, arguing that the sign was “destroyed,” not dilapidated and deteriorated. The Court of Appeals disagreed, noting that the ordinance did not contain the word “destroyed,” and that its definition of “dilapidated and deteriorated” included broken support members. The Court ruled against the sign owners on their temporary regulatory taking claim, however, citing recent Texas Supreme Court authority that the pendency of a civil-enforcement procedure, by itself, does not give rise to a taking.

CPM Trust v. City of Plano, No. 05-14-00104-CV

Business Risk Exclusion Precludes Water Damage Coverage

In this insurance coverage case, the Court of Appeals construed the “business risk exclusion” to preclude coverage for water damage to a townhome complex that the insured was building.  A business risk exclusion is a typical provision in commercial general liability insurance policies that is used to exclude coverage for “certain risks relating to the repair or replacement of the insured’s faulty work or products or defects in the insured’s work or product itself.”  The reason behind including such exclusion is simple:  the insured should be able to control the quality of the goods and services it supplies.  In this case, the Court found that the exclusion precluded coverage because the evidence established that property damage at issue occurred during the construction of the townhome complex.

Dallas Nat’l Ins. Co. v. Calitex Corp.

Maybe Next Time Try Paris, Texas?

Connie Sigel used a website to book an apartment in Paris (the one in France) for a seven-night vacation. During that stay, an intruder with keys to both the apartment and its safe stole most of Sigel’s possessions. Sigel sued the booking agency on multiple contract and tort claims. The trial court denied My Vacation Europe’s special appearance, but the Dallas Court of Appeals reversed and rendered. The Court held that Sigel’s act of accessing MVE’s website and renting an apartment while she was located in Dallas did not constitute a purposeful availment of Texas by MVE, and there was no evidence that MVE specifically targeted Texas residents for its services. The Court of Appeals also held that there could be no specific jurisdiction in Texas because the claims all arose from a burglary that occurred in France, meaning that the relationship between Texas and the operative facts of the litigation was too tenuous to support jurisdiction.

My Vacation Europe, Inc. v. Sigel, No. 05-14-00435-CV

Update: Threepeat. The dream is alive.

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Loose Lips Fail to Sink Summary Judgment

A Highland Park property dispute has resulted in a 30-page memorandum opinion affirming the trial court’s summary judgment ruling that the defendants have title to a strip of land adjacent to their home, but also reversing an attorney fee award of $40,670 against the plaintiff, Armstrong DLO Properties. ADLO filed suit, seeking to establish that (among very many other things) a 1949 warranty deed in the defendants’ chain of title was invalid, which would make the frontage of ADLO’s lot approximately 155 feet wide.

During the summary judgment hearing, the trial court revealed that it had sua sponte discovered that ADLO’s owner had successfully sued the estate of his father seeking reformation to the deed, establishing that the frontage was only 140 feet wide. The court orally stated that it would take judicial notice of that judgment, describing it as an issue of “estoppel.” The court subsequently granted summary judgment for the defendants without identifying the grounds for its ruling. The Court of Appeals rejected ADLO’s claim that the district court had improperly relied on matters outside the record in granting the summary judgment, as there was nothing in the written summary judgment order indicating that the court had actually granted summary judgment on the basis of the prior judgment. Because the grounds otherwise presented in the defendants’ motion were sufficient to justify summary judgment, the Court affirmed it. However, the Court reversed as to the award of attorney fees, holding that fees were not recoverable under the Declaratory Judgments Act because the issue was title to the property, not the location of the boundary between properties. See Tex. Civ. Prac. & Rem. Code § 37.004(c).

Armstrong DLO Props., LLC v. Furniss, No. 05-13-01581-CV

Update: The pressure is now on a for a three-peat next week.

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