After Brown missed at least twenty-five mortgage payments, the Bank sent Brown notice of default and he failed to cure. The Bank sought a declaratory judgment authorizing a non-judicial foreclosure sale of the property, and obtained summary judgment. Brown appealed, and the Court affirmed. First, the Court found that Brown’s attacks on the admissibility or competency of the Bank’s summary judgment evidence were largely inadequately briefed. Second, the Court rejected Brown’s argument that the trial judge erred by denying Brown a continuance of the summary judgment hearing because (1) Brown’s motion for continuance did not mention the summary-judgment hearing, (2) Brown failed to preserve error because there was no ruling on his motion, and (3) Brown failed to submit evidence demonstrating the materiality of the purportedly previously unavailable summary-judgment evidence. Finally, the Court held that Brown failed to show reversible error due to the clerk’s late filing of the record on appeal.
Monthly Archives: November 2013
No Governmental Immunity For Charter Schools Under Texas Whistleblower Protection Act
November 27, 2013Kimberly Ball-Lowder brought suit against Pegasus for wrongful discharge under the Texas Whistleblower Protection Act. Pegasus filed a plea to the jurisdiction, asserting that Ball-Lowder’s claims must be dismissed because the Whistleblower Protection Act is not applicable to a Texas open-enrollment charter school. The Court held that the Act applies to an open-enrollment charter school, and affirmed the trial court’s order denying the plea to the jurisdiction. Government immunity is waived for a “local government entity” respecting claims under the Act. The Court concluded that the Whistleblower Protection Act’s definition of “local government entity” must be interpreted to include an open-enrollment charter school to be consistent with the Texas Supreme Court’s decision in LTTS Charter School, Inc. v. C2 Construction III, 342 S.W.3d 73 (Tex. 2011).
In a rare en banc opinion, the Court of Appeals has clarified the standards for asserting a no-evidence motion for summary judgment. The owners of Gloria’s restaurants sued one of their long-time managers and his business partner after the manager left to start a new restaurant, Mario Sabino’s. The new restaurant served similar food, and Gloria’s claimed that the defendants had misappropriated trade secret recipes and tortiously interfered by recruiting Gloria’s employees. The defendants filed a motion for summary judgment that asserted Gloria’s had no evidence of “one or more” of the elements of Gloria’s claims. The motion listed all the elements of each of the claims, but failed to specifically identify which of those elements were being challenged. Gloria’s therefore attempted to respond with evidence of each element of its entire case, but the trial court granted the defendants’ motion on all claims.
The majority opinion rejected that shotgun approach to summary judgment practice. Rule 166a(i) and its supporting comments require the movant to specifically state which elements of a claim are being challenged, and the defendants’ invocation of “one or more” of the elements of Gloria’s case failed to meet that threshold. The Court declined to interpret “one or more” as meaning “each and every,” as the defendants argued on appeal. The Court also stressed that a no-evidence motion is intended to assess the proof of an element that the movant believes in good faith to be unsupported by evidence. In seeking to challenge every aspect of Gloria’s claims, the defendants sidestepped the specificity requirement of Rule 166a(i) and improperly forced Gloria’s to prove up its entire case.
The majority also rejected the defendants’ argument that Gloria’s had waived its complaint by responding to the motion in its entirety, following a line of cases that permit a party to challenge the legal sufficiency of a summary judgment motion for the first time on appeal. Justice Evans O’Neill dissented based on that waiver point, arguing that the motion met the “fair notice” pleading standard, that Gloria’s attempt to meet all the elements of its case demonstrated it understood what was being challenged, and that Gloria’s should have objected or specially excepted to the motion in order to raise the issue and preserve it for appeal.
Jose Fuentes Co., Inc. v. Alfaro, No. 05-11-00228-CV (majority)
The Shops at Legacy filed suit against Fine Autographs & Memorabilia for breach of their lease agreement. On the day of trial, TSAL filed a motion for continuance, which was denied. Fine Autographs then filed a motion for sanctions based on alleged discovery abuse by TSAL, apparently relating to its failure to produce copies of checks and a document related to the lease. The trial court granted the motion and dismissed TSAL’s claim with prejudice as a “death penalty” sanction. Although the court’s order recited that it had considered, and rejected, the possibility of lesser sanctions, nothing in the record of the sanctions hearing actually demonstrated the consideration of lesser sanctions. Because a court must consider the availability of lesser sanctions before dismissing a party’s case, the Court of Appeals reversed and remanded the case for further proceedings.
The Shops at Legacy (Inland) L.P. v. Fine Autographs & Memorabilia Retail Stores, Inc., No. 05-12-00864-CV
Benica Brown’s former employer, Digital Intelligence Systems (“DIS”) sued her in Dallas county, where she was employed in DIS’s Dallas office, even though Brown’s employment agreement with DIS (which DIS drafted) specified Virginia as the exclusive forum to resolve any disputes between the parties. The Court conditionally granted mandamus relief, holding that the trial court abused its discretion when it refused to dismiss the action based on the forum selection clause in the employment agreement. The Court specifically rejected DIS’s argument that Virginia would be an inconvenient forum because DIS “certainly could have foreseen that it would be required to litigate against Brown in Virginia, especially given that it drafted the employment agreement containing that requirement and required Brown to sign it.”
Last year, the Dallas Court of Appeals held that a plaintiff had properly alleged a waiver of sovereign immunity for a government body’s use or condition of tangible personal property, based on the allegation that an improperly secured whiteboard had fallen on the plaintiff. Dallas Metrocare Services v. Juarez, ___ S.W.3d ___ (Tex. App.–Dallas 2012). The Texas Supreme Court has now reversed that decision, citing its more recent decision in Rusk State Hospital v. Black, 392 S.W.3d 88 (Tex. 2012), for the proposition that the Court of Appeals should have considered Metrocare’s argument on appeal — not raised before the trial court — that the injury did not arise from the “condition” of the property. The Supreme Court also held that there was no waiver of immunity by Metrocare’s “use” of the whiteboard, since it had simply made the board available for use by patients. The case will now be remanded to the Court of Appeals for further consideration.
Dallas Metrocare Services v. Juarez, No. 12-0685
The Texas Supreme Court has also granted the petition for review in another case from the Dallas Court of Appeals. In Ponderosa Pine Energy, LLC v. Tenaska Energy, Inc., 376 S.W.3d 358 (Tex. App.–Dallas 2012, pet. granted), the Court of Appeals reinstated a $125 million arbitration award that had been vacated by the trial court. The Court of Appeals concluded that the defendant had waived its ability to challenge the “evident partiality” of one of the arbitrators by failing to investigate the arbitrator’s disclosures until after the panel had made its award. Oral argument at the Supreme Court has been set for January 7.
Readers of the blog will probably be familiar with our “Waive Goodbye” series of posts on the Dallas Court of Appeals’ recent line of cases holding that borrowers and guarantors can contractually waive their statutory right to offset any deficiency if foreclosed property is sold for less than its fair market value. The Texas Supreme Court has now granted the petition for review in the first of those cases, Interstate 35/Chisam Road L.P. v. Moayedi, 377 S.W.3d 791 (Tex. App.–Dallas 2012, pet. granted). Oral argument has been set for January 8, and we will continue to keep our eyes on the issue.
The Court of Appeals has issued a lengthy opinion in a breach of contract case. Defendant Richard Berryman and his company, Berryman South Fork, claimed that J. Baxter Brinkmann International Corp. had constructively terminated the contract and owed them $160,000 in unreimbursed expenses. JBBI got to the courthouse first, however, and claimed that Berryman had breached the contract by failing to continue his performance. The trial court granted summary judgment in favor of JBBI and awarded it more than $500,000 in damages, attorney fees, and interest.
Among many other issues, the Court of Appeals held that JBBI could not recover approximately $290,000 in breach of contract damages for payments it made to Berryman during the months following his attempted repudiation of the contract. That holding flows from the 88-year-old case of Osage Oil & Ref. Co. v. Lee Farm Oil Co., 230 S.W.2d 518 (Tex. Civ. App.–Amarillo 1921, writ ref’d). In that case, the court held that when a party is served with notice that the other party is repudiating their contract, the first party cannot continue to perform it and thereby increase the damages to which it would otherwise be entitled. However, that principle apparently does not extend beyond the breach of contract claim, as the Court’s opinion affirmed JBBI’s award of even greater damages for money had and received. The opinion also includes multiple discussions regarding the preservation of issues for appeal, including through pleadings, evidentiary objections, and briefing on appeal.
Berryman’s South Fork, Inc. v. J. Baxter Brinkmann Int’l Corp., No. 05-12-00492-CV
Innovate Technologies LP entered into a contract with another information technology firm, Youngsoft, Inc., to provide IT services on a project for one of Innovate’s clients. The job did not go well. Youngsoft sued Innovate for nonpayment, and Innovate counterclaimed for breach of warranty and breach of contract. The trial court granted summary judgment and directed verdict against Innovate’s counterclaims, based on a limitation of liability clause that provided Youngsoft “shall not be liable for any incidental, ancillary, direct, indirect, special or consequential damages, including but not limited to lost profits, whether in tort or contract, and based on any theory of liability.” Elsewhere in the contract, however, Youngsoft expressly agreed to indemnify Innovate from “all claims, damages and judgments . . . arising out of or relating to any breach of this Agreement.” The Court of Appeals reconciled those apparently conflicting provisions — which threatened to render the entire agreement illusory and unenforceable — by agreeing with Innovate that the limitation of liability clause applied to claims brought against Youngsoft by third parties, not to claims brought by its counter-party, Innovate. The Court therefore reversed the trial court’s rulings and remanded the case for a new trial.
Innovate Tech. Solutions, L.P. v. Youngsoft, Inc., No. 05-12-00658-CV
As the Court held in a similar case two weeks ago, the recitals in a trustee’s deed fall into an exception to the hearsay rule and should be admitted into evidence because the recitals are “relevant to the purpose of the document.”
Although the contract at issue in this breach of contract matter included an arbitration provision, the defendant went ahead and actively litigated the case by, among other things, filing a motion for summary judgment, propounding affirmative discovery, deposing expert witnesses and attending mediation. Then, after 19 months of active litigation (and 4 months before trial), the defendant invoked the arbitration provision in the agreement and moved to compel arbitration. The Court found that the defendant had waived arbitration by substantially invoking the judicial process.
Pattie and Warren Gilbert were married in 1959. During the course of the marriage, Pattie inherited investment assets from her parents and uncle, and in 1993 she rolled those assets into a trust for the benefit of the couple’s daughter. The following year, Pattie and Warren entered into a post-nuptial agreement that defined their separate and community property, including Pattie’s separate interest in the trust assets. Shortly thereafter, Beal Bank obtained a judgment against Warren for default on a note. In 2008, the bank sued Pattie and Warren, seeking to set aside the transfer of Pattie’s inherited assets to their daughter’s trust as a fraudulent transfer. The parties filed cross-motions for summary judgment, and the trial court ruled in favor of the Gilberts. The Court of Appeals affirmed.
Property acquired during the course of a marriage is presumed to be community property, and the bank sought to take advantage of that presumption in collecting on its judgment against Warren. In this case, however, the undisputed evidence established that Pattie had inherited the assets in the trust, and that made them her separate property. The Court of Appeals also rejected the bank’s argument that interest and dividends on those assets were community property that became commingled with the separate property in the trust account. The earnings from Pattie’s separate property might have been community property, but they were “sole management” community property, and that meant they were not subject to any non-tortious liability of her spouse. Because the bank was only a creditor of Warren, and not Patttie, her transfer of those assets to the trust was not a fraudulent transfer as to the bank.
Beal Bank v. Gilbert, No. 05-12-00692-CV
Donald and Ida Mae Card owned the headstone that once marked the grave of Lee Harvey Oswald. During the 1980s, the Cards gave the headstone to Ida Mae’s sister and brother-in-law for safekeeping. The Cards, in turn, gave the marker to their son, Johnny Ragan. Donald and Ida Mae died, and ownership of the Oswald gravestone passed to their children, who demanded it back from the Ragans. As it turns out, the Ragans had sold it to an Illinois resident, Wayne Lensing, who had arranged for its exhibition at a museum in Illinois. The Card children sued to get the headstone back. Lensing filed a special appearance challenging the court’s personal jurisdiction. The Court found that the plaintiffs had sufficiently alleged jurisdiction because they established that Lensing had committed several relevant acts in Texas, including flying to Fort Worth to take possession of the headstone. Accordingly, the Court upheld the trial court’s finding of personal jurisdiction.
In this forcible detainer case, the defendant objected to the entry into evidence of the deed at issue. While stipulating to the deed’s existence, the defendant argued that the court should exclude the deed’s recitals because they were hearsay. The Court of Appeals rejected this argument and pointed to Texas Rule of Evidence 803(15), which provides a hearsay exception to “a document purporting to establish or affect an interest in property.” Because the Court found that the recitals were “germane to the purpose of the document,” it affirmed the trial court’s decision to admit the deed in its entirety.
The court of appeals conditionally granted mandamus relief after the trial court issued a TRO preventing relators from terminating Greg Marquez’s employment. The TRO stated that Marquez’s injury was irreparably because the loss of his job would result in the loss of health insurance benefits for him and his family, and that he would be unable to obtain medical treatment. The Court of Appeals held that Marquez’s injury was not irreparable because the cost of medical treatment is compensable through monetary damages. Consequently, the trial court abused its discretion by granting the TRO.
In re Southern Foods Group, LLC
The Court subsequently withdrew its opinion and vacated its order in In re Southern Foods Groups. The Court found that because the trial court had orally denied the real party in interest’s request for a temporary injunction, the issues relating to the TRO were moot.
Among other claims, the Olmsteads sued the Goldmans for breach of contract to purchase residential real estate. The trial court rendered judgment in favor of the Olmsteads and awarded them damages and attorney fees; the Goldmans appealed. The Court of Appeals partially reversed, holding that the Olmsteads take nothing on their claims and remanded the issue of attorneys’ fees. The Court found that the trial court erred by awarding the Olmsteads damages based on the carrying costs of the house after the Goldmans breached the contract until the house was sold. The proper measure of damages was the difference between the contract price and the market value of the house on the date the Goldmans breached the contract, which was zero. The court reasoned that non-breaching sellers should not be awarded the post breach costs of ownership because it could “incent the seller to hold the property indefinitely while waiting for market conditions to change, or for a purchaser willing to pay a specific price.”
Unaware that the law prohibited the creation of a professional association between doctors and non-doctors, the plaintiff, Andrew Small (a medical doctor) formed a joint practice with the Parker brothers (two chiropractors). The association operated for several years, but ended in 2003. After the relationship ended, Small sought to establish that he should have been paid more under the the entity’s articles or association, so he brought suit. The Court of Appeals, however, rejected Small’s claim because, under Texas law, it is illegal for a doctor to jointly own a professional association with non-doctors. Accordingly, the Court voided the contract on the ground that “a contract to do a thing which cannot be performed without violation of the law is void.”
