Cornerstone Healthcare owns and operates a group of hospitals located in several states. It filed suit against Nautic Management VI, the general partner or manager of several private equity funds. NMVI filed a special appearance to challenge personal jurisdiction, but the trial court overruled it. On interlocutory appeal, the Court of Appeals reversed and rendered judgment dismissing NMVI from the case. Cornerstone argued that NMVI should be subject to specific personal jurisdiction in Texas because it controlled the funds whose representatives had traveled to Texas and conducted the business that got them all sued. The Court of Appeals disagreed, holding Cornerstone to its word that it was not attempting to pierce the corporate veil and therefore refusing to attribute the contacts of the funds to NMVI.

Nautic Mgmt. VI, LP v. Cornerstone Healthcare Group Holding, Inc., No. 05-13-00859-CV

Altus Brands II LC filed for a writ of garnishment against two officers of Swordfish Financial, Inc., seeking to enforce a $289,886 judgment from Minnesota against Swordfish. The trial court permitted Altus to execute on specific stock transferred to the officers by Swordfish in 2010, but refused to enter a money judgment against them. Altus appealed. The opinion is lengthy and exceedingly fact-specific — it’s the kind of case where dozens of findings of fact and conclusions of law get dropped into a single footnote.

Because the value of the stock had declined since the date of its transfer, the Court of Appeals held that the trial court had erred in only permitting Altus to execute on the stock, and that a money judgment was necessary to ensure that Altus’s position was not prejudiced by the fraudulent transfer. However, the amount of that money judgment was not to exceed the the value of the stock at the time of transfer, so as not to create a windfall in favor of Altus. The Court also affirmed the trial court’s findings regarding the cancellation of a $3.5 million promissory note from Swordfish to the officers, which Altus was apparently trying to use as further proof of its fraudulent transfer claim for the full amount of the Minnesota judgment.

Altus Brands II LLC v. Alexander, No. 05-13-06660-CV

The Texas Supreme Court has also granted the petition for review in another case involving foreclosure sales, deficiencies, and section 51.003 of the Property Code. In Martin v. PlainsCapital Bank, the Dallas Court of Appeals reversed judgment in favor of a lender that sought to recover a deficiency because the bank had based its deficiency claim on the price it resold the property for, rather than the price it had paid over a year earlier at the foreclosure sale. Oral argument has been set at the Supreme Court for September 18.

The Texas Supreme Court has unanimously affirmed the judgment of the Dallas Court of Appeals on petition for review from the case of Interstate 35/Chisam Road L.P. v. Moayedi. As regular readers will recall, Moayedi was the first of a string of cases from Dallas holding that borrowers and guarantors had contractually waived their statutory right to offset any deficiency if the foreclosure sale resulted in a price less than the collateral’s fair market value. Justice Willett, writing for the Supreme Court, agreed with that analysis, holding that section 51.003 of the Texas Property Code creates an affirmative defense that the borrower or guarantor can validly waive through a general waiver of defenses in the lending instruments. Unless the Legislature decides to step in, businesses and individuals can expect to see such waiver clauses become standard practice in property financing transactions.

Moayedi v. Interstate 35 Chisam Road LP, No. 12-0937

A memorandum opinion teases, but does not answer, an interesting question: Does Chapter 74 of the Civil Practice & Remedies Code require a plaintiff to produce an expert report for a breach of contract claim arising out of the provision of medical services? Margaret Miller’s son placed her in a “skilled nursing resident program” at Plaza Health Services and contractually agreed to be the “responsible party” for payment. Among other things, the contract provided that the facility was a “restraint-free community,” and that no restraints of any type would “be used as punishment or as a substitute for more effective medical nursing care or for the convenience of the community staff.” After the nursing facility sued for unpaid bills, he he counterclaimed for breach of contract, DTPA, and medical negligence claims. The negligence claims were dismissed due to the failure to file a medical expert report, and the trial court granted a motion in limine to exclude evidence of restraints or straitjackets used on Ms. Miller. Unfortunately, error was not preserved on that issue due to the lack of a proper proffer of the excluded evidence. The grant or denial of a motion in limine does not preserve error by itself. If the motion is granted, the losing party must, during trial, (1) approach the bench and ask for a ruling, (2) formally offer the excluded evidence, and (3) obtain a ruling on the offer. Here, the appellants argued about the relevance of the evidence, but never actually offered it or obtained a ruling during trial on its admissibility. Accordingly, error was not preserved, and judgment for the nursing facility was affirmed.

Ferguson v. Plaza Health Servs. at Edgemere, No. 05-12-01399

Our sister blog, 600 Camp, has posted a PowerPoint presentation by Lyle Cayce, the Clerk of the United States Court of Appeals for the Fifth Circuit. For anyone who has slogged through the hyperlinking of legal authorities and record citations in an appellate brief, it’s a glimpse into the future (or as they like to call it in the Fifth Circuit, “the present”) of e-filing. As Mr. Cayce described during last week’s appellate conference in Austin, the Fifth Circuit has commissioned software that automatically converts the parties’ electronically filed briefs into fully hyperlinked e-briefs for the judges, their staffs, and even the parties themselves. As a result, every citation is automatically converted to a hyperlink that can take the reader directly to the cited material, whether it is in the record or on whichever legal research service the user prefers. Kudos to the Fifth Circuit for figuring out how to make e-filing simpler and better for everyone involved, and let’s hope that the Texas courts will be headed that way as well.

In 2010, the Court of Appeals reversed summary judgment in favor of the lender in a collateral-disposition case, holding that the borrowers had raised a fact question as to the commercial reasonableness of the property. DMC Valley Ranch, L.L.C. v. HPSC, Inc., 315 S.W.3d 898 (Tex. App.–Dallas 2010, no pet.). On remand, the lender took the position that the defendants’ valuation expert report was correct, and again moved for summary judgment on that basis (apparently seeking to recover a smaller deficiency rather than fighting for a larger one). The trial court granted summary judgment for the lender, and also awarded attorney fees via summary judgment. The Court of Appeals affirmed on the deficiency ruling, but reversed on attorney fees. The Court held that there was a fact issue on the reasonableness and necessity of the attorney fees because the defendants’ attorney had submitted an affidavit opining that it was unreasonable to seek fees for unsuccessful appeals and motions, and that it was not appropriate to have seven lawyers on the file. The case was therefore remanded for further proceedings on attorney fees.

DMC Valley Ranch LLC v. HPSC, Inc., No. 05-11-01730-CV

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

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

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 opinion in a premises liability case has rejected a novel attempt to defeat summary judgment by invoking the special exceptions process. The plaintiff, a mother whose minor son was injured after tripping on an escalator at Amazing Jakes, argued that summary judgment should not be based on a pleading deficiency that could be cured by amendment, and that the proper procedure for doing so was to file special exceptions. The Court of Appeals disagreed, holding that Amazing Jakes had moved for traditional and no evidence summary judgment based on the facts, not on the basis that the plaintiff had failed to state a cause of action or any other pleading deficiency. The Court noted that a pleading deficiency would not be a proper basis for summary judgment unless the trial court has first given the plaintiff an opportunity to amend the pleading, except when the defect is of the type that could not be cured by amendment.

Williams v. Adventure Holdings LLC, No. 05-12-01610-CV

A long-running dispute between former business parties and their attorneys has resulted in a lengthy opinion affirming the trial court’s determination that it lacked subject matter jurisdiction over the case. The original dispute had been submitted to arbitration, which resulted in a large award of damages and attorney fees against the defendants. The Court of Appeals eventually set aside that award, holding that the arbitrator’s failure to disclose his personal relationship with plaintiffs’ counsel constituted “evident partiality” that, under the circumstances, required vacatur of the arbitration award. Karlseng v. Cooke, 346 S.W.3d 85 (Tex. App.–Dallas 2011, no pet.). Following that ruling, the defendants in the original arbitration filed suit against the lawyers and law firm that represented the plaintiffs, as well as the arbitrator and the arbitration agency, for fraud and other related claims. Despite the fairly complex set of facts, the Court of Appeals affirmed the dismissal of the new lawsuit for lack of subject matter jurisdiction, concluding that jurisdiction was preempted by the Texas Arbitration Act because the substance of the case was a prohibited collateral attack on the vacated arbitration award. Thus, the plaintiffs could not seek to hold the arbitrator, the arbitration agency, or the attorneys liable for the expenses they incurred in defense of the original arbitration proceeding.

Patten v. Johnson, No. 05-12-01695-CV

An opinion issued on an emergency motion to stay a trial court’s order unsealing alleged trade secret materials highlights a difference between Dallas and some of the other courts of appeals when it comes to obtaining temporary stays. The trial court denied the defendant’s motion to permanently seal the disputed records under TRCP 76a and ordered that the documents were to be unsealed at 5 pm last Friday. Because unsealing orders are considered to be final for purposes of appeal, the defendant perfected an appeal and moved for an emergency order to stay the unsealing of the documents. The Court of Appeals granted that request, holding that a temporary stay was necessary to preserve the rights of the parties pending appeal. The Court noted that other appellate courts have applied a more stringent standard, under which the movant must show that it would be entitled to the issuance of an injunction to protect appellate jurisdiction under section 22.221 of the Government Code. The opinion expressly states that it was not ruling on the merits of the unsealing order, and that nothing in it was intended to bind the submission panel when the appeal proceeds to the merits.

Oryon Techs. v. Marcus, No. 05-14-00446-CV

The Court of Appeals has conditionally granted mandamus relief in a divorce proceeding to vacate an order requiring a trustee to withhold distributions from the husband and pay them instead to the wife. The trust instrument included a spendthrift provision, which prevents creditors from claiming distributable money or property from the trust, as well as any assignment of a beneficiary’s interest in the trust’s distributions. The Court of Appeals held that the spendthrift provision was enforceable, and that the trial court abused its discretion by ordering the trustee to make distributions in circumvention of the trust’s terms. Because the trustee was a non-party to the divorce proceeding, it also had no adequate remedy at law, thereby justifying the grant of mandamus relief.

In re BancourpSouth Bank, No. 05-14-00294-CV

In this negligent misrepresentation and fraud case, the Court of Appeals has affirmed summary judgment for the defendant based on the statute of limitations. Collective Asset Partners LLC sued Michael Schaumburg and his architectural firm after Schaumburg informed CAP about a property for sale in Tarrant County and took a $1 million fee in the resulting sale. Half of the property turned out to be located on a floodplain, which allegedly caused CAP to be unable to develop it. Schaumburg sought and obtained summary judgment that there had been no misrepresentation because the paperwork for the sale included disclosures that identified the floodlplain. Nor could CAP show a misrepresentation based on a $10.25 million appraisal on the property, as that appraisal was only intended for use by the bank that commissioned it and could not be justifiably relied upon by third parties.

Collective Asset Partners LLC v. Schaumburg, No. 05-13-00040-CV

The Court of Appeals has issued its first-ever (so far as 600 Commerce is aware) decision in a case with its own Wikipedia page. The City of Carrolton annexed a portion of a privately owned airfield, then issued a new ordinance to regulate it. The city then ordered the airport to be closed based on violations of the ordinance, which led the nearby homeowners to sue the city in an attempt to invalidate the ordinance and the closure order, plus an additional lawsuit against the owners of the airport for failing to bring it into compliance with the ordinance. The homeowners prevailed on both summary judgment and in a jury trial, and the Court of Appeals largely affirmed, albeit on a modified basis.

Among other things, the Court’s 48-page opinion held that the ordinance was not a valid exercise of the city’s police power because it did not require notice to the homeowners whose easements burdened the airport property, thereby depriving them of due process. The ordinance was also determined to be unconstitutionally vague, as its use of the term “owner” was ambiguous and its reference to TXDOT’s Model Rules and Regulations did not provide sufficient guidance to tell the “owner” of the airport how it should be operated. The owners of the airport also could not escape judgment on the jury’s verdict merely because the judge retired after the trial and his successor issued the final judgment, nor were they successful in their attempt to inject the Noer-Pennington antitrust doctrine into breach of contract and fiduciary duty claims. The Court remanded the case to the district court for consideration of additional issues based on the Court’s modifications of the trial court’s rulings.

Noell v. City of Carrolton, No. 05-11-01377-CV

The Court of Appeals has reversed and rendered a trial court judgment in favor of the victim of a serious softball injury. Coleman and Dunagan were teammates on a slow-pitch softball team, but Coleman also had experience as a high school baseball player. While warming up to pitch the first game of the season, Coleman threw a couple of overhand curveballs to Dunagan at the catcher’s position, followed by an overhand fastball that smashed Dunagan in the mouth and caused significant injury. The jury returned a verdict in favor of the plaintiff on his claim for ordinary negligence, also finding that Coleman’s conduct had been reckless.

Citing its own precedent in Connell v. Payne, 814 S.W.2d 486 (Tex. App.–Dallas 1991, writ denied), the Court of Appeals held that a showing of mere negligence was insufficient for an injury occurring as a result of participation in a sports activity — instead, the defendant must have acted recklessly or intentionally. The Fourteenth Court of Appeals in Houston has adopted a nominally different standard for sports-related liability, holding that there is no negligence duty if the risk is one that is inherent to the sport, but that non-inherent risks are still subject to the duty of ordinary care. See Chrismon v. Brown, 246 S.W.3d 102 (Tex. App.–Houston [14th Dist.] 2007, no pet.).  However, the Court here did not view the two cases as establishing fundamentally different standards. Since being struck by a thrown ball is an inherent risk of the sport of softball, simple negligence alone could not justify a judgment for the plaintiff. And while the trial court had submitted the issue of recklessness to the jury, the Court of Appeals held that there was legally insufficient evidence to support that finding. As the Court noted, “inaccuracy is to be expected in every sport,” and nothing in the record showed that Coleman was aware his fastball created an unreasonable risk of harm that was substantially greater than mere negligence.

Given the novelty of the issue and the possibly different standards adopted by the intermediate appellate courts, this case could be a good candidate for review by the Texas Supreme Court. If the plaintiff takes it up to that Court, 600 Commerce will keep an eye on it.

Dunagan v. Coleman, No. 05-12-00171-CV

A pair of attorneys sued each other for breach of contract and breach of fiduciary duty, with the plaintiff also asserting a claim for violation of the Texas Theft Liability Act. The jury found both attorneys at fault and awarded no damages. The defendant moved for an award of attorney fees as the prevailing party on the Theft Liability Act claim, but the trial court denied the motion. The Court of Appeals affirmed, holding that the defendant’s failure to plead a claim for recovery of attorney fees under the Act precluded him from recovering his costs of defense. Pleading for recovery of fees under the breach of contract counterclaim and in special exceptions was not sufficient to invoke a claim for recovery under the Theft Liability Act, even though that statute provides for a mandatory award of attorney fees to the prevailing party.

The Court also affirmed on the plaintiff’s cross-appeal, which challenged the trial court’s disqualification of him from personally conducting the examination of his computer forensics expert. Under Disciplinary Rule 3.08, an attorney is generally prohibited from appearing as both an advocate and a witness. However, the defendant failed to meet his burden of showing he would have been prejudiced by having his opposing party conduct the examination, so the trial court did abuse its discretion by ordering the disqualification. Nevertheless, the error was deemed harmless because the plaintiff failed to advise the trial court that his attorney was not prepared to question the witness and he did not point to any specific testimony that the attorney had failed to elicit from the expert. The Court also affirmed the trial court’s rulings on a pair of evidentiary issues and on special exceptions to the Theft Liability Act claim.

Shaw v. Lemon, No. 05-12-00903-CV

Deadlines in the Texas appellate courts can often be forgiving, with extensions of time routinely and even retroactively granted. A new memorandum opinion illustrates one of the limits to those generally flexible deadlines. James Polk’s notice of appeal was due on November 4, but it was not actually filed until November 18. That was within the 15-day permitted for an extension of time to file the notice of appeal, so the Court of Appeals directed the appellant to file a motion under Rule 26.3 that set forth a reasonable explanation of the need for the extension. When that motion was filed, however, it explained that the original deadline had been missed due to Polk’s need to determine whether to appeal at all, including whether it made economic sense to do so. Because that response showed that Polk had consciously ignored the November 4 deadline, rather than missing it inadvertently, the Court of Appeals denied the extension and dismissed the appeal.

Polk v. Dallas County, No. 05-13-01731-CV

The Court of Appeals had granted mandamus relief to a witness who had been ordered to submit to a Rule 202 pre-suit deposition. The trial court abused its discretion because the movant failed to offer any evidence at the hearing on the motion, with the result being that it failed to meet the burden of showing that the likely benefit of the deposition outweighed the burden or expense of the discovery. The Court declined to uphold the Rule 202 deposition on the basis of the verified petition alone, holding instead that the findings required by the rule could not be implied from the record.

In re Noriega, No. 05-14-00307-CV

Early last year, the Texas Supreme Court granted four petitions for review out of the Dallas Court of Appeals on the same day. Today, the Supreme Court issued opinions in two of those cases, reversing them both. In Kia Motors Corp. v. Ruiz, the Supreme Court affirmed the Court of Appeals’ holding that the manufacturer was not entitled to a presumption against liability due to the vehicle’s compliance with federal crashworthiness standards. However, the Court reversed and remanded for a new trial because the trial court should not have admitted a spreadsheet containing summaries of many different warranty claims on vehicle airbag circuitry, most of which were dissimilar to the plaintiffs’ claimed defect. And in Bioderm Skin Care v. Sok, the Supreme Court reversed the Court of Appeals’ holding that the victim of a botched laser hair removal procedure was not required to submit an expert report, holding that the claim was indeed subject to the Texas Medical Liability Act because the laser could only be purchased by a licensed medical practitioner and required extensive training to operate. The case was therefore remanded for consideration of the defendants’ attorney fees and costs.

A habeas corpus case arising out of an underlying divorce proceeding helps to illustrate the limits of a court’s authority to imprison a litigant for contempt. The trial court ordered the wife to pay her former husband $40,000 secured by a lien on a residence awarded to her in the divorce, to be paid six months after the decree. After that date came and went without payment, the husband moved for contempt, and the trial court sentenced her to confinement in the Hunt County jail until she tendered payment. The Court of Appeals ordered her to be released, citing the Texas Constitution’s provision that “No person shall ever be imprisoned for debt.” Tex. Const. art I, §18. Although the trial court could have jailed the wife for failing to comply with a court order to turn over specified property or funds (e.g., “the $40,000 in Wife’s savings account”), that authority did not extend to the failure to pay a pure debt to the other spouse. The Court therefore granted habeas corpus and ordered that the wife be unconditionally released.

In re Kinney, No. 05-14-00159-CV

Seib Family GP and Richard Seib purchased a limited liability company that owned a 60-acre tract in a warehouse district adjoining the Trinity River levee in Dallas. Two years later, Seib sued the bank that held the note on the property, alleging that it was liable under the Texas Securities Act because it had failed to disclose its knowledge that the levee was “in jeopardy” and “being decertified” by the Corps of Engineers. The trial court granted traditional summary judgment for the bank, and the Court of Appeals affirmed. To the extent that Seib alleged direct seller liability by the bank, that claim failed because the bank was only a lender, not a seller of the LLC. Nor could the bank be liable under the TSA for secondary liability, as the evidence demonstrated — and Seb did not contest — that the bank did not and could not exercise control over the operation of the purchased LLC.

Seib Family GP, LLC v. Bank of the Ozarks, No. 05-12-01171-CV

A pair of California residents sought to set aside a default judgment by means of a restricted appeal. The defendants claimed that the trial court lacked jurisdiction due to defective service of process, which had been accomplished through the Secretary of State. The Secretary of State’s certificate of service stated that process for both defendants had been “Unclaimed.” After the defendants failed to appear, the trial court entered default judgment for $612,500 in damages and another $13,258.27 in attorney fees. The Court of Appeals affirmed. Although the process server had listed the date of execution as taking place the month before he received the citation, that apparent typographical error was not enough to invalidate the return of service, particularly where the other service documents demonstrated the correct date of service. Substitute service through the Texas Secretary of State was also proper, the Court held, because the petition alleged that they were doing business in Texas by entering into a promissory note and guaranty with a Texas company, with the note also secured by real property located in Kaufman County. Nor did the “Unclaimed” notations demonstrate that the citations had not been served. Instead, the Court followed previous cases holding that it indicated only that the defendants had refused or failed to claim the citations from the Secretary of State’s mailings, not that service had not been accomplished.

Dole v. LSREF2 APEX 2, LLC, No. 05-12-01683-CV

The Court of Appeals has affirmed summary judgment for the lenders in a foreclosure dispute. Anil and Sheela Das sued Deutsche Bank and others to prevent them from foreclosing on their home. The Dases claimed that DB was not an owner or holder of the note. However, an affidavit from an analyst of the loan servicing company established that the note had been transferred to DB, and that the servicer maintained the original of the note on behalf of DB. Copies of the original instruments were also attached to the affidavit, and that uncontradicted evidence was enough for the Court of Appeals to determine that Deutsche Bank had met its summary judgment burden on the issue. The Court also rejected the borrowers’ argument that the bank was judicially estopped from relying on that copy of the note, as its use of an earlier, unendorsed copy of the note during prior bankruptcy proceedings was not clearly inconsistent with a later copy that included the subsequent endorsement.

Das v. Deutsche Bank Nat’l Trust Co., No. 05-12-01612-CV

A franchise agreement between Applebee’s and Gator Apple (a Florida franchisee) prohibits the franchisee from soliciting or hiring anybody from another franchisee who was employed by that other franchisee within the previous six months, states that other franchisees are third party beneficiaries of the franchise agreement, and provides for liquidated damages equal to three times the employee’s annual salary. A Texas franchisee, Apple Texas, sued Gator Apple under that provision after Gator Apple hired five of Apple Texas’ current or former employees and executives. The trial court granted summary judgment for Apple Texas, awarding it liquidated damages in excess of $1.2 million. The Court of Appeals affirmed. After determining that the franchise agreement was governed by Kansas law due to its choice of law provision, the Court upheld the award of liquidated damages under Kansas law. The Court also rejected Gator Apple’s argument that a fact issue existed on its affirmative defense of waiver, as none of the waivers it relied on authorized Gator Apple (as opposed to other franchisees or Applebee’s corporate) to solicit Apple Texas’ employees.

Gator Apple, LLC v. Apple Texas Restaurants, Inc., No. 05-12-01369-CV

HSBC Bank foreclosed on a residential property in Cedar Hill, but failed to pay assessments on the property to the local homeowners association. The HOA foreclosed on its assessment lien, and the property was purchased out of foreclosure by Khyber Holdings, LLC. HSBC sought to redeem the property as permitted by § 209.011 of the Texas Property Code. However, when the bank’s attorney sent the required notice to Khyber, the letter incorrectly identified Countrywide Home Loans as the owner seeking to redeem the home. The attorney testified that the error had occurred because he represented the servicer for both HSBC and Countrywide, and that Khyber had purchased lots owned by both lenders during the same foreclosure sale. HSBC sued for a declaratory judgment that it was entitled to redeem the property. When Khyber responded with a letter that stated the redemption price would be $80,000, the attorney responded with an $80,000 check and a letter that once again named Countrywide as the owner, although the redemption deed correctly identified HSBC as the grantee of the redemption sale. Khyber refused to allow redemption, the case proceeded to trial, and the jury returned a verdict in favor of HSBC. The Court of Appeals affirmed, concluding that only substantial compliance is required to fulfill the notice requirements of § 209.011, and that the series of back-and-forth exchanges between the parties was sufficient proof that the notice requirements had been fulfilled. The Court also affirmed the jury’s award of damages for trespass, concluding that HSBC was entitled to recover for lost rents during the period of time the property was improperly retained by Khyber.

Khyber Holdings, LLC v. HSBC Bank USA, N.A., No. 05-12-01212-CV

The Court of Appeals has affirmed summary judgment in favor of the defendant in a libel and business disparagement case.  The case arises out of statements made by OAC Senior Living in an administrative waiver proceeding initiated by a competitor, Senior Care Resources. The allegedly defamatory statements were made to the Texas Department of Aging and Disability Services, a state agency designated to administer and monitor human services programs, including Medicaid. If that sounds like the sort of thing that would be absolutely privileged under defamation law, the Court of Appeals agrees with you. Although DADS is not a court, it was exercising quasi-judicial power in determining whether to grant Senior Care’s requested waiver. The Court’s opinion provides a lengthy analysis of when it is proper for a court to conclude, as a matter of law, that such a proceeding qualifies as quasi-judicial for purposes of the absolute privilege defense.

Senior Care Resources, Inc. v. OAC Senior Living, LLC, No. 05-12-00495-CV

The Texas Whistleblower Act prohibits a governmental entity from taking an adverse personnel action against an employee who in good faith reports a violation of law to an appropriate law enforcement authority. Tex. Gov’t Code § 554.002(a). Those elements are jurisdictional, and a plaintiff who fails to adequately plead facts supporting the claim can have his claim dismissed. The Court of Appeals did just that in an appeal from a $400,000 judgment against the Dallas Independent School District. The plaintiff alleged that he had been terminated for reporting that his supervisor had directed him to perform three gas tests in a single day, which he claimed was unsafe. But the plaintiff’s petition did not allege that any actual violation of law had taken place, just that he had been pressured to do something that might be unsafe. As a result, the employee failed to state a claim in his petition, and the trial court therefore had no jurisdiction over his claim.

Dallas Indep. Sch. Dist. v. Watson, No. 05-12-00254-CV

The Court of Appeals has issued a lengthy opinion affirming the confirmation of a take-nothing arbitration award, but reversing the trial court’s grant of a $10,000 sanction award against the attorney who challenged the award. The case arose out of the sale and subsequent foreclosure on a mineral lease in California. The lender alleged that it had been defrauded because it had not known about a $500,000 finder’s fee paid to the principal of the company that bought the mine for $2 million. The arbitrator rejected that position, finding that the lender’s chief witness was not credible in his allegations that he had not known about the finder’s fee. The opinion disposes of multiple grounds for vacating the award, including arguments that the arbitrator exceeded his authority and manifestly disregarded the law or committed a gross mistake in his award. The Court also denied the lender’s argument that the trial judge should have been disqualified due to her and her husband’s authorship (before she became a judge) of a paper praising arbitration and her husband’s continuing service as an arbitrator. But while the Court of Appeals found no merit to the lender’s challenges, it concluded that the trial court had abused its discretion in sanctioning the lender’s attorney. The largely generic facts alleged in the attorney’s pleading were supported by the record, and his legal contentions, even if not ultimately meritorious, could not serve as a basis for sanctions under Chapter 10 of the Civil Practice & Remedies Code. The Court remanded the case to the trial court for further consideration of alternative grounds for sanctions that the trial court had not ruled upon.

Humitech Dev. Corp. v. Perlman, No. 05-12-00857-CV

Mark Palla filed suit against a group of defendants for breach of contract and tortious interference arising out of the breach of a sales commission agreement. The jury returned a verdict for $278,718 on the contract claim against Bio-One, Inc., and exactly $100,000 for tortious interference against Aydemir Arapoglu and Transtrade LLC. Palla argued that the tortious interference damages should have been the same as the breach of contract award and that each of the defendants should be jointly and severally liable for the entire amount. The trial court disagreed, entering judgment against Bio-One for $178,718 and against all three of the defendants, jointly and severally, for an additional $100,000. Palla appealed, but the Court of Appeals affirmed. Although generally the measure of damages for tortious interference is the same as the measure of damages for the breach of the contract, a tortious interference defendant is only liable for damages that are proximately caused by the interference. Thus, the question on appeal was whether there was any evidence that the defendants’ interference had only caused a portion of Palla’s damages. But Palla had not brought forward any record of the trial proceedings, due to the belief that he was entitled to the full amount of contract damages as a matter of law. Since the Court of Appeals could not determine whether the evidence supported only a partial damage award for tortious interference, Palla could not demonstrate that the trial court had erred by refusing to disregard the jury’s finding.

Palla v. Bio-One, Inc., No. 05-12-01657-CV

In a contentious trade secret case, a district judge sat through the deposition of Pendragon Transportation’s corporate representative in order to rule on the objections and instructions offered by Pendragon’s attorney. That same day, the trial court sua sponte appointed a special master to attend future depositions and make rulings on the attorneys’ objections. Two months later, Pendragon filed an objection to the special master order, and the trial court overruled that objection a month later. Three months after that ruling, and only 11 days before trial, Pendragon filed its mandamus petition with the Court of Appeals. Given Pendragon’s six-month delay in seeking mandamus to challenge the appointment of the special master, and its failure to disclose that trial was only two weeks away at the time of its filing, the Court concluded that Pendragon had slept on any right it may have had to complain about the special master. However, the Court did grant Pendragon limited relief, holding that the trial court abused its discretion by ordering the company to pay the special master’s expenses in advance. That ruling was contrary to Rule 143, which only permits the court to require security to be posted for costs, not their actual payment prior to entry of a final judgment.

In re Pendragon Transp. LLC, No. 05-13-01749-CV

The Court of Appeals has reiterated that mandamus relief is available when the trial court erroneously denies a defendant’s motion for leave to designate a responsible third party. In this instance, the trial court had denied Greyhound’s attempt to join the owner of a crane truck that had been involved in a collision with a bus. The plaintiff was a passenger in the crane truck, and Greyhound alleged that the truck’s poor condition had proximately caused the accident. Following its own precedent of In re Oncor Elec. Delivery Co., 355 S.W.3d 304, 306 (Tex. App.—Dallas 2011, no pet.), the Court held that Greyhound had met its pleading requirements for naming the responsible third party, and that the improper denial of leave could not be adequately addressed by appeal. Permitting the case to be tried without the third party “would skew the proceedings, potentially affect the outcome of the litigation, and compromise the presentation of Relators’ defense in ways unlikely to be apparent in the appellate record.” The Court therefore conditionally granted mandamus.

In re Greyhound Lines, Inc., No. 05-13-01646-CV

In KingVision Pay-Per-View, Ltd. v. Dallas County, the Court affirmed the county’s plea to the jurisdiction because a statute only authorized suit against a constable and his sureties for failing to execute on the plaintiff’s judgment.  And in City of Sachse v. Wood, the Court reversed the trial court’s denial of a plea to the jurisdiction, holding that the plaintiff had failed to establish a violation of the Whistleblower Act because the he reported the alleged misconduct to fire department personnel, not an “appropriate law enforcement authority.”

Family law and medical malpractice aren’t usually our things here at 600 Commerce, but a wrongful death opinion case illustrates a principle of standing that may be of interest to commercial litigators in their own tort and family law-related cases. At issue was whether the plaintiff had standing to sue for wrongful death after her former husband died of cardiac arrest. Husband and wife were formally divorced at the time of his death, but the wife claimed that they had an “informal” or common law marriage even after the divorce. The trial court granted summary judgment for the defendants, and the Court of Appeals affirmed. The wrongful death statute required the plaintiff to have been a surviving spouse. The evidence showed that the divorce had really only happened because the couple wanted to protect their assets from potential creditors, and that they had continued to live together and hold themselves out as husband and wife. Although the couple here held themselves out to be husband and wife and lived together as such after the divorce, the wife had failed to show that they had actually agreed to be married — i.e., that they had a present, immediate, and permanent intent to be married as husband and wife. Instead, the widow testified that they had intended to “legalize the marriage again” only when the couple’s creditors were paid off. Thus, without the required element of a present intent to be married, the plaintiff could not demonstrate the existence of a common law marriage, and she had no standing to sue under the wrongful death statute.

Malik v. Bhargava, No. 05-13-00384-CV

The owners and occupants of a medical office building sued TDI, the company that installed the plumbing system, alleging a number of defects that caused mold and “brown water.” TDI filed a motion to dismiss based on the plaintiffs’ failure to file a certificate of merit, which is required when the plaintiff’s claims arise out of the provision of professional services by certain types of licensed or registered professionals, including engineers and architects. See Tex. Civ. Prac. & Rem. Code § 150.002. The trial court denied the motion to dismiss, and the Court of Appeals affirmed on interlocutory review. The only evidence TDI had offered to show it was a “licensed or registered professional” was a printout of search results from a government registry of engineering firms, and that printout showed nothing regarding TDI’s alleged status as a licensed or registered engineering firm. Based on that evidence, the trial court did not abuse its discretion in concluding that TDI had failed to meet its burden of showing itself to be a licensed or registered professional, and the certificate of merit requirement therefore did not apply.

TDIndustries v. My Three Sons, Ltd., No. 05-13-00861-CV

A Collin County divorce case turned into a temporary injunction proceeding involving claims of assault and terroristic threats by an attorney in the middle of a deposition. The plaintiff, Barry Wells, alleged that his wife’s attorney became angry when Wells told him to calm down and commented that May’s daughter had probably committed suicide due to the attorney’s supposed anger issues. The lawyer allegedly made multiple death threats in the course of throwing Wells out of the building. Five days later, Wells filed a petition seeking injunctive relief to prevent the attorney from coming within 300 feet of him. The trial court granted an ex parte TRO, but the attorney quickly moved to dissolve the order and to impose sanctions for filing a groundless, bad faith pleading. After a hearing, the trial court dissolved the TRO and entered sanctions against Wells by striking his petition and dismissing the case with prejudice.

The Court of Appeals affirmed the dissolution of the TRO, but reversed the sanctions order. The ruling on the TRO was moot, and therefore non-appealable, because the order would have expired after 14 days in any event. As to the sanctions order, the deposition transcript revealed that Wells had been the instigator of the confrontation with the defendant, and that his comment about the attorney’s daughter was outrageous, the transcript also showed that the attorney had indeed threatened to kill Wells if he did not leave or if he ever returned. Thus, even though though Wells’ pleading presented an inaccurate account of what had transpired, the threat of imminent bodily injury meant that the claims of assault and terroristic threat were not groundless. The order striking the petition was therefore reversed, and the case was remanded for further proceedings.

Wells v. May, No. 05-12-01100-CV

The Court of Appeals has conditionally granted mandamus relief to the wife of a judgment debtor after she became entangled in the creditor’s efforts to collect on the judgment against her husband. Wells Fargo alleged that Catherine Karlseng did not do any actual work for her husband’s law firm, that she only received wages by virtue of her husband’s work at the firm, and that the money was not exempt from execution as wages because her husband was really an independent contractor of the firm. The trial court entered a turnover order. The Court of Appeals held that as a third party to the underlying judgment, Mrs. Karlseng had no adequate remedy at law because she could not supersede the judgment to prevent execution and because the turnover order prevented her from paying her living expenses. The trial court had also abused its discretion, the Court held, because the turnover statute cannot be used to adjudicate third-party ownership claims. As a non-party to the underlying judgment, Mrs. Karlseng would have to be made a party to the proceeding before she could be required to turn over property in which she claimed an ownership interest.

In re Karlseng, No. 05-14-00049-CV

Gary Cooper thought he was dealing with an authorized representative of Lawyers Title Company when he deposited $1.8 million in escrow for the purchase of property in Fort Worth. In reality, Jason Chumley was an independent contractor working for an attorney for Lawyers Title. But the Fort Worth project never developed, and Chumley and two of Cooper’s business associates instead applied the money to pay off four liens on a McKinney Avenue property in Dallas. That transaction led to federal indictments for wire fraud, as well as a lawsuit by Cooper against numerous parties in an effort to recover the $1.8 million. The trial court granted summary judgment for Cooper on his claims for bailment, conversion, and money had and received, while denying Lawyers Title’s cross-motion. Those claims were then severed from the rest of the case, thereby enabling an immediate appeal. The case turned largely on whether Lawyers Title had ever received Cooper’s funds, as they had been wired to an account maintained by the title company’s attorney. There was conflicting evidence on whether Lawyers Title actually controlled that account, which was a genuine issue of material fact and required reversal of summary judgment on all three quasi-contract claims.

Lawyers Title Co. v. J.G. Cooper Dev,, Inc., No. 05-11-01537-CV

Brian Vodicka and Steven Aubrey provided nearly $1 million for a loan to fund a real estate development. The loan was only secured by a subordinate lien, and Vodicka and Aubrey lost their entire investment after the borrower defaulted. They sued North American Title, which had served as the escrow agent for the loan, alleging a variety of fraud, negligence, and fiduciary duty claims. The Court of Appeals affirmed summary judgment for the title company. The Court held that the trial court had not erred in striking the plaintiffs’ summary judgment evidence. The trial court had not abused its discretion in sustaining the defendant’s objection to a spreadsheet because the plaintiffs had failed to file it under seal as required by the court’s protective order. The plaintiffs also waived their complaint about their summary judgment affidavit because their appellate briefing failed to address several of the objections the defendant had asserted before the trial court. Those rulings meant that the plaintiffs were left with literally no evidence to respond to North American Title’s no-evidence motion, and the trial court’s grant of summary judgment was therefore affirmed.

Vodicka v. N. Am. Title Ins. Co., No. 05-13-00126-CV

Clint Simon applied for a “Termite & Pest Control General Liability” insurance policy for his d/b/a, Sherlock Pest. The application included a “WDI Exclusion,” which excluded liability for claims or losses arising out of inspections for Wood Destroying Insects. That exclusion, in somewhat different form, was included in a pair of endorsements to the policy that was subsequently issued, as well as a later renewal policy. When a homeowner sued Simon for performing an improper inspection, the insurer invoked the WDI Exclusion to deny coverage. Simon sued, but the insurer obtained summary judgment on all claims. The Court of Appeals affirmed, holding that Simon could not have justifiably relied on a coverage certificate the insurer had filed with the Texas Department of Agriculture, which had not mentioned any exclusion in Simon’s insurance policy. Because the application, the initial policy, and the renewal policy all contained the WDI Exclusion, a reasonable person could not have relied on the coverage certificate as a representation that there was actually insurance coverage for WDI inspections. The Court also rejected Simon’s argument that the trial court should have granted a continuance to permit him to conduct more discovery, as his appellate brief failed to explain how the additional discovery would have allowed him to respond to the summary judgment motion.

Simon v. Tudor Ins. Co., No. 05-12-004430CV

The Court of Appeals has affirmed a judgment in favor of the plaintiff in a breach of contract case. Defendant Cody Murphy had taken his truck to Killer Ridez, Inc. and asked that they make his 1983 Chevy pickup “look showroom new.” When Murphy went to pick up the truck, the shop informed him of everything they had and had not done, noting in particular that they had followed Murphy’s instruction by not replacing the carburetor. As a result, the truck did not run well, and Murphy put a stop payment order on the final check he had issued to the shop. On appeal, Murphy challenged the evidence supporting the existence and validity of the parties’ contract, but that issue was negated by Murphy’s own pleading, which had specifically pleaded (and not in the alternative) the existence of a contract to restore the pickup. The Court also affirmed the trial court’s fact findings in support of the breach of contract claim, including the sufficiency of the evidence establishing that Killer Ridez had performed more $28,000 worth of work but was still owed approximately $6000 by Murphy.

Murphy v. Killer Ridez, Inc., No. 05-13-00035-CV

To settle a previous lawsuit, TST Impreso agreed to make a series of payments to Overveen General Trading. After TST was failed to make the first scheduled payment, Overveen demanded that TST cure the default. Instead, TST sued Overveen for a declaratory judgment seeking to avoid its payment obligations. The Court of Appeals held that the term “security interest” was not ambiguous, TST could not successfully invoke a contract term regarding security interests by pointing to several judgments entered against an entity related to Overveen. Judgments, the Court held, are not security interests, particularly where they have not been reduced to a lien against specific property of the judgment debtor. Moreover, the judgments against Overveen’s corporate sibling did not relate to the settlement funds owed by TST, so there was no possibility that any judgment creditors could seek to enforce their judgments against the settlement payments. The Court of Appeals therefore affirmed the trial court’s grant of summary judgment in favor of Overveen, including its award of liquidated damages against TST.

TST Impreso, Inc. v. Asia Pulp & Paper Trading (USA), Inc., No. 05-12-01551-CV

The Court of Appeals has affirmed in part and reversed in part a summary judgment in favor of a law firm in a suit to recover attorney fees from its former clients. The opinion is quite lengthy and covers a number of topics. The first issue is evidentiary, as the Court decided that the trial court did not abuse its discretion in striking the affidavit of one of the defendants, in which he averred that the defendants did not owe the fees because they were not “reasonable and necessary” to the engagement. The engagement letter provided that the law firm was to perform “[r]easonable and necessary legal services . . . which [the firm] and [the clients] decide are reasonable and necessary to perform the Engagement.” Nevertheless, the affiant was not an attorney and was therefore not qualified to offer an opinion on the reasonableness or necessity of the fees. The Court also affirmed the summary judgment ruling in favor of the law firm’s cause of action for sworn account, as the defendants had failed to answer it with a verified affidavit that disputes the specific facts on which such a claim is based. The Court further affirmed that the defendants had not produced any evidence of recoverable damages on their counterclaims, since the only harm they had shown was having to incur attorney fees to defend themselves in this lawsuit. However, the Court reversed that portion of the judgment that held the president of one defendant jointly and severally liable for payment of the debt owed by one of the corporate defendants, and remanded the case to the trial court for further consideration of the attorney fees that had been assessed against that individual.

Woodhaven Partners, Ltd. v. Shamoun & Norman, L.L.P., No 05-11-01718-CV

Two and a half years ago, Charlene Taggert obtained the reversal of a declaratory judgment ordering that certain retirement accounts of her late husband belonged to his estate, not to her. The probate court had awarded attorney fees to the executors, so the Court of Appeals remanded to that court for further consideration of the attorney fees now that Charlene had become the prevailing party. On remand, the probate court awarded Charlene $18,000 for fees incurred at trial, and an additional $5,000 for the appeal. Both sides appealed the $5,000 award for the first appeal. The Court of Appeals rejected the executors’ claim that appellate fees could only be awarded on a conditional basis (i.e., “if the appeal is successful”), rather than for an appeal that has already been successful. The Court noted that “[o]n remand, the parties stand in the position they held before judgment was entered.” Likewise, the Court rejected Charlene’s argument that the probate court should have permitted her to offer new evidence of her actual appellate fees, rather than relying on the estimated fees presented during the original trial of the case. Relying on the Texas Supreme Court’s opinion in Varner v. Cardenas, 218 S.W.3d 68 (Tex. 2007), the Court held that retrial of a party’s attorney fees on remand is only necessary when the evidence offered at trial is no longer relevant.

Tigert v. Tigert, No. 05-12-01282-CV

After accepting a $1500 settlement for damage to his truck, David Lynd allegedly began to harass various executives and employees of Bass Pro Shop, threatening them and demanding additional money. Bass Pro responded by filing a motion to enforce the releases in the settlement agreement and seeking injunctive relief. The trial court granted temporary and permanent injunctions, ordering Lynd not to contact Bass Pro personnel and to stay at least 100 feet away from Bass Pro’s locations and the homes of its directors, officers, and employees. Lynd — appearing pro se — asserted an impressive 33 issues on appeal. The Court of Appeals affirmed. The Court was unwilling to consider the errors Lynd claimed from the original lawsuit, which had not been appealed and could only be attacked on bill of review. The Court rejected Lynd’s attempts to argue that the settlement had been procured by fraud, as well as his complaint that he had been “betrayed by own counsel” in that lawsuit. More notably, the Court affirmed the trial court’s injunction, holding that Lynd’s pattern of harassment demonstrated imminent harm that could not be remedied by an award of damages. An injunction was proper, the Court held, because Lynd’s demands for additional money were in violation of his settlement agreement with Bass Pro, in which he had released all his claims concerning his truck, including all claims against the company’s personnel.

Lynd v. Bass Pro Outdoor World, Inc., No. 05-12-00968-CV

A memorandum opinion demonstrates the downside of failing to respond to a discovery request. Alfredo Cornejo sued Anthony Jones for causing a multi-vehicle accident. Jones filed a general denial and alleged that someone else’s negligence proximately caused the collision. Cornejo served Jones with basic contention interrogatories, but Jones never answered them. Cornejo did not move to compel, but instead sought to exclude Jones’ testimony at trial. The trial court allowed Jones to testify, and the jury returned a verdict for the defense, apparently crediting Jones’ testimony — contrary to the police report of the incident — that he had been the victim of a rear impact that spun him into the other lanes of traffic. The Court of Appeals reversed and remanded, holding that the testimony should have been excluded under Rule 193.6(a) because Jones had failed to answer the contention interrogatories and could not show either good cause for that failure or lack of unfair surprise or prejudice to Cornejo. Contrary to the trial court’s ruling, a motion to compel is not a prerequisite to the exclusion of evidence under Rule 193.6(a), which provides for automatic exclusion if the proponent of the evidence did not answer the discovery and cannot establish those two exceptions to the exclusionary rule.

Cornejo v. Jones, No. 05-12-01256-CV

The Court of Appeals has once again reiterated that the sole issue in a forcible detainer case is the right to immediate possession of the property. Both the justice court and the county court at law sided with Wells Fargo, which had purchased the home in foreclosure. On appeal, the borrowers argued that Wells Fargo had not shown itself to be an assignee of the original deed of trust, and that notice of the foreclosure sale had not been properly recorded. Because those issues alleged defects in the bank’s title and the foreclosure process, and not the right to immediate possession, they could not  be addressed in a forcible detainer action. The Court of Appeals therefore affirmed the lower courts’ rulings awarding possession to Wells Fargo.

Noye v. Wells Fargo Bank, N.A., No. 05-12-00997-CV

In a products liability and wrongful death lawsuit, Fisher & Paykel Appliances was ordered to produce three reports it had made to the Consumer Product Safety Commission regarding the safety of its gas clothes dryers. F&P objected to the discovery based on Texas Rule of Evidence 502, which states that reports required by law to be made are privileged “if the law requiring it to be made so provides.” The Court of Appeals denied mandamus relief to F&P. The Court rejected application of the Rule 502 privilege because the Consumer Product Safety Act does not provide for any privilege for reports mandated under the statute. The Court rejected F&P’s attempt to have it recognize a more general “self-critical analysis privilege,” holding that such privileges can only be created by statute. The Court also considered the “selective waiver doctrine,” under which the federal Eighth Circuit has held that the privilege for attorney work product is not waived when the material is turned over to a government agency pursuant to subpoena. Noting that most courts around the country have rejected that rule, the Court of Appeals held that “documents transmitted to a regulator as part of an entity’s mandatory reports are not protected from disclosure simply because an attorney chooses which documents or other materials to produce to the regulator or because an attorney prepares or compiles portions of the report to the regulator.”

In re Fisher & Paykel Appliances, Inc., No 05-13-01498-Cl

In this oil and gas case, a pair of working interest owners sued to recover alleged overcharges made by the operator to the joint account. The trial court found that the joint operating agreement was ambiguous and submitted the matter to a jury, which ruled in favor of the operator. The Court of Appeals affirmed. The contract provision at issue was from a pre-printed form, but included a typewritten addition at the end. The form language permitted the operator to allocate a portion of its overhead and charge it to the joint account, while the typewritten insert provided for flat-rate monthly charges. The working interest owners believed that the flat rate in the inserted language was all the operator could charge to the joint account, while the operator believed it could charge both its overhead and the per-well rate. The Court of Appeals held that the contract was ambiguous because both proffered interpretations were reasonable, and therefore affirmed the jury’s finding in favor of the operator’s interpretation.

MCS Minerals, Ltd. v. Plains Explor. & Prod. Co., No. 05-12-01309-CV

The Court of Appeals has reversed and remanded a summary judgment ruling obtained by Minyard Food Stores. The trial court ruled that Minyard was entitled to a setoff against North Central Distributors’ receivable. The receivable was originally owned by NCD Acquisition, an entity formed by members of the Minyard family to acquire the assets of North Central. After NCD Acquisition defaulted on its note, North Central foreclosed on NCD’s assets, including the Minyard Food Stores receivable. But in the meanwhile, NCD Acquisition also breached a sublease agreement with Minyard. NCD and Minyard settled that dispute with the lessor, but reserved its right of offset against NCD. Minyard contended that it was a buyer in the ordinary course of business for the goods underlying the NCD Acquisition receivable, but the evidence on that point was disputed. There was also conflicting evidence as to the proper date for the offset, as some of the unpaid rent may have accrued after Minyard received notice of North Central’s foreclosure on NCD’s receivable, and much of the claimed offset appeared to be for future rent payments. In light of these disputed fact issues, the Court of Appeals reversed and remanded the case to the trial court.

N. Central Distribs., Inc. v. Minyard Food Stores, Inc., No. 05-12-00418-CV

In 1986, Summers Electric Company extended credit to Stuart Electric, Inc., which backed its credit application with the personal guaranty of its owners, Barry and Zac Stuart. The guaranty was in favor of Summers or its assigns, for all money that may come to be due to Summers by Stuart Electric. Although Summers’ ownership and name changed over the years, Stuart continued to do business with the company.  In 2008, Barry and Zac sold Stuart Electric. The new ownership group continued to purchase materials from Summers, but failed to pay up. Summers turned to the Stuarts to make good on their 22-year-old written guaranty, which they refused. Summers then filed suit, obtaining a default judgment against Stuart Electric and a summary judgment against Barry and Zac.

On appeal, the Court of Appeals first sustained the trial court’s decision not to strike the Stuarts’ affidavits, in which they testified that Summers’ employees had told them they were no longer on the company’s account and were not responsible for any purchases made by Stuart Electric. Although the Stuarts were interested witnesses, their affidavits were still admissible because they were sufficiently “clear, positive, and direct, free from contradictions or inconsistencies, and could have been readily controverted.”  Tex R. Civ. P. 166(a)(c). That affidavit testimony also supported each of the elements of the Stuarts’ promissory estoppel defense, which precluded the trial court’s grant of summary judgment against them. The Court therefore reversed and remanded for further proceedings.

Stuart v. Summers Group, Inc., No. 05-12-00489-CV

The Court of Appeals has granted mandamus to prevent three depositions sought by a homebuyer seeking to avoid an arbitration agreement. The trial court granted the builder’s motion to compel arbitration, but had not yet ruled whether the buyer’s claims against two individual employees of the builder were also arbitrable. While their motion was pending, the trial court granted a motion to compel the depositions of the employees and the company to explore whether they had engaged in any fraudulent or criminal conduct. The Court of Appeals held that order was an abuse of discretion. Under In re Kaplan Higher Education Corp., 235 S.W.3d 206 (Tex. 2007), agents who are nonsignatories to their principal’s arbitration agreement may still invoke equity to compel arbitration unless the claimant can demonstrate the agents had unclean hands in the formation of the arbitration provision. In this instance, the buyer alleged only that the individuals had unclean hands in the performance of the contract, not the formation of the arbitration clause. Accordingly, the issue of their unclean hands was an issue for the merits of the case that had to be determined in arbitration, making discovery of those facts inappropriate for a judicial proceeding. The Court therefore directed the trial court to stay the case so that all of the parties could proceed to arbitration. The Court also wrote separately to summarily deny the buyer’s mandamus petition challenging the arbitration order for her claims against the company.

In re Susan Newell Custom Home Builders, Inc., No. 05-13-01474-CV

Dan Lopez sues RS Clark & Associates for violating the Debt Collection Practices Act, the Texas Debt Collection Practices Act, and the DTPA. The dispute apparently arose out of a $54.34 cleaning charge assessed and turned over to the collections agency by Lopez’s former apartment complex. Lopez based his case on four unanswered phone calls the agency made to his residence during daytime hours, as well as its failure to inform credit reporting services that Lopez disputed the debt. The collections agency counterclaimed for sanctions and attorney fees, alleging that Lopez’s suit was groundless and brought in bad faith. The trial court granted summary judgment for the collections agency and, after a bench trial, awarded it attorney fees as a sanction against Lopez. On appeal, the Court of Appeals held that Lopez had failed to establish that he gave the collections agency written notice he no longer wished to communicate with them, as his letter only directed them not to call his cell phone or work number. With respect to his home phone, the letter stated only that it was “inconvenient” for them to call him at home. The letter also did not dispute the validity of the debt, stating instead that he just did not want it reported to the credit agencies. The Court of Appeals therefore affirmed.

Lopez v. RS Clark & Asscos., Inc., No. 05-12-00868-CV

Raymundo Rico was fired after being accused of sexually assaulting a co-worker at L-3 Communications. He was acquitted on the criminal charges, and subsequently brought suit against L-3 and his accuser for intentional infliction of emotional distress and malicious prosecution. The trial court granted summary judgment for the defendants, and the Court of Appeals affirmed. The Court rejected Rico’s claim that he should receive the benefit of an adverse presumption due to the defendants’ alleged failure to preserve security videos, as he had not moved to compel any discovery on those tapes. On  the malicious prosecution claim, the Court concluded that there was no evidence in the summary judgment record to negate the legal presumption that a person who reports a crime does so in good faith and with probable cause. Likewise, the Court held that there was no evidence of extreme and outrageous conduct for the intentional infliction of emotional distress claim because Rico did not have evidence that the complainant had not honestly believed she had been a victim of assault when she reported it to the police.

Rico v. L-3 Communications Corp., No. 05-12-01099-CV

One of the legacies of Texas consumer protection laws was Article XVI, Section 50 of the Texas Constitution, which effectively prohibited home equity lending. In 1997, voters approved amendments to that section to permit home equity loans, but only under certain conditions. Among other restrictions, the loan cannot exceed 80% of the value of the equity in the home, and the lender must cure any violation of the constitutional requirements within 60 days of the date the borrower gives notice. If those requirements are not met, the lender forfeits all principal and interest and loses its lien on the property.

Lonzie Leath obtained a $340,000 home equity loan in 2005, and signed an acknowledgment that his home’s fair market value was $425,000. In 2008, the servicer sought to foreclose on the property, and Leath responded by alleging that the loan was illegal because it had actually exceeded 80% of the value of the home at the time it was made. The jury found that the property’s fair market value had been only $421,400, a finding that placed the principal of the loan barely over the 80% limit. The trial court therefore entered judgment forfeiting the principal and interest and invalidating the lender’s lien.

Although the servicer claimed that Leath had failed to provide notice of the alleged constitutional deficiency, the Court of Appeals agreed with Leath that his pleadings had given notice and started the clock on the lender’s 60-day cure period. The Court also held that the jury’s valuation finding was adequately supported by the evidence, including the admission of the servicer’s appraisal expert that he had not accounted for $3,600 of electrical work that needed to be performed at the time of the loan. The Court of Appeals therefore affirmed the judgment in favor of the borrower, leaving the lender without principal, interest, or the right to foreclose.

Wells Fargo Bank, N.A. v. Leath, No. 05-11-01425

In 2005, Dibon Solutions acquired 100% of RTS’s common stock. In 2006, the Texas Secretary of State ordered the forfeiture of RTS’s charter or certificate of authority for failure to comply with the tax code. In 2007, Martinair contracted with RTS for use of RTS’s profit optimization products and related services. Martinair later terminated its agreement with RTS, and RTS sued Martinair for breach of contract, identifying the plaintiff as RTS, “a corporation organized under the laws of the State of Texas.”

Martinair filed a motion for summary judgment against RTS, arguing RTS’s forfeiture of its corporate existence in 2006 deprived it of legal authority and capacity under Texas law to enter into the Agreement upon which it sued Martinair, which the trial court granted in part. The trial court also struck RTS’s amended petition, which had purported to substitute RTS’s parent corporation, Dibon, as the plaintiff. On appeal, Dibon argued the trial court erred in striking its amended petition. The Court of Appeals disagreed, and affirmed the trial court’s ruling. Rule 28 permits a partnership doing business under an assumed name to file suit in that name. However, Dibon failed to make a showing that it actually conducted business under the name RTS, thus its amended petition was improper.

Dibon Solutions, Inc. v. Martinair Holland N.V., No. 05-11-01586-CV

The Lavon Water Supply Corp. sued TierOne Converged Networks to evict TierOne and its equipment from Lavon’s water towers. TierOne superseded the eviction by depositing $10,800 — one year of rent — into the registry of the court. Lavon then moved to increase the bond to $40,500, basing the increase on the offer of a competing company to lease the space for $3,375 per month. The trial court granted the request to increase the bond, but the Court of Appeals set aside that order on motion for review.

In setting the supersedeas bond in an eviction suit, the court must consider the reasonable value of the rents likely to accrue during appeal. Although the testimony of Lavon’s witnesses established the amount of rent that TierOne’s competitor proposed to pay, there was no evidence that $3,375 was a reasonable rental rate for space on Lavon’s water towers. In addition, TierOne had offered to waive the exclusivity provision in its lease, and the testimony established that TierOne’s competitor was willing to lease space from Lavon with TierOne’s equipment still in place. Thus, there was no evidence that Lavon was being deprived of any increased rents, and the order increasing the supersedeas bond was vacated.

TierOne Converged Networks, Inc. v. Lavon Water Supply Corp., No. 05-13-00370-CV

Kelly Hawkins obtained a default judgment in his home state of Kansas against Texas attorney Lloyd Ward and his firms. Hawkins then brought suit in Dallas to enforce the Kansas judgment. Ward contended that the Kansas judgment was ineffective because that state lacked personal jurisdiction over him. The Court of Appeals disagreed. The Kansas court had found jurisdiction based in part on the allegation that the defendants had operated as a joint venture in entering into their representation of Hawkins, and Ward failed to negate that conclusion by clear and convincing evidence. Ward also failed to negate Hawkins’ allegations of the defendants’ contacts with Hawkins in Kansas during the course of the representation. The Court of Appeals therefore affirmed the trial court’s denial of Ward’s motion to vacate the Kansas judgment.

Ward v. Hawkins, No. 05-12-00712-CV

The Court of Appeals has granted mandamus in another discovery dispute. This time, it regards a trial court’s order for an expert witness to turn over all documents reflecting discussions with the plaintiff and its counsel, as well as all documents relating to the plaintiff’s claims and defenses. But the expert had also performed services for the plaintiff in a capacity that brought him within the scope of the attorney-client privilege, and the Court held that it was an abuse of discretion for the trial court to compel the production of privileged materials and items outside the scope of the rules providing for expert disclosures.

In re Segner, No 05-13-01414-CV

Tecore, Inc. purchased equipment from AirWalk Communications and integrated the equipment into its own cellular network products. Tecore originally bought the equipment under an agreement that did not include any arbitration clause, but AirWalk elected to terminate that contract and proposed a new one instead. The proposed contract included an arbitration clause, but the parties were never able to finalize a new agreement. Nevertheless, Tecore sought to purchase additional equipment from AirWalk, and AirWalk’s quotation for that equipment attached and incorporated its own terms and conditions, including an arbitration provision. Tecore sent back a purchase order that made no reference to AirWalk’s terms, and AirWalk responded with a “Purchase Order Acceptance” form that again stated the sale was subject to the same terms attached to its previous quote. When the sale subsequently fell apart, AirWalk filed a demand for arbitration. Tecore objected to the arbitrator’s jurisdiction, but the case proceeded and an award was ultimately entered in favor of AirWalk. The district court confirmed the arbitration award, and the Court of Appeals affirmed.

Tecore argued that AirWalk’s arbitration provision had never become part of their agreement, but the Court of Appeals disagreed. Reviewing the issue de novo, the Court first disposed of Tecore’s claim that the sale had been made subject to the continuing terms of the original sales contract. Tecore also argued that it had not accepted the terms attached to AirWalk’s quote because its purchase order had not complied with the quote’s instruction to reference both the quotation number and the terms and conditions attached to the quote. However, the Court of Appeals did not read that instruction as mandating a particular form of acceptance for the formation of a contract, and even if it had been a requirement, AirWalk’s subsequent assent to Tecore’s defective acceptance confirmed that a contract had still been formed, including AirWalk’s arbitration clause.

Tecore, Inc. v. AirWalk Communications., Inc., No. 05-12-00130-CV

Miller Global Properties worked with Marriott International to build a resort and golf club in the Hill Country outside San Antonio. They entered into a series of agreements for planning and budgeting the resort, but the final contract by which Miller purchased the report included an “as-is” sale provision. In that clause, Miller acknowledged and agreed that Marriott had not made any representations, and went on to “specifically negate and disclaim any representations.” A related contract regarding the construction of the property also contained a merger clause. The cost to build the resort proved to be $90 million higher than the budget, and Miller sued Marriott on con-tort claims, alleging that Marriott had misrepresented that the plans and specifications for the resort were essentially complete and that the budget would be adequate to complete construction.

The trial court granted summary judgment for Marriott, which argued that the contracts negated the element of reliance necessary to support Miller’s tort claims. The Court of Appeals affirmed, holding that the as-is provision negated and disclaimed the extrinsic representations Marriott was alleged to have made to Miller. That met the standard set by Italian Cowboy Partners, Ltd. v. Prudential Ins. Co., 341 S.W.3d 323 (Tex. 2011), which had permitted a misrepresentation case to proceed where the parties’ contract only disclaimed the existence of representations about the subject matter of the contract, without also disclaiming reliance on any representations made outside the contract. Because the contracts negotiated between Miller and Marriott disclaimed both the existence of additional representations and any reliance on them, Miller’s claims were barred.

Miller Global Props., LLC v. Marriott Int’l, Inc., No. 05-12-0822-CV

The plaintiff in a personal injury suit sought to compel the deposition of the defendants’ outside counsel, who had also served as the parent company’s secretary. The trial court granted the motion in part, ordering the attorney to testify on certain business-related matters and his investigation of the collision that had injured the plaintiff. The Court of Appeals held that communications and materials provided to the attorney in his capacity as secretary were not privileged, but that information provided to or collected by him as the defendants’ attorney was necessarily privileged and therefore outside the proper scope of discovery. The Court of Appeals conditionally granted mandamus to exclude privileged information from the scope of the business-related topics, and to deny entirely the plaintiff’s attempt to obtain discovery regarding the attorney’s investigation of the accident.

In re Southpak Container Corp., No. 05-13-01457-CV

The Court of Appeals has granted mandamus relief in a discovery dispute over the scope of a corporate representative’s deposition. The underlying lawsuit was for damage to the plaintiffs’ property incurred in the course of moving from Texas to the United Arab Emirates. The plaintiffs sought deposition testimony on two topics that the Court of Appeals held were beyond the proper scope of discovery. First, the Court ruled that the plaintiffs were not entitled to discovery of the defendant’s gross revenues for 2009-13, as the relevant issue for purposes of exemplary damages is the defendant’s current net worth, not its past and present revenues. Second, the Court rejected the plaintiffs’ request for the witness to identify the defendants’ production documents and explain why they had been produced. On that issue, the Court cited In re Exxon Corp., 208 S.W.3d 70, 76 (Tex. App.-Beaumont 2006, orig. proceeding), for the proposition that “discovery regarding the methods of document collection and production invades the work-product privilege.” The opinion does not explain just how far that principle reaches, but attorneys and clients should keep it in mind the next time they are writing or responding to a corporate rep notice.

In re Arpin Am. Moving Sys., LLC, No. 05-13-01446-CV

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)

Justice O’Neill’s dissenting opinion

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

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

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

A short mandamus opinion from the Dallas Court of Appeals highlights a limit on the ability of courts to interfere with arbitration. In this case, the trial court stayed the arbitration and ordered the relator to dismiss it because the parties did not have an agreement to arbitrate. But the Texas Arbitration Act only authorizes a court to stay arbitration, not to order that it be dismissed. The Court of Appeals therefore directed the trial court to vacate the dismissal order, but leaving the stay in place while the litigation apparently moves forward in the trial court.

In re Seven Hills Commercial, LLC, No. 05-13-01340-CV

Plaintiff Shabaz Din was born in Pakistan, where he became a doctor and specialized in ophthalmology. After emigrating to the United States in the 1990s, Din took a job training medical assistants with ATI Career Training Center. When the position of Medical Assistants Program Director came open, Din applied for it. ATI chose to go with a doctor of osteopathy instead. That doctor was soon replaced by a different candidate with only a vocational degree, followed by yet another new hire who had not graudated from college. Din filed a complaint with the EEOC, and ATI fired him shortly thereafter. Din sued for national origin discrimination and retaliation, and the jury awarded him damages for back pay, emotional pain and suffering, and punitives.

The Court of Appeals took up several issues in its determination of the case. First, it dismissed Din’s cause of action for retaliation because he had not raised that issue in the underlying administrative proceeding as required by Chapter 21 of the Texas Labor Code (formerly, the Texas Commission on Human Rights Act). As to the damages, the Court held that there was no evidence that Din had suffered any compensible emotional pain and suffering due to the failure to promote, and it therefore vacated that portion of the judgment. The Court did find that there was evidence of back-pay damages, but nowhere near enough to sustain the jury’s award of $83,000, leading to a remand for additional proceedings on both liability and damages for the back-pay issue. Finally, the Court of Appeals reviewed the evidence supporting the jury’s finding of malice or reckless indifference and found it was legally insufficient to support an award of punitive damages. Although there was evidence that the ATI manager had intended to cause Dim “some harm” in denying his promotion, that evidence did not show an intent to cause “substantial injury or harm” because the promotion would have resulted in only a small raise in Dim’s hourly salary.

ATI Enters., Inc. v. Din, No. 05-11-01522-CV

The Court of Appeals has once again ruled that a contractual waiver prevents a guarantor from invoking its statutory right to offset if the foreclosed property was sold for less than its fair market value. This is the seventh time the Court has made that ruling in a little over a year, dating back to August 2012 in the case of Interstate 35/Chisam Road, L.P. v. Moayedi, and as recently as August 2013 in Compass Bank v. Manchester Platinum Mgmt. In this particular instance, the parties actually stipulated that the two homes at issue had fair market values in excess of the amounts owed under the promissory notes, even though they were sold for $582,623.07 less than those stipulated values. The Court further held that the broad waiver of “any statute or limitations or other defenses affecting [the guarantor’s] liability hereunder” was sufficiently specific to include a waiver of the offset defense provided by section 53.001 of the Texas Property Code. The Court therefore reversed the trial court and rendered judgment for the deficiency in favor of the lender.

Given the importance of this recurring issue to borrowers, lenders, and guarantors, it would not be surprising to see the Texas Supreme Court weigh in. The petition for review in the Moayedi case has proceeded to briefing on the merits.

Compass Bank v. Goodman, No. 05-13-00447-CV

The pace of opinions from the Court of Appeals has slowed down during the fall, but there is still news from the Texas Supreme Court. This morning, that court granted the petition for review in Farmer’s Insurance Exchange v. Greene. In August 2012, the Dallas Court of Appeals sided with the insurer in holding that a homeowner’s damages were barred by a vacancy clause in the insurance contract, which excluded liability for damages that occurred more than 60 days after the residence became vacant. The Court of Appeals rejected the insured’s claim that the exclusion did not apply because the vacancy of the home did not contribute to the fire that destroyed it. Oral argument at the Supreme Court is set for December 4, and you can find the parties’ briefs at the link below.

Greene v. Farmer’s Ins. Exch., No. 12-0867

The Court of Appeals has once again ruled that it is without jurisdiction to consider a permissive interlocutory appeal. In this instance, the developers of White Bluff Resort at Lake Whitney are in a dispute with their property owners over the assessment of fees for the property owners’ association. The parties filed cross-motions for partial summary judgment, and the trial court ruled in favor of the property owners. The parties then agreed to an interlocutory appeal of the ruling, which the trial court also authorized. The developers argued that the appeal presented “controlling questions” of law, but the Court of Appeals disagreed because the summary judgment ruling did not specify the basis for the trial court’s decision. Without a substantive ruling from the trial court, the Court of Appeals could not conclude that the appeal presented any controlling questions, and the Court was therefore without jurisdiction to hear the interlocutory appeal.

Double Diamond Delaware, Inc. v. Walkinshaw, No. 05-13-00893-CV

The Dallas Court of Appeals continues to be a difficult place to get a permissive interlocutory appeal. In this instance, a defendant in a breach of contract case attempted to appeal the denial of its motion for partial summary judgment, which had sought to establish that it could terminate its lease because of the cancellation of two government contracts. The Court of Appeals noted that while the interpretation of an unambiguous contract is question of law, it was not a controlling question of law in this case. The Court also pointed to the existence of several other issues in the lawsuit, concluding that the resolution of the contract issue would not advance the ultimate termination of the litigation. The Court therefore denied the petition for permission to appeal.

Trailblazer Health Enterprises, LLC v. Boxer F2, L.P., No. 05-13-01158-CV

According to the operators of Hank’s Texas Grill, the City of McKinney and its police officers have been wrongfully harassing the restaurant, its employees, and its customers for the last ten years. In response, the city alleges that Hank’s violates numerous city ordinances. The city filed a plea to the jurisdiction to invoke its governmental immunity. The trial court denied the plea, and the city appealed. Summarizing the recent (and conflicting) string of cases challenging local ordinances, the Court of Appeals concluded that “the Declaratory Judgments Act waives governmental immunity against claims that a statute or ordinance is invalid,” but “does not waive a governmental entity’s immunity against a claim that government actors have violated the law.” Construing Hank’s pleadings, the Court concluded that they did not demonstrate that Hank’s claim was outside the scope of the city’s governmental immunity. However, the pleading also did not demonstrate that the claim was barred by governmental immunity, meaning that Hank’s had to be given the opportunity to amend. The Court also affirmed the trial court’s ruling that Hank’s claim for damages was not barred by immunity to the extent that it was an offset against the city’s own damage claims. Finally, the Court of Appeals rejected the city’s claim that the trial court lacked subject matter jurisdiction to enjoin its enforcement of state laws and local ordinances, ruling that the pleadings and arguments at this stage of the case were still too unclear to affirmatively demonstrate that the trial court lacked jurisdiction to issue an injunction.

City of McKinney v. Hank’s Restaurant Group, L.P., No. 05-123-01359-CV

Appellant Danny Katave and two other individuals solicited Israeli investors to develop commercial real estate. The negotiations took place in Israel, and were conducted in Hebrew. The discussions resulted in two written contracts, one in Hebrew and one in English. The Hebrew document provided for a 10% success fee to Katave, but the English document included a 20% success fee. Naturally, Katave claimed the 20% fee when the property was sold. In the resulting litigation, the jury sided with the investors, finding that Katave had committed fraud by failing to disclose that the English document did not contain the same terms as the Hebrew contract.

The Court of Appeals confirmed the adequacy of the evidence supporting the finding of fraud by omission, holding that Katave had a duty to make a full disclosure in order to correct the false impression conveyed by his partial disclosure that the terms of the documents were consistent. The Court also affirmed the trial court’s finding of $466,226 in out-of-pocket damages, rejecting Katave’s contention that his agreement to submit the issue of “damages” to the trial court did not include the measure of damages to be applied. However, the Court of Appeals reversed the trial court’s award of attorney fees in favor of the investors, holding that the investors had plead and prevailed in the case as a fraud claim, not a claim for breach of contract. Because attorney fees are not recoverable on the basis of fraud, the investors could only recover their out of pocket damages.

K.A. West, LLC v. GK Investments, Inc., No. 05-11-00617-CV

The pace of the Court’s docket has slowed down since the end of August, but the stakes are still high for some litigants. Relator Todd Tomasella was convicted of criminal contempt and sentenced to consecutive terms of 6 and 3 months. The Court of Appeals granted habeas corpus because Tomasella had not had a jury trial, which cannot be denied if the sentence is in excess of six months. However, Tomasella had also been convicted of civil contempt, and he did not challenge that portion of the conviction in his habeas petition. The Court of Appeals therefore discharged the conviction and sentence for criminal contempt, but left the conviction and sentence for civil contempt in place. As a result, Tomasella will apparently remain in the custody of the Kaufman County Sheriff for an unspecified period of time.

In re Tomasella, No. 05-13-01077-CV

A little over a year ago, country music star Randy Travis was arrested for DWI, an event that was captured on the arresting officers’ dashboard video cameras. After pleading guilty, Travis’ attorney asked the court for a protective order requiring the Department of Public Saftey to destroy all copies and transcripts of the video. The trial court granted the motion. When DPS received a copy of the order, it moved to set it aside, but the trial court denied that motion. In the interim, DPS received an open records request for a copy of the video under the Texas Public Information Act. The Attorney General ruled that parts of the video could be redacted, but the rest of it must be released as public information. DPS sought mandamus relief to set aside the destruction order. Citing the AG’s ruling that the video was public information, the Court of Appeals concluded that the trial court had no jurisdiction to order that it not be released in response to an open records request, and therefore also had no authority to order that it be destroyed.

It will be a while before the video hits the Internet, however. In accordance with the PIA, Travis has filed suit in Austin to set aside the Attorney General’s ruling that the arrest video should be released. The Court of Appeals expressed no opinion on the merits of that challenge.

In re: Tex. Dep’t of Pub. Safety, No. 05-13-00882-CV

It’s not a Dallas Court of Appeals case, but the Texas Supreme Court this morning issued an opinion further limiting a trial court’s discretion to grant a new trial. The Supreme Court had previously required trial courts to issue written explanations of their reasons for granting a motion for new trial. In re Columbia Med. Ctr. of Las Colinas, Subsidiary, L.P., 290 S.W.3d 204 (Tex. 2009). Now, the court has held that if the record does not support the trial court’s explanation, the appellate courts may grant mandamus relief and order the trial court to render judgment on the jury’s verdict.

In re Toyota Motor Sales, U.S.A., Inc., No. 10-0933

Two years ago, the Dallas Court of Appeals held that the statutory “assumption of the risk” defense (CPRC § 93.001) superseded the common law “unlawful acts” doctrine, which provided that plaintiffs cannot recover damages if, at the time of injury, they were engaged in an illegal act that contributed to the injury. Gulf, C. & S.F. Ry. Co. v. Johnson, 9 S.W. 602, 603 (Tex. 1888). The unlawful acts doctrine is typically invoked in legal and medical malpractice cases. This morning, the Supreme Court decided the same case on different grounds, holding that the Proportionate Responsibility Act negates the common law doctrine and instead requires the finder of fact to apportion responsibility between the lawbreaking plaintiff (or, in this case, the decedent) and the defendant. The illegal activity in this instance was the consumption of marijuana and heroin, which led to the death of Joel Martinez, the son of plaintiff Mary Ann Arredondo. The mother sued the son’s friend, Geoffrey Dugger, who had failed to tell the paramedics that Martinez had snorted the heroin. Dugger initially escaped liability completely when the trial court granted summary judgment in his favor based on the unlawful acts doctrine. The Court of Appeals reversed, holding that § 93.001 superseded the common law doctrine, but did not apply under the facts of the case. On petition for review, the Supreme Court has now held that the Proportionate Responsibility Act applies even where the statutory assumption of the risk defense does not apply. Thus, a jury will have to apportion responsibility between the lawbreaking decedent and his partner in recreational drug consumption. However, the court expressly limited its holding to personal injury and wrongful death cases, leaving open the question of whether a client’s illegal acts will continue to serve as a complete bar to legal malpractice claims.

Dugger v. Arredondo, No. 11-0549

A landlord-tenant dispute illustrates the limits of a jury’s ability to select an amount to award as damages. After the tenant abandoned the leasehold, the landlord sued for breach of the lease agreement. The jury found for the plaintiff and awarded $200,000 in damages. On appeal, the tenant challenged the evidence of causation between the breach of the lease and the damages awarded by the jury. The Court of Appeals agreed, holding that while there was some evidence of damages caused by the breach, the evidence overall failed to establish that the specific expenses claimed by the landlord were actually made necessary by the tenant’s termination of the lease. While a jury may award damages anywhere within the range permitted by the evidence, it cannot “arbitrarily assess an amount not authorized or supported by evidence at trial.” The Court therefore remanded the case for a new trial on both liability and damages.

Curtis v. AGF Spring Creek/Coit II, Ltd., No. 05-12-00429-CV

What, you may be asking yourself, is a viatical settlement? A new securities opinion from the Dallas Court of Appeals provides the answer to that question, and in the process examines the scope of the Texas Securities Act. Life Partners, Inc. is in the business of buying life insurance policies and reselling interests in those policies to investors, transactions known as “life settlements” or “viatical settlements.” The purchasers of those policies are not told what Life Partners paid for them, and Life Partners remains the owner of the policies while holding them as the agent for the investors. Several of the company’s investors filed suit for violations of the TSA, alleging that the life settlements were actually investment contracts that qualified as securities under the TSA. The trial court court granted summary judgment for Life Partners.

The case turned on the question of whether the profits sought by the investors of these viatical settlements were derived “solely from the efforts of others,” one of the four factors for determining whether investment contracts qualify as securities under SEC v. W.J. Howey Co., 328 U.S.293 (1946) and Searsy v. Commercial Trading Corp., 560 S.W.2d 637 (Tex. 1977). After a detailed analysis of a line of cases holding that viatical settlements were not securities, the Court disagreed. Because the investors were dependent upon Life Investors for the evaluation and purchase of the policies, and because they were also required to rely on Life Investors for information about the insureds, the profits were indeed derived solely from the efforts of Life Partners. In so holding, the Court expressly disagreed with the Waco Court of Appeals, which had reached the opposite conclusion in a previous case, and instead followed rulings by the 11th Circuit, the Tyler Court of Appeals, and several courts in other states. In doing so, the Court rejected Life Partners’ argument that it was engaged in the business of selling insurance, which is exempted from regulation by the TSA. Finally, the Court determined that while the claims of the two lead plaintiffs were barred by limitations, some of the claims of two other plaintiffs had been timely filed and could proceed on remand to the trial court.

Given the split of authorities, this case would seem to be a candidate for review by the Texas Supreme Court. We’ll keep you updated if it proceeds in that direction.

Arnold v. Life Partners, Inc., No. 05-12-00092-CV

Today’s the day for successor cases from lawsuits in 2004. Alexandrea Crutcher originally sued DISD for discrimination and retaliation in that fateful (for 2013 purposes) year.  That lawsuit was resolved by settlement. In 2009, Crutcher interviewed for a job as a basketball coach and science teacher. After some initial recommendations that she be hired, the school hired a different candidate. Crutcher filed suit under the Texas Commission for Human Rights Act, alleging retaliation for her previous retaliation and discrimination lawsuit. Under the TCHRA, employers cannot retaliate or discriminate against an employee or applicant for filing a discrimination complaint. Tex. Lab. Code § 21.055. But Crutcher failed to meet her initial burden of coming forward with either direct or circumstantial evidence that the adverse employment decision was motivated by discriminatory purpose.

The principal who initially recommended Crutcher’s hiring did so after she learned of the earlier lawsuit, and only withdrew the recommendation later on. The person in the HR department who was responsible for making the employment decision was unaware of the first lawsuit, and a paperwork error had caused a misdescription of the job that was actually available. Allegations of hanky panky with a colleague in a supply closet also make a cameo appearance in the opinion, along with a bunch of other facts that the Court of Appeals ruled had adequately negated any causal connection between the decision not to hire Crutcher with her previous lawsuit. The Court therefore concluded that Crutcher had failed to show a prima facie case of retaliation, and that DISD has negated any showing of discriminatory intent in any case. As a result, the Court affirmed the trial court’s grant of summary judgment in favor of the school district.

Crutcher v. Dallas Indep. Sch. Dist., No. 05-11-01112-CV

Back in 2004, the State of Texas filed an animal cruelty proceeding against Marsha Chambers, who was apparently breeding the dogs for sale. The jury found that the animals had been treated cruelly, and the justice court transferred their ownership to the Dallas SPCA. Chambers has spent the years since then futilely pursuing collateral litigation challenging the justice court’s order. In March 2012, that quest led to the filing of a suit alleging a constitutional taking of the animals, seeking $575,000 in damages for the value of the animals and lost income. The State filed a plea to the jurisdiction, which was granted by the trial court and affirmed by the Court of Appeals. According to the Court of Appeals, Chambers had failed to plead a claim capable of evading the State’s sovereign immunity, because she had not adequately pleaded that the alleged taking had been made for a “public purpose.” Seizing neglected or mistreated animals serves to protect the welfare of the animals, not to confer a benefit on the public. Because the pleading did not establish a constitutional takings claim, the trial court properly dismissed the case, and that judgment was affirmed.

Chambers v. State, No. 05-12-01178-CV

Majestic Cast, Inc. entered into a contract with ProCon Paving to serve as a subcontractor on the construction of a Montessori school. Citing numerous complaints, Majestic Cast terminated the contract and filed suit against “Majed Khalef d/b/a ProCon Paving and Construction, Inc.” for theft, conversion, breach of contract, and fraud. Majestic Cast’s posited that Khalaf was using ProCon’s corporate form as an empty shell to avoid liability, and that he should therefore be held personally liable as an alter ego of ProCon. The trial court granted traditional and no-evidence motions for summary judgment, and Majestic Cast appealed. The Court of Appeals reversed as to the claims for theft, conversion and fraud. Whereas Majestic Case had pleaded those tort claims against Khalaf individually, Khalaf had sought summary judgment only by arguing that Majestic Cast could not pierce the veil to hold him liable on ProCon’s contract.  Because a corporate agent can be held liable for his own fraudulent or tortious acts even while acting within the scope of the agency, Khalaf was not entitled to summary judgment on the tort claims. As to Majestic Cast’s breach of contract claim, however, the Court held that there was no evidence to raise a fact issue on any theory for disregarding the corporate fiction in order to make Khalaf individually liable for breach of the Majestic Cast-ProCon contract. Thus, summary judgment was affirmed only as to the contract claim, with the tort claims remanded for further proceedings.

Majestic Cast, Inc. v. Khalaf, No. 05-12-00112-CV

The Court of Appeals has reversed the district court’s order sustaining the special appearance of an Iowa company formed by one of the plaintiff’s former employees. Interestingly, the opinion starts out with some discussion of a recurring problem in Texas practice — namely, the use and treatment of documents filed under seal. In this instance, much of the evidence necessary to determine the special appearance had been sealed by the trial court, including an exhibit that was “the only evidence of the terms of the relationship” between two of the defendants. The Court of Appeals resolved this difficulty by stating that it had made every effort to preserve the confidentiality of the designated materials, but that the appeal could not be decided without mention of some key jurisdictional facts. The lesson here appears to be that the Court will do what it can to preserve the litigants’ confidential information, but if the details are essential to the appeal, you can reasonably expect some of them to come out in an opinion that is a matter of public record.

Moving on to the merits of the special appearance, the evidence showed that Eco Technologies was an Iowa company that had all of its operations located in that state, but that it distributed its products to independent dealers in Texas and elsewhere. One of those dealers in Texas is owned by the plaintiff’s former employee Billy Cox, a Texas resident who also is a part owner of Eco Technologies itself. The plaintiff alleged that Eco Technologies and Cox had interfered with the plaintiff’s Texas contracts and unfairly competed with the plaintiff in Texas, and the Court held that those allegations were sufficient to bring Eco Technologies within the reach of the Texas long arm statute. Citing Iowa law, the Court held that as a member of a member-managed LLC, Cox was an agent of Eco Technologies, and that his recruitment of the plaintiff’s distributors in Texas to enter into relationships with Eco Technologies were jurisdictional contacts attributable to Eco Technologies. The company therefore fell short of its burden to negate the jurisdictional grounds alleged by the plaintiff.  Accordingly, the Court of Appeals reversed the order sustaining the special appearance and remanded the case for further proceedings.

Masterguard, L.P. v. Eco Techs. Int’l LLC, No. 05-12-01318-CV

Except perhaps for emotional distress, lost profits continue to be one of the most difficult measures of damages to sustain on appeal. In this instance, Timothy Barton and two other individuals formed a corporation, JMJ Development, to develop resort properties in the Riviera Maya of Mexico. The company entered into non-binding letters of intent with both property owners and the owners of the W Hotel and St. Regis Hotel brands. Before those deals were completed, however, Barton formed a new corporation, JMJ Hospitality, and the record included evidence that he instructed the landowners to deal with the new company instead of JMJ Development. The jilted business associates sued for breach of fiduciary duty, breach of their shareholder agreement, tortious interference, and conspiracy. The jury returned a verdict of $7 million for past lost profits on the fiduciary duty claim and $3 million in future lost profits on the breach of contract claim.

The Court of Appeals reversed and rendered, concluding that there was insufficient evidence the original company ever had the ability to develop the properties in the first place. Although they had multiple letters of intent, the evidence showed those letters had expired of their own terms, and there had never been any binding contracts for the purchase or development of the properties. The meant there was no causation for the lost profits claimed by Barton’s former business owners. The plaintiffs also failed to account for subsequent events — namely, the economic recession that started after Barton formed his new company — and that failure rendered their lost profits model speculative and not reasonably certain. The plaintiffs also confused projected items of income as profits, without properly accounting for associated expenses. Without any reliable, non-speculative evidence of the plaintiffs’ lost damages, the Court of Appeals reversed the jury’s verdict and the trial court’s judgment.

Barton v. Resort Dev. Latin Am., Inc., No 05-11-00769-CV

After Media Consultants, LLC defaulted on its lease and filed for bankruptcy, plaintiff 11327 Reeder Road, Inc. filed suit against Kenneth Guarino and Capital Video Corp. to recover the unpaid rent owed under the lease agreement, alleging that Media Consultants and Capital Video were Guarino’s alter egos. 11327 further alleged that Guarino had fraudulently induced it to enter into a lease modification, and that Media Consultants had conspired with Guarino to commit fraud. However, Guarino and Media Consultants were not residents of Texas, and they filed a special appearance to contest personal jurisdiction. On interlocutory review from the denial of the special appearances, the Court of Appeals reversed. Proof that an individual is an officer, director, or majority owner of a company is insufficient, standing alone, to establish alter ego. Nor was there general jurisdiction over Guradino because “Making telephone calls and sending e-mails about separate business entities in another state are not the types of continuous and systematic contacts that approach the relationship between the state and its own residents.” 11327 also failed to establish jurisdiction over Guradino through proof that he had negotiated the lease modification through a telephone call to Texas, because a single telephone call to Texas that included alleged misrepresentations does not demonstrate the defendant purposefully availed himself of the privilege of conducting activities in Texas sufficient to support specific jurisdiction.

Guarino v. 11327 Reeder Road, Inc., No. 05-12-01573-CV

We’ll start off yesterday’s flurry of opinions with CTMI, LLC v. Fischer, which reiterates the familiar principle that agreements to agree don’t actually bind the parties to reach an agreement. In this instance, the parties entered into an asset purchase agreement that contained an earn-out provision. The earn-out provided that the parties would have to “mutually agree” on the percentage of completion of projects that were in progress as of December 31, 2010. The trial court ruled that provision was enforceable, but the Court of Appeals disagreed. Without the “mutually agreed” percentages required to calculate the earn-out, there was no formula that could be applied to calculate what was owed, rendering the earn-out unenforceable as a matter of law.

CTMI, LLC v. Fischer, No. 05-11-00970-CV

Tuesday was a busy day for the Court of Appeals, which issued half a dozen new opinions we’ll be posting about soon. While we’re getting them written up for full posts, the cases are already on the site at the following links:

• Holliday v. Weaver (attorney’s breach of fiduciary duty)
• CTMI, LLC v. Fischer (agreement to agree)
• Chapman Custom Homes, Inc. v. Dallas Plumbing Co. (standing to sue under contract and economic loss rule)
• Mid-Continent Casualty Co. v. Castagna (coverage dispute)
• PetroDrillBits Int’l Indus., Inc. v. Varel Int’l Indus., L.P. (breach of sales and services contract)
• Guarino v. 11327 Reeder Road, Inc. (special appearance)

The Court of Appeals has mostly affirmed the district court’s judgment in favor of the plaintiffs in a case arising out of “the downfall of a real estate empire built by W. Eric Brauss through a complex web of real estate limited partnerships involving hundreds of investors and creditors.” Because our firm represents some of those creditors, we will keep the commentary brief. Among other issues, the court discusses the inferences that can be drawn in a civil case from a party’s invocation of the Fifth Amendment right against self-incrimination. In the end, the appellate court reversed the trial court’s decision to render damages jointly and severally against one of the individual defendants, but affirmed the findings of fraud and the overall award of damages.

Brauss v. Triple M. Holding GMBH, No. 05-11000271-CV

The Court of Appeals has affirmed the district court’s order denying two motions to compel arbitration. The plaintiffs had sued for breach of fiduciary duty, fraud, and negligent misrepresentation, arising out of a bad investment promoted by the defendants. The brokerage account documents signed by the plaintiffs contained an arbitration clause, but that clause only required arbitration of claims against “Introducing Firm, Clearing Agent, and any Sub-Advisor” — terms that were not defined in the agreement. While it may have been reasonable to conclude that the arbitration clause was intended to cover claims against the defendants, there was no abuse of discretion by the trial court in failing to find that they were within the scope of the arbitration clause. The Court of Appeals also rejected the defendants’ attempt to invoke “direct benefits estoppel,” a doctrine that allows non-signatory defendants to compel arbitration “if the nature of the underlying claims requires the signatory to rely on the terms of the written agreement containing the arbitration provision in asserting its claims against the non-signatory.” That doctrine did not apply here because the plaintiffs were not seeking any direct benefit under the contracts that contained the arbitration provisions. The order denying arbitration was therefore affirmed.

VSR Financial Services, Inc. v. McLendon, No. 05-12-01016

Marquis Acquisitions and several related entities were sued after a fire at an apartment complex killed three people. The defendants were covered by several layers of insurance, which assumed the defense of the case in successive order as policy limits were exhausted. At each layer, one or another of the defendants sought to reject the insurers’ choice of defense counsel and to be represented instead by the business partner and personal attorney of the defendants’ primary owner. Marquis eventually filed suit against Steadfast Insurance, and that move finally created a conflict between Marquis and the insurer’s chosen counsel that caused the attorney to withdraw. Marquis thereafter sued the insurer to recover “the attorney fees it expended in getting Steadfast to retain separate counsel” for Marquis and some of the other insureds. The trial court granted summary judgment for the insurer, and the Court of Appeals affirmed. Marquis could not recover for breach of the insurance contract because it could not identify any specific terms or conditions that required Steadfast to immediately hire separate counsel based on an insured’s unspecified and unsubstantiated allegations of a conflict of interest. Marquis also could not recover the attorney fees it paid to Shaw as damages, since attorney fees are only recoverable “in addition to” the recovery of actual damages, not as independent damages themselves. The court went on to reject Marquis’ claim that Steadfast’s conduct had constituted an unfair or deceptive act or practice under the Insurance Code because Marquis could not point to any alleged misrepresentation by Steadfast, and further held there was no evidence that the insurer had any duty to independently identify conflicts among its insureds when appointing legal counsel to defend them.

Marquis Acquisitions, Inc. v. Steadfast Ins. Co., No. 05-11-01663-CV

Since 1994, the City of Dallas has been in litigation with its police, firefighters, and rescue officers. The question at hand is whether a referendum and ordinance passed in 1979 amounted to a one-time salary adjustment, as the city contends, or a perpetual entitlement in all future salary adjustments. More than a decade after the lawsuits started, the city suddenly remembered that it had governmental immunity, and filed pleas to the jurisdiction on that basis. In 2011, the Texas Supreme Court held that the officers could not pursue a declaratory judgment on their interpretation of the ordinance because the only potential relief from such a declaration would be an award of money damages. City of Dallas v. Albert, 354 S.W.3d 368 (Tex. 2011). In the meantime, however, the legislature had enacted a new, retroactive statute that waived local governments’ immunity from suit for certain breach of contract claims. See Tex. Local Gov’t Code § 271.151 et seq. The case was therefore remanded to the trial court to consider whether there was jurisdiction to hear the officers’ breach of contract claims. The trial court denied the city’s renewed pleas to the jurisdiction, ruling that the contract claims fell within the new statutory waiver of immunity. On interlocutory appeal, the Court of Appeals agreed.

The analysis is somewhat lengthy, but its core relies on City of Houston v. Williams, 353 S.W.3d 128 (Tex. 2006) for the proposition that city ordinances can create a unilateral contract between the city and its employees that is within the scope of the legislature’s waiver of governmental immunity. Finding all of the elements of such a contract contained within the 1979 ordinance, the Court of Appeals concluded that it was a unilateral contract between the city and the officers. However, on the key question of whose interpretation of the ordinance would prevail, the court deferred to one of its previous rulings in the case, holding that the ordinance was ambiguous and its interpretation was therefore a question of fact to be determined at trial. The court also held there was no jurisdiction on the remaining declaratory judgment claims, concluding that the Albert decision had already established the city was entitled to governmental immunity from such claims.

City of Dallas v. Arredondo, No. 05-12-00963-CV

The Court of Appeals has granted mandamus relief to the defendants in the defamation lawsuit brought by the teenaged son of baseball player Torii Hunter. The suit arises out of sexual assault charges that a grand jury eventually no-billed. In the subsequent defamation case, the defendants moved to dismiss under the Texas Citizens Participation Act, which requires the plaintiff in such a case to come forward with prima facie evidence of each element of the case at an early stage of the litigation. The plaintiff responded with an emergency motion seeking leave to take the depositions of one of the alleged victims and her mother.  The trial court granted leave, but the Court of Appeals held that the plaintiff’s briefing had not stated any “good cause” for the discovery, as required by the TCPA, and at the hearing on the motion had only argued that the depositions were necessary “in order to defend the motion to dismiss.” Without any specific showing of good cause in the record, the Court of Appeals concluded that the trial court had abused its discretion in allowing the depositions and conditionally granted mandamus relief.

In re D.C., No. 05-13-00944-CV

The district court granted summary judgment in favor of the defendant in a car wreck case. The defendant sought summary judgment based on the 2-year statute of limitations for personal injury and the plaintiff’s alleged lack of diligence in serving the petition. The accident had happened on April 24, 2009, but the plaintiff’s petition had not been filed until April 25, 2011. The Court of Appeals reversed, holding that the summary judgment evidence was sufficient to show the petition was timely filed because the court had been closed for Good Friday when the plaintiff attempted to file it on April 22. See Tex Civ. Prac. & Rem. Code § 16.003(a). The defendant had also failed to submit any summary judgment evidence showing that he had not been timely served, thereby failing to meet his own burden to establish the plaintiff’s lack of due diligence in serving the citation after the limitations period expired.

Sutton v. Sheikh, No. 05-12-01168-CV

In the course of a lawsuit for breach of contract and fraud, the district court entered an order permitting discovery on a pair of banks, but prohibiting the litigants from disclosing their documents to third parties. The plaintiffs’ attorney subsequently filed the two business records affidavits produced by the banks, along with 1300 pages of accompanying documents. Six months later, the defendants moved to seal the documents and for sanctions based on the earlier protective order. The trial court fined the plaintiffs’ attorney $2000. The attorney appealed after final judgment in the case, arguing that the defendants had not asked for any particular amount of sanctions and had presented no evidence justifying the $2000 award. The Court of Appeals agreed, citing the Supreme Court’s recent opinion in Paradigm Oil, Inc. v. Retamco Operating, Inc. for the proposition that “[s]anctions for discovery abuse should not be dispensed as arbitrary monetary penalties unrelated to any harm.” 372 S.W.3d 177, 184 (Tex. 2012). In this instance, the defendants had not even incurred any attorney fees for bringing their motion, as they were appearing pro se at the time. Accordingly, the court rendered judgment denying the motion for sanctions.

Wiegand v. Sky King Foundation Inc., No. 05-12-00020-CV

In April 2009, American Home’s insured allegedly fell asleep while the stove was still on in her apartment, leading to a fire that damaged her unit and that of her neighbor, who was insured through Allstate. Allstate paid its insured’s claim for $18,000 in damages, then sought subrogation from American Home. However, American Home’s policy limit was $100,000, and the claim languished while American Home sought to determine the complete extent of the damage caused by the fire. After a year of waiting, Allstate filed for arbitration with Arbitration Forums, Inc. Both Allstate and American Home are signatories to AFI’s arbitration agreement, which requires parties to arbitrate subrogation claims “not in excess of $100,000.” The AFI arbitrator promptly ruled in favor of Allstate. American Home filed a post-hearing appeal as permitted by the AFI rules, arguing that arbitration was not compulsory because the overall damages from the fire were in excess of $600,000. The AFI arbitrator agreed and voided the prior award.

In the meantime, however, Allstate had filed an application to confirm the initial arbitration award. After the arbitrator voided that award, American Home moved to dismiss the court case. The county court at law apparently agreed with Allstate’s argument that the order declaring the initial award to be void was itself invalid because American Home had allegedly misrepresented its policy limits in order to obtain that order. It entered a final judgment confirming the initial award in favor of Allstate, and American Home appealed, arguing that the trial court lacked jurisdiction to enter judgment on a voided arbitration award. The court of appeals agreed, noting that “Necessarily embedded in the trial court’s ability to confirm an award is the presence of an award itself.” The court of appeals also rejected Allstate’s attempt to argue that the arbitrator’s decision to void the initial award was invalid, ruling that the documents relied upon for that argument did not constitute any evidence of misrepresentations being made by American Home. The case was therefore reversed and remanded with instructions to dismiss for lack of jurisdiction.

American Modern Home Ins. Co. v. Allstate Ins. Co., No. 05-11-00997-CV

In a breach of contract case, a group of defendants appealed from the district court’s grant of summary judgment in favor of the plaintiff. The defendants argued that the plaintiff lacked standing to sue them because there was no evidence it had privity of contract with any of the defendants. The court of appeals rejected that argument, holding that the defendants were actually challenging the capacity of the plaintiff to sue or be sued. The plaintiff had standing to sue on the contract because it pleaded and proved it was “formerly known as” the party named in the agreement. As to the challenge to the plaintiff’s capacity, the court held that the defendants had been untimely in making that challenge, as the verified denial of capacity required by Rule 93 was only filed the morning of the summary judgment hearing — not 7 days before as required by Rule 63. The trial court’s summary judgment order indicated that it had not considered the amended pleading, stating that it had considered the “pleadings timely filed,” not all of the pleadings in the case. Nor was the issue of capacity tried by consent as part of the summary judgment proceeding, since the response to the summary judgment motion raised no issue of the plaintiff’s capacity to bring suit. Likewise, the court of appeals rejected the claim of one of the individual defendants that he could not be personally liable on the contract because he had signed it as CEO of the defendant corporation. Because the defendant had not timely filed a verified denial of his capacity to be sued individually, that issue was also waived. As a result, the trial court’s judgment was afffirmed.

John C. Flood of DC, Inc. v. SuperMedia, LLC, No. 05-12-00307-CV

General Capital Group, a German investment firm, claimed that it entered into an oral deal with AT&T in January 2009 to broker the purchase of T-Mobile for a 2% commission on what was to be a $39 billion deal. In May 2009, GC held another meeting with AT&T, during which AT&T indicated it was not interested in pursuing the transaction at that time. After two years with no communication between GC and AT&T, the latter announced that it intended to acquire T-Mobile. GC approached AT&T, which denied that it had any deal with GC.

GC filed suit for breach of contract.  During the pendency of the suit, AT&T announced that it was not longer going to pursue the T-Mobile deal due to opposition by the Justice Department.  With no sale on which to base its claim for a massive commission, GC changed its theory to to fraud, seeking recovery of $30 million for the “reasonable value of its services.” The trial court granted summary judgment, and the court of appeals affirmed. GC could not recover for fraud because even if AT&T had agreed to a 2% success fee, GC could not show harm because there hadn’t ever been any success for such a fee to be based on. Likewise, GC could not recover for quantum meruit because it has no expectation of being paid unless there was a successful acquisition.

General Capital Group v. AT&T, No. 05-12-00446-CV

Jay Nanda and his brother, Atul, ended up in a dispute over their jointly-owned company, Dibon Solutions. An arbitrator awarded ownership of the company to Atul and ordered him to pay Jay in excess of $500,000. After the arbitration award, Jay began to call Dibon’s customers and its bank, claiming that Dibon was engaged in all kinds of misconduct, including money laundering, human trafficking, and forging documents. Dibon sued Jay, asking the trial court for a temporary injunction to stop Jay from spreading his allegations any further. The trial court denied the temporary injunction, and Dibon filed an interlocutory appeal. The court of appeals affirmed, holding that the testimony supported Jay’s assertion that the statements were true. Without any false or misleading statements at issue, Dibon could not meet its burden of establishing an exception to the First Amendment’s prohibition of prior restraint. The court went on to hold that an injunction could not be sustained on Dibon’s alternative theory of tortious interference because, apart from the fact that Jay admitted sending the disparaging information in an email, there was no evidence that he had otherwise taken an active part in persuading Dibon’s customer to breach its contract. Accordingly, the trial court did not abuse its discretion in denying Dibon’s request for a temporary injunction.

Dibon Solutions, Inc. v. Nanda, No. 05-12-01112-CV

The court of appeals has granted mandamus relief in a pair of cases challenging the decisions of trial courts in Dallas and Collin Counties that had granted pre-suit depositions under Rule 202. Reiterating that Rule 202 depositions are not intended for routine use, the court held that the trial courts had abused their discretion because the movants had not presented any evidence that the likely benefit of the depositions outweighed their burden or expense. Although the movant had filed verified petitions as required by Rule 202, those pleadings could not justify the pre-suit depositions because the movant had not sought to admit the verified pleadings at the Rule 202 hearings. Finding that the order granting the depositions was not subject to an ordinary appeal, the court conditionally granted mandamus to vacate the lower courts’ orders.

In re Campo, No. 05-13-00477-CV

In re Doak, No. 05-13-00538-CV

John Pride and Phareale Investments filed a restricted appeal from the district court’s grant of a no-answer default judgment against them. Among other things, the appellants argued that they should have been served with the plaintiffs’ first amended petition because it sought more onerous relief than the original petition that had been served on them. The record did not reflect that the amended petition had been served on either of the appellants, and the new pleading added claims against them for fraud, declaratory relief, and exemplary damages. Based on those additions, the court of appeals concluded that the failure to serve the appellants with the amended pleading meant that the trial court erred in entering a default judgment against them.

Curiously, the court of appeals mentions in a footnote that the restricted appeal had been abated for a period in order to let the district court dispose of some remaining issues that prevented the default judgment from being a final judgment. The court did not indicate why the appellants elected to proceed with the restricted appeal when they apparently could have still sought relief from the trial court to set aside the interlocutory default judgment, or why they did not pursue an appeal in the ordinary course after the judgment became final.

Pride v. Williams, No. 05-11-01189-CV

Regular readers may recall the plaintiff’s multi-year, multi-appeal quest to obtain a no-answer default judgment in the recent case of Elite Door & Trim, Inc. v. Tapia. That situation has presented itself again in another case arising out of the same trial court. This time, the case had only been reversed and remanded once before, unlike the two previous decisions in the Elite Door case. In the present case, the court of appeals had previously reversed the trial court’s order dismissing for want of prosecution because the court had not given the plaintiff sufficient notice of its intent to dismiss the case. On remand, the plaintiff amended its pleadings and filed an amended motion for entry of default. In the meantime, the trial court set another DWOP hearing. The plaintiff filed a motion to retain the case on the docket, noting that its request for a hearing on a default judgment had been denied by the court coordinator on the ground that the court did not set default motions for hearing unless it was deemed necessary by the court. The trial court then signed an order dismissing the case for want of prosecution. The court of appeals reversed, holding that the trial court erred in refusing to grant default judgment to the plaintiff, and that it was an abuse of discretion to dismiss the case for want of prosecution in light of the plaintiff’s diligence in amending its pleadings and seeking entry of a default judgment. The court therefore remanded again and directed that judgment be granted in favor of the plaintiff on its claims for liquidated damages, attorney fees, and pre- and post-judgment interest.

Harris, N.A. v. Obregon, No. 05-10-01349-CV

Cousins and business partners Matthew and J.W. Jenkins agreed to buy an investment property out of foreclosure. They claimed the negotiated price was to have been $250,000, but the closing documents listed the sale price as $349,000. Stewart Title Co. closed the sale, and J.P. Morgan Chase accepted assignment of the funded loan. The Jenkins sued the title company and the bank on theories including negligent misrepresentation, breach of fiduciary duty, intentional infliction of emotional distress, invasion of privacy, and defamation.

Stewart Title and Chase both filed traditional and no-evidence motions for summary judgment. The cousins did not file any response, and the trial court granted summary judgment for both defendants. The Jenkins moved for reconsideration, which the trial court denied. The Jenkins appealed from the denial of the motions for reconsideration, but the court of appeals affirmed. Although the motions for reconsideration proffered evidence contesting the prior summary judgment motions, the plaintiffs did not ask for leave of court to file that evidence, nor did they demonstrate good cause for failing to respond to the original motions in a timely manner. Hence, there was no abuse of discretion in the trial court’s decision to deny reconsideration of the summary judgment rulings.

Jenkins v. Stewart Title Co., No. 05-12-00685-CV

Nationsbuilders Insurances Services sued two of its former employees and their new employer, Houston International Insurance Group, for violating the employees’ covenants not to compete. The case was resolved with a settlement agreement in which the defendants agreed they would not compete with Nationsbuilders for one year by “soliciting, selling, quoting, binding, rating, or producing” certain specialized types of insurance. They also agreed they would not own or be employed by any entity that “conducts or plans to conduct” a competing business. The defendants did not quote or sell any such insurance during the restricted period, but they actively planned to do so by sending out marketing materials, preparing regulator filings, drafting forms, negotiating with re-insurers, and developing agent and customer lists. Nationsbuilders filed a demand for arbitration under the settlement agreement, and the arbitrator ruled that the defendants’ conduct entitled Nationsbuilders to a one-year equitable extension of the noncompete period. The defendants filed suit to vacate the arbitration ruling, and the trial court ruled that the arbitrator had “exceeded his powers” or “so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.”

The court of appeals reversed. Indulging all reasonable presumptions in favor or the arbitration award, and granting great deference to the arbitrator’s decision, the court determined that the equitable extension of the noncompete period was within the arbitrator’s “broad discretion in fashioning an appropriate remedy.” The settlement agreement had required the defendants to refrain from either conducting or planning a competing business for one year, and their actions had deprived Nationsbuilders of that bargained-for entitlement. Extending the noncompete for another year was rationally based on that contractual provision. The court of appeals also rejected the defendants’ claim that the arbitrator’s decision was moot. The court distinguished cases holding that requests for specific performance become moot after the expiration of the restricted period, noting that the remedy in this case was for an extension of the restricted period, not just its enforcement. Finally, the court of appeals rejected the defendants’ argument that the arbitration award was too badly drafted to enable them to understand how they were to comply with it. The line drawn by the arbitrator between “passive contemplation” of competition (which would not be material) and “head start” planning (which would violate the agreement) was clear enough that the defendants could reasonably understand what they were and were not permitted to do during the extended restricted period.

Surprisingly, the court of appeals relegated one obvious issue to a footnote at the end of the opinion. The extended restricted period had expired during the course of the appeal. Although the expiration of the noncompete may have rendered the appeal moot or the opinion advisory, the parties did not address how the expiration affected the case, and the court of appeals chose not to address the matter itself. That may be an issue for the trial court, as the court of appeals remanded the case for consideration of additional grounds for vacating the arbitration award that had not been ruled upon previously.

Nationsbuilders Ins. Servs., Inc. v. Houston Int’l Ins. Group, Ltd., No 05-12-01103-CV

Patrick Curry and PJC Equipment Leasing are the owners of an IAI Westwind II jet. They hired Matthew Webb and MKW Aviation to manage the plane, and MKW maintained possession of it in that capacity. A dispute arose over MKW’s charges, and the trial court granted a writ of sequestration requiring MKW to relinquish the airplane and its records to PJC. MKW then filed a lien against the aircraft for unpaid storage, maintenance, and fuel charges totaling over $35,000. The trial court granted MKW’s application for turnover relief, thereby requiring PJC to hand the plane back over to MKW. In an opinion focused on statutory construction, he court of appeals ended up denying PJC’s mandamus petition challenging that decision. Section 70.302 of the Property Code permits the holder of an aircraft storage and maintenance lien to retain and even retake possession of the subject airplane. The court of appeals rejected PJC’s contention that MKW would have to be a “secured party” to retake possession of the aircraft, ruling instead that being the holder of the aircraft lien was sufficient basis under the statute for reclaiming the property subject to the lien. The trial court therefore did not abuse its discretion in ordering the plane to be returned to MKW.

In re Curry, No. 05-13-00734-CV

Rickey Wayne Tolbert sued his former attorney, George Otstott, for legal malpractice. Tolbert is a pro se prison inmate, and was incarcerated at the time Otstott settled three separate personal injury matters on Tolbert’s behalf. The trial court granted summary judgment for the defendant based on his limitations defense, and since the underlying lawsuits were settled between 1987 and 1991, you would think that’s probably a meritorious defense. The court of appeals agreed. As a matter of law, a reasonably diligent person, after receiving a $1,012 check from his attorney, followed by sixteen years of silence, would have investigated and discovered that the lawyer had settled all three claims. Thus, the two year limitations periods for legal malpractice expired long before the filing of Tolbert’s lawsuit in 2010.

Tolbert v. Otstott, No. 05-12-0024-CV

Several years ago, the court of appeals affirmed most of a judgment against Spin Doctor Golf, but reversed the trial court’s grant of summary judgment sustaining Paymentech, L.P.’s statute of limitations defense. Spin Doctor Golf, Inc. v. Paymentech, L.P., 296 S.W.3d 354, 363 (Tex. App.-Dallas 2009, pet. denied). On remand, the trial court denied Spin Doctor’s motion to modify the scheduling order to permit it to designate expert witnesses. The court denied that motion, and granted Paymentech’s traditional and no-evidence motions for summary judgment.

Spin Doctor had sought to designate five experts prior to the first summary judgment ruling and appeal, but that designation came months after the deadline under the scheduling order then in effect, and the trial court determined Spin Doctor had not shown good cause for the late designation of the experts. On remand, the trial court again rejected Spin Doctor’s request to designate experts. The court of appeals sustained that ruling, concluding that (1) there was a valid scheduling order in effect and Spin Doctor had blown well past it, (2) Spin Doctor’s need for a lost profits expert did not establish good cause for missing the deadline, (3) Paymentech’s failure to produce certain documents did not explain why Spin Doctor was prevented from timely designating the experts, and (4) the trial court could have reasonably determined that Paymentech would be unfairly surprised by the experts’ testimony because the record did not disclose any proffered report from those experts, leaving Paymentech to take discovery in the dark. The court of appeals also affirmed the summary judgment ruling, holding that the affidavit of Spin Doctor’s president had been properly stricken the first time through the trial court, and that its lost profits analysis was conclusory in any event.  With no evidence of damages, the judgment against Spin Doctor was affirmed.

Spin Doctor Golf, Inc. v. Paymentech, L.P., No 05-11-0104-CV

Michael Tabasso was a salesman for BearCom Group, Inc., a Garland-based wireless equipment dealer. Tabasso was based out of BearCom’s office in Philadelphia, and was in charge of a sales region that did not include Texas. Nevertheless, the company disciplined Tabasso for attempting to make sales outside of his sales region, including contracting with a Texas company and then referring a portion of that contract to another party at BearCom’s expense. After Tabasso was terminated, he apparently continued to fulfill service requests by BearCom customers and forwarded confidential information to his personal email account. All of that led to BearCom filing suit against Tabasso in Dallas County. Tabasso filed a special appearance, which the district court denied.

On interlocutory appeal, the court of appeals affirmed. BearCom’s pleading raised a plethora of alleged jurisdictional contacts, including contacts with BearCom’s customers in Texas. That pleading shifted the burden to Tabasso to negate each of the alleged jurisdictional contacts, but he did not do so. Instead, the trial court deemed his affidavits to be “not credible in light of the record,” and there was ample evidence of Tabasso’s communications and dealings with those Texas customers. Tabasso also failed to preserve any objections to the trial court’s evidentiary rulings. In light of the entire record, the court of appeals found no abuse of discretion and affirmed the denial of the special appearance.

Tabasso v. BearCom Group, Inc., No. 05-11-01674-CV

A temporary injunction order is void if it does not fix the amount of security for the applicant’s bond or fails to set a trial date. The injunction issued against appellant Michael Lodispoto did neither. As a result, the court of appeals set aside both the TI order and the trial court’s subsequent order to show cause for violations of the injunction.

Lodispoto v. Ruvolo, No. 05-12-01580-CV

The district court certified a class of claimants who alleged that Stewart Title Guaranty Co. had charged them more than permitted by the Texas Department of Insurance in renewing their mortgage title policies. On interlocutory appeal, the court of appeals has now reversed that class certification. The opinion is lengthy and fact-intensive, but the case basically boils down to the question of whether questions of law or fact common to the class predominated over questions affecting only individual members. Unfortunately for the plaintiffs, the Fifth Circuit had recently rejected class actions in two recent cases alleging similar claims against different lenders.  See Ahmad v. Old Republic Nat’l Title Ins. Co., 690 F.3d 698 (5th Cir. 2012); Benavides v. Chicago Title Ins. Co., 636 F.3d 699 (5th Cir. 2011). The court of appeals discussed both cases extensively and followed them to the same conclusion, holding that that facts of each class member’s loans would have to be examined individually, negating any possibility that common questions would predominate over those individual inquiries.

Stewart Title Guaranty Co. v. Mims, No. 05-12-00534-CV

Three months ago, the court of appeals affirmed summary judgment in favor of an attorney who was alleged to have signed a fraudulent verification of deposit form on behalf of the borrower in a $1.9 million loan. In another appeal arising out of that same loan, Bank of Texas has managed to reverse summary judgment in favor of another attorney alleged to have issued letters “To Whom It May Concern” confirming the borrower’s employment and access to the same two trust accounts. The witnesses all told different stories about who prepared and signed the letters and who they had been provided to. Based on that conflicting evidence, the court of appeals concluded that the bank had submitted sufficient evidence to defeat the attorney’s no-evidence motion. Testimony of the law office’s business practices was sufficient to show that it was within the scope of his employees’ duties to sign the attorney’s name to various documents, and that the representations were made in the course of his business as an attorney. The court also rejected the defendant’s attempt to invoke the economic loss rule, reiterating the Supreme Court’s recent holding that the doctrine only applies to the parties to a contract, not between strangers to the contract. See Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 418 (Tex. 2011). The court went on to reverse the trial court’s grant of traditional summary judgment in favor of the attorney, holding that the attorney had not conclusively negated the authority of his employees to have prepared and signed the letters. And unlike the earlier case, where Bank of Texas could not show justifiable reliance because the verification form was not addressed to the bank, the letters here were addressed “To Whom It May Concern,” raising the inference that it was reasonable for anyone, including the bank, to rely on them.

Bank of Texas, N.A. v. Glenny, No. 05-11-01478

The Better Business Bureau of Metropolitan Dallas may end up being the single biggest beneficiary of the Texas Citizens Participation Act.  For the third time in the last month, the Dallas Court of Appeals has sided with the BBB in an appeal arising out of a motion to dismiss under the TCPA. In this instance, Wholesale TV and Radio Advertising, LLC sued for business disparagement, fraud, negligent misrepresentation, and DTPA claims after the Bureau gave Wholesale an F rating. The trial court granted the Bureau’s motion to dismiss, and the court of appeals affirmed. The court rejected Wholesale’s argument that the TCPA did not apply to false commercial speech, relying on its recent BH DFW and Ward opinions for the proposition that the TCPA covers speech that relates to “a good, product, or service in the marketplace.” That meant the burden was on Wholesale to come forward with prima facie evidence of each element of its claims. However, the court concluded that Wholesale had failed to adequately brief those issues on appeal, omitting any discussion of one or more of the elements of each of its claims. The court therefore affirmed both the trial court’s dismissal of Wholesale’s entire case and its award of $15,999 in attorney fees to the BBB.

Wholesale TV & Radio Advertising, LLC v. Better Business Bureau, No. 05-11-01337-CV

Suzann Ruff asked the probate court to stay arbitration of her dispute with Michael Ruff and Frost Bank. The probate court agreed and issued an order staying the arbitration, denying Michael’s motion to stay the judicial proceedings, and stating that the court would conduct a hearing to determine whether to grant of deny Michael and the bank’s motions to compel arbitration. Michael and the bank filed a notice of interlocutory appeal, and Suzann moved to dismiss. The court of appeals agreed with Suzann. An interlocutory order staying arbitration is appealable under CPRC § 171.098, and an order denying the stay of judicial proceedings in favor of arbitration is appealable under CPRC § 51.016 and 9 U.S.C. 171.098(a)(2), but those statutes first require a final decision as to whether the case is subject to arbitration. No such decision had been made in this case, because the court’s order also stated that it would proceed to a hearing on the merits of the motions to compel arbitration. Since the probate court had not determined whether the dispute was subject to arbitration, the court of appeals had no jurisdiction to hear the attempted appeal.

Ruff v. Ruff, No. 05-13-00317-CV

The court of appeals has dismissed Glenda Rhone’s appeal from the trial court’s summary judgment order. Ordinarily, this would be a bad thing for the appellant. In this instance, however, the dismissal is as good as a win. As it turns out, the lawsuit was originally dismissed for want of prosecution in January 2012, and the trial court did not enter any order reinstating the case until after the motion to reinstate had already been overruled  by operation of law under Rule 165a(3). The parties apparently proceeded to litigate the case anyway, and the trial court entered the summary judgment order in March 2013. Rhone appealed, but the court of appeals determined it did not have jurisdiction to hear the appeal. Because the case had not been timely reinstated, the final judgment was actually the January 2012 dismissal order, which would have to have been appealed within 90 days (thanks to the motion to reinstate extending the appellate deadlines). Thus, Rhone could not appeal the case, but the summary judgment order turns out to have been void in any event because it was issued after expiration of the trial court’s plenary power.

Rhone v. Geer, No. 05-13-00492-cv

In 2009, Andres Diaz paid $85,000 for his “dream car,” a 2010 Mercedes C63 AMG. Two weeks later, Caroline Culwell rear-ended him at a stop light, costing Diaz over $9,000 for repairs. At trial, Culwell stipulated to liability, leaving only the question of damages to be decided by the jury. Among other items, Diaz sought to recover $15,671 for the post-accident diminution in value of the car. That claim was supported by the testimony of Diaz’s appraisal expert, but the jury awarded $0.00 for diminished value. Diaz sought judgment notwithstanding that portion of the verdict, and the trial court awarded him the full amount of the claim. The court of appeals reversed, holding that it was within the province of the jury to disbelieve the appraisal expert’s testimony. Even uncontroverted expert testimony does not bind the jury unless the subject matter is one for experts alone. The court of appeals concluded that determining the value of a car for diminution of value damages is not so complicated that an expert’s testimony is required for the jury to understand the issue. Accordingly, the court of appeals reinstated the jury’s refusal to award Diaz any damages for diminution of value.

Culwell v. Diaz, No. 05-12-00093-CV

Citibank sued Albert Evans to collect approximately $10,000 in credit card debt. Evans appealed from the trial court’s grant of summary judgment for the bank, and the court of appeals affirmed. Among other things, Evans argued that he had never agreed to, or even seen, Citibank’s credit card agreement, that Citibank’s credit card statements were erroneous, and that the account statements were never delivered to him. However, the trial court struck those portions of Evans’ summary judgment affidavit as conclusory. The court of appeals held that the trial court had not abused its discretion in that evidentiary ruling, noting that Evans’ denials of the documents were not accompanied by any underlying facts or documentation that supported his denial. Without that affidavit testimony, Evans had no other evidence showing that he had not agreed to the amounts owed as shown by Citibank’s credit card statements, making summary judgment appropriate on the bank’s account stated claim.

Evans v. Citibank (S.D.), N.A., No. 05-11-01107

Lorrie Smith filed suit for judicial foreclosure of a judgment lien against three lots in a Frisco subdivision. Smith had obtained her judgment against Shaddock Builders & Developers, and she recorded an abstract of the judgment on July 15, 2010. Two years earlier, Shaddock had acquired the three lots and immediately conveyed them to another company, Basin, Ltd. The conveyance from Shaddock to Basin was recorded, but the original sale to Shaddock went unrecorded until the seller corrected its “oversight” exactly one day before Smith recorded her judgment lien. Shortly thereafter, Basin conveyed the lots to Sumeer Homes, which built houses and sold the lots to the current homeowners. Each of those subsequent transactions was recorded. Seeking to foreclose on the lots in order to collect on her judgment against Shaddock, Smith sued the homebuilder, the homeowners, their mortgage lenders, and the title company. The defendants moved for and obtained summary judgment against Smith.

On appeal, Smith argued that the conveyance to Shaddock had been fraudulently backdated, and that it had really been filed the day after she recorded her judgment lien. According to Smith, that meant that legal title to the property had not been transferred to Shaddock until after she filed her lien, therfore making the three lots subject to her claim. The court of appeals rejected that argument. Although “legal title” to property serves as evidence of ownership, it does not constitute full and complete title to the property. What really matters when it comes to a judgment creditor’s lien is equitable title to the property, which passes to the purchaser when it pays the purchase price and fulfills the obligations of the contract of sale. In this case, Shaddock had acquired equitable title to the lots three years before Smith recorded her lien, and Shaddock had immediately transferred that title to Basin. Equitable title is a complete defense against the lien of a judgment creditor. Because Basin had acquired equitable title long before Smith acquired her judgment against Shaddock, that title subsequently passed to Sumeer Homes and the subsequent homebuyers free and clear of Smith’s judgment judgment against Shaddock. Nor did Shaddock hold “legal title” to the three lots on the day Smith recorded her lien. The summary judgment evidence showed that the original seller had recorded the sale the day before, and because Shaddock had conveyed the property to Basin by warranty title two years earlier, legal title to the property passed instantly to Basin when the sale to Shaddock was finally recorded. The court of appeals therefore affirmed the trial court’s grant of summary judgment.

Smith v. Sumeer Homes, Inc., No. 05-11-01632-CV

The Dallas Court of Appeals denied a mandamus petition seeking to set aside the trial court’s disqualification of counsel for the plaintiff in a commercial dispute. In re RSR Corp., 405 S.W.3d 265 (Tex. App.–Dallas 2013, orig. proceeding).  The Texas Supreme Court later took the opposite review and remanded for further proceedings.  In re: RSR Corp., No. 13-0499 (Tex. Dec. 4, 2015). The opinions involve the interplay of the different disqualification standards provided by In re American Home Products Corp., 985 S.W.2d 68 (Tex. 1998), and In re Meador, 968 S.W.2d 346 (Tex. 1998). We will present this case without the usual commentary because our firm represents the real party in interest, but it is a useful read or anyone wondering about what lawyers can and cannot do with a former employee of an opposing party.

Mesquite ISD filed an interlocutory appeal after the district court denied a motion for summary judgment based on sovereign immunity. The school district had terminated plaintiff Tomasa Mendoza after she washed several dirty mop heads and placed them in the dryer, causing a fire. (Flaming mop heads are apparently a thing, and it was the second such fire in the school district in the same year.) Mendoza sued for gender and national-origin discrimination under the Texas Commission on Human Rights Act. The school district moved for summary judgment, claiming governmental immunity on the basis that Mendoza could not establish a prima facie case of discrimination.

The court of appeals held that Mendoza had failed to meet her burden on the gender discrimination claim because she had not shown that she was replaced by someone outside of the protected class, or that she was treated less favorably than similarly situated members of another class. The school district had reassigned one woman to replace Mendoza and hired another woman to take over the open slot, facts which negated the claim she had been fired based on her gender. Mendoza also argued that she had been treated differently than the male employee who had failed to collect the dirty mop heads in the first place, as he had only been reprimanded instead of being fired. However, that employee’s duties and the nature of his misconduct were both sufficiently different from Mendoza’s that the court of appeals concluded they were not “similarly situated.” But the court of appeals sustained the trial court’s ruling on the national origin claim, concluding that a genuine issue of material fact existed because the woman hired for the open custodial position was outside Mendoza’s protected class. Thus, the case was remanded to the district court for further proceedings on the claim for national-origin discrimination.

Mesquite Ind. Sch. Dist. v. Mendoza, No. 05-12-01479-CV

Michael Malone, Jr. worked for Nationwide Recovery Systems, a commercial debt collector, but resigned and began working for a competitor named HHT Limited Company. Malone also convinced two of Nationwide’s other employees to move over to HHT. Nationwide sued HHT and Malone for tortious interference with existing contract and related claims, and the jury sided with Nationwide. On appeal, the defendants argued that the trial court had erred by admitting several summaries of Nationwide’s claimed damages. The court of appeals concluded that HHT had failed to explain how the summaries were based on improper accounting methods or were otherwise inadmissible. The court also rejected the defendants’ legal sufficiency challenge to the damages. Lost profits do not need to be susceptible of exact calculation, and the testimony of Nationwide’s president was based on years of experience and an established profit margin of 20 percent. That testimony was sufficient basis for the jury’s award of damages, and the court of appeals therefore affirmed the judgment.

HHT Ltd. Co. v. Nationwide Recovery Sys., Ltd., No. 05-11-01058-CV

In 2008, the mother of plaintiff Bich Nguyen purchased a life insurance policy from Allstate, representing that she had not been diagnosed with a lung disorder in the last 10 years or treated by a doctor in the last five years. The next month, the mother was diagnosed with lung cancer, and she died just a few months later. Allstate investigated, and found that the mother had a history of lung problems, treatment, and hospitalization. Allstate therefore rescinded the insurance policy, and Nguyen filed suit.

Allstate moved for summary judgment, and Nguyen responded with 650 pages of summary judgment evidence. Allstate objected, asserting that Nguyen had failed to meet her burden of actually demonstrating where her controverting evidence could actually be located in those voluminous documents. The trial court and the court of appeals both agreed. While Nyugen’s brief contained a 28-page “Real Factual Background,” that section failed to reference any of the summary judgment evidence in support of her version of the facts, and elsewhere simply referred generally to lengthy documents in support of her claims. Because citing generally to voluminous summary judgment evidence is not sufficient to raise an issue of fact to defeat summary judgment, and because Allstate had met its own summary judgment burden, the court of appeals affirmed the trial court’s decision.

Nguyen v. Allstate Ins. Co., No. 05-11-01120-CV

Twice before, Elite Door & Trim had prevailed at the court of appeals in its attempt to obtain a no-answer default judgment against the defendant in a dispute between the two contractors. See Elite Door & Trim, Inc. v. Tapia, 355 S.W.3d 757 (Tex. App.-Dallas 2011, no pet.); In re Elite Door & Trim, Inc., 362 S.W.3d 199 (Tex. App.-Dallas 2012, orig. proceeding). After the trial court again proceeded to hear the default motion, it entered an order denying it once again, finding that Elite had failed to establish liability because it had not proven various non-damages elements of its claims. The court of appeals rejected that finding, because Tapia’s failure to file an answer served as an admission of the contentions in Elite’s petition. The court of appeals also reversed the trial court’s finding that Elite had not submitted competent evidence of its damages, concluding that the testimony of Elite’s president had adequately established the amount and method of calculating the company’s damages, attorney fees, and prejudgment interest. However, the court of appeals rejected Elite’s request for $15,000 in sanctions against the trial judge for requiring Elite to pursue multiple appeals and mandamuses to obtain a no-answer default judgment, as 42 U.S.C. § 1983 no longer permits such relief against a judge for an act or omission taken in the judge’s official capacity in the absence of extraordinary circumstances. In all other respects, the court of appeals rendered judgment in favor of Elite.

Elite Door & Trim, Inc. v. Tapia, No. 05-12-00725-CV

BH DFW, the local franchise of the Blue Haven Pool & Spa group, took out an advertisement in the Dallas Morning News, claiming that it was the “World’s Largest!” That did not sit well with the Better Business Bureau of Metropolitan Dallas, whose guidelines require its members to be truthful when making statements of objective fact in their ads. When BH was unable to substantiate that it was, in fact, the “World’s Largest!”, the BBB revoked the company’s “Accredited Business” status and demoted its rating from A+ to F. BH sued for breach of contract, and the BBB moved to dismiss under the Texas Citizens Participation Act.

On interlocutory appeal, the court of appeals reversed the trial court’s denial of the BBB’s motion to dismiss. The court first rejected BH’s argument that there was no jurisdiction to hear the appeal, disagreeing with the Fort Worth Court of Appeals’ previous holding that the TCPA did not grant the right of interlocutory appeal when the trial court timely denies a motion to dismiss. Proceeding to the merits, the court held that the TCPA was not narrowly limited to cases involving a citizen’s participation in government, but was instead more broadly extended to matters of free speech involving a matter of public concern. Although the TCPA includes an exemption for certain types of commercial speech, that exemption was not applicable to BH’s claims because the BBB was not engaged in the sale or lease of goods or services. Finally, the court of appeals held that the trial court should have granted the BBB’s motion to dismiss because BH had failed to come forward with prima facie evidence of the existence of a contract requiring the BBB to maintain BH as an accredited business in exchange for its $1000 annual fee. The court therefore rendered judgment in favor of the BBB and remanded to the trial court for consideration of its attorney fees and expenses.

Better Business Bureau v. BH DFW, Inc., No. 05-12-00587-CV

For anyone who didn’t get a copy of the slideshow at today’s Litigation Section meeting, you can download a .pdf copy here. Thanks to everyone who attended, and we hope to do it again sometime when we have a new batch of cases to discuss.

As you may have noticed the other day, there’s a new contributor to the blog. Melissa Case, who recently joined our firm, has volunteered to take the place of the departing Nick Chapleau.  Nick has been part of the blog since its inception, but he is headed back home (more or less) to Chicago. Chris Patton and I extend our great thanks to Nick for all his help in getting this enterprise up and running, and we welcome Melissa for her help in taking it forward.

Also: Lunchtime CLE today at the Belo. We hope to see you there.

A low-speed collision involving two eighteen-wheelers in Wythe County, Virginia has ended up in the Dallas Court of Appeals. Fernando Garza was injured in the accident, leading him to file suit against the other driver, Timothy Jones. Jones, however, is a resident of Memphis, Tennessee, and he therefore filed a special appearance to contest the district court’s jurisdiction to hear the case, which the trial court denied.  On interlocutory appeal, Garza argued that Jones had minimum contacts with Texas because the rig he was driving bore the name of a Texas-based corporation.  According to Garza, that made Jones a statutory employee of a Texas company. The court of appeals rejected that argument as a basis for personal jurisdiction because it was aimed at the forum contacts of the employer, not of the specially appearing defendant. The court therefore rendered judgment dismissing Garza’s claims for lack of jurisdiction.

Jones v. Garza, No. 05-12-00532-CV

Jeanette Hooper and her husband Charles sued their lawyers for legal malpractice. The underlying case had been a personal injury suit arising out of a car wreck, which was apparently dismissed after the lawyers sued the owner of the other vehicle instead of the actual driver. The jury awarded $235,000 in damages, based on the testimony of a legal expert who opined that the Hoopers should have recovered $130,000 for past medical expenses, $180,000 for lost earning capacity, $250,000 for pain and suffering, and $250,000 for damages such as loss of consortium and physical impairment. On appeal, however, the court of appeals held that the testimony did not establish a causal link between the underlying car wreck and the subsequent damages. While it was justifiable for the jury to compensate the plaintiffs for damages sustained in the immediate aftermath of the wreck, such as emergency room bills and initial pain and suffering, the “case-within-a-case” aspect of the legal malpractice claim required the plaintiffs to establish a causal connection between the accident and the health problems Charles experienced months and even years after the collision. That connection needed to be made by the testimony of a medical expert, and could not be demonstrated through bare medical records or inferred by the jury. Because some elements of the plaintiffs’ damages were valid and some were invalid, the court of appeals also sustained the defendants’ challenge to the trial court’s submission of a broad-form damages question, reversed the judgment, and remanded for further proceedings.

Kelley & Witherspoon, LLP v. Hooper, No. 05-11-01256-CV

For those of you in and around Dallas, the blog will be making its in-real-life debut at the Belo Mansion a week from today. We’ll be speaking at the monthly meeting of the Dallas Bar Association’s Appellate Law Section on Thursday, May 16 at noon. One and all are invited to drop by, enjoy some lunch, and hear a little more about some of the recent cases and developments coming out of the Dallas Court of Appeals.

Also coming up next week, our colleague David Coale — proprietor of our sister blog, 600 Camp — will also be at the Belo. David will be speaking to the Business Litigation Section next Tuesday at noon on some of the commercial litigation trends to watch in the federal courts.

That’s two blogs, two lunches, and two hours of CLE credit. We look forward to meeting some more of our readers in person.

Charles Wunderlick and Martha Wilson ended their marriage in 1990 with a written agreement that required Wunderlick to pay Wilson alimony of $1000 per month indefinitely.  The payments were to end on the occurrence of certain contingencies, one of which was Wunderlick’s compensation being substantially reduced without “good cause” at the lumber company he owned and operated. In late 2008, the company responded to the recession by laying off employees and cutting the officers’ salaries to $1 annually. Wunderlick eventually stopped paying the monthly alimony payments, and Wilson sued for breach of contract. The trial court granted summary judgment for Wilson, and Wunderlick appealed.

The issue on appeal was whether Wunderlick had submitted summary judgment evidence showing that the company had reduced his compensation without “good cause,” a term which was not defined in the contract. For his part, Wunderlick argued that “good cause” should be interpreted in the employment context, which would require the employee to have done something wrong to justify termination or demotion. Wilson argued that the divorce agreement was not an employment contract, and “good cause” should therefore be given its ordinary meaning of “good reason” — and Wunderlick had admitted that the recession gave the company “good reason” to cut his salary. The court of appeals concluded that both constructions were reasonable, that the contract was therefore ambiguous, and a genuine issue of material fact existed as to the parties’ intent. The court of appeals therefore reversed the summary judgment and remanded to the district court for further proceedings.

Wunderlick v. Wilson, No. 05-11-01597-CV

In July 2011, the Dallas Court of Appeals ruled — in a rare en banc opinion — that an arbitration clause contained in a testamentary trust could not be enforced because there was no contract with the trust’s beneficiary to arbitrate his claims. Rachal v. Reitz, 347 S.W.3d 305 (Tex App.-Dallas 2011). This morning, the Texas Supreme Court reversed that decision, holding that the beneficiary was bound to arbitrate his claims against the trustee due to the doctrine of direct benefits estoppel. In brief, that doctrine means that if the plaintiff accepts the benefits of the trust, he also has to accept the arbitration clause contained in the trust. In reaching that decision, the Supreme Court noted that the Texas Arbitration Act requires an “agreement” to enforce arbitration, not a “contract” with the claimant. Such an agreement could be satisfied through direct benefits estoppel, as the beneficiary failed to disclaim his interest in the trust, thereby accepting both its benefits and its burdens.

Rachal v. Reitz, No. 11-0708

A temporary injunction order is void if it doesn’t set a specific date for trial on the merits. In this case, the county court at law issued a temporary injunction that only said it “shall remain in effect until final disposition of this case or until further order of the Court.” Neither “final disposition” nor “further order” is a date certain, so the TI was reversed on appeal as void without further reference to the merits.

ACI Healthcare Staffing, LLC v. V-Platinum Consulting, LP, No. 05-12-01060-CV

Elizabeth Rebeles thought she was in a common law marriage with Paul Leighton, and with good reason — they had been living together since 1984, purchased property and filed tax returns as husband and wife, and started a business together. But after Rebeles filed for divorce in 2006, she discovered that there was no documentation of her divorce from her previous husband, meaning that she could not prove she had ever been validly married to Leighton. The parties nonsuited the divorce case, and Rebeles filed a new suit in which she claimed the parties had formed a general partnership during the time they were together.

The jury found that the parties had indeed formed a partnership back in 1984 and that an event requiring wind-up had occurred in 2006. In accordance with that finding, the trial court wound-up the business and divided the partnership assets. The court of appeals affirmed that aspect of the case, rejecting Leighton’s contention that Rebeles had released  her interest in the partnership through a document she had signed to relinquish “all past, present, and future interest in Paul’s Pit Sand and Gravel, and in Hutchins Sand & Gravel and any dealings by Paul M. Leighton.” That release made no reference to the partnership itself, and both parties testified that they had not intended it to release any claim to other property owned by the partnership. To the court of appeals, those facts supported the jury’s finding that Rebeles had not released her interest in the partnership itself. However, the court of appeals also reinstated a $31,000 verdict in favor of Leighton, based on his claim that Rebeles had breached a post-breakup oral contract for her separately owned company to perform billing and clerical services for one of their jointly owned gravel pits. Even though the oral contract related to the partnership business, there was sufficient evidence to show that the parties were representing their independent interests at the time it was made, and not as agents of the partnership itself. Accordingly, the breach of contract finding could still be harmonized with the general partnership finding, and the court of appeals rendered judgment in favor of Leighton.

Leighton v. Rebeles, No. 05-11-01519-CV

Cleveland Partners, L.P. took out a $520,000 loan from Live Oak State Bank to finance the purchase of an apartment building. The loan was personally guaranteed by the defendant in this case, Josiah Cleveland. The guaranty included a waiver of virtually all of the borrower’s defenses on the debt, including “any setoff available” against the lender. The borrower defaulted, and the bank purchased the property for $415,000 at the resulting foreclosure sale. The bank then sued the guarantor for the deficiency, with the guarantor arguing that the property sold for less than its fair market value. The trial court granted summary judgment for the bank.

On appeal, the guarantor argued that the waiver was “massively overbroad . . . unconscionable and unenforceable.” That issue was easily dispatched, with the court citing three of its four recent opinions holding that borrowers can validly waive their right to claim offset under Chapter 51 of the Texas Property Code. See Interstate 35/Chisam Road, L.P. v. Moayedi, 377 S.W.3d 791 (Tex. App.-Dallas 2012, pet. filed); King v. Park Cities Bank, 2012 WL 3144881 (Tex. App.-Dallas 2012, no pet.); Toor v. PNC Bank, N.A., 2012 WL 3637284 (Tex. App.-Dallas 2012, no pet.); see also Smith v. Town North Bank, 2012 WL 5499406 (Tex. App.-Dallas 2012, pet. denied). Bound by those precedents, the court concluded that Cleveland had validly waived his right to offset the difference between the foreclosure price and the fair market value of the property, rendering irrelevant his claim that he had raised a fact issue as to the property’s fair market value.

Perhaps notably, the petition for review in the Moayedi decision has already drawn some amicus support. If there are any further developments in this area, we’ll keep you updated.

Cleveland v. Live Oak State Bank, No. 05-11-00665-CV

The district court granted summary judgment in favor of the defendants in a dispute over the termination of a Gold’s Gym franchise. The defendants were listed as personal guarantors of the franchise agreements, but part of their defense was the claim that the signatures on the guaranties were forged. The court of appeals reversed summary judgment on that issue, concluding that the conflicting opinions of the two sides’ handwriting experts created a fact issue that would need to be tried. However, the court of appeals rejected Gold’s Gym’s contention that the defendants had ratified the agreements even if they were forged, concluding (1) that the defendants were never listed as parties to the franchise agreement, and therefore they could not have ratified it through their actions on behalf of their company that was the actual franchisee, and (2) that Gold’s Gym had not produced any summary judgment evidence showing that the defendants ratified the guaranties where they had consistently refused to pay Gold’s demands on the basis that the signatures had been forged.

Gold’s Gym Franchising, LLC v. Brewer, No. 05-11-00699-CV

When the defendant has filed an answer but doesn’t appear for trial, the plaintiffs have to prove up all elements of their claim in order to obtain a default judgment. In this case, the plaintiffs had previously obtained a temporary restraining order and temporary injunction against their stepfather. When they appeared for trial on their request for a permanent injunction, the stepfather did not show up. The plaintiffs’ lawyer then asked the trial court to take judicial notice of the court file, and the lead plaintiff testified that she was asking the court to convert the temporary injunction into a permanent one. On appeal, the court of appeals sided with the stepfather. While the plaintiffs had asked the court to take judicial notice of the file, there had been no ruling on that request, nor had the plaintiffs pointed to any particular materials in the file. Moreover, the elements of a temporary injunction are different from a permanent injunction in any event, particularly the requirement of no adequate remedy at law in order to obtain a permanent injunction. Accordingly, the case was reversed and remanded to the trial court for further proceedings.

Young v. Smith, No. 05-10-01294-CV

In a lengthy opinion arising from a legal malpractice case, the court of appeals has reversed the judgment of the district court striking the plaintiffs’ experts and granting judgment for the defendants due to the lack of expert testimony. The experts had been struck after the plaintiff’s attorney had missed two previous disclosure deadlines, then failed to provide expert reports as required by the trial court’s amended scheduling order. The plaintiff argued that the trial court had issued improper “death penalty” sanctions, and the court of appeals agreed. There was nothing in the record indicating that the plaintiff herself bore any responsibility for her attorney’s failure to timely designate the experts, so there was no direct relationship between the plaintiff’s conduct and the sanction imposed. The court of appeals also held that the sanctions were excessive in any event, because the trial court had not previously awarded any lesser sanctions for the previous failures to timely designate the experts. It was not enough, the court of appeals held, for the trial court to simply recite that no lesser sanction would suffice because this was not the type of egregious and exceptional discovery abuse that would make death penalty sanctions “clearly justified” and “fully apparent.” However, the court of appeals also affirmed the trial court’s denial of the plaintiff’s motion for leave to file an amended petition after the pleading deadline, where the petition sought to add new claims and causes of action to the case.

Gunn v. Fuqua, No. 05-11-00162-cv

In February, the court of appeals reversed a district court’s temporary injunction prohibiting a lender from foreclosing on the borrower’s properties, concluding that the testimony only established an agreement to negotiate, not an enforceable agreement to forebear from foreclosure. The court has now issued an updated opinion in that case that clarifies the standard of review. In the original opinion, the court wrote that “the trial court abuses its discretion when it misapplies the law to established facts or when the evidence does not reasonably support the trial court’s determination of the existence of a probable injury or a probable right of recovery.” In the revised opinion, the court states that an abuse of discretion occurs when the trial court “misapplies the law to established facts or when there is no evidence that supports the trial court’s determination of the existence of a probable injury or a probable right of recovery.” The difference between those two standards yielded no difference in the outcome of the case, but anyone appealing a temporary injunction should be sure to cite the correct standard of review.

Branch Banking & Trust Co. v. TCI Luna Ventures, LLC, No. 05-12-00653-CV

Phytel, Inc. brought an interlocutory appeal after the district court denied its motion to compel arbitration of its former CEO’s claim that his noncompete agreement was unenforceable. The arbitration clause was contained in the CEO’s termination agreement, which also reaffirmed the noncompete provision in his original employment agreement. However, a subsequent agreement for the repurchase of the CEO’s stock did not contain a separate arbitration clause, although it reaffirmed the terms and conditions of the earlier termination agreement and modified the noncompete provision. The court of appeals concluded that the reincorporation of the prior contact necessarily encompassed the dispute resolution provisions of that agreement, and further held that the arbitration requirement applied to the validity of the noncompete because its subject matter related to all three of the parties’ agreements. The court rejected the CEO’s contention that a merger clause in the third contract worked to exclude the arbitration provision of the second contract because the incorporation of the second agreement by reference resulted in it becoming an inherent part of the subsequent document. Finally, the court of appeals also rejected the claim that Phytel had waived its right to invoke arbitration, holding that waiting two months after the lawsuit was filed and exchanging one set of discovery and initial disclosures did not substantially invoke the judicial process to the prejudice of the CEO. The court of appeals therefore reversed and rendered the trial court’s denial of the motion to compel arbitration.

Phytel, Inc. v. Snyder, No. 05-12-00607-CV

A short memorandum opinion from the court of appeals highlights the importance of timely objecting even in unusual circumstances. At a status conference on July 26, the trial court directed the parties to file any motions, responses, or replies by August 10, and stated that the court would rule on those motions the week of August 15. Nobody objected to that timetable. Both parties filed motions for summary judgment on August 10, and on August 16 the trial court granted Ford’s motion and denied Crear’s — without benefit of either a response or a hearing on Ford’s motions. The court of appeals rejected Crear’s claim that the trial court had abused its discretion by summarily ruling in accordance with that schedule, holding that Crear had failed to preserve any issue for appellate review because he had not objected to either the schedule or the lack of a hearing on Ford’s motion.

Crear v. Ford Motor Co., No. 05-11-01363-CV

In 2011, the Dallas Court of Appeals affirmed the trial court’s dismissal of an inverse condemnation suit, holding that the former owners of the property did not have a compensable interest merely because they had the right to repurchase it if the City of McKinney ceased using it as a park. That right was invoked when the city decided to build a library on a portion of the property, but the city defended the subsequent takings suit by arguing that the substance of the claim was really a breach of contract for which no sovereign immunity had been waived. On petition for review, the Texas Supreme Court has rejected that argument, holding that the former owners’ deed conveyed a “defeasible estate” to the City, and that the former owners retained a “conditional future interest” in the property. According to the Supreme Court, that was not simply a contractual right, but a property interest that was indeed compensable as a taking. The Supreme Court therefore reversed the judgment of the court of appeals and remanded the case to the trial court to determine whether and to what extent building the library had actually constituted a taking of the property.

El Dorado Land Co., L.P. v. City of McKinney, No. 11-0834

In 1989, the Texas Legislature passed the Residential Construction Liability Act, which preempts or modifies many types of claims for damages arising from any “construction defect.” In this case, the court of appeals applied the RCLA to bar a homeowner’s claim for lost rental value of his condominium during the long delay occasioned by the remodeling contractor before the contract was finally terminated. Under the statute, a “construction defect” is defined broadly to include any matter “concerning the design, construction, or repair of a new residence, of an alteration of or repair or addition to an existing residence, or of an appurtenance to a residence, on which a person has a complaint against a contractor.” Tex. Prop. Code § 27.001(4). Because the contractor’s delay was one such matter, the court held that the RCLA governed the claim for damages caused by the delay. The plaintiff’s claim could not succeed under the RCLA for two reasons. First, the homeowner had failed to give the contractor notice of the claim, as required by the statute. Second, the plaintiff was seeking to recover the rental value of his own home during the time that completion of the remodeling was delayed, while the RCLA would only allow the homeowner to recover the cost of substitute housing. Id. § 27.004(g)(4). The court of appeals therefore rendered judgment that the plaintiff take nothinig and remanded the case to the trial court to determine the amount of attorney fees the defendant was entitled to under an agreement of the parties.

Timmerman v. Dale, No. 05-11-01690-CV