It’s not a Dallas Court of Appeals case, but the Texas Supreme Court this morning issued an opinion further limiting a trial court’s discretion to grant a new trial. The Supreme Court had previously required trial courts to issue written explanations of their reasons for granting a motion for new trial. In re Columbia Med. Ctr. of Las Colinas, Subsidiary, L.P., 290 S.W.3d 204 (Tex. 2009). Now, the court has held that if the record does not support the trial court’s explanation, the appellate courts may grant mandamus relief and order the trial court to render judgment on the jury’s verdict.

In re Toyota Motor Sales, U.S.A., Inc., No. 10-0933

Two years ago, the Dallas Court of Appeals held that the statutory “assumption of the risk” defense (CPRC § 93.001) superseded the common law “unlawful acts” doctrine, which provided that plaintiffs cannot recover damages if, at the time of injury, they were engaged in an illegal act that contributed to the injury. Gulf, C. & S.F. Ry. Co. v. Johnson, 9 S.W. 602, 603 (Tex. 1888). The unlawful acts doctrine is typically invoked in legal and medical malpractice cases. This morning, the Supreme Court decided the same case on different grounds, holding that the Proportionate Responsibility Act negates the common law doctrine and instead requires the finder of fact to apportion responsibility between the lawbreaking plaintiff (or, in this case, the decedent) and the defendant. The illegal activity in this instance was the consumption of marijuana and heroin, which led to the death of Joel Martinez, the son of plaintiff Mary Ann Arredondo. The mother sued the son’s friend, Geoffrey Dugger, who had failed to tell the paramedics that Martinez had snorted the heroin. Dugger initially escaped liability completely when the trial court granted summary judgment in his favor based on the unlawful acts doctrine. The Court of Appeals reversed, holding that § 93.001 superseded the common law doctrine, but did not apply under the facts of the case. On petition for review, the Supreme Court has now held that the Proportionate Responsibility Act applies even where the statutory assumption of the risk defense does not apply. Thus, a jury will have to apportion responsibility between the lawbreaking decedent and his partner in recreational drug consumption. However, the court expressly limited its holding to personal injury and wrongful death cases, leaving open the question of whether a client’s illegal acts will continue to serve as a complete bar to legal malpractice claims.

Dugger v. Arredondo, No. 11-0549

A landlord-tenant dispute illustrates the limits of a jury’s ability to select an amount to award as damages. After the tenant abandoned the leasehold, the landlord sued for breach of the lease agreement. The jury found for the plaintiff and awarded $200,000 in damages. On appeal, the tenant challenged the evidence of causation between the breach of the lease and the damages awarded by the jury. The Court of Appeals agreed, holding that while there was some evidence of damages caused by the breach, the evidence overall failed to establish that the specific expenses claimed by the landlord were actually made necessary by the tenant’s termination of the lease. While a jury may award damages anywhere within the range permitted by the evidence, it cannot “arbitrarily assess an amount not authorized or supported by evidence at trial.” The Court therefore remanded the case for a new trial on both liability and damages.

Curtis v. AGF Spring Creek/Coit II, Ltd., No. 05-12-00429-CV

What, you may be asking yourself, is a viatical settlement? A new securities opinion from the Dallas Court of Appeals provides the answer to that question, and in the process examines the scope of the Texas Securities Act. Life Partners, Inc. is in the business of buying life insurance policies and reselling interests in those policies to investors, transactions known as “life settlements” or “viatical settlements.” The purchasers of those policies are not told what Life Partners paid for them, and Life Partners remains the owner of the policies while holding them as the agent for the investors. Several of the company’s investors filed suit for violations of the TSA, alleging that the life settlements were actually investment contracts that qualified as securities under the TSA. The trial court court granted summary judgment for Life Partners.

The case turned on the question of whether the profits sought by the investors of these viatical settlements were derived “solely from the efforts of others,” one of the four factors for determining whether investment contracts qualify as securities under SEC v. W.J. Howey Co., 328 U.S.293 (1946) and Searsy v. Commercial Trading Corp., 560 S.W.2d 637 (Tex. 1977). After a detailed analysis of a line of cases holding that viatical settlements were not securities, the Court disagreed. Because the investors were dependent upon Life Investors for the evaluation and purchase of the policies, and because they were also required to rely on Life Investors for information about the insureds, the profits were indeed derived solely from the efforts of Life Partners. In so holding, the Court expressly disagreed with the Waco Court of Appeals, which had reached the opposite conclusion in a previous case, and instead followed rulings by the 11th Circuit, the Tyler Court of Appeals, and several courts in other states. In doing so, the Court rejected Life Partners’ argument that it was engaged in the business of selling insurance, which is exempted from regulation by the TSA. Finally, the Court determined that while the claims of the two lead plaintiffs were barred by limitations, some of the claims of two other plaintiffs had been timely filed and could proceed on remand to the trial court.

Given the split of authorities, this case would seem to be a candidate for review by the Texas Supreme Court. We’ll keep you updated if it proceeds in that direction.

Arnold v. Life Partners, Inc., No. 05-12-00092-CV

In this memorandum opinion, the Court found that the trial court’s temporary injunction preventing the defendants from disclosing, among other things, “techniques,”  “materials,” “confidential information” and “proprietary information,” was not specific enough to meet the  requirements of TRCP 683, which requires that an injunction shall “describe in reasonable detail . . . the acts sought to be restrained.”

Ramirez v. Ignite Holdings

Today’s the day for successor cases from lawsuits in 2004. Alexandrea Crutcher originally sued DISD for discrimination and retaliation in that fateful (for 2013 purposes) year.  That lawsuit was resolved by settlement. In 2009, Crutcher interviewed for a job as a basketball coach and science teacher. After some initial recommendations that she be hired, the school hired a different candidate. Crutcher filed suit under the Texas Commission for Human Rights Act, alleging retaliation for her previous retaliation and discrimination lawsuit. Under the TCHRA, employers cannot retaliate or discriminate against an employee or applicant for filing a discrimination complaint. Tex. Lab. Code § 21.055. But Crutcher failed to meet her initial burden of coming forward with either direct or circumstantial evidence that the adverse employment decision was motivated by discriminatory purpose.

The principal who initially recommended Crutcher’s hiring did so after she learned of the earlier lawsuit, and only withdrew the recommendation later on. The person in the HR department who was responsible for making the employment decision was unaware of the first lawsuit, and a paperwork error had caused a misdescription of the job that was actually available. Allegations of hanky panky with a colleague in a supply closet also make a cameo appearance in the opinion, along with a bunch of other facts that the Court of Appeals ruled had adequately negated any causal connection between the decision not to hire Crutcher with her previous lawsuit. The Court therefore concluded that Crutcher had failed to show a prima facie case of retaliation, and that DISD has negated any showing of discriminatory intent in any case. As a result, the Court affirmed the trial court’s grant of summary judgment in favor of the school district.

Crutcher v. Dallas Indep. Sch. Dist., No. 05-11-01112-CV

Back in 2004, the State of Texas filed an animal cruelty proceeding against Marsha Chambers, who was apparently breeding the dogs for sale. The jury found that the animals had been treated cruelly, and the justice court transferred their ownership to the Dallas SPCA. Chambers has spent the years since then futilely pursuing collateral litigation challenging the justice court’s order. In March 2012, that quest led to the filing of a suit alleging a constitutional taking of the animals, seeking $575,000 in damages for the value of the animals and lost income. The State filed a plea to the jurisdiction, which was granted by the trial court and affirmed by the Court of Appeals. According to the Court of Appeals, Chambers had failed to plead a claim capable of evading the State’s sovereign immunity, because she had not adequately pleaded that the alleged taking had been made for a “public purpose.” Seizing neglected or mistreated animals serves to protect the welfare of the animals, not to confer a benefit on the public. Because the pleading did not establish a constitutional takings claim, the trial court properly dismissed the case, and that judgment was affirmed.

Chambers v. State, No. 05-12-01178-CV

Majestic Cast, Inc. entered into a contract with ProCon Paving to serve as a subcontractor on the construction of a Montessori school. Citing numerous complaints, Majestic Cast terminated the contract and filed suit against “Majed Khalef d/b/a ProCon Paving and Construction, Inc.” for theft, conversion, breach of contract, and fraud. Majestic Cast’s posited that Khalaf was using ProCon’s corporate form as an empty shell to avoid liability, and that he should therefore be held personally liable as an alter ego of ProCon. The trial court granted traditional and no-evidence motions for summary judgment, and Majestic Cast appealed. The Court of Appeals reversed as to the claims for theft, conversion and fraud. Whereas Majestic Case had pleaded those tort claims against Khalaf individually, Khalaf had sought summary judgment only by arguing that Majestic Cast could not pierce the veil to hold him liable on ProCon’s contract.  Because a corporate agent can be held liable for his own fraudulent or tortious acts even while acting within the scope of the agency, Khalaf was not entitled to summary judgment on the tort claims. As to Majestic Cast’s breach of contract claim, however, the Court held that there was no evidence to raise a fact issue on any theory for disregarding the corporate fiction in order to make Khalaf individually liable for breach of the Majestic Cast-ProCon contract. Thus, summary judgment was affirmed only as to the contract claim, with the tort claims remanded for further proceedings.

Majestic Cast, Inc. v. Khalaf, No. 05-12-00112-CV

Pursuant to a contract with Chapman Custom Homes, Duncan Plumbing installed the plumbing in a house Chapman was building in Frisco, Texas.  But a year-and-a-half later, those pipes sprung a leak and damaged the house.  The Court of Appeals, however, found that Chapman could not recover for negligence because the economic loss rule bars such a tort claim where a contract governs the parties’ relationship.  The Court rejected Chapman’s argument that the economic loss rule only bars recovery for damages to the “plumbing system itself” (while its damages based on injuries to the entire home), because “the only duty [Chapman] alleged Dallas Plumbing breached was its contractual duty.”

Chapman Custom Homes v. Dallas Plumbing Co.

The Court of Appeals has reversed the district court’s order sustaining the special appearance of an Iowa company formed by one of the plaintiff’s former employees. Interestingly, the opinion starts out with some discussion of a recurring problem in Texas practice — namely, the use and treatment of documents filed under seal. In this instance, much of the evidence necessary to determine the special appearance had been sealed by the trial court, including an exhibit that was “the only evidence of the terms of the relationship” between two of the defendants. The Court of Appeals resolved this difficulty by stating that it had made every effort to preserve the confidentiality of the designated materials, but that the appeal could not be decided without mention of some key jurisdictional facts. The lesson here appears to be that the Court will do what it can to preserve the litigants’ confidential information, but if the details are essential to the appeal, you can reasonably expect some of them to come out in an opinion that is a matter of public record.

Moving on to the merits of the special appearance, the evidence showed that Eco Technologies was an Iowa company that had all of its operations located in that state, but that it distributed its products to independent dealers in Texas and elsewhere. One of those dealers in Texas is owned by the plaintiff’s former employee Billy Cox, a Texas resident who also is a part owner of Eco Technologies itself. The plaintiff alleged that Eco Technologies and Cox had interfered with the plaintiff’s Texas contracts and unfairly competed with the plaintiff in Texas, and the Court held that those allegations were sufficient to bring Eco Technologies within the reach of the Texas long arm statute. Citing Iowa law, the Court held that as a member of a member-managed LLC, Cox was an agent of Eco Technologies, and that his recruitment of the plaintiff’s distributors in Texas to enter into relationships with Eco Technologies were jurisdictional contacts attributable to Eco Technologies. The company therefore fell short of its burden to negate the jurisdictional grounds alleged by the plaintiff.  Accordingly, the Court of Appeals reversed the order sustaining the special appearance and remanded the case for further proceedings.

Masterguard, L.P. v. Eco Techs. Int’l LLC, No. 05-12-01318-CV

The trial court granted summary judgment for approximately $30,000 in unpaid invoices under an “account stated” theory, as well as roughly $15,000 in attorneys fees.  Pegasus Transportation Group v. CSX Transportation, No. 05-12-00465-CV (August 14, 2013, mem. op.)  The Court of Appeals affirmed, reminding that “account stated” can allow recovery without an express contract when the parties have “a standard course of dealing . . . after the expiration of that written agreement.”  The Court also gave no weight to a controverting affidavit on attorneys fees, noting that it “does not address what was described by [plaintiff’s] lawyer as the work that was done, what is customarily charged in similar cases, why the time expended was excessive to accomplish the work provided, or that the work performed was unnecessary.”  (citing Cammack the Cook, LLC v. Eastburn, 296 S.W.3d 884, 895 (Tex. App.–Texarkana 2009, pet. denied)).

McKinney Aerospace was in the business of airplane repair.  In 2006, Boyington Capital Group came to McKinney for repairs on its airplane.  During negotiations, McKinney’s executive vice president, Randall Haler, told Boyington Capital, that McKinney was in “very fine legally financial shape.”  As it turns out, McKinney was on the verge of bankruptcy and failed to repair the plane.  It had also used Boyington’s initial payments to hold off creditors, so it could not return those funds to Boyington.  Boyington sued McKinney and Haler for, among other things, fraud, conversion, breach of fiduciary duty and breach of the Texas Theft Liability Act.  The jury found for Boyington.

On appeal, Haler argued that there was insufficient evidence to establish a claim under the TTLA against him. The Court of Appeals disagreed, upholding the jury’s finding and pointing out that “by misrepresenting the financial condition of McKinney Aerospace and spending money it received from Boyington on payments other than those related to repairing Boyington’s plane, Haler unlawfully appropriated Boyington’s property with the intent to deprive Boyington of its money.”  However, the Court of Appeals reversed the trial court’s grant of attorney’s fee to Boyington because Boyington did not segregate and exclude the fees for services that relate to its claims for which fees are not recoverable.

Haler v. Boyington Capital Group

Except perhaps for emotional distress, lost profits continue to be one of the most difficult measures of damages to sustain on appeal. In this instance, Timothy Barton and two other individuals formed a corporation, JMJ Development, to develop resort properties in the Riviera Maya of Mexico. The company entered into non-binding letters of intent with both property owners and the owners of the W Hotel and St. Regis Hotel brands. Before those deals were completed, however, Barton formed a new corporation, JMJ Hospitality, and the record included evidence that he instructed the landowners to deal with the new company instead of JMJ Development. The jilted business associates sued for breach of fiduciary duty, breach of their shareholder agreement, tortious interference, and conspiracy. The jury returned a verdict of $7 million for past lost profits on the fiduciary duty claim and $3 million in future lost profits on the breach of contract claim.

The Court of Appeals reversed and rendered, concluding that there was insufficient evidence the original company ever had the ability to develop the properties in the first place. Although they had multiple letters of intent, the evidence showed those letters had expired of their own terms, and there had never been any binding contracts for the purchase or development of the properties. The meant there was no causation for the lost profits claimed by Barton’s former business owners. The plaintiffs also failed to account for subsequent events — namely, the economic recession that started after Barton formed his new company — and that failure rendered their lost profits model speculative and not reasonably certain. The plaintiffs also confused projected items of income as profits, without properly accounting for associated expenses. Without any reliable, non-speculative evidence of the plaintiffs’ lost damages, the Court of Appeals reversed the jury’s verdict and the trial court’s judgment.

Barton v. Resort Dev. Latin Am., Inc., No 05-11-00769-CV

After Media Consultants, LLC defaulted on its lease and filed for bankruptcy, plaintiff 11327 Reeder Road, Inc. filed suit against Kenneth Guarino and Capital Video Corp. to recover the unpaid rent owed under the lease agreement, alleging that Media Consultants and Capital Video were Guarino’s alter egos. 11327 further alleged that Guarino had fraudulently induced it to enter into a lease modification, and that Media Consultants had conspired with Guarino to commit fraud. However, Guarino and Media Consultants were not residents of Texas, and they filed a special appearance to contest personal jurisdiction. On interlocutory review from the denial of the special appearances, the Court of Appeals reversed. Proof that an individual is an officer, director, or majority owner of a company is insufficient, standing alone, to establish alter ego. Nor was there general jurisdiction over Guradino because “Making telephone calls and sending e-mails about separate business entities in another state are not the types of continuous and systematic contacts that approach the relationship between the state and its own residents.” 11327 also failed to establish jurisdiction over Guradino through proof that he had negotiated the lease modification through a telephone call to Texas, because a single telephone call to Texas that included alleged misrepresentations does not demonstrate the defendant purposefully availed himself of the privilege of conducting activities in Texas sufficient to support specific jurisdiction.

Guarino v. 11327 Reeder Road, Inc., No. 05-12-01573-CV

Liability for foundation damage under a multi-year series of CGL policies was at issue in Mid-Continent Casualty Co. v. Castagna, No.05-12-00383-CV (Aug. 20, 2013).  Among other holdings, the Court concluded that one policy, which named “McClure Brothers Custom Homes, LLC,” did not extend to an entity of which it was a general partner, “McClure Brothers Homes LP,” because of an exclusion “with respect to the conduct of any current or past partnership . . . or limited liability company” not expressly named. While that policy did reach members and managers of the LLC, no summary judgment evidence made that connection as to this party.  The Court also found that a breach of the implied warranty of good workmanship, despite its relationship to the parties’ construction contracts, did not go so far as to trigger the “contractual liability” exclusion under Gilbert Texas Construction, LP v. Underwriters at Lloyds, 327 S.W.3d 118 (Tex. 2010).

We’ll start off yesterday’s flurry of opinions with CTMI, LLC v. Fischer, which reiterates the familiar principle that agreements to agree don’t actually bind the parties to reach an agreement. In this instance, the parties entered into an asset purchase agreement that contained an earn-out provision. The earn-out provided that the parties would have to “mutually agree” on the percentage of completion of projects that were in progress as of December 31, 2010. The trial court ruled that provision was enforceable, but the Court of Appeals disagreed. Without the “mutually agreed” percentages required to calculate the earn-out, there was no formula that could be applied to calculate what was owed, rendering the earn-out unenforceable as a matter of law.

CTMI, LLC v. Fischer, No. 05-11-00970-CV

Tuesday was a busy day for the Court of Appeals, which issued half a dozen new opinions we’ll be posting about soon. While we’re getting them written up for full posts, the cases are already on the site at the following links:

• Holliday v. Weaver (attorney’s breach of fiduciary duty)
• CTMI, LLC v. Fischer (agreement to agree)
• Chapman Custom Homes, Inc. v. Dallas Plumbing Co. (standing to sue under contract and economic loss rule)
• Mid-Continent Casualty Co. v. Castagna (coverage dispute)
• PetroDrillBits Int’l Indus., Inc. v. Varel Int’l Indus., L.P. (breach of sales and services contract)
• Guarino v. 11327 Reeder Road, Inc. (special appearance)

The Court of Appeals has mostly affirmed the district court’s judgment in favor of the plaintiffs in a case arising out of “the downfall of a real estate empire built by W. Eric Brauss through a complex web of real estate limited partnerships involving hundreds of investors and creditors.” Because our firm represents some of those creditors, we will keep the commentary brief. Among other issues, the court discusses the inferences that can be drawn in a civil case from a party’s invocation of the Fifth Amendment right against self-incrimination. In the end, the appellate court reversed the trial court’s decision to render damages jointly and severally against one of the individual defendants, but affirmed the findings of fraud and the overall award of damages.

Brauss v. Triple M. Holding GMBH, No. 05-11000271-CV

The Court of Appeals has affirmed the district court’s order denying two motions to compel arbitration. The plaintiffs had sued for breach of fiduciary duty, fraud, and negligent misrepresentation, arising out of a bad investment promoted by the defendants. The brokerage account documents signed by the plaintiffs contained an arbitration clause, but that clause only required arbitration of claims against “Introducing Firm, Clearing Agent, and any Sub-Advisor” — terms that were not defined in the agreement. While it may have been reasonable to conclude that the arbitration clause was intended to cover claims against the defendants, there was no abuse of discretion by the trial court in failing to find that they were within the scope of the arbitration clause. The Court of Appeals also rejected the defendants’ attempt to invoke “direct benefits estoppel,” a doctrine that allows non-signatory defendants to compel arbitration “if the nature of the underlying claims requires the signatory to rely on the terms of the written agreement containing the arbitration provision in asserting its claims against the non-signatory.” That doctrine did not apply here because the plaintiffs were not seeking any direct benefit under the contracts that contained the arbitration provisions. The order denying arbitration was therefore affirmed.

VSR Financial Services, Inc. v. McLendon, No. 05-12-01016

Marquis Acquisitions and several related entities were sued after a fire at an apartment complex killed three people. The defendants were covered by several layers of insurance, which assumed the defense of the case in successive order as policy limits were exhausted. At each layer, one or another of the defendants sought to reject the insurers’ choice of defense counsel and to be represented instead by the business partner and personal attorney of the defendants’ primary owner. Marquis eventually filed suit against Steadfast Insurance, and that move finally created a conflict between Marquis and the insurer’s chosen counsel that caused the attorney to withdraw. Marquis thereafter sued the insurer to recover “the attorney fees it expended in getting Steadfast to retain separate counsel” for Marquis and some of the other insureds. The trial court granted summary judgment for the insurer, and the Court of Appeals affirmed. Marquis could not recover for breach of the insurance contract because it could not identify any specific terms or conditions that required Steadfast to immediately hire separate counsel based on an insured’s unspecified and unsubstantiated allegations of a conflict of interest. Marquis also could not recover the attorney fees it paid to Shaw as damages, since attorney fees are only recoverable “in addition to” the recovery of actual damages, not as independent damages themselves. The court went on to reject Marquis’ claim that Steadfast’s conduct had constituted an unfair or deceptive act or practice under the Insurance Code because Marquis could not point to any alleged misrepresentation by Steadfast, and further held there was no evidence that the insurer had any duty to independently identify conflicts among its insureds when appointing legal counsel to defend them.

Marquis Acquisitions, Inc. v. Steadfast Ins. Co., No. 05-11-01663-CV

With its motion for summary judgment, the plaintiff submitted affidavits testifying to, among other things, the terms of an unsigned lease agreement with its former tenant, a law firm.  The defendant generally objected to these affidavits as inadmissible hearsay, but failed to specify which portions of the affidavits contained the hearsay.  The Court of Appeals held that, although an affidavit containing hearsay may not support summary judgment, the opposing party must make “specific objections to each component part of a particular piece of evidence to preserve error on appeal.”  Because the defendant simply objected that “the Affidavits contain inadmissible hearsay,” the Court of Appeals held that they had not specifically objected to the allegedly inadmissible statements and concluded that the trial court properly considered the affidavits.

Stovall & Assocs. v. Hibbs Fin. Ctr., Ltd.

Following a number of recent waiver cases, the Court of Appeals held that the appellees waived their contractual right to offset when they agreed that “Guarantor waives, to the fullest extent permitted by applicable law, the benefit of any statute of limitations or other defenses affecting its liability hereunder.”  The Court rejected appelles’ argument that this language was not specific enough to waiver their rights under section 51.003.

Compass Bank v. Manchester Platinum Mgmt.

Since 1994, the City of Dallas has been in litigation with its police, firefighters, and rescue officers. The question at hand is whether a referendum and ordinance passed in 1979 amounted to a one-time salary adjustment, as the city contends, or a perpetual entitlement in all future salary adjustments. More than a decade after the lawsuits started, the city suddenly remembered that it had governmental immunity, and filed pleas to the jurisdiction on that basis. In 2011, the Texas Supreme Court held that the officers could not pursue a declaratory judgment on their interpretation of the ordinance because the only potential relief from such a declaration would be an award of money damages. City of Dallas v. Albert, 354 S.W.3d 368 (Tex. 2011). In the meantime, however, the legislature had enacted a new, retroactive statute that waived local governments’ immunity from suit for certain breach of contract claims. See Tex. Local Gov’t Code § 271.151 et seq. The case was therefore remanded to the trial court to consider whether there was jurisdiction to hear the officers’ breach of contract claims. The trial court denied the city’s renewed pleas to the jurisdiction, ruling that the contract claims fell within the new statutory waiver of immunity. On interlocutory appeal, the Court of Appeals agreed.

The analysis is somewhat lengthy, but its core relies on City of Houston v. Williams, 353 S.W.3d 128 (Tex. 2006) for the proposition that city ordinances can create a unilateral contract between the city and its employees that is within the scope of the legislature’s waiver of governmental immunity. Finding all of the elements of such a contract contained within the 1979 ordinance, the Court of Appeals concluded that it was a unilateral contract between the city and the officers. However, on the key question of whose interpretation of the ordinance would prevail, the court deferred to one of its previous rulings in the case, holding that the ordinance was ambiguous and its interpretation was therefore a question of fact to be determined at trial. The court also held there was no jurisdiction on the remaining declaratory judgment claims, concluding that the Albert decision had already established the city was entitled to governmental immunity from such claims.

City of Dallas v. Arredondo, No. 05-12-00963-CV

Based on a report from a confidential informant, the Texas Department of Family and Protective Services investigated Robert Mason for allegations that he hit his ten-year-old daughter three times.  The investigation determined that, based on the available evidence, the alleged abuse did not occur.  But Mason suspected that the informant was David Glickman, the Rabbi of a congregation with which Mason associated, so he sued Glickman for defamation.  Because the TDFPS had redacted its report (as required by Texas law) to conceal the name of the informant, Mason could not establish that Glickman was the one who made the allegedly defamatory statement.  Under a Texas Family Code provision, however, Mason moved the trial court to order disclosure of the unredacted report, arguing that disclosure was essential to the administration of justice.  The trial court denied the motion and granted Glickman’s no-evidence motion for summary judgment.  The Court of Appeals agreed, holding that disclosure of the report was not essential to the administration of justice.  Further, the court rejected Mason’s stated goal of discouraging reports of suspected child abuse since the statute exists to encourage child abuse reporting, regardless of whether the allegations are ultimately confirmed.

Mason v. Glickman

The Court of Appeals has granted mandamus relief to the defendants in the defamation lawsuit brought by the teenaged son of baseball player Torii Hunter. The suit arises out of sexual assault charges that a grand jury eventually no-billed. In the subsequent defamation case, the defendants moved to dismiss under the Texas Citizens Participation Act, which requires the plaintiff in such a case to come forward with prima facie evidence of each element of the case at an early stage of the litigation. The plaintiff responded with an emergency motion seeking leave to take the depositions of one of the alleged victims and her mother.  The trial court granted leave, but the Court of Appeals held that the plaintiff’s briefing had not stated any “good cause” for the discovery, as required by the TCPA, and at the hearing on the motion had only argued that the depositions were necessary “in order to defend the motion to dismiss.” Without any specific showing of good cause in the record, the Court of Appeals concluded that the trial court had abused its discretion in allowing the depositions and conditionally granted mandamus relief.

In re D.C., No. 05-13-00944-CV

The district court granted summary judgment in favor of the defendant in a car wreck case. The defendant sought summary judgment based on the 2-year statute of limitations for personal injury and the plaintiff’s alleged lack of diligence in serving the petition. The accident had happened on April 24, 2009, but the plaintiff’s petition had not been filed until April 25, 2011. The Court of Appeals reversed, holding that the summary judgment evidence was sufficient to show the petition was timely filed because the court had been closed for Good Friday when the plaintiff attempted to file it on April 22. See Tex Civ. Prac. & Rem. Code § 16.003(a). The defendant had also failed to submit any summary judgment evidence showing that he had not been timely served, thereby failing to meet his own burden to establish the plaintiff’s lack of due diligence in serving the citation after the limitations period expired.

Sutton v. Sheikh, No. 05-12-01168-CV

In the course of a lawsuit for breach of contract and fraud, the district court entered an order permitting discovery on a pair of banks, but prohibiting the litigants from disclosing their documents to third parties. The plaintiffs’ attorney subsequently filed the two business records affidavits produced by the banks, along with 1300 pages of accompanying documents. Six months later, the defendants moved to seal the documents and for sanctions based on the earlier protective order. The trial court fined the plaintiffs’ attorney $2000. The attorney appealed after final judgment in the case, arguing that the defendants had not asked for any particular amount of sanctions and had presented no evidence justifying the $2000 award. The Court of Appeals agreed, citing the Supreme Court’s recent opinion in Paradigm Oil, Inc. v. Retamco Operating, Inc. for the proposition that “[s]anctions for discovery abuse should not be dispensed as arbitrary monetary penalties unrelated to any harm.” 372 S.W.3d 177, 184 (Tex. 2012). In this instance, the defendants had not even incurred any attorney fees for bringing their motion, as they were appearing pro se at the time. Accordingly, the court rendered judgment denying the motion for sanctions.

Wiegand v. Sky King Foundation Inc., No. 05-12-00020-CV

IBP leased a restaurant space to Pizza Associates.  Graman executed the lease for Pizza Associates as its president, and executed a written guaranty, guaranteeing the payment and performance of the lease.  IBP terminated the lease after Pizza Associates failed to comply with its terms.  IBP sued Pizza Associates for breach of the lease, and sued Graman pursuant to the guaranty.  The trial court granted IBP’s motion for summary judgment, to which Graman had filed a response but Pizza Associates did not.  Graman appealed.

The court of appeals held that Graman did not raise a viable challenge to the trial court’s summary judgment against them because their arguments did not address the obligation to pay under the guaranty.  Instead, Graman raised issues related to the lease, but Pizza Associates’ liability was settled.  The court of appeals determined that Graman cannot avoid liability under the guaranty by now questioning the settled underlying liability related to the lease.  The court of appeals also rejected Graman’s argument that IBP was required to segregate its fees between the breach of lease suit and the breach of guaranty claim.  The court of appeals affirmed the trial court’s judgment.

Graman v. IBP Retail No. 5, L.P., No. 05-12-00565-CV

In April 2009, American Home’s insured allegedly fell asleep while the stove was still on in her apartment, leading to a fire that damaged her unit and that of her neighbor, who was insured through Allstate. Allstate paid its insured’s claim for $18,000 in damages, then sought subrogation from American Home. However, American Home’s policy limit was $100,000, and the claim languished while American Home sought to determine the complete extent of the damage caused by the fire. After a year of waiting, Allstate filed for arbitration with Arbitration Forums, Inc. Both Allstate and American Home are signatories to AFI’s arbitration agreement, which requires parties to arbitrate subrogation claims “not in excess of $100,000.” The AFI arbitrator promptly ruled in favor of Allstate. American Home filed a post-hearing appeal as permitted by the AFI rules, arguing that arbitration was not compulsory because the overall damages from the fire were in excess of $600,000. The AFI arbitrator agreed and voided the prior award.

In the meantime, however, Allstate had filed an application to confirm the initial arbitration award. After the arbitrator voided that award, American Home moved to dismiss the court case. The county court at law apparently agreed with Allstate’s argument that the order declaring the initial award to be void was itself invalid because American Home had allegedly misrepresented its policy limits in order to obtain that order. It entered a final judgment confirming the initial award in favor of Allstate, and American Home appealed, arguing that the trial court lacked jurisdiction to enter judgment on a voided arbitration award. The court of appeals agreed, noting that “Necessarily embedded in the trial court’s ability to confirm an award is the presence of an award itself.” The court of appeals also rejected Allstate’s attempt to argue that the arbitrator’s decision to void the initial award was invalid, ruling that the documents relied upon for that argument did not constitute any evidence of misrepresentations being made by American Home. The case was therefore reversed and remanded with instructions to dismiss for lack of jurisdiction.

American Modern Home Ins. Co. v. Allstate Ins. Co., No. 05-11-00997-CV

Bob Montgomery Chevrolet, a car dealership doing business entirely in Kentucky, entered into an agreement with Dent Zone, a dent repair service, to allow Dent Zone to operate out of Montgomery’s dealership in exchange for a cut of Dent Zone’s take.  After some negotiation, the parties signed an agreement that included the following language: “Additional benefits, qualifications and details of the [relationship] are available for your review at our website:  http//.linxmanager.com./pdf.CRCTermsconditions.pdf.”  The terms and conditions on that website included a minimum six-month contractual term, a Texas choice-of-law provision, and a forum-selection clause requiring any suit between the parties to be brought in Dallas, Texas.  One month after signing the agreement, Montgomery ended its relationship with Dent Zone.  Dent Zone sued Montgomery for breach of contract in Dallas, and Montgomery filed a special appearance, which the trial court denied.

On appeal, Montgomery insisted that the terms and conditions linked to in the agreement were not part of the contract, while Dent Zone argued that the terms were incorporated by reference.  The Court of Appeals agreed with Montgomery, explaining that for a contract to incorporate another document by reference that contract must demonstrate the parties’ intent to incorporate all or part of the referenced document.  Turning to the language of the agreement, the Court found that the phrase “Additional benefits, qualifications and details of the [relationship] are available for your review at our website” was informative only and   does not suggest that the parties intended the terms and conditions to become part of their agreement.

Bob Montgomery Chevrolet v. Dent Zone Cos.

PAM Transport’s truck driver, James Herdo, allegedly backed into one of Stevens Transport’s semi-tractors.  Stevens sued PAM for negligence because it claimed Herdo failed to keep a proper “lookout” when he was backing the truck up.  The trial court found that Stevens had established that Herdo’s negligence proximately caused the collision and granted Stevens’ motion for summary judgment.  The Court of Appeals disagreed, holding that the mere occurrence of an accident does not establish negligence.  Instead, Stevens had to prove conclusively that Herdo’s failure to keep a lookout proximately caused the accident, not simply that Herdo backed into Steven’s tractor.

PAM v. Stevens

Okunfulure hired Ortiz to build a masonry wall along the front of his house.  Ortiz sued Okunfulure, claiming he was not fully paid according to the parties’ oral agreement.  Okunfulure counterclaimed, alleging Ortiz’s performance was deficient.  The trial court found in favor of Ortiz and dismissed Okunfulure’s counterclaim with prejudice.  Okunfulure appealed, and the court of appeals affirmed the trial court’s judgment.  The parties disagreed on the amount Ortiz was to be paid, but the court of appeals held that a reasonable fact finder could have believed Ortiz’s testimony that Okunfulure failed to pay him $1250.  The parties also gave conflicting testimony on whether Ortiz advised Okunfulure to build a foundation below the masonry wall to prevent deterioration, but the court of appeals again concluded that a reasonable fact finder could have believed Ortiz warned Okunfulure about the foundation.  Thus, the court of appeals held that the evidence was legally sufficient to support the trial court’s judgment.

Okunfulure v. Ortiz, No. 05-12-01045

In a breach of contract case, a group of defendants appealed from the district court’s grant of summary judgment in favor of the plaintiff. The defendants argued that the plaintiff lacked standing to sue them because there was no evidence it had privity of contract with any of the defendants. The court of appeals rejected that argument, holding that the defendants were actually challenging the capacity of the plaintiff to sue or be sued. The plaintiff had standing to sue on the contract because it pleaded and proved it was “formerly known as” the party named in the agreement. As to the challenge to the plaintiff’s capacity, the court held that the defendants had been untimely in making that challenge, as the verified denial of capacity required by Rule 93 was only filed the morning of the summary judgment hearing — not 7 days before as required by Rule 63. The trial court’s summary judgment order indicated that it had not considered the amended pleading, stating that it had considered the “pleadings timely filed,” not all of the pleadings in the case. Nor was the issue of capacity tried by consent as part of the summary judgment proceeding, since the response to the summary judgment motion raised no issue of the plaintiff’s capacity to bring suit. Likewise, the court of appeals rejected the claim of one of the individual defendants that he could not be personally liable on the contract because he had signed it as CEO of the defendant corporation. Because the defendant had not timely filed a verified denial of his capacity to be sued individually, that issue was also waived. As a result, the trial court’s judgment was afffirmed.

John C. Flood of DC, Inc. v. SuperMedia, LLC, No. 05-12-00307-CV

The court of appeals conditionally granted mandamus relief after the trial court appointed a receiver over relators and then expanded the powers of that receiver.  The court of appeals found that the trial court’s orders were void as to relators because they were not served with process or otherwise notified of the receivership proceedings, which meant the trial court had no jurisdiction over relators.

In re C.D. Henderson Construction Servs., No. 05-13-00593-CV

General Capital Group, a German investment firm, claimed that it entered into an oral deal with AT&T in January 2009 to broker the purchase of T-Mobile for a 2% commission on what was to be a $39 billion deal. In May 2009, GC held another meeting with AT&T, during which AT&T indicated it was not interested in pursuing the transaction at that time. After two years with no communication between GC and AT&T, the latter announced that it intended to acquire T-Mobile. GC approached AT&T, which denied that it had any deal with GC.

GC filed suit for breach of contract.  During the pendency of the suit, AT&T announced that it was not longer going to pursue the T-Mobile deal due to opposition by the Justice Department.  With no sale on which to base its claim for a massive commission, GC changed its theory to to fraud, seeking recovery of $30 million for the “reasonable value of its services.” The trial court granted summary judgment, and the court of appeals affirmed. GC could not recover for fraud because even if AT&T had agreed to a 2% success fee, GC could not show harm because there hadn’t ever been any success for such a fee to be based on. Likewise, GC could not recover for quantum meruit because it has no expectation of being paid unless there was a successful acquisition.

General Capital Group v. AT&T, No. 05-12-00446-CV