As AutoGas Systems saw that its future prospects looked bleak, one of its executives, John Cullen (its president and COO), circulated to certain employees a severance plan, which included incentives for employees to remain with the company as it wound up its affairs.  Dana Kelman was one of the employees who received the severance plan.  When his time with AutoGas ended, he sued to obtain the funds he was due under the agreement.  The only problem was that AutoGas’s CEO and Chairman, G. Randolph Nicholson, denied that Cullen ever had authority to enter into those severance agreements on behalf of the company.  Kelman moved for summary judgement, insisting that he conclusively established that Cullen’s authority to enter into the severance plan stemmed from his position as president and member of the board.  The trial court agreed and awarded Kelman $93,000 in damages.

The Court of Appeals reversed and remanded.  It found that, although a senior executive like Cullen had authority to bind the company on routine matters arising in the ordinary course of business, the parties advanced conflicting evidence on whether the purported severance agreement qualified as a “routine matter.”   The Court went further, however, and rejected as a matter of law that “a severance agreement developed in anticipation of the winding up of the corporation’s business and resulting in payments substantially higher than the employee’s annual salary of $70,000 is a routine matter.”  The Court also rejected Kelman’s claim that Cullen had apparent authority to bind the company to the severance plan because the parties has presented conflicting evidence of that authority.

AutoGas Acquisitions Corp. v. Kelman, No. 05-11-00692-CV

While Bruce Adams was carrying out his duties as a senior “troubleshooter” for defendant Oncor, he fell 25 feet from a utility pole and broke his back.  Adams spent weeks in the hospital and underwent several surgeries.  While Adams recovered, he received his full salary under Oncor’s salary continuation policy, but, when it appeared that Adams would no longer be able to return to work as a troubleshooter, Oncor sent him its standard letter informing him, among other things, that if he could not return to perform the “essential job duties of [his] occupation” within several months he would be terminated.  Although Oncor worked with Adams to find a position as a dispatcher, this new position did not work out.  Adams sued, alleging that Oncor violated section 451.001 of the Texas Labor Code by wrongfully terminating his employment in retaliation for his filing a workers’ compensation claim.

The Court granted Oncor’s motion for summary judgment, finding that Adams had presented no evidence demonstrating that his termination was the result of his filing a workers’ compensation claim.  Instead, the Court held that Oncor had terminated Adams “based on the uniform application of a reasonable absence control policy.”

Adams v. Oncor Electric Delivery Co., LLC, NO05-11-00618

Having won a default judgment over Art and Frame Direct/Timeless Industries Georgia (“A&F Direct”), Dallas Market sought to execute that judgment by filing a post-judgment writ of garnishment against Wachovia, A&F Direct’s bank.  Wachovia sought to comply, identifying an account they believed to be held by A&F Direct as well as three other accounts held by Art & Frame (a separate entity).  Dallas Market claimed entitlement to the funds in the Art &  Frame account based on a “Zero Balance Agreement,” which allowed Wachovia to transfer funds from one of the Art & Frame accounts to the A&F Direct account.   The trial court eventually granted Dallas Market’s summary judgment motion, permitting them to obtain the funds held in the Art & Frame account, even though Art & Frame was not the judgment debtor.

On appeal, the Court delved into the factual record to determine the nature of the relationship between the two accounts.    Among other things, the Court examined the scope of the Zero Balance Agreement, as well as testimony about how transfers under the agreement actually worked in practice.  Ultimately, however, the Court concluded that Dallas Market could not establish that A&F Direct was the true owner of the funds based on the Zero Balance Agreement or any other facts.  In sum, the Court concluded that Dallas Market did not meet its burden on summary judgment, and proceeded to reverse and remand the trial court’s decision.

Art and Frame Direct v. Dallas Market, No. 05-01471-CV

In February 2008, Booklab sued Konica over the faulty printer it had purchased from Konica.  Sixteen months after the suit began, Konica filed a “no evidence” summary judgment motion on Booklab’s damages claim.  Booklab objected, contending that the motion was improper because it had not had enough time for discovery.  The trial court granted Konica’s motion and Booklab appealed.

The main issue on appeal was whether Booklab’s time for discovery had been adequate.  Booklab argued that its case was “complex”–thus requiring an extended discovery period.  It also asserted that the trial court’s established discovery period had not expired by the time Konica had filed its motion.  The court of appeals rejected both of these arguments.  Because determining whether adequate time for discovery is so fact specific, it held that “the rules do not require that the discovery period applicable to the case have ended before a no-evidence summary judgment may be granted.”  It also rejected Booklab’s claim that the case was complex, finding that Booklab’s damages claim required only that it prove a loss of business opportunities with its own clients.  It noted that Booklab could not explain why discovery of Konica’s employees and executives was necessary to its claim.

Booklab Inc. v. Konica Minolta Business Solutions, Inc., No. 05-10-00095

In 2005, Parkwood Creek Owner’s Association sued Aharon Chen for Chen’s failure to complete the repair work Parkwood had hired him to complete, as well as for Chen’s failure to repair the defective work that he did complete.  This suit settled in March 2008, with the parties entering into a Rule 11 Agreement whereby Chen agreed to make specified monthly payments to Parkwood and to remedy some of his previous shoddy work.  Several months later, Parkwood moved to enforced the Rule 11 Agreement, claiming that Chen had failed both to deliver the stipulated materials and to deliver them at the specified time.  After an bench trial, the court found for Parkwood and entered judgment against Chen for $30,000 (the agreed-to liquidated damages amount) and for $7,500 in attorney’s fees.

On appeal, Chen argued, among other things, that he substantially performed the contract and that Parkwood itself committed a prior material breach by not giving Chen a list of materials.  The Court of Appeals rejected Chen’s arguments, holding that the evidence was sufficient to establish a breach of the Rule 11 Agreement.  The Court found that  Chen did not, in fact, provide the right materials, and that he refused to show up to inspections.  It further found that Chen had met with Parkwood representatives and determined the precise materials needed for repair.  The Court thus sustained the trial court’s decision and upheld the liquidated damages provision.

Aharon Chen v. Parkwood Creek Owner’s Association, Inc., No. 05-10-015511

R.J. Suarez Enterprises owned a sandwich shop, which was operated out of a leased location owned by PNYX.  After notifying PNYX that it would not renew the lease, Suarez vacated the premises, but claimed that it was entitled to take the walk-in cooler, walk-in freezer, sandwich unit, beverage cooler, and ice machine. PNYX disagreed. Suarez sued for conversion, and won.  The trial court, however, awarded no damages because Suarez failed to present evidence of the property’s fair market value.

The Court of Appeals sustained the decision, finding that “even when there is evidence supporting a finding of conversion, there must be evidence of fair market value of the converted property to support a damages award.”  Suarez, it held, did not present any evidence of the property’s fair market value, and instead only offered as damages evidence of the property’s replacement cost.  This was insufficient, as replacement value and fair market value are not interchangeable.

R.J. Suarez Enterprises, Inc. v. PNYX LP, et al., No. 05-11-00934

James Owen did not have a winning case.  In fact, the lawsuit he filed on behalf of Rhonda Krisle against Rusty Wallis Volkswagen asserted the precise claim (under the Texas Finance Code) that the Court of Appeals had rejected several years earlier.  What’s more, Owen knew about this earlier case because he had been counsel for the losing appellant.  Despite this, Owen still brought suit.  After motion practice, which ended in a non-suit of all claims by Krisle, Rusty Wallis moved for sanctions.  Not surprisingly, the trial court sanctioned Owen to the tune of $20,000.

Owen appealed.  The Court of Appeals, however, was equally unimpressed was Owen’s reasons why he should not be sanctioned, which included the claim that the decisions by the Court of Appeals do not have binding precedential value unless they are explicitly approved by the Texas Supreme Court.   Among other things, the Court found that, based on the explicit precedent rejecting Krisle’s claim, as well as Owen’s clear awareness of this precedent, the trial court did not abuse its discretion in sanctioning Owen.  After rejecting the rest of Owen’s arguments against sanctions, the Court then concluded that Owen’s appeal was “objectively frivolous” and cited him for an additional $7,500.

Owen v. Rusty Wallis Volkswagen, No. 05-10-01021

Willie Addison hurt his back at work and, after complaining about it, was fired.  He sued his employer alleging retaliatory discharge under the Texas Workers’ Compensation Act.  Addison’s employer, however, was not a subscriber to the states’ worker’s compensation program.

Undeterred, Addison charged that his employer should nevertheless be held liable for retaliatory discharge because the employee handbook indicates the company maintains a workers compensation plan (though it is not governed by the Act).  The court rejected Addison’s claim, finding that “only subscribing employers can be subject to section 451.001 claims.”

Addison v. Diversified Healthcare, No 05-11-01455

Appellants leased property in Heath, Texas.  Under the lease, they were granted the option to buy, which they claim they exercised (even though no closing ever occurred and no title ever passed).  Appellees, the landlords, sought to evict the Appellants for violations of the local HOA rules and for failure to pay rent.

The issue the Court of Appeals decided was a narrow one:  whether, because Appellants exercised the option to purchase the property, there was no longer a landlord-tenant relationship between the parties so that a forcible entry and detainer suit was improper.  The Court found that, even if Appellants exercised the option, they do not have title–equitable or otherwise–and thus rejected Appellants’ argument that a forcible detainer action was improper.

Lugo v. Ross, No. 05-11-00517-CV

This landlord-tenant dispute involved Tenet Health Systems and Live Oak, a group of doctors, as tenants.  Live Oak entered into a lease with Tenet for a five year period, expiring on June 30, 2006.  Live Oak claimed that, before the lease expired, Tenent successfully encouraged them to relocate to a new space in Frisco, Texas, with the promise that Tenet would find someone to take over the lease.  However, sometime after Live Oak abandoned the original lease and stopped making payments, Tenet demanded unpaid rent for that lease.

The Court of Appeals first found that the doctors who signed the lease were personally liable for unpaid rent under the lease agreement, because “[t]he objective intent of the parties, as expressed in the unambiguous language of the lease, was that those persons comprising Live Oak . . . would be jointly and severally responsible for Live Oak’s obligations under the lease.”

On a separate issue, Live Oak also argued that they had raised sufficient facts for their defenses of mitigation and estoppel to survive summary judgment because they had submitted an affidavit asserting that (1) Tenet had a willing tenant to take over the lease, but purposefully waited until the term expired before letting this new tenant take over and (2) Tenet had made promises to induce them to move to Frisco.  The Court of Appeals rejected this argument, holding that conclusory statements in an affidavit not based on personal knowledge cannot present sufficient evidence to survive summary judgment.

In dissent, Justice Lang-Miers disputed the holding that the doctors should be individually liable under the lease because the lease’s terms were ambiguous and the landlord could not show that its interpretation of the contract should control.

Live Oak v. Tenent Healthsystem Hospitals Dallas, Inc., No 05-11-00342 (majority)

Live Oak v. Tenent Healthsystem Hospitals Dallas, Inc., No. 05-11-00342 (dissent)

Inwood on the Park Apartments brought a forcible detainer action to get tenant, Stephanie Morris, to vacate her apartment.  According to Inwood, Morris breached her lease by permitting a guest to create “disturbances” in the apartment parking lot, which included disturbances involving public indecency.  After the suit was filed, Morris vacated the apartment, and Inwood filed a notice of nonsuit as to “possession” but reserved its claim for attorney’s fees.

Morris moved to dismiss the claim for attorney’s fees, arguing that Inwood’s nonsuit of its claim for forcible detainer mooted any claim for attorney’s fees.  Rejecting Morris’ argument, the Court of Appeals held that a “dispute over attorney’s fees is a live controversy and may prevent an appeal from being moot.”

Inwood on the Park Apartments v. Morris, No. 05-11-0142

This lawsuit arose from the sale of a 42,000 acre West Texas ranch. In 2007, JP Morgan, the trustee holding the ranch, entered into a contract with AKB Hendrick Limited Partnership, granting AKB ten months to raise money to purchase the ranch during which JP Morgan would not market, solicit or accept any “back up” offers to purchase the ranch. AKB would deposit $250,000 in escrow, from which fees would be deducted as time passed.  Despite this contract, Hamilton, a member of AKB, subsequently approached Kenneth Musgrave about purchasing the ranch.  Musgrave and Hamilton entered into an agreement whereby AKB permitted Musgrave to seek to purchase the ranch if AKB were paid $1M upon Musgrave’s successful purchase.

AKB then informed JP Morgan that it was terminating their agreement.  Negotiations continued between Musgrave and JP Morgan.  The parties agreed to a sale in April 2008, but in August 2008, before closing, Musgrave terminated the agreement.  AKB sued Musgrave (and various Musgrave entites) for fraud, breach of contract, and several other counts.  The trial court granted summary judgment in favor of Musgrave, and AKB appealed.

On the fraud count, the Court of Appeals found that AKB was not justified in relying on certain representations made by Musgrave because, when the representations were made, the two were involved in a commercial transaction and “the representation took place in an adversarial context.”  The Court also dismissed fraud claims stemming from  Musgrave’s statement that “he could help out with certain fees if those became an issue.”  According to the Court, promises of future performance are only actionable misstatements if the promise was made with no intention to perform, and AKB did not present evidence establishing such intent.  The also Court found that Musgrave did not breach its contract with AKB because Musgrave never successfully purchased the Ranch.

AKB Hendrick v. Musgrave Enterprises, No. 05-11-00251

In this legal malpractice action, Jean Pierre – a Dallas commercial real estate investor – brought suit against the lawyer who represented him in a failed real estate transaction.  Pierre claimed that the lawyer had failed to advise him of the consequences of his counterparty’s changes to the earnest money provision in the real estate contract at issue.  As a result of the revised earnest money provision, Pierre lost $400,000 because the contract did not permit him to retain the earnest money when the purchaser pulled out of the transaction at the last minute.

Though the jury found in Pierre’s favor, the Court of Appeals overturned the trial court’s judgment because it found that Pierre failed to offer legally sufficient evidence of proximate causation.  In so doing, the Court of Appeals rejected Pierre’s contention that all that he needed to prove to establish causation was that he would not have signed the contract if he had understood the earnest money provision.  The Court, in rejecting Pierre’s claim, concluded that Pierre was required to prove that the counterparty would have agreed to the alternative earnest money provision (that would have refunded the money to Pierre), and that Pierre could not establish such a conclusion.

Pierre v. Steinbach

In 2009, a class of shareholders challenged the stock-for-stock merger between Centex Corp. and Pulte Homes, charging that the board breached its fiduciary duties by failing to obtain an adequate price for the shareholders.  As often happens, the parties quickly settled, and Centex and Pulte agreed to disclose additional information about the merger in the proxy statements.  While the settlement provided class counsel with a hefty cash payment of attorneys’ fees, the shareholder’s reward was simply more information.

Rocker raised several objections to the settlement, but his most salient objections were (1) that the settlement’s release was too broad because it waived all known and unknown claims without granting the shareholders an opportunity to opt-out; and (2) that class counsel could not recover their attorneys’ fee in cash, when the class received only injunctive relief.  The Court credited both of Rocker’s arguments.  Regarding the first, the Court held that “[i]f appellees require a ‘limitless release,’ then due process requires that class members be afforded the option to be excluded from the class.” Regarding the second, it found that “if there is no cash recovery for the class, fees could not be awarded in cash, regardless of the value of the benefit to the class.”    The Court then remanded the case to the trial court for further proceedings.

Rocker v. Centex Corp, No. 05-10-00903

One day, Appellee Dale Allen came home to see construction workers installing “HardiPlank” siding on his neighbor’s house.  This neighbor, Appellant Michael Jamison, had chosen to use HardiPlank on the exterior of his house because it is virtually indistinguishable from wood, and yet remains  fire resistant, rot resistant, and insect resistant.  HardiPlank does not shrink, it does not swell, and it does not absorb moisture.  It turns out, however, that the one thing HardiPlank is not resistant to is the subdivision’s restrictive covenant, which required that the “exterior walls” of the homes be covered in approved materials only.  And HardiPlank was not an approved material.

Allen, thus, brought suit to ensure that Jamison complied with the neighborhood’s exterior standards.  The only problem:  Allen himself had wrapped HIS house’s gables in HardiPlank.  Jaimson pointed out Allen’s hypocrisy, arguing, under the doctrine of quasi estoppel, that Allen cannot enforce a covenant with which he failed to comply.  The trial court rejected Jamison’s argument, finding that a “gable” is not the same and an “exterior wall,” and ruled in Allen’s favor.  The court of appeals, however, plunged the depths of Webster’s Third New International Dictionary and determined that a “gable” does, in fact, qualify as an exterior wall.  Having so determined, the Court then held that Allen was estopped from suing to require that Jamison comply with the very covenant he refused to abide by.

Jamison v. Allen, No. 05-11-00603-CV

This action involved a deficiency claim by a Bank against several loan Guarantors.  The loans at issue were undertaken to finance improvements on properties owned by a partnership in Collin County.   After the partnership defaulted, the Bank exercised its right to sell the properties at non-judicial foreclosure sales, and then brought this action action against the Guarantors.  Because the Guarantors had agreed in the original Guaranty Agreement to waive any defense of offset to the bank’s deficiciency claim, the trial court granted the Bank’s motion for summary judgment and awared the Bank the outstanding amounts due on each of the promissory notes.  On appeal, the Guarantors argued that the right of offset provided for in section 51.003(c) of the property code cannot be contractually waived and, alternatively, that if such waiver were available they did not, in fact, waive the right of offset because the waiver provision did not contain the phrase “right of offset.”  Relying on the reasoning in Moayedi, the Court of Appeals rejected both of the Guarantors’ arguments, finding that nothing  in the property code prevents a guarantor from waiving his right to an offset in a guaranty agreement.  Additionally, the Court found that the waiver language need not include the precise terms “right of offset” to constitute an effective waiver.  Thus, the court upheld the trial court’s summary judgment decision.

King, et al. v. Park Cities Bank, No. 05-11-00593-CV

In Farmers Insurance Exchange v. Greene, Appellee-Greene maintained a homeowner’s insurance policy with Famers Insurance Exchange (“FIE”).  Among other things, the Policy contained a vacancy provision which suspended coverage for any damage to the dwelling that occurred 60 days after the dwelling becomes vacant.  As luck would have it, Greene moved out of the covered residence 4 months before a fire destroyed it.  Greene notified FIE of the damage, but FIE denied her claim based on the vacancy provision.  She sued and the trial court granted summary judgment in Greene’s favor, finding that her violaiton of the vacancy clause did not contribute to the loss, and thus did not prevent her from recovering under the Policy.

The Court of Appeals reversed, holding that the vacancy clause was clear and unambiguous in that it suspends coverage sixty days after the residence becomes vacant.  It also noted that “the vacancy clause functions as an exclusion; it excepts a specific condition (vacancy) from coverage.”  Further, the Court found that Section 862.054 of the Insurance Code—which provides that an insured’s breach of a provision or condition in a policy does not constitute a defense to a suit for loss unless the violation contributed to the destruction of the property—was inapplicable.   The vacancy of the home increased the risk of insuring it, and the Court felt that, under such circumstances, “we are loathe to engraft by judicial fiat additional terms requiring FIE to assume liability for a risk the Policy specifically excluded.

In Green v. McKay, the Court of Appeals addressed the causation requirement in a legal malpractice action.  Appellants were charged by the City of Dallas with certain code violations on a property they had sold to a debtor, who had executed a deed of trust in their favor, but who was later forced to file in Chapter 13 bankruptcy.  In response to the suit, appellants sought legal advice from appellee, McKay, who told appellants that they did not have to do anything and that “it would go away.”  The City ultimately obtained a default judgment of $562,275 against appellants, who then turned around and sued McKay for legal malpractice.  The Court of Appeals upheld the trial court’s decision, finding that the appellants had not presented any evidence of “causation.”  According to the Court, in a legal malpractice action, “[c]ausation requires that a plantiff prove a meritorious defense to the underlying case.”  Based on principles of bankruptcy law—which established that under the vendor’s lien held by appellants, they held legal title to the property in question—the Court found the appellants would not have been able to establish a meritorious defense in the code violations lawsuit even if McKay had filed an answer.  Accordingly, the Court concluded that the appellants could not establish the causation element of their malpractice claim and upheld the trial court’s dismissal.