In this whistleblower suit against Dallas County, the County filed a plea to the jurisdiction based on sovereign immunity. The plaintiff, a former deputy constable, complained of illegal activity and retaliation in his employment division to the Dallas County Commissions Court. The County contended, however, that this entity does not fall within the confines of the Whistleblower Act and, therefore, the plaintiff did not have an objective good faith belief that he was reporting the misdeeds to an appropriate law enforcement body. While the Court found that “an appropriate law enforcement authority must be actually responsible for regulating under or enforcing the law allegedly violated,” it nevertheless remanded the proceedings to the trial court because the record did not show that evidence was presented about the plaintiff’s good faith belief that the Commissioners Court was the appropriate body. This was particularly true given that some of the County’s jurisdictional arguments were newly raised on appeal.
Category Archives: Result
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
In November 2012, a Union Pacific train collided with a flatbed trailer carrying veterans and their spouses during a Veteran’s Day parade in Midland, Texas. The plaintiffs filed their personal injury/wrongful death suit in Dallas County. Union Pacific moved to transfer venue back to Midland County because its principal place of business in Texas is not in Dallas, but rather Harris County and, thus, the only proper venue is in Midland where the accident occurred. The trial court denied Union Pacific’s motion to transfer. The Court of Appeals disagreed, however, holding that Union Pacific’s “principal office” in Texas was not in Dallas because, although some management occurred in that office, the plaintiffs failed to establish that the Union Pacific employees in the Dallas office had “comparable authority” to the executives in Harris County.
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
In this memorandum opinion, the Court held that the plaintiff failed to effect service on the defendant because the proof of service on the Secretary of State’s return stated that “no such number” existed. This, according to the Court, was prima facie evidence that the defendant was not served.
A roofer died after falling from the rooftop on one of his jobs. His estate sued the general contractor for negligence, claiming that the general contractor maintained a duty to ensure the roofer operated with all proper safety equipment. The Court of Appeals upheld the trial court’s grant of summary judgment in the general contractor’s favor because it found that the general contractor did not owe the roofer, a sub-contractor, a duty to ensure he performed his job safely. According to the Court, “a general contractor’s duty of reasonable care is commensurate with the control it retains over the subcontractor.” Because the general contractor here did not maintain either contractual or actual control over how the roofer performed his job, it did not owe him any duty to ensure his safe work habits.
The Court of Appeals affirmed the trial court’s ruling that appellees lacked sufficient contacts with Texas in their individual capacities to support the exercise of personal jurisdiction over them. Appellants argued that appellees were subject to specific jurisdiction in Texas because the tortious interference and related conspiracy claims against appellees directly relate to and arise from appellees’ purposeful contacts with Texas. According to the Court, any alleged jurisdictional contacts in furtherance of tortious interference made by appellees in their capacity as corporate officers are subject to the fiduciary shield doctrine and do not constitute contacts with Texas in their individual capacities because there was no proof such contacts were motivated solely by appelees’ personal interest. Accordingly, the Court found appellees’ evidence that none of their contacts with Texas were in their individual capacities, combined with the fact that appellees could not be liable in their individual capacities for their conduct on behalf of out of state entities, negated appellant’s jurisdictional allegations.
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 2007, LG Auto Laundry sold a .8-acre tract to Shammy Man Auto Wash, with Shammy Man purchasing the land by means of a mortgage from Millennium State Bank. At the same time, LG and Shammy signed a ground lease permitting LG to possess .06 acres of the property containing a cell phone tower. LG and Millennium signed a Subordination, Non-Disturbance and Attornment Agreement (SNDA) providing that, in the event of foreclosure, LG’s possession of the leased property would not be disturbed. Shammy defaulted, but before Millennium could foreclose, the FDIC took over Millennium and transferred the assets to the State Bank of Texas. The plaintiff purchased the property from the State Bank of Texas and filed this lawsuit to establish that the foreclosure extinguished LG’s ground lease.
Although a valid foreclosure on a lien terminates leases, here the ground lease specifically stated that it was subordinate to Millennium’s deed, but the SNDA provided that LG’s possession would survive the foreclosure. However, because the FDIC took over Millennium, federal law prohibited LG from enforcing the SNDA. As a result, the Court found that the plaintiff acquired the land free and clear of LG’s lease.
In this slip-and-fall litigation, the defendant moved for an order declaring the plaintiff a vexatious litigant, which the trial court granted. The Court of Appeals held that the trial court abused its discretion in finding the plaintiff vexatious because, while he had, indeed, brought a number of prior lawsuits (thus satisfying one prong standard), the plaintiff could establish a reasonable probability of success in the pending litigation. Thus, the defendants could not satisfy the second prong of the two-prong test.
No Governmental Immunity For Charter Schools Under Texas Whistleblower Protection Act
November 27, 2013Kimberly Ball-Lowder brought suit against Pegasus for wrongful discharge under the Texas Whistleblower Protection Act. Pegasus filed a plea to the jurisdiction, asserting that Ball-Lowder’s claims must be dismissed because the Whistleblower Protection Act is not applicable to a Texas open-enrollment charter school. The Court held that the Act applies to an open-enrollment charter school, and affirmed the trial court’s order denying the plea to the jurisdiction. Government immunity is waived for a “local government entity” respecting claims under the Act. The Court concluded that the Whistleblower Protection Act’s definition of “local government entity” must be interpreted to include an open-enrollment charter school to be consistent with the Texas Supreme Court’s decision in LTTS Charter School, Inc. v. C2 Construction III, 342 S.W.3d 73 (Tex. 2011).
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)
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
Benica Brown’s former employer, Digital Intelligence Systems (“DIS”) sued her in Dallas county, where she was employed in DIS’s Dallas office, even though Brown’s employment agreement with DIS (which DIS drafted) specified Virginia as the exclusive forum to resolve any disputes between the parties. The Court conditionally granted mandamus relief, holding that the trial court abused its discretion when it refused to dismiss the action based on the forum selection clause in the employment agreement. The Court specifically rejected DIS’s argument that Virginia would be an inconvenient forum because DIS “certainly could have foreseen that it would be required to litigate against Brown in Virginia, especially given that it drafted the employment agreement containing that requirement and required Brown to sign it.”
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
As the Court held in a similar case two weeks ago, the recitals in a trustee’s deed fall into an exception to the hearsay rule and should be admitted into evidence because the recitals are “relevant to the purpose of the document.”
Although the contract at issue in this breach of contract matter included an arbitration provision, the defendant went ahead and actively litigated the case by, among other things, filing a motion for summary judgment, propounding affirmative discovery, deposing expert witnesses and attending mediation. Then, after 19 months of active litigation (and 4 months before trial), the defendant invoked the arbitration provision in the agreement and moved to compel arbitration. The Court found that the defendant had waived arbitration by substantially invoking the judicial process.
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
Donald and Ida Mae Card owned the headstone that once marked the grave of Lee Harvey Oswald. During the 1980s, the Cards gave the headstone to Ida Mae’s sister and brother-in-law for safekeeping. The Cards, in turn, gave the marker to their son, Johnny Ragan. Donald and Ida Mae died, and ownership of the Oswald gravestone passed to their children, who demanded it back from the Ragans. As it turns out, the Ragans had sold it to an Illinois resident, Wayne Lensing, who had arranged for its exhibition at a museum in Illinois. The Card children sued to get the headstone back. Lensing filed a special appearance challenging the court’s personal jurisdiction. The Court found that the plaintiffs had sufficiently alleged jurisdiction because they established that Lensing had committed several relevant acts in Texas, including flying to Fort Worth to take possession of the headstone. Accordingly, the Court upheld the trial court’s finding of personal jurisdiction.
In this forcible detainer case, the defendant objected to the entry into evidence of the deed at issue. While stipulating to the deed’s existence, the defendant argued that the court should exclude the deed’s recitals because they were hearsay. The Court of Appeals rejected this argument and pointed to Texas Rule of Evidence 803(15), which provides a hearsay exception to “a document purporting to establish or affect an interest in property.” Because the Court found that the recitals were “germane to the purpose of the document,” it affirmed the trial court’s decision to admit the deed in its entirety.
Among other claims, the Olmsteads sued the Goldmans for breach of contract to purchase residential real estate. The trial court rendered judgment in favor of the Olmsteads and awarded them damages and attorney fees; the Goldmans appealed. The Court of Appeals partially reversed, holding that the Olmsteads take nothing on their claims and remanded the issue of attorneys’ fees. The Court found that the trial court erred by awarding the Olmsteads damages based on the carrying costs of the house after the Goldmans breached the contract until the house was sold. The proper measure of damages was the difference between the contract price and the market value of the house on the date the Goldmans breached the contract, which was zero. The court reasoned that non-breaching sellers should not be awarded the post breach costs of ownership because it could “incent the seller to hold the property indefinitely while waiting for market conditions to change, or for a purchaser willing to pay a specific price.”
Unaware that the law prohibited the creation of a professional association between doctors and non-doctors, the plaintiff, Andrew Small (a medical doctor) formed a joint practice with the Parker brothers (two chiropractors). The association operated for several years, but ended in 2003. After the relationship ended, Small sought to establish that he should have been paid more under the the entity’s articles or association, so he brought suit. The Court of Appeals, however, rejected Small’s claim because, under Texas law, it is illegal for a doctor to jointly own a professional association with non-doctors. Accordingly, the Court voided the contract on the ground that “a contract to do a thing which cannot be performed without violation of the law is void.”
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
In 1977, Bullough married Hundley because she told him she was pregnant with his child – Dale Jr. – who was born the following year. In 2004, the parties divorced after a two-day trial, and the trial court made a division of the parties’ marital estate. More than six years later, Bullough learned that Dale Jr. was not his biological son through DNA testing. A few months later, the Will Slip 2011 Trust was created for the benefit of Bullough and the children of Dale Jr. Bullough then assigned his claims against Hundley to the Trust, and seventeen days later, the Trust filed suit.
The essence of the Trust’s claims was that Hundley deceived Bullough into marrying her by lying about the paternity of Dale Jr., and continued to lie throughout the marriage. As damages, the Trust sought the value of the support Bullough provided Hundley during more than 20 years of marriage, the value of the assets Hundley received as part of the divorce, and the parties’ art collection. The trial court found that the 2004 final divorce decree barred the Trust’s claims and granted Hundley’s motion to dismiss and motion for summary judgment. The Court of Appeals affirmed, holding that because the Trust’s claims arise out of facts that could have been litigated in the divorce, they were barred by res judicata.
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 parties entered an operating agreement, which contained a forum selection clause that required them to submit to jurisdiction in Oregon. CKH initiated litigation related to the operating agreement in Texas. The trial court granted appellees motion to dismiss on venue finding that CHK agreed to venue in Oregon, and CKH appealed.
The Court of Appeals affirmed for three reasons. First, the Court found that appellees did not waive the court’s jurisdiction to rule on its motion to dismiss based on a forum selection clause simply because the trial court denied their special appearance. Second, the Court held that whether CKH’s claims are subject to arbitration is irrelevant to the forum selection clause. The operating agreement requires parties to submit to jurisdiction in Oregon “provided such claim is not required to be arbitrated.” CKH initiated a lawsuit rather than filing arbitration; the Court found such “action” to be controlled by the forum selection clause. Further, the parties agreed to arbitration in Oregon, which makes it clear that the parties envisioned all claims–whether brought before a court or an arbitration panel–be filed in Oregon. Third, the Court held that a non-signatory was entitled to rely on and enforce the forum selection clause because the claims against the non-signatory are substantially interdependent on the claims against the signatory.
Several landowners entered into an easement agreement with the City of Celina so the City could build a sewer to a local high school. Among other things, the City agreed to replace the top soil along the easement after the sewer was installed. When the original top soil was not replaced, the landowners sued for inverse condemnation. The Court of Appeals found that the agreement’s top soil provision was not intended to act as a condition subsequent. Because the takings claim was based on the landowners assertion that breach of a condition subsequent voided the easement, the Court found that the trial court erred in denying the City’s plea to the jurisdiction.
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 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
In 2008, Metroplex entered a mail processing agreement with Donnelley’s predecessor in interest Browne & Co under which Metroplex would sort mail for Browne’s Dallas facility customers. In 2009, Metroplex ceased its operations, and Browne filed suit against Metroplex seeking the return of money it had on deposit. The jury found in favor of Browne, and Metroplex appealed. The Court of Appeals affirmed the jury’s finding of breach of contract against Metroplex and its award of attorney’s fees. The Court, however, found no evidence to support piercing Metroplex’s corporate veil to hold its president personally liable. Accordingly, the Court reversed the trial court’s judgment to the extent it orders recovery against the president individually, and affirmed the trial court’s judgment in all other respects.
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
Jeffrey Bay sued Regions Bank for breaching an escrow agreement. According to Bay, Regions was to serve as escrow agent for his $500,000 investment and was only to carry out the investment if it received an opinion from counsel affirming that the described investment was either registered securities or exempt from registration. Regions argued that it did receive such a letter prior to releasing the funds, but the Court of Appeals held that the only letter it did receive describing the securities at issue did not provide the opinion required by the escrow agreement. Instead, the letter merely stated that the offering was “designed” to be exempt from securities registration. The Court thus held that Bay had offered sufficient evidence to show Regions breached the escrow agreement.
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
Fiduciary Shield Doctrine Blocks Personal Jurisdiction Over Party Planning Executives
September 5, 2013The defendants here were two executives of a California-based party-planing company that contracted in with a Texas company to throw a Super Bowl party before the 2011 Super Bowl in Dallas. While the details on what happened at the party are unclear, the party apparently did not go well, so the plaintiff sued these two executives for breach. After the trial court granted the defendants’ special appearance based on the fiduciary shield doctrine, the plaintiff appealed, arguing that the fiduciary shield doctrine applies only in cases where the plaintiff asserts general jurisdiction over the defendants, and here the plaintiff asserted specific jurisdiction over the executives. The Court rejected this argument and affirmed the trial court’s decision.
In 2004, Crutcher filed a lawsuit against the Dallas Independent School District (“DISD”) alleging discrimination and retaliation. The 2004 lawsuit was settled out of court. In the summer of 2009, Crutcher interviewed for a position with the DISD, but did not get the job. Following this adverse employment decision, Crutcher sued DISD. The trial court granted summary judgment in favor of DISD, and Crutcher appealed. The Court of Appeals held that Crutcher failed to establish a causal connection between Crutcher’s filing of the 2004 lawsuit and the adverse employment decision so as to establish a prima facie case of retaliation. The Court further held that DISD provided substantial evidence to show legitimate, nondiscriminatory reasons for its decision to not hire Crutcher.
Crutcher v. Dallas Indep.Sch. Dist., No. 05-11-01112-CV
PDBI and Varel entered into an agreement in which PDBI agreed to act as Varel’s authorized sales representative by providing “sales and technical service” to certain customers. Pursuant to this contract, PDBI met with MMS several times to pitch Varel’s products and provide product price sheets, product requirements, and technical services. Varel then cancelled its agreement with PDBI, and informed PDBI that any sales to MMS would be made directly by Varel. MMS subsequently began buying products directly from Varel. PDBI sued Varel, alleging that PDBI procured MMS as a buyer of Varel products, provided “sales and technical services” to MMS, and was “entitled to commission on sales” to MMS. The Court of Appeals reversed the trial court’s grant of summary judgment in favor of Varel. The Court reasoned that PDBI’s evidence raises a fact issue whether it rendered sales and technical service to MMS under the terms of its contract with Varel.
PetroDrillBits Int’l v. Varel Int’l Indus., No. 05-12-00406
The Weavers hired attorney Holliday to pursue claims relating to a car accident. The Weavers later sued Holliday for breach of fiduciary duty, professional negligence, fraud, and violation of the DTPA, alleging that Holliday settled an insurance claim without the Weavers’ consent and converted the money for personal use. The trial court found in favor of the Weavers on all four claims, and the Weavers elected to recover on the DTPA claim. The Court of Appeals reversed the trial court’s judgment on the DTPA claim, and rendered judgment for the Weavers on the breach of fiduciary duty claim. The Court of Appeals noted that there was “no evidence that [Holliday’s] acceptance of the settlement payments…or his attorney’s fees, constituted a pecuniary loss to the Weavers that was caused by Holliday’s DTPA violations as opposed to the other claimed wrongful conduct.” Thus, the evidence was legally insufficient to support the award of damages under the DTPA because there was no evidence that the DTPA violations were a producing cause of the Weavers’ claimed pecuniary loss.
Holliday v. Weaver, No. 05-10-01614-CV
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
In this memorandum opinion, the Court found that the trial court’s temporary injunction preventing the defendants from disclosing, among other things, “techniques,” “materials,” “confidential information” and “proprietary information,” was not specific enough to meet the requirements of TRCP 683, which requires that an injunction shall “describe in reasonable detail . . . the acts sought to be restrained.”
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
Pursuant to a contract with Chapman Custom Homes, Duncan Plumbing installed the plumbing in a house Chapman was building in Frisco, Texas. But a year-and-a-half later, those pipes sprung a leak and damaged the house. The Court of Appeals, however, found that Chapman could not recover for negligence because the economic loss rule bars such a tort claim where a contract governs the parties’ relationship. The Court rejected Chapman’s argument that the economic loss rule only bars recovery for damages to the “plumbing system itself” (while its damages based on injuries to the entire home), because “the only duty [Chapman] alleged Dallas Plumbing breached was its contractual duty.”
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
The trial court granted summary judgment for approximately $30,000 in unpaid invoices under an “account stated” theory, as well as roughly $15,000 in attorneys fees. Pegasus Transportation Group v. CSX Transportation, No. 05-12-00465-CV (August 14, 2013, mem. op.) The Court of Appeals affirmed, reminding that “account stated” can allow recovery without an express contract when the parties have “a standard course of dealing . . . after the expiration of that written agreement.” The Court also gave no weight to a controverting affidavit on attorneys fees, noting that it “does not address what was described by [plaintiff’s] lawyer as the work that was done, what is customarily charged in similar cases, why the time expended was excessive to accomplish the work provided, or that the work performed was unnecessary.” (citing Cammack the Cook, LLC v. Eastburn, 296 S.W.3d 884, 895 (Tex. App.–Texarkana 2009, pet. denied)).
McKinney Aerospace was in the business of airplane repair. In 2006, Boyington Capital Group came to McKinney for repairs on its airplane. During negotiations, McKinney’s executive vice president, Randall Haler, told Boyington Capital, that McKinney was in “very fine legally financial shape.” As it turns out, McKinney was on the verge of bankruptcy and failed to repair the plane. It had also used Boyington’s initial payments to hold off creditors, so it could not return those funds to Boyington. Boyington sued McKinney and Haler for, among other things, fraud, conversion, breach of fiduciary duty and breach of the Texas Theft Liability Act. The jury found for Boyington.
On appeal, Haler argued that there was insufficient evidence to establish a claim under the TTLA against him. The Court of Appeals disagreed, upholding the jury’s finding and pointing out that “by misrepresenting the financial condition of McKinney Aerospace and spending money it received from Boyington on payments other than those related to repairing Boyington’s plane, Haler unlawfully appropriated Boyington’s property with the intent to deprive Boyington of its money.” However, the Court of Appeals reversed the trial court’s grant of attorney’s fee to Boyington because Boyington did not segregate and exclude the fees for services that relate to its claims for which fees are not recoverable.
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
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
With its motion for summary judgment, the plaintiff submitted affidavits testifying to, among other things, the terms of an unsigned lease agreement with its former tenant, a law firm. The defendant generally objected to these affidavits as inadmissible hearsay, but failed to specify which portions of the affidavits contained the hearsay. The Court of Appeals held that, although an affidavit containing hearsay may not support summary judgment, the opposing party must make “specific objections to each component part of a particular piece of evidence to preserve error on appeal.” Because the defendant simply objected that “the Affidavits contain inadmissible hearsay,” the Court of Appeals held that they had not specifically objected to the allegedly inadmissible statements and concluded that the trial court properly considered the affidavits.
Following a number of recent waiver cases, the Court of Appeals held that the appellees waived their contractual right to offset when they agreed that “Guarantor waives, to the fullest extent permitted by applicable law, the benefit of any statute of limitations or other defenses affecting its liability hereunder.” The Court rejected appelles’ argument that this language was not specific enough to waiver their rights under section 51.003.
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
Based on a report from a confidential informant, the Texas Department of Family and Protective Services investigated Robert Mason for allegations that he hit his ten-year-old daughter three times. The investigation determined that, based on the available evidence, the alleged abuse did not occur. But Mason suspected that the informant was David Glickman, the Rabbi of a congregation with which Mason associated, so he sued Glickman for defamation. Because the TDFPS had redacted its report (as required by Texas law) to conceal the name of the informant, Mason could not establish that Glickman was the one who made the allegedly defamatory statement. Under a Texas Family Code provision, however, Mason moved the trial court to order disclosure of the unredacted report, arguing that disclosure was essential to the administration of justice. The trial court denied the motion and granted Glickman’s no-evidence motion for summary judgment. The Court of Appeals agreed, holding that disclosure of the report was not essential to the administration of justice. Further, the court rejected Mason’s stated goal of discouraging reports of suspected child abuse since the statute exists to encourage child abuse reporting, regardless of whether the allegations are ultimately confirmed.
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
IBP leased a restaurant space to Pizza Associates. Graman executed the lease for Pizza Associates as its president, and executed a written guaranty, guaranteeing the payment and performance of the lease. IBP terminated the lease after Pizza Associates failed to comply with its terms. IBP sued Pizza Associates for breach of the lease, and sued Graman pursuant to the guaranty. The trial court granted IBP’s motion for summary judgment, to which Graman had filed a response but Pizza Associates did not. Graman appealed.
The court of appeals held that Graman did not raise a viable challenge to the trial court’s summary judgment against them because their arguments did not address the obligation to pay under the guaranty. Instead, Graman raised issues related to the lease, but Pizza Associates’ liability was settled. The court of appeals determined that Graman cannot avoid liability under the guaranty by now questioning the settled underlying liability related to the lease. The court of appeals also rejected Graman’s argument that IBP was required to segregate its fees between the breach of lease suit and the breach of guaranty claim. The court of appeals affirmed the trial court’s judgment.
Graman v. IBP Retail No. 5, L.P., No. 05-12-00565-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
Bob Montgomery Chevrolet, a car dealership doing business entirely in Kentucky, entered into an agreement with Dent Zone, a dent repair service, to allow Dent Zone to operate out of Montgomery’s dealership in exchange for a cut of Dent Zone’s take. After some negotiation, the parties signed an agreement that included the following language: “Additional benefits, qualifications and details of the [relationship] are available for your review at our website: http//.linxmanager.com./pdf.CRCTermsconditions.pdf.” The terms and conditions on that website included a minimum six-month contractual term, a Texas choice-of-law provision, and a forum-selection clause requiring any suit between the parties to be brought in Dallas, Texas. One month after signing the agreement, Montgomery ended its relationship with Dent Zone. Dent Zone sued Montgomery for breach of contract in Dallas, and Montgomery filed a special appearance, which the trial court denied.
On appeal, Montgomery insisted that the terms and conditions linked to in the agreement were not part of the contract, while Dent Zone argued that the terms were incorporated by reference. The Court of Appeals agreed with Montgomery, explaining that for a contract to incorporate another document by reference that contract must demonstrate the parties’ intent to incorporate all or part of the referenced document. Turning to the language of the agreement, the Court found that the phrase “Additional benefits, qualifications and details of the [relationship] are available for your review at our website” was informative only and does not suggest that the parties intended the terms and conditions to become part of their agreement.
PAM Transport’s truck driver, James Herdo, allegedly backed into one of Stevens Transport’s semi-tractors. Stevens sued PAM for negligence because it claimed Herdo failed to keep a proper “lookout” when he was backing the truck up. The trial court found that Stevens had established that Herdo’s negligence proximately caused the collision and granted Stevens’ motion for summary judgment. The Court of Appeals disagreed, holding that the mere occurrence of an accident does not establish negligence. Instead, Stevens had to prove conclusively that Herdo’s failure to keep a lookout proximately caused the accident, not simply that Herdo backed into Steven’s tractor.
Okunfulure hired Ortiz to build a masonry wall along the front of his house. Ortiz sued Okunfulure, claiming he was not fully paid according to the parties’ oral agreement. Okunfulure counterclaimed, alleging Ortiz’s performance was deficient. The trial court found in favor of Ortiz and dismissed Okunfulure’s counterclaim with prejudice. Okunfulure appealed, and the court of appeals affirmed the trial court’s judgment. The parties disagreed on the amount Ortiz was to be paid, but the court of appeals held that a reasonable fact finder could have believed Ortiz’s testimony that Okunfulure failed to pay him $1250. The parties also gave conflicting testimony on whether Ortiz advised Okunfulure to build a foundation below the masonry wall to prevent deterioration, but the court of appeals again concluded that a reasonable fact finder could have believed Ortiz warned Okunfulure about the foundation. Thus, the court of appeals held that the evidence was legally sufficient to support the trial court’s judgment.
Okunfulure v. Ortiz, No. 05-12-01045
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
Orr is the trustee of a trust of which Wall is a beneficiary. Wall sued Orr in Kentucky for actions he took as trustee. The case was sent to arbitration, and the arbitrators Wall’s claim that the trust must distribute $63,000 to her. But the arbitrators did grant Orr’s counter motion to permit him to give a cashier’s check for $63,000 made out to Wall to the arbitrators until Wall signed a release. A Kentucky trial court confirmed the order. Several years later, Wall filed suit in Collin County, Texas, claiming she is still owed the $63,000 despite the fact that she never signed the release. The Court of Appeals upheld the trial court’s conclusion that Orr wins on the affirmative defense of claim preclusion because the transactional nucleus of facts between the two cases were essentially identical. Wall argued that her claim in this suit was that the requirement that she sign a release constitutes a breach of fiduciary duty, which was not litigated in the prior suit. The court rejected this argument.
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
Robison filed a medical malpractice suit against Texas Health Resources, Inc. d/b/a Texas Health Presbyterian Hospital Allen a/k/a Texas Health Allen (“THR”). However, Robinson was treated by Texas Health Presbyterian Hospital Allen (“THPHA”), and THR does not do business as THPHA nor did THR provide any of the care at issue in Robinson’s claim. The trial court granted summary judgment for THR, and dismissed Robison’s claims due to the misidentification. Robinson appealed, claiming that her original petition against “d/b/a [THPHA]” constituted an actual suit against THPHA. The court of appeals disagreed, finding that the “d/b/a” designation does not make the entity a party to the lawsuit. Further, nothing in the record showed that THPHA has been an assumed name for THR or vice-versa. Thus, the court of appeals affirmed the judgment of the trial court.
Robison v. Texas Health Resources, No. 05-11-01376-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
Cambridge and Jain entered into an option program agreement. Cambridge later determined the investment programs managed by Jain were not economically feasible and told Jain it intended to terminate them. Jain demanded Cambridge pay certain fees allegedly due him, Cambridge refused, and Jain filed suit for breach of contract. The matter was arbitrated before a Financial Industry Regulatory Authority (FINRA) panel of arbitrators. The panel entered an award in favor of Jain, which the trial court confirmed. Cambridge appealed the judicial confirmation of the award. The court of appeals rejected Jain’s argument that Cambridge waived judicial review of the arbitration award by agreeing to arbitrate pursuant to FINRA rules. However, the court of appeals affirmed the trial court’s judgment because it found that the arbitrators did not exceed their powers by relying on impermissible matters outside the broad scope of the arbitration agreement.
Cambridge Legacy Group v. Jain, No. 05-12-00991-CV
Several former Dallas municipal judges brought this lawsuit challenging the 2012 municipal judge selection process, claiming that the Mayor and the City Council violated the city code by asking nominees to comment in writing on legislative proposals by an ad hoc legislative committee and by interviewing additional candidates without justification. The Court of Appeals, however, concluded that these former judges lack standing to sue because they seek only a declaration that the City Council violated the law. The Court found that the judges lacked any personal stake in the outcome of the case because (1) they disclaimed any intent to challenge the appointment of their successor judges; (2) they do not seek to be reinstated as judges; and (3) they deny that they are challenging the legitimacy of any ordinance.
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
Sullivan purchased a commercial cleaning franchise from Jani-King. The parties ended up in two disputes that were resolved through a single settlement agreement in 2004. The settlement agreement required Sullivan to “immediately and permanently cease operation” of his competing business, and Jani-King to offer Sullivan a certain amount of accounts within the next 12 months. The franchise agreement remained in full force and effect. In 2005, Jani-King sued Sullivan for breach of the franchise and settlement agreements, alleging that Sullivan continued to operate his competing business and failed to pay Jani-King royalty and advertising fees in compliance with the franchise agreement. The jury found in favor of Jani-King and Sullivan appealed.
Among other issues, Sullivan challenged the factual sufficiency of the jury’s findings. The court of appeals found that Sullivan’s factual sufficiency complaints were not preserved for review because Sullivan failed to file a motion for new trial. The court rejected Sullivan’s claim that his motion to disregard the jury’s findings or for judgment notwithstanding the verdict sufficed as a motion for new trial because those motions did not ask the trial court to vacate the judgment and order a new trial. The court of appeals also found that Jani-King’s failure to provide Sullivan with accounts was excused by Sullivan’s prior breach of the settlement agreement through his failure to immediately cease operation of his competing business. The court of appeals affirmed the trial court’s judgment.
Sullivan v. Jani-King of NY, Inc., No. 05-11-01546-CV
In August 2002, after Kroupa and WIlliams had been living together in a common law marriage for a number of years, Williams took out a home equity loan on the parties’ residence without telling Kroupa. Kroupa discovered the home equity loan the following month, in September 2002. Several years passed, and Kroupa and Williams finalized their divorced in 2007 and Kroupa received the residence as part of that proceeding. In 2008, Kroupa filed a petition seeking to have the home equity loan declared as void.
On appeal, the Court looked to the Texas Constitution’s 1998 amendment concerning home equity loans to determine whether Kroupa could prevail. Under that amendment , Kroupa argued that the home equity line was void because she did not sign the written agreement or consent to it as the Texas Constitution required. In response, Williams and Wachovia (the holder of the lien) insisted that Kroupa’s claim was barred by the applicable statute of limitations. Examining the Texas Constitution and the line of cases discussing this specific provision, the Court found that becuase the lien here was voidable and not void, the statute of limitations applied. The Court then found that, because Kroupa discovered the lien in September in 2002, and because she filed her lawsuit in September 2008, her suit was barred by the four-year statute of limitations.
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
In this forcible detainer action, the defendant disputed the validity of the foreclosure sale in light of an automatic bankruptcy stay that had been issued. The Court noted, however, that under Texas Rule of Civil Procedure 746, the only issue that may be adjudicated in a forcible detainer action is the right to actual possession. Accordingly, because the validity of of the foreclosure sale in light of a bankruptcy stay goes to the merits of the title, the Court held that this issue may not be raised in a forcible detainer action and rejected the defendant’s argument.
Failure To Submit Jury Question on Damages Does Not Waive Sufficiency Arguments on Appeal
July 11, 2013At a trial involving, among other things, counterclaims for breach of contract, the counterclaimant forgot to submit a jury question on the issue of damages. Because the jury agreed with the counterclaimant for all other elements of the breach of contract claim, the counterclaimant moved for judgment and requested that the trial court find that damages for the breach of contract established as a matter of law. The trial court did not expressly rule on the motion for judgment, but instead rendered a take-nothing judgment on the counterclaim.
On appeal, the Court addressed several issues, including whether the counterclaimants had waived any objection to the jury charge on appeal. The Court explained that, under the Texas Rules of Civil Procedure “[w]hen an element of a claim is omitted from the jury charge without objection and no written findings are made by the trial court on that element then the omitted element is deemed to have been found by the court in such a manner as to support the judgment.” Based on this, the Court concluded that the counterclaimants did not waive their claim for damages by failing to submit a jury question on that element of their claim and that they had also not waived argument concerning the legal and factual sufficiency of the trial court’s “deemed finding.”
Parman sued TierOne to recover stock he allegedly owned in the company. The jury found that TierOne converted 4.5 million shares that belonged to Parman, and awarded him $600,000 in damages. TierOne appealed, arguing that the trial court erred by excluding evidence discovered after the trial began. TierOne received an audiotape after the second day of trial wherein Parman told another lawyer that “[No], man, I’ve got no stock [in TierOne], no nothing buddy.” TierOne produced the audiotape the next day, but the trial court denied TierOne’s motion to admit the tape.
Not surprisingly, the court of appeals determined that the trial court abused its discretion by refusing to admit the newly discovered audiotape of Parman admitting he doesn’t own any of the stock he was suing to recover from his employer. The court of appeals found that TierOne had good cause for failing to produce the audiotape before becoming aware that the lawyer who produced the tape had relevant information and becoming aware of the existence of the audiotape. The court also determined that TierOne supplemented its discovery responses reasonably promptly by producing the tape to Parman the day after TierOne received it. Finally, the court held that the trial court’s errors “probably caused the rendition of an improper judgment” because the audiotape likely would have impacted the weight the jury accorded Parman’s testimony. The court of appeals reversed the trial court’s judgment and remanded the case for further proceedings.
TierOne Converged Networks v. Parman, No. 05-12-00026-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
Henning obtained a mortgage loan from Willow Bend Mortgage, which was later sold to IndyMac Mortgage Services, a division of OneWest Bank. IndyMac notified Henning that his loan was in serious default, and that failure to cure the default could result in foreclosure. Henning filed suit against OneWest, and OneWest filed a counterclaim for foreclosure. The trial court granted OneWest’s no evidence motion for summary judgment as to all of Henning’s claims, and OneWest’s summary judgment motion on its counterclaim. Among other issues, Henning alleges that the trial court erred by granting OneWest’s motion for summary judgment on its counterclaim for foreclosure.
The court of appeals rejected Henning’s claim that the assignment of the note and deed of trust from IndyMac to OneWest was invalid because it was signed by a “robo-signer,” ruling instead that the note was endorsed in blank and OneWest was in possession of the original note. Thus, there was no genuine issue of material fact respecting the “chain of title” on the note. The court of appeals also concluded that Henning failed to raise a genuine issue of material fact as to default. The court found no evidence in support of Henning’s claim that OneWest’s documents reflect confusion and misrepresentations regarding its claim of default. The court also rejected Henning’s claim that OneWest’s “loss mitigation obligations” precluded foreclosure because the record did not show that the note or deed of trust “expressly incorporated” any “loss mitigation obligations.” Thus, the court affirmed summary judgment for OneWest on its foreclosure counterclaim.
Henning v. Onewest Bank FSB, No. 05-12-00078-CV
Court Reinstates Arbitrator’s Award of Equitable Extension for Violation of Covenant Not to Compete
July 5, 2013Nationsbuilders 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
Amy Self sued Tina King and Elizabeth Tucker for injuries she received in a car accident purportedly caused by King. On March 21, the trial judge sent a letter to all counsel requiring them to sign and return the enclosed scheduling order by April 8, 2011, or the court would place the matter on its dismissal docket. Self failed to comply with this requirement and the court notified the parties of a dismissal hearing on April 21. When Self failed to appear at this hearing, the court issued an order of dismissal. In July 2011, Self moved to vacate the order of dismissal because, she argued, neither she nor her attorney had received notice of the scheduling order or the dismissal hearing. The trial judge stated that, although the court lacked jurisdiction to reinstate the case, she would deny the motion to reinstate if she had jurisdiction to do so. On appeal, the Court found that Self failed to address all possible grounds for the dismissal of the case, which was required because “[i]f a dismissal order does not state the grounds for the dismissal, a plaintiff seeking reinstatement must negate all possible grounds.”
Sauer obtained judgments in Pennsylvania and California against Valley Games, a foreign corporation. Sauer domesticated these judgments in the trial court, and filed suit against relator, Valley Games and others for fraudulent transfer and sought to pierce the corporate veil. Sauer obtained an ex parte order for a pre-judgment writ of attachment against relator, and an order requiring relator to deposit $260,000 into the court registry. The court of appeals conditionally granted a writ of mandamus as to both orders. The court found that it was error for the trial court to order the writ of attachment because Sauer’s claims were contingent and unliquidated. As the court noted, such writ “may be issued only when the demand is not contingent, is capable of ascertainment by the usual means of evidence, and does not rest in the discretion of the jury.” The order requiring relator to deposit money in the court’s registry was also error because it is a form of mandatory injunction, and Sauer had not proven that he was entitled to injunctive relief.
In Re Radiant Darkstar Productions, LLC, No. 05-13-00586-CV
In 2006, Dr. Tran bought medical equipment on eBay for $14,580 using his Citibank credit card. When the equipment arrived, Dr. Tran found that it was missing a key component so he contacted Citibank to dispute the purchase. In response, Citibank issued two chargebacks: one in October 2006 for $4,580 (which the seller accepted) and one in November 2006 for the remaining $10,000 (which the seller did not accept). Among other things, Tran sued Citibank for breach of an oral agreement to “timely” issue the credit card chargebacks together. The Court of Appeals found that Tran had not put forward any evidence showing that Citibank agreed to issue the chargebacks “by a certain date, within a certain time frame, or at the same time.” Thus, the Court held that the oral contract alleged by Dr. Tran failed for indefiniteness.
In a commercial dispute concerning a furniture liquidation sale, the trial court awarded appellees damages for breach of contract and fraud, and attorney’s fees, but reduced the jury’s attorney’s fee award by nearly $425,000. Among other issues, appellants challenge the trial court’s $100,000 judgment against Lavercombe based on fraud, and appellees challenge the trial court’s reduction of attorney’s fees.
The court of appeals reversed the trial court’s judgment with respect to the fraud claim. The court found no evidence in the record showing that Lavercombe made a material misrepresentation as to the quantity and availability of upholstery products with an intent to deceive and with no intention of performing as represented. The court of appeals also reinstated the jury’s higher award of attorney’s fees because there was more than a scintilla of evidence in the record supporting the jury’s award. In all other respects, the court of appeals affirmed the trial court’s judgment.
Broyhill Furniture Indus. v. Murphy, No. 05-11-01545-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
The trial court awarded the appellees over $360,000 in attorney’s fees in a commercial dispute concerning the sale of a business under an asset purchase agreement. On appeal, the Court addressed the requirement that, when a party seeks attorney’s fees in a case involving several claims, some of which permit the recover of fees and some of which don’t, “the party must segregate and exclude the fees for services related to the claims for which fees are not recoverable.” In this case, the appellees argued that they could not segregate fees because their tort claims (which don’t provide for attorney’s fees) arose from the same transactions and facts as their contract claims (which do). The Court disagreed and found that “[b]ecause there is not a de minimis exception to the requirement to segregate recoverable attorney’s fees from non-recoverable and there was evidence of unsegregated non-recoverable attorney’s fees included in the amount awarded by the trial court, a new trial on attorney’s fees is required.”
Big D appealed from the denial of its motion for new trial following a no-answer default judgment. The court of appeals found that the trial court properly refused to set aside the default judgment. Big D did not prove that its failure to answer was not intentional or the result of conscious indifference but was due to a mistake or accident. Rollins properly served Big D by substituted service on the secretary of state after seven failed attempts to serve Big D’s registered agent at the agent’s registered office and home. The substitute service on the secretary of state was not rendered void by the process being returned with the notation “Refused” because the secretary is not an agent for serving but for receiving process on the defendant’s behalf. Big D also failed to show that the evidence was insufficient to support the amount of damages awarded by the trial court. The court of appeals found that the car owner’s testimony regarding the “Blue Book” value of her vehicle was not so weak that the finding of damages was clearly wrong and unjust. Thus, the court of appeals affirmed the trial court’s judgment.
Big D Transmission v. Rollins, No. 05-11-01019
Van Voris was taking an aikido course at Chop Shop when he was injured during demonstration of a jiu-jitsu technique. Van Voris sued Chop Shop for negligence and gross negligence. Chop Shop moved for summary judgment based on its defense of pre-injury release from a one page “Release and Waiver of Liability and Indemnity Agreement.” Chop Shop argued that the waiver barred the negligence claims, and that the gross negligence claim was inseparable from the negligence claim.
The court of appeals found that the one-page release met the fair notice requirements for purposes of releasing Chop Shop from liability for its own negligence. The release was sufficiently conspicuous, and the language was specific and expressed the intent of exculpating Chop Shop. However, the court found that the waiver did not release the gross negligence claims and did not preclude proof of claims for negligence and actual damages. The court pointed to Texas’s strong public policy prohibiting pre-injury releases of negligence, heightened concerns involving gross negligence and exemplary damages, and the distinct elements for proving negligence and gross negligence. Thus, the court of appeals reversed the summary judgment against Van Voris regarding his gross negligence claims, and affirmed as to the negligence claims.
Van Voris v. Team Chop Shop, No. 05-11-01370-CV
UES sued Four D for failing to pay its invoices. In support of its motion for summary judgment, UES attached an affidavit that established the amount due. The trial court granted summary judgment in favor of UES, and Four D appealed. Four D argued that fact issues exist on the amount owed on the account. The court of appeals rejected UES’s argument that the affidavit could not support the summary judgment motion because it failed to meet the requirements of an interested witness affidavit. The court found that UES waived this argument because it failed to obtain a ruling on its objection. “Reasserting” the objection in UES’s motion for a new trial, which was subsequently overruled by operation of law, did not preserve the error. However, the court agreed with Four D that invoices attached to the affidavit that were stamped “PAID” raised a fact issue as to the amount owed. The court of appeals reversed and remanded.
Four D Construction v. Utility & Environmental Services, No. 05-12-00068-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 this car accident case, the defendant moved for summary judgment on the ground that the suit was barred by the two-year statute of limitations. In response, the plaintiff argued that, under CPRC 16.063, the out-of-state trips she took over the past two years tolled the statute of limitations for the time period she was outside of Texas. On appeal, the Court rejected the plaintiff’s argument, finding that section 16.063 was intended to apply to “Texas creditors faced with individuals who enter Texas, contract a debt, depart, and then default on the debt.” Here, the plaintiff remained a Texas resident for the entire two-year statue of limitations, and, during that period, would have had no difficulty in serving the defendant with process.
A dissenting opinion argued that the majority’s reading of the section 16.063 “has rendered the statute meaningless and effectively repealed the statute.”
Gautam and Shweta Daftary leased office space for their dental practice from the Henry S. Miller real estate firm (“HSM”). Among other disputes with HSM, the Dafatarys argued that they were constructively evicted from their office space when a excessively loud dance studio moved into the the office next door. Although HSM contended that the Dafatarys took too long to leave the premises to support a constructive eviction claim, the Court of Appeals upheld the jury’s finding that 13 months is a reasonable amount of time to expect a dental practice to move offices.
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
ICON appealed the trial court’s order denying their post judgment motion to enforce a pretrial protective order. ICON sought to prevent the City of Lubbock from publicly disclosing an audit of ICON’s administration of the City’s health care plan. The court of appeals concluded that the trial court’s ruling was not subject to direct appeal; the ruling was not a final judgment or an appealable order under a statutory exception. The court rejected ICON’s attempt to characterize the order as a request for injunctive relief or an order relating to the unsealing of court records. The court determined that the proper procedural vehicle to challenge the ruling is to seek mandamus relief. In the interest of judicial economy, the court treated the appeal as a petition for writ of mandamus.
The court of appeals held that the trial court’s order permitting disclosure of the audit contradicted the plain meaning of its earlier protective order. The audit was created using and analyzing protected materials, and the protective order prohibited public disclosure not only of protected materials, but also any knowledge or intelligence taken from or received by those protected materials. Because the order denying ICON’s motion was a clear abuse of the trial court’s discretion, the court of appeals conditionally granted mandamus relief.
Icon Benefit Administrators v. Mullin, No. 05-11-00935-CV
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.
Gardners appealed from a take-nothing judgment in a medical malpractice lawsuit against Children’s Medical Center. Gardners challenge the constitutionality of section 74.153 of the Texas Civil Practice and Remedies Code, arguing that the heightened standard of proof in cases involving emergency medical care in certain facilities violates the Equal Protection Clauses of the Texas and US Constitution. The statute created two categories of claimants: (1) those who received emergency medical care in certain settings and must meet a heightened standard of proof, and (2) those who receive emergency medical care in non-covered settings or receive non-emergency care and must only meet the traditional standard of proof. Gardners claim this classification is arbitrary, unreasonable, and not rationally related to a legitimate state interest.
The court of appeals held that the statute does not violate the Equal Protection clauses. According to the court, the lack of legislative facts explaining the basis for the statute’s classification has no significance in rational-basis analysis because legislative choices may be based on rational speculation unsupported by evidence or empirical data. The court also noted that the classification does not fail rational-basis review simply because in practice it results in some inequity. Instead, the statute must be upheld if there is any reasonably conceivable state of facts that could provide a rational basis for the classification. The court determined that the statute bears a rational relationship to the State’s legitimate interest in ensuring the provision and availability of emergency medical care to its citizens. Thus, Gardners’ sole issue on appeal was overruled, and the trial court’s judgment was affirmed.
Gardner v. Children’s Medical Center, No. 05-11-00758-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.
After their fathers’ death, Brenda Levitz and Thomas Sutton sued each other over the distribution of his estate. They settled this dispute during a mediation, but 4 months later Levitz moved to set aside the settlement. Levitz argued that sleep deprivation combined with medications and fibromyalgia made it so that she didn’t have the requisite capacity to enter into the settlement during the mediation. Sutton moved to compel a medical evaluation of his sister, and amended his petition to include a claim for breach of the settlement agreement, seeking, among other things, specific performance. After a bench trial, the trial judge found that Levitz had had the requisite capacity the day she signed the settlement agreement and granted Sutton’s motion to for specific performance. Levitz moved for a new trial, which the court denied.
On appeal, the Court found that the trial judge could not grant specific performance as a remedy because specific performance is a remedy for a breach of contract claim only. In granting this remedy, the trial court only decided whether a binding contract existed between the brother and sister, it did not address whether Levitz had breached the agreement. Because a breach of contract claim requires proof of a valid contract, performance or tendered performance, breach and damages, “a determination that an agreement is enforceable . . . does not equate to a determination that a party is entitled to specific performance.” The Court of Appeals therefore reversed the trial court’s judgment and remanded the case for further proceedings.
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
Voltaix is a New Jersey company that manufactures a specialty gas used in the semiconductor and solar energy industries. Voltaix alleged that two of its former employees at its New Jersey plant stole its trade secrets, moved to Texas, and started a competing company based in Texas named Metaloid Precursors. Voltaix sued these employees, their new company, and John Ajongwen (the chairman and a major investor in Metaloid) in Texas for, among other things, misappropriation of trade secrets. Ajongwen, however, filed a special appearance because, in his view, he was a New Jersey resident with no minimum contacts in Texas. The trial court agreed.
The Court of Appeals affirmed the trial court’s decision. It found that Ajongwen came to Texas only one time, for half a day, to oversee set up of the plant’s water purification system and to conduct a safety inspection of the plant. Because neither of these events had any connection with the trade secret misappropriation allegations, the court held Texas courts lacked personal jurisdiction over Ajongwen in this suit.
Karen Smith sued Brown Consulting & Associates, her employer, for injuries she sustained during the course of her employment. BCA never appeared, and the trial court entered default judgment in Smith’s favor. On appeal, BCA argued that Smith failed to properly serve it, and that the default judgment should be voided. The Court of Appeals agreed with BCA, finding that the affidavit Smith submitted in suport of her rule 106(b) motion for substitute service of process was defective for two reasons. First, the affidavit did not contain a statement that BCA’s address was the usual place of business of the defendant or its registered agent. Second, the affidavit did not contain a statement that the address is a place where the registered agent could probably be found. Because the Court strictly construes the rules governing service when a default judgment is entered, it reversed the trial court’s entry of default judgment and remanded the case for further proceedings.
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
Among other issues, appellants argued that the trial court erred in the amounts awarded in pre-judgment interest and by denying a motion for recusal. The amount of pre-judgment interest could have been increased to include the time between when appellants submitted their proposed final judgment, which delineated the exact amount of prejudgment interest, and when that judgment was signed. However, the court of appeals found that appellants waived this argument by not excepting to the judgment or bringing the complaint to the trial court’s attention. The court affirmed the pre-judgment interest award, noting that the “invited error doctrine” precludes appellants from complaining when the trial court enters the appellants’ requested judgment. The court of appeals also affirmed the denial of appellants’ motion for recusal, finding that a single comment by the Judge, and the reversal and remand of the Judge’s prior judgment did not evidence bias.
David L. Assocs. v. Stealth Detection, Inc., No. 05-12-00073-CV
The court of appeals affirmed the trial court’s order granting CFC’s special appearance and dismissed NexBank’s claims against it. CFC negated personal jurisdiction by producing an affidavit, which alleged that CFC is a holding company that does not have business operations in Texas, does not own property or other assets in Texas, and does not maintain employees in Texas. NexBank’s evidence showed only that CFC’s subsidiaries may have had sufficient contact with Texas. But the court noted that it cannot exercise personal jurisdiction over a holding company based on the actions of its subsidiaries. NexBank also cited three unrelated cases as evidence that CFC sought relief in Texas courts. However, the court found that CFC defending itself in a lawsuit, failing to contest jurisdiction in two other suits, and filing a counter-claim in a third suit did not waive CFC’s right to contest jurisdiction in this matter. Thus, NexBank failed to establish that CFC has some minimum, purposeful contact with Texas.
NexBank, SSB v. Countrywide Fin. Corp., No. 05-12-00567-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
AmeriPlan Corporation’s customers pay a monthly membership fee in order to access a network of healthcare professionals who have agreed to provide discounted medical services. Anderson worked as an independent contractor for AmeriPlan, and recruited its customers, healthcare professionals, and other independent contractors. AmeriPlan’s business model is based on multilevel direct marketing, and Anderson was compensated through commissions and bonuses. After AmeriPlan terminated his employment, Anderson sued AmeriPlan claiming that he was promised “lifetime residual income,” but did not receive any commissions or bonuses after his termination. The trial court rendered judgment for Anderson, and AmeriPlan appealed.
The issue on appeal was whether the evidence was legally sufficient to support the jury’s finding that AmeriPlan breached Anderson’s written sales contract. AmeriPlan argued that the contract unambiguously required it to pay commissions and bonuses only during the continuation of the contract. Anderson alleged that the jury was entitled to consider AmeriPlan’s promise of “lifetime vested benefits” contained in AmeriPlan’s marketing materials in deciding whether AmeriPlan breached the written contract. The court of appeals concluded that the parol evidence rule barred the jury from considering the statements made in AmeriPlan’s marketing materials because the alleged promises were not a collateral consistent agreement. The court also found that the fraud exception to the parol evidence rule was inapplicable because Anderson was not the defendant, and was not seeking to avoid the contract. Because the jury was precluded from giving weight to AmeriPlan’s alleged promises, the court of appeals held that the evidence was legally insufficient to support Anderson’s breach of contract claim. The court reversed and remanded to the trial court for consideration of the jury’s alternative liability and damages findings.
AmeriPlan Corp. v. Anderson, No. 05-11-00628-CV
Though we usually restrict ourselves to business related cases here at 600 Commerce, this criminal case was too interesting to ignore, so enjoy:
After William Youkers pleaded guilty to assaulting his pregnant girlfriend, he subsequently failed to abide by the his community supervision requirements. Youkers made a bunch of excuses for his failure to comply, but ultimately the trial judge sentenced him to eight years in prison. Youkers moved for a new trial, arguing that the trial judge’s undisclosed Facebook “friendship” with the father of his girlfriend biased the court’s decision. During the hearing on Youkers’ motion for a new trial, the judge testified that he knew the father only because both had run for public office in the same election cycle, and nothing more. Despite this fleeting relationship, the father had, through this Facebook friendship, sent a message to the judge, asking him to go easy on Youkers. The judge replied by telling the father that the communication was improper and that he didn’t even read the entire message once he figured out what it was about. The judge then put a copy of the Facebook message in the court file and told the lawyers for both sides about it. No other messages were exchanged.
On appeal, the Court noted that no Texas case has ever before addressed this topic. It then explained that, as a general matter, “judges are not prohibited from using social media.” Following the ABA’s commentary on this subject, the Court advised that simply being a Facebook friend with someone does not provide any evidence of the degree of the parties’ relationship in the real world, and that further context is needed to determine whether bias exists. On the facts in this case, the Court found that there was no suggestion of bias and that the trial judge acted just as he should have upon receiving the message. The Court therefore sustained his denial of Youkers’ motion for a new trial and moved on to other issues.
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
Challenger Gaming Solutions made a loan to Mr. Earp. Shortly after the loan was made, the Earps settled an unrelated lawsuit for $1.1 million, with an initial payment to the Earps of $200,000. A few months later, Mr. Earp defaulted on his loan from Challenger, and the Earps divorced. Under the divorce decree, Mrs. Earp was awarded all the community assets, including the settlement proceeds, and Mr. Earp was ordered to assume all the couple’s debts. Challenger sued Mrs. Earp under the UFTA, contending that the transfer of settlement funds to Mrs. Earp constituted a fraudulent transfer. Mr. Earp was designated a responsible third party in Challenger’s suit. The jury found in favor of Challenger, but apportioned damages between the Earps. Challenger appealed.
The court of appeals held that the proportionate responsibility statute does not apply to UFTA claims because they do not lend themselves to a fault-allocation scheme. The focus of UFTA claims is to ensure the satisfaction of a creditor’s claim when the elements of a fraudulent transfer are proven. The UFTA allows recovery against the debtor, the transferee, or the person for whose benefit the transfer was made, but does not distinguish the forms of relief based on culpability. The court concluded that the proportionate responsibility statute conflicts with the liability scheme in the UFTA and cannot be reconciled. The court made Mrs. Earp liable for the entire award and affirmed the remainder of the trial court’s judgment.
Challenger Gaming Solutions, Inc. v. Earp, No. 05-11-01366-CV
After receiving a number of unresolved or unanswered complaints over several years, the Better Business Bureau (“BBB”) gave the Lloyd Ward & Associates (“Ward”) an “F” rating. Ward was not happy about this and sued the BBB for libel, slander, and negligence, seeking an injunction preventing the BBB from including Ward in its listing service. The BBB moved to dismiss on constitutional and other grounds, but the trial court denied their motion.
On appeal, the Court referred to its related opinion in another BBB-related lawsuit, which held that the BBB’s rating service provided a service to the marketplace and, thus, qualified as a matter of public concern under the Texas Citizens Participation Act (“TCPA”). Because the TCPA applied to the BBB’s ratings, the burden shifted to Ward to establish “by clear and specific evidence” a prima facie case for each element of his claims. But in his arguments on appeal Ward never presented any evidence for his case, instead relying entirely on the argument that the TCPA did not apply at all. The Court therefore found that Ward failed to meet his burden and reversed the trial court’s decision.
The court conditionally granted a writ of mandamus preventing disclosure of a “Confidential Quality Review Occurrence Report” protected by the medical committee privilege. A visitor to the relator Hospital slipped and fell on Hospital premises, and sought damages in a premises liability suit. The visitor sought production of all incident reports made by the Hospital related to her fall. A two-page report titled “Occurrence Report Form” listed the visitor’s name and identifying information, the date and location of her fall, and a description of the occurrence and treatment provided; it was signed by a Hospital nurse. The report also stated “Confidential Quality Review Committee Document (NOT PART OF MEDICAL RECORD).” The Occurrence Reports are given to the Hospital’s quality review committee, which provides general governance for the Hospital’s quality of service. The court held that the Hospital met the standard for claiming medical committee privilege through its privilege log and a doctor’s affidavit because the Occurrence Report was not created in the regular course of business and was not part of a patient’s medical file. The court rejected the visitor’s argument that because this case involves a non-patient visitor, the medical committee privilege cannot apply. Instead, the court found that the medical committee privilege is not limited to evaluation of occurrences relating only to direct patient care.
In re Methodist Dallas Medical Center, No. 05-13-00134-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
Defendant Lafayette Escadrill Inc. lost on summary judgment for its breach of contract claim of wrongful termination against its former contract counterparty, CCU. The Court of Appeals upheld the trial court’s decision on res judicata grounds because Lafayette previously had the opportunity to raise the wrongful termination as a counterclaim in a prior litigation (which it also lost) in which CCU sued Lafayette for breach of contract. According to the Court, the wrongful termination counterclaim should have been raised in the earlier suit because it was “fully mature” as soon as CCU terminated the contract in accordance with the contract’s provisions.
In the mid-1990s, Hydroscience Technologies, Inc. (“HTI”) sold shares of its preferred stock to Hydroscienc, Inc. (“HSI”). HTI alleges that in 2001, in order to settle an unrelated dispute between Whitehall Corporation (HSI’s parent corporation) and itself, Whitehall orally agreed during a mediation session to transfer the HTI shares held by HSI back to HTI. But the parties never reduced this agreement to writing and HSI never transferred the original stock certificate back to HTI. The parties didn’t raise the question of HSI’s stock ownership again until 2010, when HSI, as purported shareholder, requested to inspect the books and records of HTI. When HTI refused, HSI filed a lawsuit seeking a declaratory judgment that HSI remained an HTI shareholder. After the trial court granted HSI’s motions for summary judgment, HTI appealed.
The Court of Appeals addressed a number of issues in its opinion. Most relevant, however, was its holding that while delivery of a stock certificate was not required to show a transfer of stock, the fact that HSI still possessed the certificate establishes its ownership unless HTI can present evidence of the stock transfer agreement the parties purportedly came to during the 2001 mediation. But the Court found that HTI could not demonstrate that intent because, under Texas law, HTI is prohibited from using as evidence statements of the parties during a mediation session. It explained that “to allow HTI to used alleged discussions from the mediation regarding the stock would undermine the very purpose of confidentiality in the mediation process. Parties must not be allowed to use evidence from mediation to dispute terms of a settlement agreement, particularly years later, as is the case here.” According to the Court, to hold otherwise would chill the overall purpose of mediation. Thus, because the final 2001 settlement agreement did not show the stock transfer agreement, and because HTI could not show that the parties had orally agreed to make such a transfer, the Court upheld the trial court’s ruling.
Hydroscience Technologies, Inc. v. Hydroscience, Inc.
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
Natalie Holmes, a graduate student at SMU, has taken and failed twice the graduate comprehensive exam (“GCE”)–which she needed to pass to receive her Master’s Degree in Music Education. After both tests, Holmes appealed the results to SMU’s internal academic appeals board as either “arbitrary and capricious” or “beyond the scope of the coursework.” SMU offered Holmes the chance to re-take the exam a third time, but Holmes refused and instead insisted that SMU giver her the degree as well as monetary damages. While her second appeal remained pending, Holmes sued SMU for breach of contract, fraud and DTPA violations. SMU moved to dismiss the case for lack of subject matter jurisdiction, arguing that Holmes had failed to exhaust her administrative appeal rights before bringing suit. The trial court agreed with SMU and dismissed the case.
The Court of Appeals, however, reversed the trial court, finding that SMU had failed to submit any evidence to establish that Holmes was required to proceed through an administrative appeal before bringing suit. According to the Court, SMU’s only evidence was a “short and conclusory” affidavit that did not address the appeals process, and this was not enough to establish that the trial court lacked jurisdiction.
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
When Emily Hairston was a high school sophomore, the women’s soccer coach at Southern Methodist University, Brent Erwin, sought to recruit her to play on SMU’s team when she graduated. In May 2007, Erwin verbally offered Hairston a “100%” scholarship if she came to play at SMU. Over the next few years, Hairston and the coach communicated about the SMU soccer program, and Erwin even encouraged Hairston to try to graduate early from high school, which Hairston did. Hairston enrolled at SMU in early 2009, and joined the women’s soccer team. In February 2009, Hairston was told that she needed to pay $25,000 in tuition for that semester. Surprised, Hairston spoke with Erwin, who informed her that she did not, in fact, have an athletic scholarship. After some further discussion, Erwin and her father sued SMU and Erwin for, among other things, breach of contract. The trial court dismissed the case in SMU’s favor on summary judgment.
On appeal, the Court found that the statute of frauds barred Hairston’s breach of contract claim in at least two ways. First, to the extent Hairston claimed the scholarship was for all four years of her college career at SMU, the oral agreement could not be performed within a year of acceptance and, thus, had to be in writing under the statute of frauds. Alternatively, the Court noted that Hairston purported to accept the offer in May 2007, when she was a sophomore in high school. Because she could not have realistically enrolled in SMU within a year of her sophomore year of high school, the statute of frauds required the contract to be in writing. As a result, the Court affirmed the trial court’s decision.
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 court affirmed a judgment in favor of FNMA in this forcible detainer action. After Henning defaulted on a promissory note, FNMA purchased the property in foreclosure and demanded that Henning vacate. FNMA filed a forcible detainer proceeding and received a judgment awarding it possession.
After losing on appeal to the county court at law, Henning appealed to the district court arguing that the lower courts lacked jurisdiction because this was a suit over title to land. The court noted that a forcible detainer action only determines immediate right to possession. Further, a separate lawsuit to determine title does not deprive a court of jurisdiction over a forcible detainer action unless determining who has the right to immediate possession necessarily requires resolution of the title dispute. Because it was not necessary for the trial court to determine whether the foreclosure was valid and to resolve the title dispute before awarding possession to FNMA, it had jurisdiction.
Henning v. Federal National Mortgage Association, No. 05-12-00726-CV
In 2001, the Dunmores bought two adjacent lots (Lots 8 & 9) in Lancaster, Texas from Rolene Long, but the Deed of Trust, the Warranty Deed and other related documents only referenced Lot 9. Eight years later, in 2009, a slew of local taxing authorities sued Long to collect back taxes on Lot 8, which they assumed she had just failed to pay. The Dunmores and Chicago Title Insurance (the title insurer for the 2001 transaction) were joined in the lawsuit, and the Dunmores filed cross-claims against Chicago Title for breach of contract, negligence, DTPA violations, and breach of fiduciary duty. As of the appeal, these two were the only parties left in the lawsuit.
The trial court granted Chicago Title’s motion for summary judgment on its statute of limitations’ affirmative defense, and the Dunmores appealed. The Court of Appeals affirmed the trial court’s decision. In doing so, it held that the four-year statute of limitations for the Dunmores’ causes of action had run and that the Dunmores could not be rescued by their argument that the limitations period was tolled because Chicago Title’s mistakes were undiscoverable. To the contrary, the Court of Appeals made clear that they were charged with knowledge of the contents of those legal documents as of 2001, and, as such, the mistake was not inherently undiscoverable.
In 1998, the McNutt Group leased one of its properties in downtown Dallas to Landry’s Crab Shack for a 20-year term. Ten years later, Landry’s assigned its lease to Cadillac Bar, in accordance with the lease provisions that allowed such an assignment. As part of the transaction, McNutt signed an estoppel certificate, thereby giving its consent to the assignment. Cadillac Bar paid rent for a year, but then stopped. McNutt sued Landry’s and Cadillac Bar for breach, and Landry’s sued Cadillac Bar. Each of the parties moved for summary judgment, which the court (1) granted with respect to McNutt; (2) denied with respect to Cadillac Bar; and (3) did not rule on with respect to Landry’s. Cadillac Bar appealed.
On appeal, Cadillac Bar argued that Landry’s couldn’t assert a breach of contract claim because the parties didn’t perform all the conditions associated with the assignment, and thus there was no assignment in the first place. Specifically, Cadillac Bar claimed that McNutt conditioned his assent to the assignment on (1) having the estoppel certificate signed by all parties and (2) his receipt of attorney fees, neither of which ever actually happened. The court of appeals rejected this argument, holding that the Cadillac Bar could not take advantage of conditions McNutt had imposed on his own consent to the assignment because those conditions were for McNutt’s sole benefit. Thus, the court found that “Cadillac Bar cannot avoid its own obligations under the Lease by identifying what is, at most, McNutt’s waived injury.” The court also explained that the doctrine of quasi-estoppell also thwarted Cadillac Bar’s argument. Under this doctrine, Cadillac Bar couldn’t now assert that an assignment never occurred when, previously, it had benefited from the assignment.
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
The Court affirmed a summary judgment in favor of Frost Bank on counterclaims related to a loan default. TAM failed to pay off a loan it received from Frost by the maturity date stated in the written loan agreement. Frost setoff part of the amount due with money from TAM’s operating account and sued for the remainder. TAM counterclaimed, alleging that Frost had orally extended the maturity date in a meeting with TAM’s representative and that Frost’s wrongful setoff caused TAM significant damage. Frost moved for, and TAM failed to challenge, traditional summary judgment on its breach of contract claims, which the court granted based primarily on the written loan agreement. It then granted no-evidence summary judgments dismissing TAM’s counterclaims related to the alleged oral extension. TAM appealed, challenging the trial court’s judgment on TAM’s counterclaims for breach of contract, promissory estoppel, negligent misrepresentation, fraud, conversion, and wrongful setoff.
On appeal, the court held that because TAM did not challenge the traditional summary judgment on Frost’s breach of contract claim, the trial court’s judgment as to the enforceability of the written agreement between TAM and Frost was binding. Thus, TAM’s corresponding counterclaims for breach of contract, negligent misrepresentation, and fraud, which were based on the alleged oral extension, failed due to the written agreement’s enforceability. The court agreed that there was no evidence that TAM relied on the alleged oral extension in its decision to deposit more money into the operating account, so TAM’s promissory estoppel claim also failed. And because TAM’s conversion and wrongful setoff claims required that TAM be entitled to possession of the funds in the operating account, and thus relied on the success of at least one of TAM’s other failed counterclaims, those claims likewise failed.
Trevino & Associates Mechanical v. Frost National Bank, No. 05-11-00650-CV
When the trial court granted summary judgment against Tiffiney Cottledge on a breach of contract claim brought against her, Ms. Cottledge decided to appeal the ruling pro se. Her main argument on appeal consisted of a complaint that the evidence does not support the trial court’s ruling, and that the trial court was biased in its findings. On her first argument, the Court found that the appellee had presented seven exhibits supporting his motion for summary judgment and Cottledge did not present any discussion or analysis about why the exhibits could not support the trial court’s ruling. On her second argument, the Court found that the issue was inadequately briefed because Cottledge failed to include appropriate citations to the record or to applicable authorities. According to the Court, “[o]ur appellate rules have specific briefing provisions that require appellant to state concisely her complaint and provide an understandable, succinct, and clear argument for why her complaint has merit in fact and law, and cite and apply applicable law together with appropriate record references.”
