In this action for negligent appraisal, the Court of Appeals found that the two-year statute of limitations for negligence actions had not been tolled by the discovery rule because the homebuyer knew, before closing, of information indicating the value of the property was much less than what he had offered to pay for it.  Specifically, the appraiser had indicated that the house was worth $295,000 (or $10,000 less than what the plaintiff had offered to pay for it).  More importantly, Zillow.com showed that the property was $100,000 less than what the buyer had offered.  Despite these two indications that should cause a reasonable person to investigate further, the plaintiff did not bring suit until three years later, when he had hired another appraiser to provide an estimate of the property’s value and found out that the property was, in fact, worth much less than he had paid.

Bruning v. Hollowell

The Court of Appeals has affirmed summary judgment for Albert G. Hill, Jr. in one part of the long-running legal battle initiated by his son, Albert G. Hill III. The trial court ordered the receiver for Hill 3 Investments, LLC to wind up the company and distribute its assets to Hill Jr. and Hill III. Among other items, the Court of Appeals rejected Hill III’s argument that his accountant’s declaration had demonstrated a fact dispute over the receiver’s calculation of the company’s capital accounts. No fact issue existed, the Court of Appeals held, because the accountant only noted that he could not verify the receiver’s calculation with the records available to him. That statement gave rise to “no more than a surmise or suspicion that the accounting might be different if additional documents were reviewed.”

Full disclosure: Our firm formerly represented Hill Jr., including in the case that originally resulted in the appointment of the receiver for Hill 3 Investments. We were not involved in the case at issue here, however.

Hill v. Hill, No. 05-13-00732-CV

Two years ago, the Dallas Court of Appeals ruled that PlainsCapital Bank was not entitled to judgment against a borrower because it based its deficiency claim on the price it obtained when the property was sold a year after foreclosure, rather than the fair market value of the property at the time it was foreclosed. Last summer, the Texas Supreme Court granted the bank’s petition for review and set the case for oral argument. This morning, the Supreme Court held that the Court of Appeals was correct in ruling that § 51.003 of the Texas Property Code controlled PlainsCapital’s deficiency claim. However, the Court also ruled that “fair market value” under the deficiency statute does not mean the price that a willing buyer would pay to a willing seller at the time of foreclosure. Because § 51.003(b)(5) permits the trier of fact to consider the forward-looking factor of discounts that may be applied to a future sales price, it was proper for the trial court to base its fair market value finding on the price the bank actually received in its post-foreclosure sale. The Supreme Court remanded to the Court of Appeals for consideration of additional issues.

Justice Boyd (joined by Justice Guzman) dissented, arguing that the majority had improperly cast aside the historical definition of fair market value, and that evidence of any future discounts in the sale price of the property was only relevant to consideration of the fair market value at the time of the foreclosure.

TLDR: To determine FMV at the time of foreclosure, you can look to values received in the future.

PlainsCapital Bank v. Martin (majority)

PlainsCapital Bank v. Martin (dissent)

In a case involving a dispute among members of the Obowu Union DFW, the plaintiff sued the other members for defamation after he was suspended.  The Union filed a plea in intervention but the plaintiff never filed an answer and the Union moved for default judgment, which the trial court granted.  The case went to trial and a jury returned a verdict in the plaintiff’s favor on his defamation claim for over $200,000.

The defendants appealed the defamation verdict, which the Court of Appeals affirmed, and the plaintiff also appealed the default judgment.  The Court affirmed the default judgment, rejecting the plaintiff’s argument that the trial court should have granted him a new trial because the intervenors failed to serve a copy of the motion for default judgment on him.  Specifically, the Court noted that “after a defendant has been served with citation and the petition, the plaintiff has no legal duty to notify the defendant before taking a default judgment . . . .”

Iroh v. Igwe

Just under two years ago, the Court of Appeals reversed summary judgment for Compass Bank because its custodian of records affidavit did not explain how the witness would have personal knowledge to prove up the promissory note. On remand, the trial court granted the bank’s amended motion for summary judgment, and this time that judgment was affirmed. Among other things, the defendants sought to establish a fact issue by pointing to a discrepancy in the amount of damages owed to the bank in the original summary judgment affidavit versus the affidavit in the amended motion. The Court of Appeals disposed of that issue by pointing out that it had already held the original affidavit to be “no evidence,” so the purported conflict was not really a conflict at all. The Court also held that the bank was not required to file the original promissory note, despite a Collin County local rule to that effect, because the local rule conflicted with the Texas Rules of Evidence governing the admissibility of a duplicate. Finally, although the lending instrument contained an illegal homestead warranty provision, the Court held that provision was severable from the remainder of the contract.

Vince Poscente Int’l, Inc. v. Compass Bank, No. 05-14-00165-CV

Less than a month ago, the Court of Appeals held that a Motion for New Bench Trial Is Not Mandamus-able. Now the Court has reiterated that holding where a district judge granted a new new trial after the case had originally been tried to an assigned judge. The Court relied in part on Justice O’Neill’s dissent in In re Columbia Medical Center, which argued that in the situation of a short bench trial, the benefits of a prompt retrial outweigh the detriments of prolonging the case with interlocutory review.

If motions for new bench trial are becoming a thing, we’ll keep an eye on the Supreme Court to see whether it wants to weigh in.

In re Dixon, No. 05-15-00242

A trio of worked-up horse breeders managed to Facebook-rant their way into a colorful defamation lawsuit, which the Dallas Court of Appeals has now permitted to proceed as to one of the two counterclaim defendants. Appellants Jane McCurley Backes and Tracy Johns sued Appellee Karen Misko for tortious interference.  Misko counterclaimed against Johns for libel and against Backes for conspiracy to libel. The opinion quotes extensively from the women’s online postings, the pettiness of which will be no surprise to anyone familiar with the Internet. Misko eventually unfriended Backes and Johns, the latter of whom then posted a thinly-disguised query whether anyone had ever known someone with Munchausen Syndrome by Proxy. Misko’s daughter had long been a victim of health issues, and other posters saw Johns’ post as an attack on Misko. That post served as the basis for Misko’s libel claim. The trial court denied Johns and Backes’ motions to dismiss under the Texas Citizens Participation Act.

The Court of Appeals held that Johns and Backes both met their initial burden of demonstrating that the claims against them were based on their rights to free speech and association, respectively. That shifted the burden to Misko to come forward with clear and specific evidence establishing a prima facie case of each element of her claims. The Court of Appeals held that Misko had indeed met that burden with respect to her libel claim against Johns, but not as to the conspiracy claim against Backes. Because Misko had not come forward with clear and specific evidence of a meeting of the minds between Backes and Johns, the Court rendered judgment dismissing the civil conspiracy claim and remanded the case to the trial court for consideration of an award of attorney fees and costs.

Backes v. Misko, No 05-14-0566-CV

The defendant in this private jet interior decoration case pleaded a series of affirmative defenses.  After the defendant’s counsel objected to requests for production asking for documents related to these affirmative defenses and then instructed its corporate representative not to answer depositions questions about them, the trial court struck the affirmative defenses in their entirety as a sanction.  The defendant later lost at trial and appealed the trial court’s sanction.

The Court of Appeals reversed, holding that striking the defendant’s affirmative defenses amounted to a “death penalty” sanction that went too far.  Because the trial court had not adequately considered other remedies (such as assessing deposition costs or awarding attorneys’ fees), the sanction was unwarranted.  The Court explained that “case determinative sanctions may be imposed in the first instance only in exceptional cases when they are clearly justified and it is fully apparent that no lesser sanctions would promote compliance with the rules.”

Associated Air Ctr. LP v. Tary Network Ltd.

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

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

If a court orders a party to be subjected to weekly drug testing, the testee can’t sue the testor over how it is fulfilling its court-appointed duties thanks to the doctrine of derived judicial immunity.

B.W.D. v. Turnage, No. 05-13-01733-CV

In this case involving a plaintiff’s purchase of a condominium allegedly containing “harmful indoor mold,” the plaintiff insisted that the trial court erred by (among other things) granting the defendants’ no-evidence motions for summary judgment without permitting adequate time for discovery.  The Court of Appeals held that adequate time for discovery had, indeed, passed since the plaintiff had announced ready for trial several times prior to the defendants’ motions were filed In addition, the plaintiff had previously agreed not to seek additional discovery and did not explain what additional discovery was necessary.  Thus, the Court concluded that the plaintiff had failed to show that the trial court abused its discretion when it determined that there had been adequate time for discovery.

Manautou v. Ebby Haiilday Real Estate, Inc.

The Dallas Court of Appeals has reversed an order appointing a receiver to wind up the affairs of a business equally owned by two siblings who could not agree on selling the cattle ranch they operated. The opinion serves as a useful primer on the statutory criteria for appointment of a receiver. In this instance, the Court of Appeals held that a receiver could not be justified because there was no evidence that the company was under threat of an irreparable injury if the property was not sold.

Spiritas v. Davidoff, No. 05-14-00068-CV

In this partnership dispute, two individual limited partners sued their fellow individual partner (who also signed the limited partnership agreement on behalf of the general partner entity) for, among other things, breach of contract and breach of fiduciary duty.  The jury returned a verdict in favor of the two limited partners, but the trial court granted a JNOV, dismissing those claims for lack of standing.  The Court of Appeals affirmed because “a limited partner does not have standing to sue for injuries to the partnership that merely diminish the value of that partner’s interest” and the plaintiffs’ claims were based solely on their fellow partner’s duties as a partner.

Hodges v. Rajpal