The court affirmed a summary judgment in favor of Citibank in a suit to recover a credit card debt. Citibank sued Aymett, alleging breach of contract and account stated, and moved for summary judgment. Citibank supported its motion with account statements and excerpts from Aymett’s deposition, in which Aymett admitted using the credit card and making payments for some time and agreed that he has no dispute as to the amount claimed to be due and owing on the account. The trial court granted summary judgment and Aymett appealed.

On appeal, Aymett complained that Citibank did not present a copy of a written contract and that there was no evidence he actually received any of the account statements mailed to him. The court held that a claim for account stated does not require a written contract, but only an agreement to pay an amount owed. Additionally, the summary judgment evidence demonstrated that Citibank mailed, to the same address for Aymett each time, monthly statements and that Aymett responded to the statements by making regular monthly payments until he finally stopped paying. Finally, the trial court did not err in granting summary judgment on an implied contract just because Citibank claimed an express contract based upon the same transaction, as there was no determination that Citibank was entitled to recover on both an express and an implied contract.

Aymett v. Citibank, No. 05-11-00451-CV

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

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

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

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

Gregory Strange worked at HRsmart for over 5 years designing and developing software designed to help companies manage human resources.  As part of his employment with HRsmart, Strange signed a non-competition agreement in which he consented not to work for a competing business for one year following his termination of employment.  The agreement defined “competing business” as one “which provides the same or substantially similar products and services” as HRsmart.  Shortly after he left HRsmart, Strange and another former co-worker developed a new program called ClearVision, which was a human resources program aimed at small businesses with less than 200 employees.  In developing this new program, Strange felt that he had not run afoul of his non-competition agreement because, in his view, HRsmart did not aim to serve small businesses.  HRsmart, of course, disagreed and sued Strange.  The trial court granted HRsmart’s request for a temporary injunction, and, later, HRsmart’s motion for summary judgment.  Strange appealed.

On appeal, Strange pointed out all of the differences between the products designed and marketed by HRsmart and what Strange sought to do with ClearVision.  First, ClearVision sought to serve a niche market of “micro businesses” with less than 200 employees, whereas HRsmart targeted businesses with more than 500 employees.  Second, ClearVision was “less function” and could not be “configured,”but HRsmart’s products were “fully customizable.”  Finally, ClearVision is a single product, while HRsmart includes seven interconnected HR modules.  On this record, the Court of Appeals concluded that fact questions exist regarding whether HRsmart actually competes with ClearVision, and reversed and remanded the trial court’s decision.

Strange v. HRsmart

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

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

The Dallas City Code contains certain provisions governing the activities of “Alternative Financial Establishments.”  Under this section of the code, these establishments are defined to include “car title loan business[es], check cashing business[es], or money transfer business[es]” but not businesses that “provide financial  services that are accessory to another main use.”  Last year, the City informed Texas EZPAWN that its loan service business qualified as an alternative financial establishment under the code.  EZPAWN disagreed and filed a lawsuit seeking a declaration that its loan services business did not fall within the code’s definition.  The City filed a plea to the jurisdiction, arguing that governmental immunity barred EZPAWN’s suit and that the Uniform Declaratory Judgments Act did not apply because the governmental immunity waiver in that ordinance only applies to suits challenging the validity of a ordinance whereas EZPAWN’s suit merely seeks a construction or interpretation of the ordinance.   The Court of Appeals agreed with the City, finding that the UDJA does not waive the City’s governmental immunity because EZPAWN did not seek to invalidate the provision.  It therefore reversed the trial court’s judgment and dismissed the petition with prejudice.

City of Dallas v Texas EZPawn

The court reversed a trial court’s judgment in favor of PlainsCapital Bank for damages and attorney’s fees resulting from Martin’s loan default based on Chapter 51 of the Property Code. In 2008 Martin defaulted and the Bank foreclosed upon and purchased the underlying property at auction for $539,000. Martin owed the Bank nearly $800,000. In 2009, over a year later, the Bank sold the property for $599,000 and sued Martin for the deficiency. Martin sought a damages offset under Property Code § 51.003 based on the value of the property, introducing expert testimony at trial that the property’s fair market value at the time of foreclosure was $850,000. The Bank argued that § 51.003 did not apply because it was not seeking to apply the foreclosure sale price as a credit but instead what the Bank actually received from the property: the 2009 sales price. The trial court agreed, holding § 51.003 inapplicable and crediting Martin $599,000 toward the deficiency.

On appeal, the court held that § 51.003 applies, regardless of the lender’s requested measure of damages, when (1) §51.002 foreclosure sale occurs, (2) the foreclosure sale price is less than the debt, and (3) an action is brought to recover the “deficiency,” or the amount owed on the debt after application of the collateral’s value. The court noted that the lender may not receive the benefit of a § 51.002 foreclosure sale but then “opt out” of § 51.003’s offset to the borrower. Additionally, the price received in the 2009 sale was legally insufficient evidence under § 51.003 because the Bank failed to link that price to the property’s value on the date of foreclosure. The court refused to render judgment based on Martin’s evidence, however, noting that the Bank refuted this value with its own expert testimony but indicating that the 2009 sales price was not evidence of the property’s fair market value at foreclosure.

It should be noted that the court did not hold that a later sales price of property can never be evidence of its fair market value. Rather, it is important for the lender to tie the actual sales price closely to § 51.003’s definition of fair market value, including a showing how it reflects the property’s value on the date of foreclosure.

Martin v. PlainsCapital Bank, No. 05-10-00235-CV

The court withdrew its previous opinion in this case, which dismissed the appeal for want of jurisdiction, and entered a new opinion affirming the trial court’s judgment denying Whitehead’s motion to vacate entry of a foreign judgment against him. The previous opinion held that Whitehead could not maintain a restricted appeal because he had participated in the hearing on the motion to vacate, despite not participating in the proceedings in Indiana that resulted in the underlying judgment. The new opinion holds that Whitehead’s lack of participation in the Indiana proceedings meets the relevant requirement to maintain a restricted appeal. The court affirmed the entry of the Indiana judgment, however, because there was no error by the Texas trial court. The certification of the Indiana judgment was accomplished by the stamped “certified copy” on the final page, meeting the authentication requirements of Texas Rule of Evidence 902.

Whitehead v. Bulldog Battery Corporation, No. 05-12-00449-CV (Memorandum Opinion on Rehearing)

In this suit by Compass Bank to recover money owed under a promissory note, Compass moved for summary judgment.  To support its motion, Compass submitted an affidavit by a custodian of records attaching copies of the note and the trial court granted summary judgment.  The Court of Appeals, however, overturned the trial court’s ruling because it found Compass’s affidavit could not satisfy the personal knowledge requirement.  In particular, “[t]he affidavit did not demonstrate whether [the affiant] was employed by Compass, what her job position and responsibilities were, or how her job duties gave her personal knowledge of the facts.”

Vince Poscente Int’l v. Compass Bank

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

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

In this appeal of a trial court’s confirmation of an arbitration award, the Court of Appeals rejected the argument that the trial court should not have confirmed the award because the arbitrators did not permit appellant to obtain the discovery necessary for him to adequately assert his rights.  In so holding, the Court found that the appellant failed to provide the trial court with a complete record of the arbitration proceedings and thus could not establish that the discovery he sought was, in fact, relevant to his claim.

Goldman v Buchanan

Timothy Brown, a professional golfer, started a company and then sold it to Golf & Tennis Pro Shop, Inc. (“GTPS”).  Brown then worked for GTPS for a while, but the relationship deteriorated and he left the company shortly thereafter.  Brown, however, remained bound by a non-compete agreement with GTPS.  Still, he entered into discussions with Jeff Blankinship to pursue a similar idea to his former company, but this time apart from GTPS.  As Brown negotiated a contract with Blankinship, Brown had his lawyer, Gary Blanscet, review the agreement.  Blanscet required changes to the agreement to reflect Brown’s prior dealings with GTPS.  Blankinship signed the revised agreement without reading it and, a week later, found out about GTPS.  Blankinship sued Brown and Blanscet for, among other things, fraud and negligent misrepresentation.  The trial court granted Blanscet’s no evidence summary judgment motion.  Later, the jury found in favor of Blankinship as against Brown.  Blankinship appealed the trial court’s summary judgment decision concerning Blanscet.

On appeal, the Court found that Blankinship could not establish the reliance element of his causes of action because, among other things, Blankinship admitted at trial that he never read the contract before he signed it.  Blankinship tried to argue that Blanscet had a duty to him under the Texas Rules of Professional Conduct not to make any misrepresentations, but the Court of Appeals found that a non-client cannot rely on an attorney’s representation unless the attorney invites that reliance, such as when the attorney issues an opinion letter or some other type of evaluation.  Because that was not the case here, the Court upheld the trial court’s grant of summary judgment in favor of Blanscet.

Blankinship v. Brown

To hold a professional liable for negligent misrepresentation, the plaintiff has to prove that the defendant provided the information “to a known party for a known purpose.” McCamish, Martin, Brown & Loeffler v. FE. Appling Interests, 991 S.W.2d 787, 794 (Tex, 1999). The “known party” requirement is satisfied where the professional is “aware of the nonclient and intends that the nonclient rely on the information.” Id. In this case, attorney William Ravkind allegedly filled out a “Verification of Deposit” form stating that he was the depository of two trust accounts belonging to his client. (Ravkind claimed his signature was forged.) Bank of Texas claimed that information was false, and that it relied upon it deciding to make a $2 million loan to the client, who later defaulted. But Ravkind had not provided the verification form to Bank of Texas. Instead, the form was addressed to an individual at Bright Mortgage, and it was apparently packaged and presented to Bank of Texas by yet another mortgage company. The trial court granted Ravkind’s no-evidence motion for summary judgment, and the court of appeals affirmed, holding that the bank could not demonstrate Ravkind made a representation to it by proof that it was the practice of the lending industry to receive and rely on documents submitted to other financial institutions in connection with the loan.

Bank of Texas, N.A. v. Ravkind, No. 05-11-01123-CV

In July 2008, the Dean Group entered into a standard listing agreement agreement to sell Metal Systems, Inc, including the real estate owned by Metal Systems.  TDG sued Metal Systems in May 2010 for breach of contract and quantum meruit, and the trial court dismissed these claims on summary judgment.  TDG appealed.  On appeal, Metal argued that the contract claim failed because TDG could present no evidence of a valid, enforceable contract on the ground that the listing agreement included real estate and TDG presented no evidence that it held the real estate licenses required by the Texas Real Estate License Act.  The Court agreed, finding that TDG did not “allege, prove, or create a fact issue that it was a real estate license holder at the time the Agreement was signed.”  It therefore upheld the trial court’s dismissal.

Dean A. Smith Sales v. Metal Systems

This breach of contract case arises out of an inverse condemnation action filed by Continental Foods against the state of Texas.  In that action, Continental alleged that the state had acquired property for a highway expansion and did not compensate it for its loss of value under its lease with Rossmore Enterprises.  The Court of Appeals ruled that the lease’s language stated that the lease terminated upon condemnation, leaving Continental with no compensable interest to protect.  Continental then sued Rossmore arguing that its landlord had breached the lease in two ways: (1) by not requiring the state to proceed with the condemnation in a Special Commissioner’s hearing so Continental could receive compensation and (2) by not tendering to Continental its share of the condemnation proceeds.  Rossmore moved for summary judgment on the ground that the doctrine of collateral estoppel barred Continental’s claim because its right to condemnation had already been decided.  The Court of Appeals disagreed, holding that “[n]othing in our prior opinion determined the parties’ obligation under the Master Lease before condemnation.”  Accordingly, Continental’s claim was not barred by collateral estoppel.

Continental Foods v. Rossmore Enterprises

Duffy McKenzie sued Christopher Utz and several of Utz’s companies, seeking to recover unpaid wages. The defendants did not answer, and McKenzie obtained a default judgment against them for approximately $34,000. Thirty days later, the defendants filed a motion for new trial, seeking to set aside the judgment under the familiar Craddock standards. McKenzie opposed the motion, eliciting testimony at the hearing that Utz had simply put the lawsuit in his drawer because did not want to deal with it. The trial court denied the motion for new trial, and the court of appeals affirmed. Although the court noted the defendants’ evidence that they had not answered because they thought the parties were trying to settle the lawsuit, the conflict between that evidence and the testimony during the hearing was sufficient basis for the trial court to have found that the failure to appear was intentional or the result of conscious indifference. When the evidence conflicts, the court held, the trial court was not required to accept the movant’s version of events. The court of appeals also ruled against the defendants on a motion for sanctions, holding that various alleged misstatements in McKenzie’s appellate brief were insufficient to support any sanctions.

Utz v. McKenzie, No. 05-11-01647-CV

The court affirmed a take-nothing summary judgment in favor of DCAD in a property tax dispute. The property owner challenged the appraisal value of his property as both unequal and excessive. DCAD filed a no-evidence motion for summary judgment arguing that the appraised value was neither excessive nor unequal. In responsive briefing, the owner stated that its property manager and tax representative would testify that the appraisal values do not reflect the accurate market values, and attached an affidavit from him verifying the truth of statements in the response. The trial court granted summary judgment.

On appeal, the court held that the owner’s evidence failed because an affidavit in which a party attempts to verify the truth and correctness of all “allegations and facts” in a response to a motion for summary judgment is not competent summary judgment evidence. Moreover, the response did not state what the property manager believed the market value actually was or whether he would testify that the appraisal value was excessive or unequal. Therefore, the owner did not raise a fact issue and summary judgment was proper.

WOL+MED v. DCAD, No. 05-12-00011-CV

Creation Construction sued Charlie Patel and EZN News Nibbles Necessities for breach of contract after they failed to pay for the construction of a convenience store in NorthPark Mall. After a bench trial, the court entered judgment in favor of Creation for approximately $42,000 in damages and $71,000 in attorney fees. On appeal, Patel argued that he could not be personally liable on the construction contract because he has signed it in his capacity as an agent of EZN. Unfortunately, the contract did not actually say what capacity Patel was signing in, nor had he raised that claim before the trial court. Accordingly, the court of appeals affirmed the trial court’s finding of liability against Patel. However, the court also reversed on Creation’s cross-appeal, which argued that the trial court had erred by failing to award prejudgment interest, and the case was remanded for consideration of the interest to be added on to the judgment.

Patel v. Creative Construction, Inc., No. 05-11-00759-CV

The court affirmed a summary judgment against the Poynors in their negligence suit. When shopping for a new car at a BMW dealership, the salesperson, Homer, took them for a test drive and negligently crashed the vehicle. The Poynors sued the North American BMW distributor and BMW’s U.S. holding company for various claims of negligence, including one claim for vicarious liability, contending that BMW was vicariously liable for the dealership’s negligence due to its agency relationship with the dealership. The trial court granted BMW’s summary judgment and the Poynors appealed.

On appeal, the court first noted that the contract between BMW and the dealership specifically disclaimed an agency relationship. The same contract, however, required the dealership to maintain certain standards that the Poynors argues amounted to “control” sufficient to create an agency relationship. Looking to the activity that caused the injury, the court observed that the contract did not provide BMW control over the test drive and, while BMW required the dealership to train its salespeople, BMW was not directly responsible for Homer’s training or supervision. Thus, BMW was entitled to summary judgment on these claims. Finding that BMW also owed no direct duty to train or supervise Homer, the court affirmed the judgment.

Poyner v. BMW, No. 05-10-00724-CV

In 2003, insurance broker Brett Woods signed an “Employment, Confidentiality, and Non-Compete Agreement” with U.S. Risk Insurance Group, Inc. USRIG is a holding company that owns companies engaged in the insurance business, including U.S. Risk, Inc. But USRIG does not conduct any insurance business on its own behalf, and the non-compete agreement was solely between Woods and USRIG. Woods resigned in 2009 and went to work for a competitor, which prompted USRIG to file suit for breach of the non-compete. Woods prevailed on cross-motions for summary judgment, and the court of appeals affirmed.

The court first held that the only summary judgment evidence in the record supported Woods’ claim that he had resigned for “good reason,” which only triggered a non-solicitation requirement rather than the full non-compete. The court went on to hold that the non-compete was overbroad in any event, as it prevented Woods from competing with USRIG in any aspect of its business, regardless of whether Woods had worked in that business while employed with the company. Finally, the court of appeals held that Woods could not be liable for soliciting any of USRIG’s customers, since it didn’t actually have any. The court declined to construe the contract to include the subsidiary that was actually engaged in the insurance business, nor would it recognize the subsidiary as a third-party beneficiary (despite a clause providing that the contract inured to the benefit of USRIG’s “subsidiaries, affiliates, successors, and assigns”). On the latter point, the court expressly noted that even if the sub were a third-party beneficiary, it still could not receive greater rights than were bargained for between the original parties to the contract, and the contract only prevented Woods from competing  with the holding company, not its subsidiaries.

U.S. Risk Insurance Group, Inc. v. Woods, No. 05-11-00558-CV

Turner Brothers Trucking sued Kristal Baker, S/W Quality Hay and others in 2007 for breach of contract, fraud, and DTPA violations, among other things.  The suit stemmed from the brokerage agreement between Baker and Turner Brothers under which Turner would invoice customers, receive payment and pay Baker a commission.  S/W Quality was one of Baker’s customers who refused to pay Turner a commission.  Turner won on summary judgment and was awarded damages and attorneys fees.  But in March 2010, Turner sought an application for turnover so it could join the former managers and members of S/W Quality because those managers purportedly paid for and received life insurance proceeds with company funds. Turner thought this money should be available for creditors like itself.  The court agreed with Turner and required S/W to turnover two computers, a tractor and a pickup truck, but refused to appoint a receiver to pursue legal claims against S/W’s managers.

On appeal, Turner challenged the court’s refusal to appoint a receiver as well as its conclusion that Turner was not entitled to attorneys’ fees.  The Court of Appeals upheld the trial court’s refusal to appoint a receiver to go after the manager of S/W because, it held, “Texas courts do not apply the turnover statute to non-judgment debtors.”  The Court, however, reversed the trial court’s holding on attorneys fees, noting that “a judgment creditor who obtains turnover relief is entitled to reasonable costs, including attorneys’ fees.”

Turner Bros v Baker

The court of appeals has reversed the grant of a temporary injunction that prohibited the lender from foreclosing on a pair of properties that secured a $10,000,000 promissory note. After multiple previous foreclosures, a bankruptcy filing, and the voluntary dismissal of the bankruptcy case, the borrower sued to enjoin further foreclosures, claiming that the parties had entered into a binding agreement that limited the lender’s ability to foreclose. The court of appeals rejected that argument, concluding that the testimony of the borrower’s witness at the injunction hearing only demonstrated an agreement to engage in further negotiations following dismissal of the bankruptcy, not any concrete and enforceable contractual terms. The court of appeals also rejected the borrower’s contention that the foreclosures would be wrongful because they would result in less than fair market value being received. That argument, the court held, was only applicable to a deficiency claim after foreclosure, not as grounds to prevent foreclosure itself.  The court of appeals therefore dissolved the temporary injunction and remanded the case to the trial court.

Branch Banking & Trust Co. v. TCI Luna Ventures, LLC, No. 05-12-000653-CV

UPDATE: The court has issued a revised opinion in the case, in which it clarifies the standard of review. The outcome remains the same.

Charles Searock sued his former employer, Tactical Air Defense Services, Inc. and Gary Fears, for, among other things, breaching his employment contract.  After the defendants filed an answer and participated in discovery, their attorney withdrew as counsel and they didn’t show up for trial.  The trial court entered a post-answer default, but Fears and TADS moved for a new trial because, they claim, they never got notice of the trial date.  This motion was denied. The Court of Appeals reversed the trial court because affidavit evidence proved that neither Fears nor TADS received notice of the trial setting.  Moreover, the notice of trial provided to counsel for Fears and TADS before he withdrew cannot be imputed to them because the record lacked evidence indicating that the withdrawing counsel took efforts to inform his clients of the trial date before he withdrew.

Tactical Air Defense v. Searock

In January 2010, Rodney Meisel found an uncashed paycheck from his former employer, dated May 2009.  After calling the former employer’s bank to confirm that the check hadn’t been previously cashed, Mr. Meisel deposited it in his account at U.S. Bank and informed the ex-employer that he had done so.  But four days later, the employer designated the check for return, based on a computer program that indicated it had been previously paid. The next day, the employer told its bank that the check was still good, but the check was still returned to U.S. Bank. Although U.S. Bank was informed that the check wasn’t counterfeit, it still closed Meisel’s accounts and reported to a credit agency that the closure was due to “transactions involving items or checks belonging to another party.” Meisel sued for defamation based on that communication. The trial court granted summary judgment for U.S. Bank, and the court of appeals affirmed based on the defense of truth.

On appeal, the court noted that a true statement is not actionable as libel. Starting from that premise, the court noted that there were two versions of the check in the summary judgment record. Version 1 was a “LEGAL COPY” of Meisel’s check, apparently a type of substitute check provided for under federal law, that he deposited in 2009. The second copy was the one deposited in 2010, which was the original, non-substitute version of the same check. The court of appeals rejected Meisel’s contention that he still “owned” the original check even though he had deposited the substitute version of the same check eight months earlier. Copies may be admissible the same way as originals, but they are not owned in the same way.

Meisel v. U.S. Bank, N.A., No. 05-11-01336-CV

The court affirmed a judgment for the plaintiff in a car wreck case over complaints of improper jury arguments. Nguyen crashed her car into Myers car, and Myers sued. Nguyen did not contest liability at trial, but disputed the amount Myers’s claimed damages. The parties agreed in limine that Myers be precluded from mentioning Nguyen’s liability insurance. At trial, one of Myers’s chiropractors testified that Nguyen’s expert, Dr. Timberlake, was “hired by insurance companies to make judgment on patients he’s never seen before . . . .” Nguyen objected to this testimony as an interjection of insurance, which was overruled, and moved for a mistrial, which was denied. Later in closing, Myers’s counsel stated that Timberlake was “paid by them” and was “their hired gun.” The jury awarded Myers his requested damages and Nguyen filed a motion for new trial based on the court’s denial of mistrial, which was not granted.

On appeal, the court held that any error caused by the interjection of insurance did not rise to the level of “harmful error,” and the testimony was not an “incurable statement,” because the jury’s verdict could not have turned on the one isolated mention of insurance. Furthermore, Nguyen failed to preserve her arguments that Myers’s counsel’s statements were incurable jury arguments because she failed to object to them, request a limiting instruction, or assert that argument in her motion for new trial.

Nguyen v. Myers, No. 05-11-01510-CV

In this case (Gonerway v. Corrections Corporation of America, et al.), the plaintiff–an inmate at the privately run correctional facility run by defendant CCA–claimed that defendants negligently failed to provide adequate medical care when she developed an severe eye infection as a result of the cosmetic contact lenses she wore while she was incarcerated.  CCA moved for summary judgment, which the trial court granted.  The Court of Appeals affirmed the trial court’s ruling, finding that CCA’s contract with the Texas Department of Criminal Justice did not give rise to a duty to provide medical care to inmates because that duty was outsourced to another entity, the Correctional Managed Health Care Committee. The Court also rejected Gonerway’s additional claim that CCA owed her a duty to insure that she received timely medical care because Gonerway’s own testimony indicated that CCA did, in fact, provide care shortly after it was informed of Gonerway’s complaints.

Gonerway v. CCA, No. 05-11-01524-CV

Almost nine years ago, the 68th District Court granted judgment notwithstanding the verdict against plaintiff Basic Capital Management and several related entities, wiping out a jury verdict in their favor for tens of millions of dollars in lost profits. The underlying dispute involved the failure of Dynex to fund an alleged $160 million loan commitment for Basic’s “Single-Asset, Bankruptcy Remote Entities” to make real estate investments. In 2008, the Dallas Court of Appeals affirmed that ruling, holding that the SABRE entities were not intended, third-party beneficiaries of the loan agreement, and that the lost profits from the contemplated real estate transactions were not foreseeable. In 2011, the Texas Supreme Court reversed that decision and remanded the case for consideration of Dynex’s argument that the damages were not supported by legally sufficient evidence. Now, in 2013, the court of appeals has held that, with one exception, there was legally sufficient evidence to support the jury’s original award of damages. The court went through a detailed analysis of the testimony of Basic’s damages expert, concluding that his testimony was sufficient to sustain the jury’s award of damages for the lost real estate investments Basic had envisioned. However, the court of appeals sustained the trial court’s grant of JNOV as to one item of damages — $252,577 awarded by the jury for “lost opportunity” on an investment that Basic had actually completed.

The saga of Basic v. Dynex is not over yet. In addition to the possibility of further appeal to the Supreme Court, the court of appeals also remanded to the district court for further consideration of Basic’s claim for attorney fees, as well as pre- and post-judgment interest. We’ll keep you posted if the case results in any further opinions on appeal.

Basic Capital Mgmt., Inc. v. Dynex Commercial, Inc., No. 05-04-01358-CV

HCBeck was hired to build a hall for a church. It subcontracted the foundation work to another company, B&R Development. After the building was completed, the hall began to have foundation problems, which cost HCBeck $68,976 to repair. HCBeck sued B&R for negligence and breach of contract, and obtained a no-answer default judgment. The company proved up the amount of its damages with an affidavit and supporting documentation, but the trial court did not hold an evidentiary hearing. On restricted appeal, the court of appeals reversed and remanded, holding that an evidentiary hearing was necessary because the damages sought by HCBeck were unliquidated. HCBeck’s affidavit was also inadequate to prove the claimed damages because the supporting documents totaled approximately $87,000, not the $68,976 that HCBeck sought for the default judgment. However, the court of appeals denied B&R’s request for a new trial on the merits because the company had never filed a motion for new trial in the district court. Accordingly, the remand was limited to the issue of HCBeck’s damages.

B&R Development , Inc. v. HCBeck, Ltd., No. 05-11-01150-CV

The court reversed and remanded for a new trial a judgment for the plaintiff on its fraudulent transfer claims. MacArthur Ranch sued the owners of a nail salon for missed rent payments under their commercial lease. Just before summary judgment, the owners conveyed two assets to the two Hos, a parent and brother of the owners. MacArthur Ranch then filed a fraudulent transfer suit against the Hos under the Texas Uniform Fraudulent Transfer Act. The trial court found that the transfers were fraudulent and awarded damages and ordered execution on the transferred assets.

On appeal, the Hos argued that the evidence was factually and legally insufficient to support the finding of fraudulent transfers. But the court held that there was sufficient evidence that the transfers were intended to “hinder, delay, or defraud” MacArthur Ranch because they were made to insiders, without consideration, and before a substantial judgment, and thus were fraudulent. The court held, however, that the amount of MacArthur Ranch’s damages was not supported by the evidence because the expert testimony of MacArthur Ranch’s property manager was conclusory as to the fair market value of the assets. The manager provided no testimony as to how she reached those values, merely answering “yes” to counsels leading questions regarding those values. Because the record showed that the value of the assets was undetermined, but greater than zero, and liability was contested, the court remanded for a new trial.

Ho v. MacArthur Ranch, LLC, No. 05-11-00967-CV

Back in December, the Dallas Court of Appeals became one of the first courts to issue a ruling on the merits under our new anti-SLAPP statute, the Texas Citizens Participation Act. As we noted previously, the TCPA permits defamation defendants to file a motion to dismiss, which then puts the plaintiff to the burden of producing prima facie evidence in support of their claim. The statute may also permit an interlocutory appeal if the trial court denies the motion to dismiss (although maybe not so much under the Fort Worth Court of Appeals’ reading of the statute). But to invoke the right to an interlocutory appeal, the defendant still has to follow the deadlines established by the TCPA, which requires the notice of appeal to be filed within 60 days after the motion to dismiss is denied, whether by order of the trial court or by operation of law.

Defendant Ravinder Jain timely filed his motion to dismiss, and the trial court heard the motion on February 2, 2012. But the court did not issue a ruling on the motion within 30 days, at which time the TCPA deems the motion to be denied by operation of law. On May 17, the trial court issued an order expressly denying the motion to dismiss, and Jain filed his notice of appeal only a few days after that order. However, the court of appeals held that the notice of appeal needed to be filed within 60 days of the date that the motion was originally denied by operation of law (i.e., early March), making Rain’s late-May notice of appeal untimely. The court therefore dismissed the interlocutory appeal for lack of jurisdiction.

Jain v. Cambridge Petroleum Group, Inc., No. 05-12-0677-CV

The court vacated and reversed and rendered the trial court’s judgment in a forcible-detainer action awarding the Plaintiff possession of the property, damages, and attorney’s fees. The Daftarys commercial real estate lease with HSM expired in 2008, and they sought to exercise a three-year renewal option. The parties did not execute a written extension, but the Daftarys continued paying rent for over a year beginning in July 2008. In December 2009, HSM requested that the Daftarys either execute a new long-term lease or vacate, and when the Daftarys refused filed this forcible-detainer action. On the morning of trial, the Daftarys relinquished the keys to the property and tendered possession of the space to the court and then argued that the case was moot because it no longer presented an issue about which party was entitled to possession. The trial court proceeded to a bench trial, awarding HSM possession, damages for the rental difference, and attorney’s fees.

On appeal, the court held that the issue of possession was moot, but that HSM’s claims for damages and attorney’s fees incurred defending possession presented live controversies. HSM failed to show sufficient evidence of damages, however, because they only presented evidence that the property’s rental value had increased in July 2008, and presented no evidence of value in December 2009 when their right to possession accrued. And because the trial court lacked jurisdiction to consider the possession issue and erred by awarding HSM’s damages, HSM was no longer the prevailing party and could not collect attorney’s fees.

Daftary v. Prestonwood Market Square, No. 05-11-00673-CV

After defaulting on his home equity loan, the borrower filed suit to stop the servicer from foreclosing on his home. The borrower argued that (1) the note had been cancelled through the addition of a “VOID” on the last page, (2) that the photocopy of the note produced by the servicer was not authentic, and (3) that the servicer had not shown how it acquired the note, and therefore had not proven it was authorized to enforce it. The court of appeals affirmed summary judgment in favor of the servicer, rejecting all three of the homeowner’s claims. The “VOID” stamp did not show any intent to cancel the note, the court held, because it only appeared over an unused endorsement line on the last page, and there was no other indication of cancellation. The servicer also did not need to produce the original of the promissory note because it was seeking a judicial foreclosure, not making demand for payment of the note, and the borrower had admitted he had defaulted under the note. Finally, the servicer was not required to establish a complete record of the transactions by which it had acquired the note, as its ownership was validly established by the allonge that transferred the note from the original lender to the servicer.

Chance v. CitiMortgage, Inc., No. 05-12-00306-CV

In this forcible detainer action, Jackqueline McDaniel (the mortgagee in default) challenged the trial court’s decision to grant HSBC’s (the purchaser at the foreclosure auction) possession of the premises because, according to McDaniel, HSBC did not present any evidence of its landlord-tenant relationship with her. But HSBC had introduced the deed of trust and the foreclosures sale deed, and together these instruments demonstrated that (1) the landlord-tenant relationship, which arose following McDaniel’s default and (2) evidence that HSBC purchased the property at a public auction. Thus, HSBC established its right to immediate possession of the property and the Court of Appeals affirmed the trial court’s judgement.

McDaniel v HSBC Bank

AdvoCare employed Plaintiffs as distributors to sell its products.  Under this distribution arrangement, these distributors earned commissions based on products sold both to consumers and to other distributors “down line.”   But AdvoCare could choose not to renew these distributorships every year, and it retained the right to terminate its distributors if they breached certain conditions.  When AdvoCare terminated each of the Plaintiffs for failing to comply with these very conditions, Plaintiffs brought claims for breach of contract, fraud, unjust enrichment, and for violations of the Deceptive Trade Practices Act.  The jury found for the Plaintiffs on the DTPA claim only.

AdvoCare appealed because, it argued, the Plaintiffs were not “consumers,” and the DTPA expressly limits recovery to situations where (1) consumers acquired goods or services by purchase or lease and (2) the goods or services purchased or leased form the basis of the complaint.  Examining the record, the Court of Appeals found that Plaintiffs’ claim rested almost entirely on the wrongful termination of their distributorships.  Indeed, the Court pointed out that “the sole basis for the claimed damages is the value of each distributorship as of the date AdvoCare terminated their distributorships.”  Because “[n]either the termination nor the lost value is tied to any alleged defective product or service,” the DTPA claim fails.

Advocare International LP v. Ford, et al. No. 05-10-00590-CV

We don’t usually cover family law cases here at 600 Commerce, but this one involves the validity of an award of attorney fees as a sanction against the plaintiff. Steven Shilling and Karrie Gough divorced in 2005. The divorce decree included an agreed permanent injunction prohibiting the Ms. Gough from “disclosing” information about her ex-husband’s medical history. Several years later, Mr. Shilling sued his ex-wife for allegedly violating the injunction. After a bench trial, the trial court ruled that Gough had not violated the injunction by discussing Shilling’s medical history with her friend and new husband because they already knew about Shilling’s medical history — hence, Gough had not “disclosed” it to them. The trial court then awarded Ms. Gough $96,000 in attorney fees under both section 9.014 of the Family Code and as sanctions against Shilling for bringing a frivolous and bad faith lawsuit.

After rejecting section 9.014 as the basis for an award of fees — concluding that section only authorizes attorney fees in a suit for enforcement of the division of property, not enforcement of an injunction against speech — the court of appeals turned to the issue of attorney fees as a sanction. Gough’s answer had requested an award of attorney fees and stated that Shilling’s suit was “frivolous and brought for the purposes of harassment only.” The pleading was otherwise silent on the basis for any award of fees, no motion for sanctions was ever filed, and the trial court never issued any order for Shilling to show cause why he should not be sanctioned. Under those circumstances, the court of appeals held that the trial court abused its discretion by awarding fees to Gough under Chapter 10 of the Civil Practice & Remedies Code, which requires either a motion for sanctions or an order to show cause that describes the sanctionable conduct. The court likewise ruled that the attorney fees could not be sustained as a sanction under Rule 13 for filing a case that was “groundless and brought in bad faith,” because it was not self-evident that Ms. Gough’s discussions with her friend and new husband had not “disclosed” new information about Shilling’s medical history. Accordingly, the court of appeals reversed and rendered the attorney fees award.

Shilling v. Gough, No. 05-11-00292-CV

Upon dismissing appellant’s groundless DTPA claim, the trial court awarded appellee $42,500 in attorney’s fees.  On top of that, the trial court ruled that appellant had to deposit $36,000 to supersede the judgment.  This ruling was based on the trial courts finding that the attorney’s fees it awarded to appellee were compensatory damages requiring a supersedeas bond. The Court of Appeals disagreed, holding that attorney’s fees are not compensatory damages and thus do not necessitate the identified security.

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

Kaufman County obtained a temporary injunction against the operators of a local firing range, preventing them from continuing to operate the gun range because it was too close to nearby businesses and residences.  The range owners filed an interlocutory appeal, and the parties thereafter agreed to stay the trial court proceedings while the appeal was pending. But an interlocutory appeal of a temporary injunction is not supposed to delay the trial on the merits, as the issue on appeal is whether the court abused its discretion in ordering temporary relief before the case can proceed to full trial, not to obtain a ruling on the merits from the appellate courts. Invoking the rule that the fastest way to cure the hardship of a temporary injunction is to try the case on the merits, the court of appeals dismissed the appeal, admonishing the parties and the trial court to proceed “expeditiously” to trial.

Morgan Security Consultants, LLC v. Kaufman County, No. 05-12-00721-CV

On cross-motions for summary judgment, the trial court granted summary judgment for the appellant on count one and for apellee on counts two and four, but said nothing about counts three and five other than invoking a Mother Hubbard clause in the order, which reads: “All relief requested and not expressly granted herein is hereby denied.”   With its order, the trial court granted appellee permanent injunctive relief, exonerated appellee’s bond, and taxed costs against appellant.

On appeal, the Court avoided the substantive issues and only addressed its own jurisdiction.  Following Lehmann v. Har-Con Corp., 39 S.W.3d 191 (Tex. 2001), the Court held that the trial court’s order was not “final” because it neglected to address claims three and five, and because the Mother Hubbard clause and the permanent injunction did not suffice to render those claims final.

Auroura Loan Services v. Aurora Loan Services, LLC

The court of appeals has affirmed a summary judgment ruling in favor of the owner of Las Colinas Country Club, in a case arising out of the death of a man who was diving for golf balls in the water hazard at the 18th green. The worker’s widow claimed that the country club was liable under the theory that it was engaged in a joint enterprise with the company it had contracted to recover lost golf balls, which had also employed the decedent. The country club obtained summary judgment on the basis that there was no evidence of a “community of pecuniary interest,” as required by the joint enterprise doctrine. The court of appeals agreed, holding that it was insufficient for the plaintiff to show that the country club paid the ball retrieval company 12 cents for each ball recovered. Joint enterprise theory does not rest on the fact that the defendants each had a common business interest in the enterprise.  Instead, it requires a common interest that is “shared without special or distinguishing characteristics” in the relevant common purpose. Although each party to the ball retrieval contract benefited from it, that fact alone was not capable of establishing that the defendants had a community of pecuniary interest.

Logan v. Irving Club Acquisition Corp., No. 05-11-01314-CV

The court affirmed the dismissal of an action for lack of subject matter jurisdiction based upon the ecclesiastical abstention doctrine. Jennison, a former Episcopal Priest, sued Prasifka, an Episcopal Church parishioner, for slander, tortious interference with a contractual relationship, and wrongful discharge, stemming from complaints she made to a church official in response to a request by the church in connection with internal church disciplinary proceedings against Jennison. The proceedings resulted in his discharge from the priesthood. Prasifka filed, and the court granted, a motion to dismiss because the action involved church matters outside of the court’s jurisdiction.

On appeal, the court noted that the ecclesiastical abstention doctrine removes most issues related to a church’s ministerial employment decisions from the jurisdiction of the civil courts. In this case, Prasifka’s defamatory statements were made entirely in connection with church disciplinary proceedings. These statements and Jennison’s claims were inextricably intertwined with the church’s investigation and thus closely related to internal matters of church governance and discipline. Further, a causation determination would require an analysis of the church’s disciplinary decision-making process. Thus, the ecclesiastical abstention doctrine applied and the district court lacked jurisdiction.

Jennison v. Prasifka,   05-11-01253-CV

Just before trial, Victor Enterprises Incorporated (“VEI”) moved for recusal.  The trial judge, however, denied the motion as untimely.  The case proceeded to trial, and the judge entered a final judgment in favor of Defendant, Clifford Holland.  The Court of Appeals reversed the recusal decision and voided the judgment.  Turning to the text of TRCP 18a, the Court unequivocally found that “in the event a recusal motion is filed, a trial judge must promptly enter one of two orders which are permitted:  recusal or referral.”  Because the trial judge denied the motion as untimely, she did not follow either of the two permitted courses.  Thus, she did not comply with Rule 18a and abused her discretion.

Victor Enterprises v. Clifford Holland, No. 05-10-01592-CV

FedEx sued Smith Protective Services for breaching the parties’ services agreement after thieves cut holes in the fences on its property and looted several of its trucks. The trial court found that Smith had, indeed, breached the parties’ agreement. It found that the thieves had cut two holes in the shipping terminal’s perimeter fence over a period of two days (with a third cut several days later), through which the thieves entered and “off-loaded” valuable cargo by hand. FedEx investigated, finding that, while the contract purportedly required it, none of the guards present during the heist knew that one of their duties was to conduct patrols. FedEx also opined that the thieves knew about this failure and took advantage of it.

On appeal, Smith challenged the conclusion that the parties’ contract required its guards to patrol the premises. The court of appeals, however, pointed to express language in the contract along with testimony by several FedEx employees to refute this claim, and, accordingly, upheld the trial court’s findings of fact and conclusions of law.

Smith Protective Services v FedEx, No. 05-11-00715-CV

On the eve of trial, the district court granted a motion to withdraw filed by the attorneys for L’Arte de la Mode, Inc., but denied the company’s request for a continuance because it was the client’s fault they had not been paying their bills. The case was called to trial, but nobody appeared for L’Arte. The trial court therefore granted a default judgment for Neiman Marcus, awarding it more than $150,000 in compensatory damages and twice that amount for exemplary damages, all attributable to Neiman’s claim for money had and received.  L’Arte retained substitute counsel, but the trial court denied the company’s motion for new trial. The court of appeals reversed, holding that L’Arte had established all of the elements for a new trial.

The court of appeals analyzed the case under the venerable standards of Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939), which requires the movant to establish that (1) the failure to appear was not intentional or the result of conscious indifference, but was the result of an accident or mistake, (2) the movant has a meritorious defense, and (3) granting the motion will occasion no delay or otherwise injure the plaintiff. L’Arte established the first element through the affidavit of its in-house counsel, who stated that L’Arte had not received either the attorneys’ motion to withdraw or the order granting the withdrawal. L’Arte also established that it had a meritorious defense through its contention that Wells Fargo actually holds Neiman’s money, thanks to its factoring arrangement with L’Arte. Finally, the court of appeals held that L’Arte had satisfactorily assured that a new trial would not injure Neiman Marcus by agreeing to pay its attorney fees incurred in obtaining the default judgment, despite Neiman’s objection that the promise was hollow in light of L’Arte’s inability to pay its own attorneys and its failure to post a bond to supersede the existing judgment. The court of appeals therefore reversed the default and remanded to the district court for a trial on the merits.

L’Arte de la Mode, Inc. v. Neiman Marcus Group, No. 05-11-01440-CV

In this divorce proceeding, the parties negotiated and signed (but did not file with the Court) a Final Divorce Decree.  Over the next year, the parties continued to negotiate the Final Decree even though they had already finalized and signed a prior version.  These additional negotiations broke down and the parties could not arrive at a new agreement, so one party filed the previously signed version with the court, which the judge accepted.

When the trial court refused to set aside the Final Decree, this appeal followed, with the party challenging the Final Decree arguing that the agreement did not meet Rule 11’s requirements because it was not filed before it was signed by the trial judge.  The Court of Appeals disagreed, holding that “[a]lthough rule 11 requires the writing to be filed as part of the record, the rules does not state when the writing must be filed.”  According to the Court, Rule 11 only requires the agreement to be filed before it is sought to be enforced.

Markarian v Markarian, No. 05-11-01076-CV

The court affirmed a judgment in a forcible detainer action awarding possession of a property purchased at a foreclosure sale to the buyer. The owners of a property defaulted on their promissory note, and the property was sold to FHLMC in foreclosure. FHLMC notified the former owners to vacate twice, the first in three and the second in ninety days, and eventually filed a petition for forcible detainer. After the former owners failed to object to FHLMC’s evidence or present any evidence of their own, FHLMC was awarded judgment. The former owners appealed arguing that the petition insufficiently identified the property and that the notice to vacate was insufficient. The court rejected both arguments, holding that the petition was sufficiently identified the property by including the address of the property and that the evidence of the notices to vacate was sufficient to support the judgment.

Caro v. FHLMC, No. 05-11-01023-CV

The court of appeals continues to explore the limits of permissive interlocutory appeals. In this instance, the court was faced with an agreed-upon appeal from an order granting a motion to quash the deposition of the appellant’s former attorney, who allegedly had information showing that a mediated settlement agreement should be vacated. The trial court granted the opposing party’s motion to quash, and the parties agreed to present that ruling to the court of appeals under section 51.014(d) of the Civil Practice & Remedies Code. But the court of appeals rejected that effort, holding that the appeal did not present a “controlling issue of law,” as required by the statute. The trial court’s ruling on a motion to quash did not determine whether other sources of evidence regarding the mediation would be admissible at trial, and the parties could not use an agreed appeal to resolve that evidentiary issue before it was presented at the time of trial. The court therefore dismissed the appeal.

Gunter v. Empire Pipeline Corp., No. 05-12-00249-CV

In this shareholder challenge to the pending merger of MetroPCS, Deutsche Telekom and T-Mobile, the plaintiffs sought a TRO enjoining the defendants’ use of several “deal protection devices,” including “Poison-Pill Lock-Up” and “Force-the-Vote” provisions.  The trial court granted the TRO, agreeing with the plaintiffs that these deal protection devices irreparably harmed shareholders by, among other things, warding off other potential acquirers.  Defendants petitioned for a writ of mandamus to vacate the TRO because the trial court failed to address their motion to dismiss or stay the action based on the forum-selection clause in MetroPCS’s bylaws, which mandated Delaware as the proper forum.  The Court of Appeals found that because the motion to dismiss or stay was filed before the request for a TRO, the trial court abused its discretion by granting injunctive relief without first ruling on the forum-selection clause issue.  Citing the Texas Supreme Court’s holding in In re AutoNation, the Court of Appeals found that “subjecting  a party to trial in a forum other than that agreed upon and requiring an appeal to vindicate the rights granted in a forum-selection clause” warrants mandamus.  Accordingly, the Court vacated the TRO and stayed the case until the motion to dismiss could be decided.

In re MetroPCS, No. 05-12-01577-CV

Denise and Greg Brown sued their homeowner’s association for failing to maintain portions of the property. The HOA counterclaimed, alleging that the Browns had made a number of unauthorized alterations to their home. The Browns then joined American Western, the HOA’s insurer, asserting numerous causes of action against the insurance company. The insurer moved for summary judgment, arguing that the Browns were not named insureds under the policy and that the HOA’s counterclaim was not a covered “occurrence” under the policy in any event. The trial court granted the motion, and the court of appeals affirmed. Under the terms of the insurance policy, American Western was only liable for damage that arose from “an accident,” and it did not apply to property damage to the insured’s own leased property. Thus, even if the Browns were named insureds under the policy — an issue the court of appeals did not reach — the insurer was still not obligated to defend them from the HOA’s counterclaim.

Brown v. American Western Home Ins. Co., No. 05-11-00561-CV

In this Memorandum Opinion, the Court of Appeals addressed whether it may exercise jurisdiction over an order granting an interlocutory summary judgment order for permanent injunctive relief, but which did not dispose of the defendant’s counterclaims. The Court refused to exercise jurisdiction, holding that “[a] summary judgment that fails to dispose of all claims, even if it grants a permanent injunction, is interlocutory and unappealable.”  Notably, however, the court pointed out that the appellant could have tried to challenge the injunction as actually being an appealable temporary injunction, but the appellant had not attempted to use that procedure.

Young v. Golfing Green Homeowners Ass’n, Inc., No. 05-12-00651

This appeal arises from a jury verdict in favor of three brothers who were hit by a tractor-trailer while they were changing a flat tire on the side of the freeway. Among other things, the jury awarded damages for lost wages and loss of earning capacity.

On appeal, the central issue was whether federal law preempts the ability of undocumented workers, like the plaintiffs, to recover lost wages. The defendants argued that the federal Immigration Reform and Control Act preempts the lost wages jury award because the U.S. Supreme Court has determined that the “IRCA has preempted the field of regulation of employment of illegal aliens.” Arizona v. United States, 132 S.Ct. 2492 (2012). The court, however, rejected this argument, holding instead that “Congress’s power to regulate immigration cannot imply that every state law that might impact or touch on an undocumented alien is necessarily preempted.” It further held that nothing in the IRCA indicates that Congress intended this statute to supersede state law on this issue.

Grocers Supply, Inc. v. Cabello, No. 05-10-00843-CV

Way back in 1989, a latex products manufacturer named Ansell Healthcare Products registered a federal trademark for the phrase “Condom Sense,” which it used in advertising its Lifestyle condoms. A few years later, Ansell sought federal registration of Condom Sense as a service mark for a proposed chain of retail stores. But Ansell’s own retail stores never materialized, and it ended up licensing the mark to Condom Sense, Inc. (“CSI”), which had already opened up its own Condom Sense store in Dallas.

In 1997, CSI sold its original store on Greenville Avenue, including the right to use the Condom Sense name. That sale led to a series of competing claims over use of the name at multiple locations, including some inconclusive preliminary litigation. In 2005, Ansell — which had never used the mark itself, and which had been unaware of all the drama over its use in Texas — assigned CSI all of its interest in the federal service mark.  CSI then registered the mark in Texas, along with three related service marks that also used the Condom Sense name. CSI ended up suing the operators of the other Condom Sense stores, alleging trademark infringement under the federal Lanham Act, the Texas Trademark Act, and Texas common law. After a bench trial, the trial court ruled in favor of the competitors and cancelled registrations of both the federal and state service marks.  CSI and its owners appealed.

According to the court of appeals, CSI’s competitors were not entitled to cancellation of the state service mark even though the trial court found that CSI registered the mark fraudulently, i.e., while knowing that competitors were also using the Condom Sense mark.  Under section 16.28 of the Business & Commerce Code, the party asking the court to cancel the registration must be someone who was “injured” by the false or fraudulent procurement of the service mark registration, but the other Condom Sense owners had failed to submit any evidence that they were injured by it.  But the court of appeals sustained the trial court’s cancellation of the federal service mark, giving credit to testimony that Ansell’s licensing agreement with CSI had not been renewed past its original expiration date in 1999, and that the mark had therefore lapsed because Ansell had abandoned it. Finally, the court of appeals affirmed the trial court’s ruling in favor of the competitors’ laches and unclean hands defenses, holding that the evidence supported the lower court’s rulings that five years had been too long for CSI to sit on its rights before bringing suit, and that it had acted improperly in selling any rights to the Condom Sense name (in the 1997 sale of the original store) at a time when it was merely a licensee of Ansell’s mark.

Condom Sense, Inc. v. Alshalabi, No. 05-10-01024-CV

The court dismissed an appeal from post-judgment orders following foreclosure proceedings for lack of jurisdiction. After trial, the trial court entered one order denying Knoles’s efforts to avoid a writ of execution and prohibiting him from challenging the writ going forward and a second order sanctioning Knoles’s counsel for actions related to the writ. In a letter brief to the court of appeals, Knoles argued that the orders were appealable final judgments because they adjudicated a new set of facts and followed a conventional trial on the merits. The court rejected this argument, holding that the orders were issued to aid in the enforcement of the underlying unappealed judgment and that Knoles has no standing to appeal the order imposing sanctions against his counsel. Thus, the court had no jurisdiction over the appeal.

Knoles v. Wells Fargo Bank, N.A., 05-12-00473-CV

In 2011, the Texas Legislature enacted the Texas Citizens Participation Act, a type of statute that is known nationally as an anti-SLAPP (“Strategic Lawsuit Against Public Participation”) act. As with other anti-SLAPP laws, the TCPA gives litigants the right to file a motion to dismiss if the claim involves their “exercise of the right of free speech, right to participation, or right of association.” Tex. Civ. Prac. & Rem. Code § 27.003(a). The filing of such a motion stays discovery in the case (except on a showing of good cause) and puts the burden on the claimant to establish a prima facie case for each element of the claim.  Id. §§ 27.003(a) & 27.005(c). The motion has to be heard within 30 days of filing, and the court must rule on the motion within an additional 30 days or the motion is deemed to be denied by operation of law. §§ 27.004, 27.005, 27.008(a). If the motion is overruled by operation of law, the TCPA grants the movant the right to an interlocutory appeal. Id. § 27.008(a). In short, the TCPA is a powerful tool for the defendant in a defamation case, requiring the plaintiff to prove early in the case that it already has evidence supporting each element of the defamation claim, and potentially taking the case out of the hands of the trial court altogether.

(Strangely, the statute does not expressly grant the movant the right to appeal if the trial court timely denies the motion to dismiss. See Lipsky v. Range Prod. Co., 2012 WL 3600014 (Tex. App.-Fort Worth Aug. 23, 2012, pet. filed). It is unclear whether anything will be done to fix that apparent oversight in the coming legislative session, or whether the Supreme Court will find authorization for such an appeal implicit in the statute.)

The Dallas Court of Appeals has now become one of the first appellate courts to weigh in on the substance of the TCPA. In Avila v. Larrea, an attorney sued Univision and one of its reporters after they broadcast a story suggesting he had engaged in misconduct against some of his clients. The defendants filed a motion to dismiss pursuant to the TCPA and the trial court conducted a hearing. But instead of ruling on the motion itself, the trial court found good cause to permit 90 days of discovery and continued the hearing until that discovery was completed. After 30 days, however, the defendants filed their interlocutory appeal, arguing that the appeal was authorized because the motion was automatically denied after 30 days. The court of appeals agreed, then went on to hold that the plaintiff had failed to produce sufficient evidence that the alleged statements were false, or that the broadcaster had failed to exercise due care to prevent other people from making defamatory statements in the broadcast.  The court of appeals therefore rendered judgment in favor of the defendants and remanded to the trial court to consider an award of damages and costs against the plaintiff.

Avila v. Larrea, No. 05-11-01637-CV

The court affirmed a judgment in favor of AT&T against an attorney for breaches of a 2008 and a 2009 agreement for Yellow Pages advertising. Thornton entered into the agreements with AT&T but only made partial payments on the 2008 contract and none on the 2009 one. The trial court entered judgment in favor of AT&T after a half-day bench trial. On appeal, Thornton challenged the legal sufficiency of the evidence of a valid contract, breach, and any award based on quantum meruit. The court held that AT&T’s evidence at trial, including four contract documents with Thornton’s signature and evidence that Thornton began making partial payments according to the 2008 contract, was sufficient to support the finding of a contract. Further, the evidence showing that AT&T  produced advertisements of Thornton’s law practice as stated in the contracts, and the Thornton no making payments according to those contracts was sufficient to show support the finding of breach and damages. Thus, the judgment was upheld.

Thornton v. AT&T Advertising, No. 05-11-00767-CV

Texas Pallet Operations, LP rented commercial property form Ostrovitz & Gwinn, LLC  (“O&G”).  As required by the lease, Texas Pallet obtained property insurance from First Specialty Insurance Company.  In 2006, a fire damaged the property and O&G sought payment from First Specialty for the loss.  But First Specialty refused because, it argued, O&G was not a party to the insurance contract.  O&G sued, and the trial court dismissed the case on summary judgment.

On appeal, O&G’s primary argument was that dismissal was unwarranted because it had standing to enforce the insurance contract as a third-party beneficiary.  Specifically, O&G contended that the “Loss Payable Provisions” of the policy identified O&G by name as a “Loss Payee,” thus solidifying its status as a third-party beneficiary.  The Court disagreed.  Assessing the policy’s express language, the Court found that “the policy does not clearly and fully demonstrate an intention by [Texas Pallate] and First Specialty to contract for the direct benefit of [O&G].”  It then proceeded to rejected the other issues raised by O&G and affirm the trial court’s decision.

Ostrovitz and Gwinn, LLC v. First Specialty Insurance Co., No. 05-11-00143-CV

Few defendants are willing to take the risk of not answering a lawsuit when service of process has been defective.  After all, moving to quash service in Texas only gets you additional time to file an answer (see TRCP 122), and there is always the chance that a default judgment will be sustained if the attack on service is unsuccessful.  But whether by  luck or design, Bailey’s Furniture, Inc. has reversed the trial court’s entry of default judgment by challenging the plaintiff’s attempted service of process.  According to the process server’s affidavit, he had attempted to serve “Defendant Charles Bailey” on five occasions.  But while the petition identified Charles Bailey as the registered agent of Bailey’s Furniture, nothing in the process server’s affidavit indicated that he was being served in that capacity, and he was not in fact the defendant named in the lawsuit.  Because proper service had not been made prior to entry of the default judgment, the trial court never obtained personal jurisdiction over Bailey’s, rendering the judgment void.  The court of appeals therefore reversed and remanded the case to the district court for further proceedings.

Bailey’s Furniture, Inc. v. Graham-Rutledge & Co., No. 05-11-00710-CV

The court of appeals has affirmed a judgment in excess of $350,000 for breach of a commercial lease agreement. VSC, LLC entered into the lease as the tenant, while its manager Gary White was the guarantor. Both parties were sued by the landlord, Mike Harrison, after a sublessor stopped paying rent to Harrison. On appeal, VSC and White challenged the trial judge’s findings against their affirmative defenses, including repudiation, modification, ratification, and waiver. The court of appeals held that there was adequate evidence supporting the trial court’s rejection of each of those defenses. The court further held that White could not challenge his status as a guarantor of the lease agreement because he had failed to file a verified denial after he was sued in the capacity of a guarantor. Even without that defect, however, the court still found ample evidence to support the conclusion that White’s personal guaranty applied to the lease agreement.

White v. Harrison, No. 05-10-01611-CV

RTKL, an architecture firm, worked for Woodmont Investment Co., a real estate developer.    In a prior case, Woodmont sued RTKL, seeking a declaratory judgment that it did not owe RKTL its remaining fees because the services agreement between the parties was invalid. That case settled for $700,000, with $140,000 to be paid to RTKL up front and the rest to be paid to it in monthly installments of $10,000.  As the parties negotiated the settlement, it was determined that the entity paying the settlement would be Woodmont TCI Group XIII, LP (“XIII”), another Woodmont-related entity that developed one of the properties for which  RTKL provided services.  Several months after the settlement agreement was signed, however, XIII filed for bankruptcy.

When RTKL realized the XIII had no cash to pay the settlement it sued TCI (XIII’s parent) for fraud and breach of the settlement agreement.  TCI moved for summary judgment on the breach of contract claim, which the trial court granted, and the jury found in TCI’s favor on the fraud claim.  RTKL appealed the denial of summary judgment.   The Court of Appeals examined the language of the release entered into as part of the settlement and found that TCI, as XIII’s parent, fell within its terms.  It then found that the release included the claim related to the settlement agreement.  Accordingly, the court affirmed the trial court’s summary judgment decision.

RTKL Associates v. Transcontinental Realty Investors, Inc., No. 05-11-00786-CV

The court affirmed summary judgment in a mortgage foreclosure case against Givens, the mortgagor. Givens defaulted on a Note and Deed of Trust. The lender, MidFirst, noticed Givens of the default through its servicer, Midland. Midland eventually noticed the Note’s acceleration and foreclosure sale through its legal counsel, BD, and filed this notice with the Dallas County Clerk. Givens was provided with a reinstatement opportunity but did not tender the required funds by the deadline, and the property was sold in foreclosure. Givens sued Midland, MidFirst, and BD asserting various claims. The court granted summary judgment for the defendants on each claim.

On appeal, Givens first argued that because the Deed of Trust provides that either the lender or trustee shall give notice of the foreclosure sale, notice from BD was inadequate. The court rejected this argument because the evidence conclusively established that BD acted as legal counsel for Midland, who in turn acted as mortgage servicer for MidFirst, and such notice is adequate under Texas law. The court next rejected Givens’s argument that the recording of notice of the foreclosure sale was inadequate, holding that a party need not record such notice in the permanent deed records, but may do so with the county clerk. Finally, the court held that Givens’s was given adequate opportunity to reinstate the loan.

Givens v. Midland Mortgage Co, et al., 05-11-00524-CV

Dr. Wallace Sarver was hired by Primary Health Physicians, P.A. to serve as a doctor at its clinic in Frisco.  The parties’ written employment agreement included a covenant not to compete, which prohibited Dr. Sarver from practicing medicine within ten miles of the clinic for a period of two years after his termination of employment.  Sarver resigned from the clinic, and shortly thereafter assumed the practice of another physician in Allen — less than 10 miles away from PHP’s clinic.  Dr. Allen sued filed suit for a declaratory judgment on the non-compete.  PHP’s counterclaims included a request for a temporary injunction, which the district court denied.

On interlocutory appeal, the court of appeals affirmed the trial court’s ruling.  The court rejected PHP’s argument that the Covenants Not to Compete Act preempted any requirement to show irreparable harm in order to enjoin Dr. Sarver from violating his non-compete agreement.  In making that ruling, the court dismissed contrary statements in three previous opinions as dicta: McNeilus Cos. Inc. v. Sams, 971 S.W.2d 507 (Tex. App.-Dallas 1997, no pet.); Hilb, Rogal & Hamilton Co. of Tex. v. Wurzman, 861 S.W.2d 30 (Tex. App.-Dallas 1993, no writ); Recon Exploration, Inc. v. Hodges, 798 S.W.2d 848 (Tex. App.-Dallas 1990, no writ).

The court of appeals also rejected PHP’s claim that the trial court had abused its discretion by failing to find irreparable harm.  Although PHP had established that Dr. Sarver had been popular with patients and that patients had continued to ask for him, there was little evidence that any of those patients had left PHP’s clinic and gone to Dr. Sarver’s new practice.  The court of appeals also relied on evidence that the two clinics practiced different types of medicine, with PHP’s facility focused on “episodic” illnesses and injuries, while Dr. Sarver’s new practice was devoted to a more traditional family practice.  Two of PHP’s witnesses also confirmed that the patient volume and profitability of its clinic were about the same as they had been before Dr. Sarver left.  That evidence supported the trial court’s finding of no irreparable harm, and the temporary injunction was therefore affirmed.

Primary Health Physicians, P.A. v. Sarver, No. 05-12-00351-CV

In 2008, CNC hired Sunshine Jespersen to work as a leasing agent and provide on-site management services to Sweetwater Ranch Apartments.  Apparently seeking a shorter commute, Sunshine took advantage of a rent discount provided as an employment perk and moved into the Sweetwater Ranch Apartments.  But the job turned out to be arduous, requiring long work weeks and excessive overtime.  And, shortly after starting, Sunshine discovered she was pregnant with twins.  The parties dispute what happened next.  According to Sunshine, her doctor told her she needed to work less, so she asked for a reduction in hours.  When her boss demurred, she either quit (according to CNC) or asked for three weeks of medical leave (says Sunshine).  Sunshine then sought to come back, but CNC apparently had already filled her position.  While the facts surrounding the termination/resignation/rehiring are muddy, what is clear is that CNC/Sweetwater tried to raise her rent because she was no longer entitled to the employee rent discount.  Sunshine did not like this and tried to move out, but as she was trying to move out CNC/Sweetwater changed the locks, posted a notice of abandonment, and charged Sunshine for cleaning and repairing the apartment.

Sunshine sued.  She claimed pregnancy and disability discrimination, and that CNC/Sweetwater breached the lease by locking her out.  The trial court, however, rejected her motion for summary judgment and granted CNC/Sweetwater’s corresponding motion.  On appeal, the Court found that Sunshine had produced no direct evidence of pregnancy discrimination.  It also found that she produced no indirect evidence of discrimination because she could not show that she was replaced by someone outside the protected class since one of her replacements was, in fact, pregnant.  The court also upheld the trial court’s decision on the breach of the lease, finding that, under the lease’s terms, she had abandoned the apartment because she had previously moved out most of her belongings.

Sunshine Jespersen v. Sweetwater Ranch Apartments

The court affirmed the trial court’s judgment in this commercial real estate lawsuit. Jarvis provided a loan through its loan servicer, NAC, to CAS for the purchase of an apartment complex. The loan documentation identified NAC as the “servicer” and the lender as Jarvis “c/o” NAC. CAS made monthly loan payments directly to NAC, who then disbursed them to Jarvis. CAS later sold the property to K&E through Stewart Title. Stewart Title paid the loan payoff amount directly to NAC for payment to Jarvis, as NAC had done for two other loan payoff transactions to Jarvis in the past. But in this case, NAC did not provide the funds to Jarvis and instead purported to continue making CAS’s monthly payments without notifying Jarvis of the sale. When NAC stopped making those payments, evidently due to insolvency, Jarvis learned of the property sale and sought to foreclose on the property.

K&E filed a declaratory action asserting that the loan was paid off and seeking to prevent foreclosure. Jarvis filed a third-party petition against CAS, Stewart Title asserting negligence and breach of contract claims against Stewart Title for making the loan payment to NAC instead of directly to Jarvis. Jarvis also sought a declaration that the loan was not discharged and sought to quiet title. At trial, Jarvis moved to exclude evidence of the other loans serviced by NAC in which NAC received the payoff amount and disbursed it to Jarvis, which was denied. Based on this evidence, the trial court found that Jarvis and NAC established a procedure where NAC received payoff funds and disbursed them to Jarvis and that NAC had actual and apparent authority to accept the payoff amount here. It entered judgment for K&E, declaring that the loan was fully paid, enjoining Jarvis from attempting to foreclose on the party, and awarding K&E attorney’s fees. The court also granted K&E and Stewart Title summary judgment on Jarvis’s negligence and breach of contract claims and severed out Jarvis’s claims against CAS.

On appeal, Jarvis argued that the trial court erred by denying its motion to exclude because the loan documents dictated the relationship between the parties, and thus the parol evidence rule precluded the evidence of Jarvis and NAC’s other course of dealings. The court held that the loan documents indicated that NAC had authority to act for Jarvis, but the scope of that authority was unclear. Thus, parol evidence showing the scope of NAC’s authority to accept loan payoff amounts and not contradicting the terms of the documents was not barred. Additionally, the evidence was sufficient to show that NAC had implied actual authority to accept the loan payoff. This holding also disposed of Jarvis’s claims against Stewart Title, whose transfer of funds to NAC constituted payment to Jarvis rather than a breach of any duty to Jarvis, and Jarvis’s declaratory action because its lien and deed of trust on the property was discharged. Finally, K&E’s attorney’s fees recovery was warranted because the UDJA permits a declaratory action brought to invalidate a real estate note, as well as any lien securing the note.

Jarvis v. K&E RE One, LLC, et al., 05-11-00341-CV

The court affirmed the dismissal of a condemnation case in which the defendant failed to appear at trial. The City petitioned for condemnation and special commissioners made an award to McKinney for the taking. McKinney filed an objection, but when the case was called for trial McKinney’s attorney withdrew and another person, Boles, attempted to file a motion for continuance on behalf of McKinney, who was absent. Boles stated that he had “power of attorney” to represent McKinney, though he was not, in fact, a licensed attorney. The court refused to consider the motion and dismissed the case due to McKinney’s absence. On pro se appeal, the court held that the trial court did not abuse its discretion because McKinney presented no evidence that he was not negligent for failing to find representation to replace his original attorney, and the could determine that such a failure was his own fault.

W.A. McKinney v. City of Cedar Hill, No. 05-12-00368-CV

Regency Gas Services owns a natural gas processing facility in the Hugoton Basin. One of the byproducts of natural gas is crude helium.  In 1996, Regency entered into a 12-year contract with Keyes Helium Co., which owned a helium processing facility in Oklahoma.  Under the agreement, Keyes agreed to purchase all of the crude helium produced by Regency’s facility.  But in 2003, Regency found out that one of its biggest customers was unlikely to renew its contracts, which would deprive Regency of the volumes of natural gas needed to make helium production possible.  As a result, Regency decided to shut down its plant and move its processing to a nearby facility owned by another company.  Keyes sued for breach of contract, contending that Regency had not acted in good faith when it decided to eliminate its production of crude helium.  The jury returned a verdict in favor of Regency.

On appeal, Keyes claimed jury charge error in the trial court’s definition of “good faith” under the UCC.  Keyes contended that the trial court should have limited its instruction to the one found in the U.C.C., which simply states that good faith means “honesty in fact and the observance of reasonable commercial standards standards in the trade.”  The trial court had expanded on that definition by adding the phrase “including whether Regency had a legitimate business reason for eliminating its output under the Contract, as opposed to a desire to avoid the contract.”  The court of appeals rejected that argument, concluding that the additional language could not have caused the rendition of an improper verdict because Keyes had failed to submit any evidence that Regency’s decision to shut down its plant had been made in bad faith.  The court of appeals also affirmed the trial court’s grant of a directed verdict against Keyes on its claim that the UCC prevented Regency from reducing its output below the estimates stated in the contract, ruling that section 2-306(1) of the UCC did not such reductions if they were made in good faith.

Keyes Helium Co. v. Regency Gas Services, LP, No. 05-10-00929-CV

It was a landmark decision when the Texas Supreme Court decided that trial courts had to explain their reasoning for granting a new trial, and that the failure to do so was reviewable by mandamus.  In re Columbia Med. Ctr., 290 S.W.3d 204 (Tex. 2009).  Four years later, the correction of such omissions has become a more or less routine part of the job for Texas appellate courts.  In this case, the trial court ordered a new trial on the real party in interest’s attorney fees “in light of a verdict in its favor.”  Because there was no further explanation in the order granting the new trial, the court of appeals issued a short memorandum opinion ordering the trial court to more fully explain its reasoning.  However, the court also denied the relator’s request that the court of appeals enter judgment on the jury verdict, thereby preserving the decision on a new trial for the district court.

In re Whaley, No. 05-12-01518-CV

Being an appellant is hard when you don’t have a reporter’s record.  In this instance, the defendant filed an interlocutory appeal of a temporary injunction order, claiming that the plaintiff and intervenors had no standing to assert their claims and that the trial court had made a host of other errors.  But the court of appeals could find no request for a reporter’s record.  Only a partial transcript of the temporary injunction was included in the record, and there was no notice of issues relied upon in the clerk’s record.  In the absence of a complete reporter’s record, the court of appeals had to presume that the missing portions of the transcript supported the trial court’s ruling.  Accordingly, the temporary injunction was affirmed.

Dao v. Silva, No. 5-12-00331-CV

Van Peterson entered into a contract with ADT to provide commercial alarm services to his jewelry store. Allegedly, an unidentified man wearing an ADT uniform and driving an ADT van came to the jewelry store and sold Van Peterson a device for its alarm system, but instead of installing the device, the man disabled the alarm. Van Peterson’s store was burgled soon after. Van Peterson brought various tort, fraud and DTPA claims against ADT. ADT filed a traditional motion for summary judgment on the tort claims, arguing that Van Peterson waived liability for these claims in the contract, and a no-evidence motion on the other claims. The trial court eventually denied the motions but permitted an interlocutory appeal under former section 51.014(d) of the Texas Civil Practice and Remedies Code.

On appeal, the court first held that ADT could not raise issues first advanced in its reply in support of its no-evidence motion for summary judgment. The court reversed the trial court’s denial of summary judgment on the tort claims because the parties’ contract included a limitation-of-liability provision as to those claims. Such waivers are not invalidated by the DTPA, which only limits waivers of DTPA claims. Finally, the court held that ADT could not challenge on appeal Van Peterson’s subrogated insurer’s pursuit of a DTPA claim because only Van Peterson was a party to the litigation and any opinion as to the insurer would be advisory.

ADT Security Services, Inc. v. Van Peterson Fine Jewelers, No. 05-11-01468-CV

Attorney Robert Collins was sued by his client, Chris Green, for professional negligence and breach of fiduciary duty.  Green claimed that Collins had failed to serve the defendant in the underlying lawsuit, thereby allowing that case to be dismissed for want of prosecution.  As a result, Green’s claims became time-barred.  Collins filed an answer to Green’s lawsuit, but failed to appear at trial. Green testified in support of his claim, and the trial court granted a default judgment for $31,500.  The trial court subsequently denied Collins’ motion for new trial, and Collins appealed.

On appeal, Collins argued that the judgment had to be reversed because Green had failed to prove that he could have collected on any judgment in the underlying lawsuit.  But while that complaint may have been accurate, the court of appeals saw no need to reach it because Collins had failed to brief anything about Green’s breach of fiduciary duty claim.  That meant that he had failed to attack all independent grounds supporting the judgment, resulting in affirmance of the case.

Collins v. Green, No. 05-11-00893-CV

In this Memorandum Opinion, the appellant, a director of a bankrupt company, was found liable for the amount the bankruptcy court required his company to distribute to a creditor.  Strangely, this personal liability was based on Chapter 171 of the Tax Code, which provides that if a corporation forfeits its “corporate privileges” for failure to pay its franchise taxes, each director or officer of the corporation is liable for any debt of the corporation.  While the appellant argued that this provision only applied to tax liabilities, the Court of Appeals affirmed the trial court’s decision and held that “[n]othing in the wording of this statute suggests that personal liability of officers and directors is limited to the tax liability.”

Yigal Bosch v. Cirro Group, Inc., No. 05-11-01625-CV

The court of appeals has issued an opinion reversing an award of sactions in a case arising out of the purchase of a $1.5 million painting.  According to the plaintiff, the defendant art gallery had sold him an N.C. Wyeth painting titled The Sheriff (you can see it here), based in part on the representation that it had been used on the cover of the Saturday Evening Post in 1908.  The buyer subsequently found out that was not true, and sued the gallery for a number of claims, including violations of the Deceptive Trade Practices Act.  The gallery moved for summary judgment, and the plaintiff nonsuited his case.  That led the gallery to move for sanctions, alleging that the suit had been brought in bad faith.

The trial court held a hearing on the sanctions motion, but the plaintiff’s attorney missed it due to a mix-up by his office. The court went ahead with the hearing anyway and awarded sanctions of approximately $83,000.  When the attorney discovered what had happened, he filed a motion for reconsideration and motion to vacate, which the court granted, reducing the sanctions award to $7,500.  But while the first sanctions order had explained the basis for the award in detail, the second order stated only that it was for “violation of TEX. CIV. PRAC. & REM. CODE § 10.001 (1), (3) relating to the plaintiff’s claims brought against the defendant pursuant to the Deceptive Trade Practices Act.”  The court of appeals held that finding was insufficiently specific to sustain the sanctions, especially in light of the nearly $75,000 difference between the two orders.  The court of appeals therefore reversed the judgment and remanded to the trial court for additional consideration — but with a footnote noting the panel’s “grave reservation to condone an award of sanctions against an attorney for filing a suit with multiple claims and asking for more in damages than the statutory limit of a single claim.”

Although it was not mentioned in the court’s opinion, the plaintiff had actually refiled his case in federal court shortly after he nonsuited it in state court.  You can find some of the background of the dispute, including a statement from the gallery’s attorney, here.  According to PACER, that version of the lawsuit is still being litigated.

Sell v. Peters Fine Art, Ltd., No. 05-11-00469-CV

Green Mountain Oil and Gas Corporation sought to “flip” its oil leases by assigning them to EOG Resources at a higher price than it had paid for them.  After it had signed the assignment, however, EOG discovered that the lease assignments created an additional overriding royalty that reduced the mineral estate amount.  Because the leases included a draft–and because each draft provided that if the draft was not paid within 20 banking days, the bank was to return it to the payee and all further obligations of the parties would terminate–EOG decided to decline payment of each of the drafts and terminate the contract.   Green Mountain sued, seeking enforcement of the assignment.  The Court of Appeals, however, found that, under the terms of the draft, “EOG had an absolute right not to pay the draft.”  Accordingly, it did not breach the contract when it declined the draft regardless of whether EOG’s agent had established good title.

Green Meadow Oil & Gas Corp. v. EOG Resources, Inc., No. 05-11-00291-CV

The court of appeals has issued a lengthy opinion in an employment non-disclosure case, partially affirming a jury verdict in favor of the former employer.  In this instance, both the plaintiff and the corporate defendant were in the business of providing in-home pediatric nursing services.  After the defendant company hired away three of the plaintiff’s employees, eleven of the plaintiff’s most profitable accounts moved over to the new company.  The court of appeals started by noting that the defendants did not challenge the jury’s finding that they had entered into a conspiracy to damage the plaintiff.  That led the court to conclude that each of the defendants was jointly and severally liable for the other defendants’ breaches of their non-disclosure agreements, which were themselves established by sufficient evidence at trial.  The court of appeals upheld the jury’s award of $250,000 in lost profits attributable to the eleven patients lost by the plaintiff, but reversed and rendered amounts that had been awarded for profits that would have been earned after the plaintiff went bankrupt and sold off its business.  According to the court, there was no evidence that he plaintiff would have had the right to continue receiving profits from customers after the business was sold, so there was no evidentiary basis for the recovery of those post-sale profits.  Finally, the court of appeals affirmed the trial court’s grant of JNOV against the plaintiff on its claim for attorney fees, holding that fees were not recoverable because the plaintiff had not offered any proof of presentment to the defendants.

Helping Hands Home Care, Inc. v. Home Health of Tarrant County, Inc., No. 05-08-01657-CV

The court of appeals has issued an opinion that serves as a useful primer on the statute of frauds.  The appellant, Michael Kalmus, sue to recover for unpaid commissions after his employment was terminated.  The appellee, Financial Necessities Network, defended the case with the statute of frauds, claiming that the oral agreement alleged by Kalmyus was essentially an agreement for lifetime employment that could not be enforced in the absence of a signed writing.  The court of appeals reversed and remanded, holding that the evidence showed the agreement was terminable at will, and therefore could have been concluded within a year’s time.  In the course of announcing that decision, the opinion collects and recites much of the black-letter law regarding the statute of frauds, making it a useful source of future citations on the topic.

Kalmus v. Oliver, No. 05-11-00486-CV

The court dismissed an agreed interlocutory appeal from the trial court’s denial of competing motions for summary judgment related to a home foreclosure for want of jurisdiction. The Guzmans obtained a home mortgage on which the Bank eventually foreclosed. The Guzmans sued for wrongful foreclosure and breach of contract and argued that the Bank lacked standing to foreclose on the property or enforce the original note. Both sides moved for summary judgment, and the trial court denied the competing motions on the basis that the parties failed to satisfy their burdens for summary judgment. In agreement on the facts and the relevant legal issues, the parties filed a joint motion to appeal from interlocutory order under section 51.014(d) of the Civil Practice and Remedies Code contending that the “issues raised in [the] dispositive motions involve controlling questions of law as to which there is a substantial ground for difference of opinion, and obtaining a ruling on those issues of law from the appeals court will materially advance the outcome of this case.”

In its jurisdictional analysis, however, the court of appeals emphasized the fact that the trial court did not substantively rule on the controlling legal issues presented in the agreed interlocutory appeal. Instead, it submitted the issues to the appellate court for an advisory opinion – contrary to the purpose of section 51.014(d) – and thus the court had no jurisdiction over the appeal under that section.

Bank of New York Mellon v. Guzman, 05-12-00417-CV

In this Memorandum Opinion, the Court of Appeals addressed who has the authority to determine whether arbitration should be compelled: a court or an arbitrator.  The Court noted that, while, as a general matter, the courts decide whether the parties have agreed to arbitrate an particular issue, “the parties may agree to submit the substantive issue of arbitrability to arbitration.”  In this case, the relevant arbitration provision included the following clause: “Whether such Dispute will be subject to arbitration will likewise be determined in such arbitration as will the determination as to whether all procedural conditions precedent to arbitration have been satisfied.”  According to the Court, this provision presents “clear an unmistakable evidence of the parties’ intent to delegate arbitrability to the arbitrator.”  The Court, however, expressed no opinion on whether the plaintiffs’ claims actually should be submitted to arbitration because that, of course, was an issue for the arbitrator to decide.

Continuum Health Services, LLC v. Sheila Cross, No. 05-11-01520-CV

The court affirmed a summary judgment in favor of the bank in a foreclosure case dealing with the waiver statutory offset rights contained in Chapter 51 of the Texas Property Code. A builder entered construction loan agreement secured by four properties and signed a personal guaranty of the loan, eventually defaulting. The bank foreclosed on and sold the properties and sued the builder for the deficiency. The builder invoked Chapter 51, asking the court to determine the fair market value of the properties for the deficiency calculation rather than the foreclosure sale price. Town North moved for summary judgment arguing that the guaranty included a waiver of his right to claim any deductions or offsets from the amount guaranteed including any right to seek a reduction in the deficiency under section 51.003, which the trial court granted and then entered a judgment on the deficiency.

On appeal, the court cited its opinion in Interstate 35/Chisam Road, L.P. v. Moayedi, No. 05-11-00209-CV, 2012 WL 3125148 (Tex. App.—Dallas Aug. 2, 2012, no pet.) holding that the rights provided by section 51.003 are subject to waiver. It also cited King v. Park Cities Bank, No. 05-11- 00593-CV, 2012 WL 3144881, at *3 (Tex. App.—Dallas Aug. 3, 2012, no pet. h.) to reject the builder’s argument that language in the guaranty waiving “any defenses given to guarantors at law or in equity other than actual payment and performance of the indebtedness” did not encompass a waiver of section 51.003’s right of offset despite the guaranty’s later reference to a “claim of setoff.” Thus, the court held that the builder waived his rights under section 51.003.

Smith v. Town North Bank, 05-11-00520-CV

The court affirmed a judgment in a construction contract dispute between two subcontractors. The general contractor of a shopping center project, Mycon, subcontracted with Bulldog to fabricate the steel and erect the steel-reinforced concrete panels around the center’s trash dumpsters. Bulldog subcontracted Top Flight to erect the panels. Top flight testified that Mycon directed the concrete pouring to take place well outside of the range that Top Flight had instructed. Top Flight then requested a $7,500 change order from Bulldog for the extra erection cost, which Mycon refused. Under pressure from Mycon, Bulldog eventually installed the panels themselves, without notifying Top Flight, and then invoiced and eventually sued Top Flight for the cost of installation. Top Flight counterclaimed for the 10% retainage amount left on the contract. Finding that Bulldog did not notify Top Flight to complete installation of the panels breached the subcontract by preventing Top Flight’s performance, the trial court rendered judgment for Top Flight for its retainage, interest, and attorney’s fees.

On appeal, Bulldog did not challenge the trial court’s finding that Top Flight was never notified to complete the installation of the dumpster panels despite the extra cost, and without allowing Top Flight an opportunity to perform, Bulldog undertook to install the dumpster panels using its own employees. The court held the fact that Bulldog prevented Top Flight from performing under the contract, which supported the conclusion that Top Flight did not breach the contract and that Bulldog did.

Bulldog Ironworks, LLC v. Top Flight Steel, Inc., 05-10-01360-CV

Richardson Hospital Authority (“RHA”) hired Plaintiff, Placidus Duru, as a nursing assistant.  But when Duru was indicted for sexually abusing a patient, the hospital terminated him.  Four years later, when the prosecution dismissed the criminal case against Duru, he turned around and sued RHA for malicious prosecution, business disparagement, breach of contract and unjust enrichment.  RHA moved to dismiss these claims for lack of subject matter jurisdiction, but the trial court denied their motion for all claims except malicious prosecution.  The Court of Appeals reversed the trial court’s decision to dismiss the business disparagement, breach of contract and unjust enrichment claims (the malicious prosecution claim’s dismissal was not appealed), finding that the Texas Tort Claims Act did not waive the sovereign immunity enjoyed by RHA, a public institution, because Duru’s pleadings “affirmatively negate jurisdiction.”

Richardson Hospital Authority v. Placidus Duru, No. 05-12-00165-CV

Maybe things would have gone better for King Lear if the court of appeals had been around to mandamus Goneril and Regan.  In this case, Francis Hutchins’ will divided the estate among her three daughters and appointed one of them, Susan Jones, as the executrix of the estate.  But before the will was filed with the probate court, another one of the daughters, Karen Coyle, took possession of some of the property, including a Chrysler 300 and some jewelry.  Susan filed a “Motion for Turnover Order,” citing both section 37 of the Probate Code and section 31.002 of the Civil Practice & Remedies Code, seeking to force Karen to return the property to the estate.  The trial court denied the motion, leaving Susan to seek mandamus relief from the Dallas Court of Appeals.

Karen argued that section 31.002 was inapplicable because it only governs post-judgment turnover orders, and there was no judgment resolving the disputed issue of who should get to keep the property.  But while the parties’ arguments below had focused on that question, the court of appeals relied on the Probate Code to determine that the property should be returned pending administration of the estate, and that the trial court had abused  its discretion by denying the turnover motion solely on the basis of section 31.002.  The court further held that Susan had no adequate remedy at law because she was entitled to possession of the property even in the absence of an appealable judgment.  Accordingly, the court of appeals conditionally granted Susan’s petition for writ of mandamus.

In re Estate of Francis J. Hutchins, No. 05-12-01098-CV; see also In re Estate of Francis J. Hutchins, No. 05-12-01163 (dismissing concurrent appeal for lack of jurisdiction because there was no appealable judgment).

Carment Llerena, a former bookkeeper and secretary for Defendant North Texas Trucking, sued her former employer for negligence and fraud related to her termination.  The jury found North Texas liable and rendered judgment in Llerena’s favor, and the trial court overruled North Texas’s motion for judgment notwithstanding the verdict.  On appeal, however, the Court of Appeals reversed the trial court’s decision and found that Llerena should instead take nothing from North Texas on both claims.

The Court’s opinion turned on two issues.  First, the Court rejected Llerena’s fraud claim. While Llerena argued that she was fraudulently induced to accept a job with defendant based on North Texas’ representation that it had workers’ compensation insurance, the Court found that she had presented no evidence of “what she would have received had North Texas provided workers’ compensation insurance.”  Second, the Court rejected Llerena’s contention that her former employer caused her to work in unsafe conditions that led to her carpal tunnel syndrome, finding instead that she presented “no evidence that any modification of her work environment or work requirements would have prevented or lessened her injury.”

North Texas Trucking v. Carmen Llerna, NO. 05-10-01061-CV

In an opinion affirming a breach-of-contract case between two subcontractors, the court of appeals reiterated an important appellate principle: unchallenged findings of fact is binding against the appellant.  In this case, Bulldog Ironworks failed to challenge the trial court’s finding that the prevailing party, Top Flight, was never notified by Bulldog or the general contractor that it needed to complete its portion of the project before Bulldog completed the task with its own employees.  Without such notice, the court of appeals concluded that Bulldog had prevented Top Flight from performing, thereby breaching Bulldog’s own contractual obligations.

Bulldog Ironworks, LLC v. Top Flight Steel, Inc., No. 05-10-01360-CV

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

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

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

A developer in Wylie purchased two adjoining tracts of land.  In 2004, he decided to sell  one of the properties to Capital One.  However, the city decided that both properties would have to be developed as one site, with a single access site on the Capitol One property.  The parties therefore entered into a cross-easement agreement, requiring Capital One to pave the internal drives that would link the access site to both of the properties.  However, Capital One finished its construction and obtained a certificate of occupancy without ever constructing the new approach.  The developer ended up building the driveway himself, and sued Capital One to pay for its cost.  After a bench trial, the trial court awarded the developer awarding approximately $22,000 in damages and another $100,000 for attorney fees.

The court of appeals reversed.   According to the appellate court, the cross-easement agreement required the parties to “keep and maintain” the driveway, but not to actually construct it.  The court also rejected the developer’s argument that Capital One had breached the agreement by failing to comply with a government regulation by not constructing the driveway, because there was no evidence the city had ever ordered Capital One to construct it.  The court also rejected the developer’s quantum meruit argument for failing to attack all grounds asserted in the bank’s summary judgment motion, and remanded to the district court for a determination of the bank’s attorney fees as the prevailing party under their contract.

Capital One, N.A. v. Haddock, No. 05-10-01028-CV

Fannie Mae might sound like somebody’s sweet old grandma, but this grandma knows how to get defaulting borrowers out of the property.  In this instance, the borrower’s mortgage provided that if the house went into foreclosure, he would have to either surrender possession immediately or he would become a tenant at sufferance.  The borrower defaulted, the property was sold at foreclosure, and the buyer sold the property to the Federal National Mortgage Association.  Fannie Mae sent notices to vacate by certified and first class mail, then filed a forcible detainer proceeding.  Both the justice court and the county court at law (in a de novo appeal) ruled in favor of Fannie Mae, and the court of appeals affirmed.  The court held that the tenant at sufferance provision in the mortgage was legally sufficient to establish a landlord-tenant relationship between Fannie Mae and the borrower.  The court of appeals also rejected the borrower’s claim that Fannie Mae had failed to prove it had given him notice of the eviction, holding that delivery of the notice was adequately established by testimony that the copy sent by first class mail had not been returned by the postal service.  Finally, the court of appeals rejected the borrower’s claim that the forcible detainer proceeding should have been abated in favor of a separate lawsuit he had filed in district court to contest title to the property.  Because forcible detainer only determines immediate possession of the property, a separate title contest does not deprive the court of jurisdiction to decide who gets possession of the property in the meantime.

Farkas v. Federal National Mortgage Ass’n a/k/a Fannie Mae, No. 05-11-01416-CV

The court reversed a judgment awarding an law firm lost profits in an action against a litigation services company. Elrod, a litigation law firm, hired A-Legal to perform support services related to E-Discovery. Two days later, Elrod pulled the job when A-Legal doubled the price it previously quoted. Both parties sued each other for breach of contract. Elrod claimed damages from lost revenue and lost business opportunities due to the time its attorney’s and staff lost dealing with A-Legal’s breach. Elrod presented evidence of lost revenue, which it valued at $20,000, but the only specific evidence relating to a worker’s time lost dealing with the breach came from one attorney, Nassar. Nassar testified that her hourly rate is $325 and that she spent about eighty hours in total “dealing with the situation.” Elrod made no attempt to establish what expenses would have been attributable to Nassar’s billable hours or whether the firm lost any specific business or billing during that time. The trial court entered a judgment awarding $20,000 lost profits plus attorney’s fees.

On appeal, the court noted that the only calculation that can be made from Elrod’s evidence is potential gross revenue brought in by Nassar, not net profits, because Elrod presented no evidence to show any expenses related to that revenue or that she actually billed less time because of the breach than she would have otherwise. Thus, the evidence was legally insufficient to show lost profits, the only measure of damages presented, and the court reversed and rendered a take nothing judgment.

A-Delta Overnight Legal Reproduction Services Corp. v. David W. Elrod, PLLC, No. 05-11-00708-CV

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

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

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

The court affirmed the trial court’s summary judgment dismissing a plaintiff’s claims against his former employer for breach of the employment contract. Twin Lakes Golf Course hired Holloway to move from Illinois and serve as its head pro for three years. After further negotiations in July 2008, Twin Lakes and Holloway orally agreed to an employment term lasting one year with an agreement to extend for another three years based on his performance. Holloway started working on August 5, 2008, and soon after Twin Lakes presented a written contract, dated July 23, containing the terms of the agreement. Holloway signed the document but Twin Lakes never did. Holloway was fired eight weeks later and he sued for breach of contract and fraudulent inducement. The trial court granted summary judgment in favor of Twin Lakes.

On appeal, the court determined that the agreement was not enforceable because, as an agreement that could not be performed within one year, it fell within the statute of frauds. The court noted that the contract was negotiated in July 2008 and the document that Holloway signed was dated July 23. Thus, the agreement was made in July 2008 and performance was to end in August 2009 – over one year. Additionally, Holloway’s employment was to last from August 5, 2008 to August 5, 2009 – one year and one day. The court also held that Holloway’s affidavit testimony stating that the agreement could be performed within one year was conclusory. Finally, his partial performance did not remove the agreement from the statute of frauds because he was compensated. Thus, the agreement was unenforceable and Holloway’s claims failed as a matter of law.

Holloway v. Dekkers and Twin Lakes Golf Course, Inc., 05-10-01132-CV

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

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

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

The court of appeals has issued a short memorandum opinion in a restricted appeal following the trial court’s entry of a default judgment.  Tejas Asset Holdings filed suit against a predecessor company of JPMorgan Chase, seeking a declaration that Chase’s deed of trust lien was invalid because it allegedly did not have Tejas’ original promissory note.  Tejas attempted to serve Chase’s registered agent by certified mail, but neither the citation nor the proof of service were actually included in the clerk’s record, and the certified mail receipt was not sufficient to demonstrate service had actually occurred.  Since the record did not show that any proper return of service was on file with the clerk at least ten days before the default judgment was entered, the court reversed the default and remanded the case for further proceedings.

JPMorgan Chase Bank, N.A. v. Tejas Asset Holdings, L.L.C., No. 05-11-00962

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

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

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

Another installment in the court’s recent spate of shareholder oppression opinions finds the court reversing a judgment in favor of the minority shareholder. Martin and Shagrithaya started a software company named ARGO in 1980 with $1000. Martin and Shagrithaya retained 53% and 47% interests in ARGO respectively and were the sole board members, but Martin had the right to appoint a tiebreaker. There was no express agreement as to employment or compensation, which was determined on a year to year basis. For 25 years, they received equal compensation. By 2008, ARGO was valued at $152 million.

In the early 2000s, tensions arose as Martin became unhappy with what he saw as Shagrithaya’s refusal to take on executive responsibilities. In 2006, Martin unilaterally cut Shagrithaya’s annual compensation from $1 million to $300,000. Soon after, Martin and ARGO’s management began to isolate Shagrithaya. Around this time, the IRS performed an audit of ARGO and found assess it over $7 million in retained earnings tax. ARGO contested this assessment and won. Shagrithaya was not informed of the assessment or contest.

After an independent appraisal of ARGO, Martin offered Shagrithaya $66 million for his shares, representing their values less a 35% minority holder discount. Shagrithaya refused, arguing that there should be no discount because ARGO is not a third-party. Shagrithaya demanded an audit of ARGO and proposed an alternative plan to restore his previous salary, explore a sale of ARGO, and issue an $85 million dividend. ARGO allowed the audit, which uncovered that Martin had misappropriated ARGO funds to his personal use. Martin reimbursed ARGO the amount appropriated plus some amount more. In a final board meeting in December 2008, Martin appointed ARGO president Engebos as the third board member. They voted in favor of Martin’s plans regarding compensation, executive positions, and a$25 million dividend.

After losing the vote on all three issues, Shagrithaya resigned and filed a suit for shareholder oppression and other torts. At trial, Shagrithaya advanced the theory that Martin schemed to withhold compensation and dividends to ARGO so that ARGO could purchase Shagrithaya’s shares at a minority discount and force Shagrithaya out of the company. The jury found in Shagrithaya’s favor, and the trial court entered a judgment awarding Shagrithaya back compensation and ordering ARGO to issue an $85 million dividend.

On appeal, Martin and ARGO challenged the legal and factual sufficiency of the evidence supporting the jury’s finding of suppression. The court reviewed eleven of Martin and AGRO’s actions that the jury found to be oppressive to determine whether they (1) substantially defeated Shagrithaya’s objectively reasonable expectations central to his decision to join the venture or (2) constituted “burdensome, harsh, or wrongful conduct; a lack of probity and fair dealing in the company’s affairs to the prejudice of [Shagrithaya]; or a visible departure from the standards of fair dealing and a violation of fair play.”

ACTS 1 and 7: Martin reduced Shagrithaya’s annual compensation by 70 percent and forced him to report to ARGO’s president, Engebos, without the approval of the Board of Directors or shareholders. The court held that it was not reasonable for Shagrithaya to expect to maintain a level of compensation equal to Martin’s indefinitely without an employment contract. Additionally, the absence of board approval was later corrected at the December 2008 board meeting and the board retroactively cured the discrepancy in Shagrithaya’s actual past compensation. Though Shagrithaya voted against the reduction, the court noted that the inability to control board decisions is inherent in the position of a minority shareholder, citing Patton v. Nicholas. Finally, it did not prejudice Shagrithaya’s rights as a board member because these issues were purely employment matters.

ACT 2: ARGO maintained Martin’s compensation at $1 million without board approval. Shagrithaya argued that this constituted a de facto dividend to Martin, but the court found no evidence of such. And again, the boards retroactively approved and cured this action.

ACTS 3-4: Martin schemed to buy out Shagrithaya retaining earnings and refusing to pay dividends. The court held that these actions alone did not constitute oppression. The dividend were equally suppressed for Martin, and some dividends were issued and shared accordingly with Shagrithaya. Further, there was no evidence that these actions reduced Shagrithaya’s share value. The court noted that Shagrithaya had no specific expectation of dividends, and shareholders have not general expectation of dividends.

ACTS 5 and 11: Martin did not disclose the IRS assessment or ARGO’s engagement of a law firm to challenge it. The court held that because the assessment was reversed, there was no harm to Shagrithaya’s interests, and the legal representation benefited ARGO by securing the reversal.

ACT 6: Martin offered Shagrithaya $66 million for his shares at a minority discount and forced him to accept by withholding dividends. The court held that because Shagrithaya was never forced to relinquish ownership – his intent to sell was voluntary – the fair market value of his minority shares, including the discount, was the proper valuation. Using the shares’ enterprise value in the sale would only be required if ARGO or Martin were forced to purchase them. Further, the mere purchase offer, without other financial pressure, was not oppressive.

ACTS 8-10: Martin’s misappropriation of ARGO assets for his personal use. Martin’s repayment remedied any harm to Shagrithaya prior to trial.

The jury also found for Shagrithaya on his claims for fraud, breach of implied agreement, and breach of fiduciary duty. The fraud claim related to Martin’s failure to disclose his buyout scheme. The court held that his failure to disclose did not harm Shagrithaya because Shagrithaya could not force a dividend and possible sale of shares at that time were to speculative. Shagrithaya’s alleged Martin breached an implied agreement to continue their practice of equal compensation. The court held that this practice was not sufficient to establish an agreement, and in any case the terms of any agreement were too indefinite. Finally, Martin’s retaining of earnings, misuse of funds, and sale of ARGO’s assets did not cause Shagrithaya harm even if it breached his fiduciary duties.

ARGO Data Resource Corporation and Max Martin v. Balkrishna Shagrithaya, 05-10-00690-CV

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

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

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

The loan agreement for the Regal Parc apartments in Irving was generally non-recourse to the borrower, but it also included a carve-out that made the loan fully recourse if the borrower breached its obligation to remain a single-purpose entity.  After the lender foreclosed on the property, it sued the borrowers for an $11.6 million deficiency, alleging they had violated the agreement by commingling funds with their related entities and committing waste by failing to maintain the property.  The trial court accepted the borrowers’ explanations of why they had not commingled Regal Parc funds with those of other entities, meaning that the loan remained non-recourse.  But the trial court also entered judgment against the owners for approximately $1 million due to waste and improper retention of post-default rents.  The court of appeals affirmed, holding that the trial court’s finding was adequately supported by the testimony of the borrowers’ witnesses.  The court of appeals also rejected the lender’s claim that the borrowers should have been responsible for an additional million dollars worth of waste that occurred before they assumed the loan, because the loan agreement only made the borrowers responsible for waste that occurred “henceforth” — i.e., from the date they assumed the loan.  Finally, the court found sufficient evidence to support the award of damages for waste and retained rents.

Wells Fargo Bank, N.A. v. HB Regal Parc, LLC, No. 05-10-01428-CV

The owners of a tract of land in Collin County formed a limited partnership with an investor and his company to develop the property, then sold the land to the LP.  As part of the sale, the LP issued a $9 million promissory note to the seller, plus another $1.5 million promissory note to a mortgage company, secured by a deed of trust on the property.  Subsequent loans by the mortgage company to the LP upped the debt by another $6.5 million, also secured by deeds of trust and with priority over the note issued to the sellers.  Since it all ended up in litigation, you will not be surprised to learn that the development collapsed.  The sellers sued the limited partnership, their fellow investor, and the mortgage company for fraud, breach of fiduciary duty, and related claims.  The mortgage company initiated foreclosure proceedings, which were stayed by the grant of a temporary injunction.  Before long, everybody filed motions for summary judgment, and the trial court granted them all.

The court of appeals affirmed.  With respect to the seller’s fraud claims, there was no evidence of misrepresentation in the original loan documents because those documents were not in the record on appeal.  Nor was there any evidence the seller relied on any misrepresentations in the subsequent loan agreements because, citing health concerns, she had not presented herself for deposition and she had not included any affidavit in response to the mortgage company’s no-evidence motion.  The court rejected the seller’s argument that the mere fact of having signed the agreement established that the seller had relied on the alleged misrepresentations.

Hall v. Douglas, No. 05-10-01102-CV

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

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

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

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

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

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