The Texas Citizens Participation Act continues to be a fruitful source of appellate activity. In this instance, the Court of Appeals has reversed the trial court’s order denying a motion to dismiss in a case arising out of a bad review on Angie’s List. Barbara Young hired Perennial Properties to construct an outdoor living space at her home, but Young claimed that Perennial failed to perform its work as required. McKinney Lumber Company then filed a lien against Young’s property for $9,779 in lumber that Perennial had failed to pay for. After the lumber company sued everyone involved, Young wrote up her experience in an online review, giving Perennial an overall grade of “F” and describing Perennial’s owners as incompetent crooks. Those owners then intervened in the lawsuit in order to sue Young and her attorney for defamation and intentional infliction of emotional distress.

The Court of Appeals first held that Young had met her initial burden of showing that the online review was an exercise of her right to free speech because it was a communication made to the public in connection with a good, product, or service. That brought it within the scope of the TCPA and shifted the burden to Perennial’s owners to establish by clear and specific evidence a prima facie case for each element of their claims. That they failed to do, according to the Court of Appeals. The defamation claim failed because the owners had not provided any evidence that the allegedly false statements were defamatory (as opposed to non-actionable opinions) or that Young had been negligent in making them. The intentional infliction of emotional distress claim failed because that cause of action is only a “gap-filler” tort, and there were no different or distinguishing facts from the defamation claim to permit it to proceed separately. The Court of Appeals therefore dismissed both claims and remanded the case for further proceedings under the TCPA, presumably to consider an award of attorney fees to Young.

Young v. Krantz, No. 05-13-00853-CV

This negligence lawsuit arises from a prior medical malpractice lawsuit in which Darwin Flores sued his doctor for causing him to suffer monocular vision.  This doctor hired appellees, an investigative firm, to surreptitiously record Flores to show the true extent of his injury.  On the videotape, the defendants mistakenly included video of a man rollerblading (who they determined was not Flores), and informed the doctor’s counsel that it was in fact not the plaintiff.  Flores lost his malpractice trial (though it’s unclear whether the rollerblading videotape was played or had anything to do with the loss).  Nevertheless, he followed up by suing the investigators for creating a “misleading perception” of him.  He is seeking $1 billion dollars in damages.

On appeal, the Court rejected Flores’ argument that a “private detective who conducts surveillance on an adversary owes his adversary a duty to refrain from circulating work product that the private detective knows can be used as fake evidence.”  Instead, the Court pointed out the undisputed fact that there was no relationship between appellees and Flores, let alone one that would impose a duty of care.

Flores v. Intelligence Servs. of Tex., Inc.

In this breach of contract case, the defendant corporation filed an answer pro se. Because corporations must be represented by an attorney, the trial court entered an order giving the defendant notice that its pleading would be struck if it did not file a proper answer within 30 days. After it failed to do so, the plaintiffs moved to strike the pro se pleading and also filed a motion for default judgment. The trial court granted both motions, entering a default judgment in plaintiffs’ favor that included $78,000 in actual damages and over $10,000 in attorneys’ fees.

On appeal, the defendant argued that the trial court erred in striking its answer and entering a default judgment. The Court of Appeals rejected the defendant’s argument that the trial court’s action was overly harsh, but it agreed with the defendant that there was insufficient evidence in the record to enter the default judgment. The Court noted that, even if the facts in the plaintiffs’ petition were accepted as true, they had “failed to establish a breach of contract claim” against the defendant. Because the plaintiffs had not alleged sufficient facts to establish their claim, the Court set aside the default judgment and remanded the case back to the trial court.

GQ Enters. Corp. v. Rajani, No. 05-12-01353-CV

If “blogger” sounds like an unusual pastime for the son of an oil-and-gas billionaire, this colorful case may be the one for you. T. Boone Pickens and several of his children sued Michael Pickens. Michael is T. Boone’s son and a recovering drug addict who has chronicled his life and his recovery in his blog, “5 Days in Connecticut” (which is now closed to uninvited readers). The blog has not been very kind to the other members of Michael’s family, which led them to sue for invasion of privacy, defamation, and intentional infliction of emotional distress. Michael moved to dismiss based on the Texas Citizens Participation Act, our version of the “anti-SLAPP” laws that have been enacted around the country in recent years. The trial court denied the motion to dismiss, and the Court of Appeals affirmed, holding that Michael’s statements about his life and his family did not qualify for protection under the TCPA because they were not “made in connection with a matter of public concern.”  Tex. Civ. Prac. & Rem. Code § 27.001(3).

Although the TCPA defines “public concern” to include statements relating to “a public figure,” the Court drew a distinction between general-purpose public figures and limited-purpose public figures. To qualify as a matter of public concern under the TCPA, the speech must either relate to a general-purpose public figure (whose entire life is followed by the public) or a limited-purpose public figure (who is only followed at times, or on certain topics). If it is a limited-purpose public figure, then the defendant’s speech only qualifies as a matter of public concern if the statements relate to the subject matter that makes the person a limited-purpose public figure. Here, the Court concluded that Michael’s evidence was insufficient to show that T. Boone was a public figure for all purposes, and that he was only a public figure for the limited purpose of his opinions and activities in the energy industry. Because Michael’s statements related to T. Boone’s family life, and not the energy industry, they did not qualify as matter of public interest under the TCPA, and therefore Michael’s motion to dismiss had to be denied.

Pickens v. Cordia, No. 05-13-00780-CV

Two years ago, the Court of Appeals reinstated a $125 million arbitration award that the trial court had set aside on the basis of evident partiality, after one of the three arbitrators failed to disclose the full extent of his ties to the claimant’s attorneys.  Our report on that decision is here: A Bonanza for Ponderosa. After this morning’s orders from the Texas Supreme Court, that bonanza is no more. That court has reversed the Court of Appeals’ judgment, reinstated the trial court’s order vacating the arbitration award, and will permit the case to once again be arbitrated before a new panel.

Tenaska Energy, Inc. v. Ponderosa Pine Energy, LLC, No. 12-0789

The Dallas Court of Appeals continues to be a hard place for borrowers and guarantors to claim the statutory right to offset deficiencies when collateral is sold in foreclosure for less than its fair market value. In this instance, the bank sued the guarantor of a $9.5 million loan. After the apartment complex that secured the debt was sold in foreclosure for only $4 million, the bank sought to recover the deficiency. The guarantor argued that the bank should only be permitted to recover the difference between the balance of the loan and the fair market value of the property, not the price realized in the foreclosure sale. See Tex. Prop. Code  § 51.003(c). The trial court granted summary judgment for the bank, and the Court of Appeals affirmed. Although the opinion does not cite to the Moayedi case that started off this line of decisions (and that is currently pending before the Texas Supreme Court after oral argument in January), the Court once again held that the parties’ contract validly waived the guarantor’s right to offset. In this particular agreement, the waiver clause referred to “any and all rights or defenses based on suretyship or impairment of collateral” and “any claim of setoff.”  Both clauses, the Court held, were sufficient to waive the statutory offset rights.

Nussbaum v. OneWest Bank, FSB, No. 05-13-00081-CV

In this insurance dispute, the United States Youth Soccer Association (“USYSA”) sought coverage form its liability insurer for claims filed against it by the National Association of Competitive Soccer Clubs (“NACSC”).  The NACSC alleged that USYSA had violated the bylaws of the governing board for soccer in the United States, the USSF, by discriminating against certain youth soccer players who want to play for both organizations.  The Court upheld the insurers denial of coverage based on the policy exclusion that precludes coverage for claims based on a breach of contract.  Employing the “eight corners” rule, the Court found that the allegations in the underlying lawsuit relate to breaches of the USSF bylaws, policies rules and regulations, which, in the Court’s view, constituted a breach of contract.

Arch Ins. Co. v. U.S. Youth Soccer Ass’n

Boardwalk Motor Cars sued Imagine Automotive Group over allegations that it had bribed Boardwalk employees to obtain used cars at preferential prices for resale, and that it had outright stolen some cars from Boardwalk’s dealerships. During discovery, Boardwalk successfully moved to compel the production of certain financial records, including canceled checks and documents supporting Imagine’s claim that it had paid for the allegedly stolen vehicles. That set off a lengthy series of sanctions motions and hearings. A week before trial, the court struck Imagine’s defenses for failing to produce some of those documents, and on the third day of trial it struck all of Imagine’s pleadings when Boardwalk informed the court of Imagine’s failure to produce still other documents. The jury awarded $269,950 in damages under the Theft Liability Act. The trial court then awarded Boardwalk $389,898 for its attorney fees under the Act, plus an additional $180,000 in sanctions against Imagine for the discovery abuse. The Court of Appeals affirmed.

The Court held that the trial court had not failed to consider the availability of lesser sanctions before imposing its death penalty sanctions. Among other things, the court had previously warned that noncompliance could result in dismissal, and the sanctions order stated that the judge had considered and rejected the less intrusive remedy of reopening discovery and continuing the trial. The trial court also did not err in refusing Imagine’s attempt to put on evidence disputing causation for Boardwalk’s claimed damages, as the striking of the pleadings meant that Imagine’s theft of the cars was an established fact. Imagine could have put on evidence that the cars were worth less than Boardwalk claimed, but could not dispute they had been stolen. The Court held that the sanctions were not excessive in light of Imagine’s multiple misrepresentations and acts of discovery abuse. Finally, the Court of Appeals rejected Imagine’s argument that Boardwalk should have been required to sub-segregate its attorney fees for the Theft Liability Act claim because that claim had shrunk during the course of the litigation from 256 allegedly stolen vehicles to only 11. The Court reasoned that segregation is only required between causes of action, not within a particular cause of action.

Imagine Automotive Group v. Boardwalk Motor Cars, No. 05-11-01119-CV

The plaintiff, a licensed real estate broker, sued the vice president of a real estate property management company for tortious interference based on the defendant’s involvement in the refusal to provide the plaintiff with a commission for a property he allegedly had the exclusive right to sell.  Because the promise to pay a commission was not in writing, however, the plaintiff was limited by statute to a “cause of action among brokers for interference with business relationships.”  The Court of Appeals found that the defendant was not a licensed real estate broker and that the plaintiff admitted that the defendant did not act as a broker.  Thus, the Court found that the plaintiff’s claim was barred under the Real Estate License Act and affirmed the trial court’s decision.

Murphy v. Williams

In this attorney malpractice case, a client sued his lawyer for malpractice and a number of other related causes of action.  The parties settled the case at mediation and signed a settlement agreement requiring the lawyer to sign an agreed judgment to secure payment of the settlement amount.  The client’s attorney prepared the agreed judgment and sent it to the lawyer’s attorney, but, after several attempts, never received a response.  As a result, the trial court re-opened the case (which had been dismissed due to the settlement), set it for a bench trial, and sent notice of the trial setting to both parties.

At the bench trial, neither the lawyer nor his attorney showed up, and the trial court awarded the client damages in an amount that was more than three times the amount of the settlement.  The lawyer then filed a motion for a new trial.  His attorney acknowledged, however, that he had received notice of the trial but ignored it because he thought that it was an “erroneous” notice since the case had settled.  The trial court found this excuse insufficient and denied the motion.  On appeal, the Court of Appeals agreed, and, although it reversed some of the damages awarded to the client, held that it was within the trial court’s discretion to conclude that the lawyer and his attorney “failed to appear for trial as the result of intentional conduct or conscious indifference.”

McLeod v. Gyr, No. CC-11-02708-B

The McGonagles bought property in Granbury, Texas subject to a dedication instrument involving the city’s historic district.  At closing, the McGonagles also purchased a title insurance policy.  The McGonagles later tried to resell the property, but couldn’t because  of the dedication instrument, so they sued the title insurance company, who had denied coverage.  The Court agreed with the title insurers, holding, among other things, that a dedication does not fall with the scope of title insurance coverage because it is not a tax, assessment or lien on real property.

McGonagle v. Stewart Title Guaranty Co.