The Court of Appeals has reversed a trial court’s judgment awarding approximately $46,000 in attorney fees in a denial of coverage dispute. The case was brought by a homebuyer who sued his builders for a number of defects.  The buyer obtained a judgment against the builders in arbitration. The builders had tendered the buyer’s claim to their insurer, Oklahoma Surety Co., but OSC denied coverage for both the defense of the case and ultimate liability. After arbitration, the builders assigned their coverage claim to the buyer, who then sued OSC for the builders’ defense costs and for indemnification under the policy. The trial court ruled that OSC had a duty to the defend the case, but had no duty to indemnify for damages. The Court of Appeals disagreed, holding that an exclusion for property damage to “your work” applied under the “eight corners” rule, thereby barring both coverage and the duty to defend.

Oklahoma Surety Co. v. Novielo, No. 05-13-01546-CV

In this memorandum opinion on an attempt to satisfy a judgment, the Court of Appeals held that the judgment creditor could obtain the income paid to appellant, an attorney, by his law firm pursuant to a turnover order issued by the trial court.  Although the appellant argued that this income was “exempt” under the relevant statute because he essentially acted as an independent contractor, the Court rejected this argument given that the appellant failed to offer any evidence concerning right of control.

Karlseng v. Wells Fargo, N.A.

The Dallas Court of Appeals has affirmed a trial court’s award of $3.1 million in attorney fees following the settlement of a shareholder derivative suit against J.C. Penney. The settlement required J.C. Penney to stop guaranteeing the unvested incentive equity awards of certain officers, which the plaintiffs’ evidence showed to be worth $62 million over the four years covered by the settlement. The settlement agreement permitted the plaintiffs to apply for a fee award to “compensate Plaintiff’s Counsel for the results achieved in the Action and the risks of undertaking the prosecution of the Action on a contingent basis.” Although plaintiffs’ evidence showed that the lodestar fee for the case would have been $558,123.50, the Court held that the specific language of the parties’ agreement justified a departure from the lodestar. The Court further held that the $3.1 million award was reasonable because it represented 5% of the monetary value of the settlement, citing a number of shareholder derivative cases that also approved fee awards based on a percentage of the settlement value.

J.C. Penney Co., Inc. v. Ozenne, No. 05-13-01601-CV

In this car accident case, the defendant moved for summary judgment on statute of limitations grounds.  While the plaintiff claimed that a typo in the original petition precluded the process server from locating the defendant before the limitations period expired, the Court of Appeals found that the plaintiff had no explanation for the delay in serving the defendant because the defendant’s correct address, telephone number, driver’s license number, and license plane number were available in the police report describing the accident that is the basis for the lawsuit.

Quezada v. Fulton

In this breach of contract claim, the defendant answered the petition with a general denial, but then failed to show up at trial.  During the subsequent “prove-up” hearing, the plaintiff offered as its only evidence the contract between the parties.  Based on this evidence alone, the trial court entered judgment and awarded the plaintiff $55,000 in damages.  On appeal, the Court held that the award of damages was improper because the plaintiff did not offer proof of each element of her claim, including damages.

Correa v. Salas

The Relator in this mandamus action sought to avoid his obligation to respond to post-judgment discovery requests.  He argued that the trial court abused its discretion in ordering him to respond because he did not receive notice of the trial date and therefore the judgment against him was void.

The Dallas Court of Appeals denied his mandamus petition because procedurally the Relator did not follow the correct steps to challenge the validity of the underlying judgment.  The Court noted that if indeed the Relator did not have notice of the trial setting, the judgment may be voidable.  But the proper procedural path to challenging the judgment was for Relator to file a bill of review in the trial court to set aside the judgment (as it had become final and was no longer appealable).  Then, if the Relator wanted to avoid enforcement of the judgment pending a decision on the bill of review, he could petition the trial court to enjoin its enforcement.

In this case, the Court noted that until it was set aside, the judgment was valid and therefore the trial court did not abuse its discretion in allowing the plaintiff’s post-judgment discovery.  Moreover, because Relator could seek to set aside the judgment and enjoin its enforcement in the trial court, mandamus relief was not appropriate.

In re Lowery

For the last six years or so, the sublessor of a property in Irving has been seeking compensation for loss of the leasehold after it was sold to the state in lieu of condemnation for a highway project. In 2011, the Court of Appeals affirmed the dismissal of the lessor’s claim against the state on jurisdictional grounds. The lessor then sued the former owner of the property, claiming breach of the lease agreement by accepting the state’s offer instead of pursuing the matter in a special commissioners’ hearing. In 2013, the Court reversed summary judgment for the owner and remanded to the trial court, holding that the lessor was not collaterally estopped by its loss of the case against the state. But the third time is not the charm, as the Court of Appeals today affirmed summary judgment in favor of the former owner, holding that the lease only requires payment to the lessor in the event of a “condemnation proceeding,” and the private sale in lieu of condemnation was not such a proceeding.

Continental Foods, Inc. v. Rossmore Enters., No. 05-14-00244-CV

Previously: Inverse Condemnation Action Is No Bar to Recovery for Breach of Contract (March 5, 2013)

In 2013, the Dallas Court of Appeals held that “viatical settlements” — basically, interests in life insurance policies purchased and then resold by Life Partners, Inc. — were securities subject to the Texas Securities Act. Given that the opinion expressly rejected a contrary holding from the Waco Court of Appeals, we predicted that this would be a good candidate for review by the Texas Supreme Court. And in fact, that court granted the petition for review today, consolidating the case for oral argument with another Life Partners case out of the Austin Court of Appeals. The argument has been set for January 15, and we will keep you posted when an opinion is issued.

Previously: Viatical Settlements Are Securities (Aug. 29, 2013)

Several months before the decedent died, he had his attorney prepare an amendment to a trust he had created that would have increased the distributions to his two children.  The attorney drafted the amendment, but the decedent never signed it.  Acting in their capacity as personal representatives for their father’s estate, the children sued the attorney for negligence.  The attorney moved for summary judgment, which the trial court granted based on its finding that the attorney owed no duty to them.

The children appealed, and the Dallas Court of Appeals affirmed, holding that “an attorney owes a duty of care only to his or her client, not to third parties who may have been damaged by the attorney’s negligent representation of the client.”

Donaldson v. Mincey

The Court of Appeals has dissolved a temporary injunction that would have prevented a court in Bastrop County from continuing to oversee a homeowner’s insurance appraisal process. James and Patricia Barrentines’ home in Bastrop was damaged by one the wildfires that plagued that area in 2011. Their insurer, Safeco, demanded an appraisal of the loss, and both parties appointed their own appraisers pursuant to the policy. When the two party-appointed appraisers were unable to agree on an umpire, Safeco went to court in Bastrop County to have one appointed. The court-appointed umpire issued an appraisal favorable to the homeowners, but the Bastrop County court then appointed a different umpire. The Barrentines then refiled in Dallas and obtained a temporary injunction forbidding any reappraisal. The Dallas Court of Appeals reversed that ruling, holding that it disturbed — rather than preserved — the status quo by interfering with the Bastrop County court’s authority to conduct the appraisal under the insurance contract.

Safeco Lloyds Ins. Co. v. Barrentine, No. 05-13-01011

In this memorandum opinion, the Court of Appeals affirmed the trial court’s dismissal of the plaintiff’s breach of contract claim.  According to the Court, the plaintiff failed to present evidence that the defendant breached the contract at issue and thus affirmed the trial court’s decision to grant defendant’s no evidence motion for summary judgment.

Alonso v. Alliance AFT

In this restricted appeal, the plaintiff carried out service on the defendant, a bank with a registered agent in New York, solely though service of process upon the Texas Secretary of State.  On appeal, the Court agreed with the defendant that such service was improper because the plaintiff failed to strictly comply with CPRC 17.028, which permits service upon a financial institution by service to “the president or a branch manager at any office located in the state.”

Bank of N.Y. Mellon v. Redbud 115 Land Tr.

Chandler Management sued First Specialty Insurance after the insurer denied coverage of a claim for wind and hail damage at a Dallas apartment complex managed by Chandler. The insurer moved to dismiss based on a forum selection clause in the policy that provided for exclusive jurisdiction in New York. The Dallas Court of Appeals affirmed the trial court’s dismissal order, without prejudice to refiling in New York. The Court found no error in the trial court’s decision to dismiss the claims against two additional defendants because they had expressly agreed to the insurer’s motion and because the claims against them were also based on the insurance contract. The insurer also established that the policy was procured through a licensed agent, which allowed First Specialty to issue surplus lines insurance in Texas (and therefore allowed it to enforce the contract against its insured). The Court shrugged off a number of claimed failures of the policy under the Insurance Code, holding that noncompliance with those provisions did not affect enforcement of the contract because nothing showed that they were “material and intentional” violations. Finally, the Court rejected Chandler’s arguments that the forum selection clause was overreaching and against public policy.

Chandler Mgmt. Corp. v. First Specialty Ins. Corp., No. 05-13-01044-CV

In this breach of contract suit, the parties disputed the meaning of “sale” in a real estate brokerage contract.  The City of Dallas purchased a portion of the Premises for a public drainage project, but it was disputed whether the City would have taken steps to exercise its power of eminent domain if it had not purchased the Premises.  The Court concluded that the language of the contract was clear in its definition of “Sale,” and that the City did not compel the transfer of the land.  Thus, the broker was entitled to the fee under the contract.

TFO Realty, LLC v. Smith

In a dispute between former business partners, the plaintiff sued the defendant for breach of contract, alleging that the defendant first agreed to reimburse him for certain expenses totaling $75,000, and then, second, when he refused to pay, promised the plaintiff that he would give him a check for $75,000 instead.  The jury found that the defendant breached both contracts and awarded the plaintiff $75,000 for each breach (for a total of $150,000).  Because that amounted to a double recovery, the Dallas Court of Appeals reversed and limited the plaintiff to one recovery of $75,000 for breach of contract.

Kim v. Pak

Legacy Hillcrest Investments is seeking to develop a pair of lots just west of the SMU law School and north of of a single family district. After a series of proposals and counterproposals, Legacy sought a permit for to build a three-story parking garage. The community development staff approved the application, but the Board of Adjustment denied it. That led Legacy to file for a writ of mandamus, which the district court granted. The Dallas Court of Appeals reversed. The city’s zoning ordinance provided that only surface parking lots could be located “adjacent to” a single-family district. The Court held that the ordinance prohibited a parking garage because Legacy’s lots were across the street from the single-family district, making them “adjacent” to one another under the plain meaning of the term.

Bd. of Adjustment v. Legacy Hillcrest Invests., LP, No. 05-13-01128-CV

A memorandum opinion provides a short lesson in the nature of equitable remedies. Monterey Mushrooms sued Majestic Realty Co. and McLane Foodservice after one of Monterey’s employees slipped and fell on ice located on their property, causing Monterey to pay the worker through its ERISA injury benefits plan. Monterey sued the defendants for equitable subrogation, unjust enrichment, and money had and received. The Dallas Court of Appeals affirmed no-evidence summary judgment for the defendants. Although Monterey had evidence supporting an equitable right of subrogation, that subrogation claim only put it in the shoes of its injured worker, and there was no evidence that he would have a claim against the defendants. The Court distinguished between haveing a right of subrogation and having the ability to recover under that right. Monterey’s unjust enrichment claim failed because there was no evidence that the defendants received any benefit from Monterey’s payment of its injured worker’s benefits. Nor was there a claim for money had and received because there was no evidence teh defendants received any money or benefits belonging to Monterey.

Monterey Mushrooms, Inc. v. Majestic Realty Co., No. 05-13-01015-CV

Sky Capital, a single-asset entity, ordered a private jet from Bombardier for a (presumably) wealthy Russian man named Iouri Chliaifchtein.  Unhappy with the jet Bombardier delivered, Sky Capital sued Bombardier for, among other things, breach of the delivery contract.  The case went to trial and the jury returned a defense verdict in favor of Bombardier.

Sky Capital appealed, arguing that the evidence was legally and factually insufficient to support the jury’s verdict because Bombardier clearly breached part of the delivery contract.  On appeal, the Court noted that the jury was instructed that to find a breach, it must be material.  Although, as the Court recognized, materiality instructions are generally presented in the context of when a party is excused from performing under a contract based on the other party’s breach, Sky Capital did not challenge the instruction itself.  Consequently, the Court upheld the verdict on the basis that although Bombardier did breach the delivery contract, the evidence was sufficient to support the jury’s finding that it was not material.

Attorney Baltasar Cruz sued for libel against the operators of the Burnt Orange Report, which published a statement that Cruz had been “thrown out three times, finally by the police, of an Elizabeth Edwards book signing event in Dallas several years ago.” The defendants moved to dismiss on anti-SLAPP grounds. The trial court granted the motion and awarded the defendants their attorney fees. The Court of Appeals affirmed the dismissal of the case, but reversed on the award of attorney fees.

Cruz raised a remarkable 121 issues for appellate review, taking up 25 pages of non-word count briefing. The Court of Appeals did not find that lack of conciseness persuasive — see Tex. R. App. P. 38.1(f) — nor did it care for the absence of headings, divisions, or groupings in the brief’s 69 pages of argument. The Court also noted that the brief lacked legal authority and failed to identify the evidentiary objections Cruz was seeking to vindicate on appeal. As a result, the Court deemed many of Cruz’s “multifarious” issues to be waived. On the merits of the anti-SLAPP motion, the Court quickly disposed of Cruz’s claim that the statement was not a “matter of public concern” because he was a candidate for judicial office at the time the blog post was published and a candidate’s character is relevant to his qualification for public office. Cruz also could not establish that the statement was published with malice just because the defendants had not been present at the book signing incident, while the defendants averred they had relied on several sources for their account.

However, the Court of Appeals vacated an award of $158,521.50 in attorney fees to one group of defendants because they had not actually “incurred” those fees. Since their attorneys had taken the case pro bono, the clients were not personally responsible for payment of the claimed fees. However, the Court sustained a separate fee award of $31,783.75 to another defendant, holding that there was evidence showing that party was personally liable for those fees.

Cruz v. Van Sickle, No. 05-13000191-CV

After Ricky Holland suffered injuries from taking medication, he convinced a law firm to bring a lawsuit on his behalf against the drug manufacturer.  That lawsuit went nowhere, and actually led to the law firm suing the Hollands for fraudulently inducing them to take his case. The Hollands countersued, bringing a claim for intentional infliction of emotional distress based on the lawsuit the law firm filed against them.

The trial court dismissed the Hollands’ IIED claim because it was inapplicable in light of the other claims they had pleaded.  On appeal, the Court of Appeals reversed the trial court because plaintiffs are permitted to plead claims in the alternative.  The Court also refused to consider the law firm’s additional argument that the claim fails because it was based on statements made in its lawsuit and thus protected by an absolute privilege.

Following up on an opinion issued last month that ruled an interlocutory appeal from the denial of a special appearance was frivolous, the Court of Appeals has now awarded the appellee sanctions of $9,650 in attorney fees and $191.25 in expenses as damages from the frivolous appeal. The Court shaved off $2,325 from the appellee’s fee application because some of her attorney’s billing entries either did not relate to the appeal or consisted of block billing that contained a mix of appellate and non-appellate activities.

Estate of Ardyce Deuel-Nash, Deceased (II), No 05-14-00128-CV

An overly-complicated series of transactions led to a dispute over who had valid title to a residential property at 2701 Wickham Court in Plano. The case turned on which of two competing deeds — one filed by the corporation of Quang Dangtran and the second filed by another company that took its deed from his ex-wife, Tuyet Anh Le — was effective. The Court of Appeals affirmed in part and reversed in part. The Court agreed with the trial court’s summary judgment ruling that Dangtran’s deed was not properly acknowledged because it failed to identify the state where the corporate entity was incorporated (see Tex. Civ. Prac. & Rem. Code 121.008(b)(4)). However, the Court also held that there was a genuine issue of material fact whether the second claimant took the deed from Le with notice of her ex-husband’s claim, which would negate her transferee’s status as a bona fide purchaser. Because Dangtran was in unequivocal possession of the property at the time of the second transaction, and because Dangtran was not a member of Le’s family at that time, summary judgment could not be sustained on the second claimant’s bona fide purchaser defense.

Whoa USA, Inc. v. Regan Props., LLC, No.05-13-01412-CV