The Dallas Court of Appeals has affirmed the order confirming an arbitration award in favor of our firm’s client, Steven Pully. As explained in the Court’s opinion, Mr. Pully sued his former employer, Newcastle Capital Management, alleging that the company owed him substantial amounts of unpaid compensation. But some of his claims were also subject to arbitration, and the arbitrator ruled in favor of Mr. Pully. The district court affirmed the arbitration award, and that portion of the case was eventually severed from the remaining claims in the lawsuit. On appeal, Newcastle challenged the scope of the arbitration clause, which covered “[a]ny dispute, controversy or claim arising out of or relating to” the parties’ agreements. The Court noted that the phrase “relates to” is very broad, and that a claim relates to a contract “if it has a significant relationship with or touches matters covered by the contract.” Under that standard, Mr. Pully’s claims did indeed relate to the parties’ contracts, making the dispute arbitrable. The Court also rejected Newcastle’s argument that the parties’ oral agreement was against public policy, and therefore affirmed the arbitration award in its entirety.

Schwarz v. Pully, No. 05-14-00615-CV

The Court of Appeals has reversed a summary judgment in favor of the attorney defendants in a civil barratry case. The plaintiffs were victims of a pipeline explosion. Their case against the pipeline company eventualy settled, and the lawyers collected their 40% contingency fee. But the plaintiffs learned that they had actually been solicited by a private investigator working for their attorneys, so they sued to rescind the fee agreement and recover their contingency fees. The Court of Appeals agreed that rescission was an available remedy for barratry, and that the attorney defendants had not established their former clients would be unable to make counter-restitution for the benefits they had received from the lawyers.

Neese v. Lyon, No. 05-13-01597-CV

After the real estate bubble burst in 2008, borrowers attempted all sorts of ways to get out of their obligations. Most notably, debtors repeatedly challenged the ways that their mortgages had been transferred and recorded (or not) by the banks that had held, swapped, sold, and securitized them. Long story short, it hardly ever worked, as courts across the country mostly (but not always) eschewed technical arguments in favor of the big picture of who owed what to whom. But a new opinion from the Dallas Court of Appeals shows that when the bank doesn’t follow the rules in litigation, the debtors may still escape liability on a loan.

In this instance, a pair of individual guarantors for a $748,000 loan were sued by Wells Fargo after the borrower defaulted. While the case was pending, Wells Fargo allegedly assigned the loan documents to another entity, Apex. Wells Fargo’s attorneys later filed a motion for withdrawal and substitution, which the trial court granted. The motion failed to mention the assignment of the loan documents to Apex. The guarantors then filed for no-evidence summary judgment, pointing out that Wells Fargo had conducted no discovery and that the discovery period was closed. The motion argued that there was no evidence to show who owned the guaranty. When Apex appeared and tried to cure that deficiency, the guarantors objected and moved to strike Apex’s summary judgment evidence. The trial court sustained the objections and granted summary judgment. The Court of Appeals affirmed, holding that it was not an abuse of discretion to exclude Apex’s evidence because it had waited 11 months after acquiring the loan to amend Wells Fargo’s discovery responses by disclosing its ownership. That was not “reasonably prompt,” and it acted as an unfair surprise to the guarantors to have that come out only in response to their summary judgment motion.

LSREF2 Apex (TX) II, LLC v. Blomquist, No. 05-14-00851-CV

A short opinion helps to illustrate the limited reach of an appellate court’s authority over the cases before it. On interlocutory appeal, both litigants agreed that the trial court should have vacated an order appointing a receiver in Texas to serve ancillary to a primary receivership in Minnesota. But in addition to vacting the order appointing the receiver, the appellant also wanted the Court of Appeals to undo all the receiver’s actions. That was beyond the appellate court’s powers however. Pointing to TRAP 43.2, the Court held that it could affirm, modify, reverse and render, reverse and remand, vacate, or dismiss — none of which permitted the Court to grant the additional relief sought by the appellant.

Burlington Resources Oil & Gas Co. LP v. Verde Minerals, LLC, No. 05-15-00014-CV

The Dallas Court of Appeals has reversed a trial court order denying a motion to compel arbitration. The arbitration clause was contained in a contract between a temporary employee and his employment agency, which gave both parties the right to “elect mandatory, binding arbitration for any claim, dispute, or controversy between you, and our clients or us” [sic]. The plaintiff claimed that the arbitration agreement was unenforceable due to substantive unconscionability, lack of consideration, and lack of essential terms. The Court held that nothing in the arbitration agreement demonstrated that the specific manner of arbitration was a material consideration to the parties, noting that the FAA specifically contemplates circumstances in which the parties have not provided for a method of appointment for an arbitrator. The Court also held that the consideration for the overall contract was sufficient to support the arbitration clause as well. Finally, the Court held that the provision was not substantively unconscionable despite its inclusion of a waiver of the right “to take any legal action” because it was not clear that potentially-unconscionable waiver was actually aimed at waiving substantive claims instead of just waiving the right to do so in court instead of arbitration.

Stride Staffing v. Holloway, No. 05-14-00811-CV

The Dallas Court of Appeals has granted mandamus to correct a trial court’s failure to grant special exceptions and dismiss the plaintiff’s claims against the settlor of a royalty trust. The Court held that a beneficiary of the trust had no authority to interfere with the trustee’s exercise of discretionary powers, concluding that the trustee acted within its discretion by refusing to sue the settlor on claims that were precluded by the terms of the trust instruments. Citing the “practical and prudential” mandamus standard of In re Prudential, the Court of Appeals held that mandamus relief was appropriate because allowing the plaintiff to proceed to trial on behalf of the trust would defeat the trustee’s right to control such litigation. But while the settlor of the trust was dismissed from the lawsuit, and the plaintiff could not sue the trustee on behalf of the trust, the Court held that the plaintiff should have the opportunity to amend her petition to sue the trustee solely on her own behalf.

In re XTO Energy, Inc., No. 05-14-01446-CV

600 Commerce always has its eye out for trends in litigation, and a new one may now be emerging: a plague of boards falling off of government walls onto innocent members of the public. A year ago, it was a whiteboard falling off the wall of Dallas Metrocare Services (held: no sovereign immunity because plaintiff pleaded a dangerous “condition” of property with allegation of an improperly secured whiteboard). This time, the Court of Appeals sustained the Texas Health and Human Services Commission’s sovereign immunity claim after a notice board fell on plaintiff Joseph McRae. The Court agreed with the Commission that McRae’s claim was one for premises defect, not for “negligent use or condition” of the notice board. Because it was in substance a premises defect claim, McRae was required to plead, and ultimately prove, that the Commission had actual knowledge of the condition that caused his injuries. But it was not clear that McRae would be unable to cure that defect in his pleading, so the Court remanded the matter to the trial court for further proceedings.

Texas Health & Human Servs. Comm’n v. McRae, No. 05-14-00894

With all the TCPA cases running through the appellate courts, it’s worth taking a quick look at one procedural issue. The question presented by way of motion to the Court of Appeals was whether the appellants were required to supersede the attorney fees awarded to the defendants in a judgment dismissing the plaintiffs’ business disparagement claims. The appellate court held that attorney fees are not damages, and therefore the trial court did not err in denying the defendants’ motion to raise the supersedeas amount to include the attorney fees.

Mansik & Young Plaza LLC v. K-Town Mgmt., LLC, No. 05-15-00353-CV

A year ago, the Dallas Court of Appeals affirmed the denial of an equitable bill of review in which the defendants claimed that the plaintiff had not exercised reasonable diligence in its attempts to effect service through registered mail and personal delivery. The Texas Supreme Court has now set aside that ruling, holding that the defendants had presented some evidence that their failure to receive notice of the default judgment resulted solely from the plaintiff’s failure to certify the defendants’ last known mailing address, and not from any negligence or fault on the defendants’ own part. The record contained evidence that the plaintiff’s owner had met with the defendants’ registered agent at their current address, rather than the outdated address on file with the Secretary of State, that raised a genuine issue of material fact as to the validity of the plaintiff’s “last known mailing address” certification.

Katy Venture, Ltd. v. Cremona Bistro, LLC, No. 14-0629

Clyde Parks signed a $10,000 promissory note, bearing 15% interest and secured by Super Bowl tickets, in favor of Scott Seybold. Parks defaulted on the note, but did make some sporadic payments before limitations expired. When Seybold demanded payment after the limitations period had expired, Parks responded with emails stating that he was working to get the note paid and that he was not ignoring it. That was enough for both the trial court and the Dallas Court of Appeals to conclude that the claim was not barred by limitations, because the debtor had acknowledged the debt, in writing, as a current obligation. See Tex. Civ. Prac. & Rem. Code § 16.065. The Court of Appeals rejected Parks’ argument that he had not “signed” the emails pursuant to the Texas Uniform Electronic Transactions Act, affirming the trial court’s finding that the “Thank you, Clyde” salutation in each email was intended to be Parks’ signature. Notably, the Court of Appeals pointed out that it was expressing no opinion on whether the automatically-generated name and contact information block at the end of each email could constitute an electronic signature.

Parks v. Seybold, No. 05-13-00694-CV

The Court of Appeals has affirmed a jury verdict and judgment of approximately $705,000 in a contract dispute between a medical products manufacturer and a distributor. The parties’ agreement prohibited the distributor from selling undisclosed competing products and allowed the manufacturer to terminate the agreement for cause if the distributor violated that provision. The manufacturer terminated the agreement, and the distributor filed suit. On appeal, the manufacturer argued that multiple affirmative defenses should have defeated the distributor’s claim as a matter of law, but the Court of Appeals disagreed. There was some evidence in the record that the distributor had disclosed the competing products, and a rather confusing jury question that combined breach with the defenses of prior material breach and waiver led to the manufacturer’s failure to challenge all independent grounds for the jury’s verdict. And with respect to a number of additional issues, the Court of Appeals generally held that the manufacturer had failed to present them to the trial court of preserve their arguments for appeal.

Blackstone Med., Inc. v. Phoenix Surgicals, LLC, No. 05-13-00870-CV

The parties in a workplace injury lawsuit entered into a Rule 11 agreement to abate the suit while they conducted limited discovery and mediation. A second Rule 11 agreement continued the abatement until one of the parties would file a motion to re-open the case. Notwithstanding those Rule 11 agreements, the parties were also subject to a binding arbitration clause contained in the employer’s injury benefit plan. The parties disputed whether they had each complied with their discovery obligations under the Rule 11 agreements, which led the employer to move to re-open and to compel arbitration. The trial court denied the motion and ordered that the case remain abated until the Rule 11 discovery was completed.

The Dallas Court of Appeals reversed. The Court first held that the case was subject to interlocutory appeal because the trial court’s order “affirmatively denies Baylor’s motion to compel arbitration over at least a portion of the proceeding . . . .” (The opinion noted that this holding conflicts with a pair of decisions out of the El Paso Court of Appeals, possibly setting up the case for further review by the Texas Supreme Court.) As to the discovery, the Court agreed with the defendant that the Rule 11 had expired by its own terms when the employer moved to re-open the lawsuit, mooting the completion of the agreed-upon discovery as an ongoing issue. But because the trial court had not actually ruled on the employer’s motion to compel arbitration, the Court of Appeals remanded for formal consideration of the case’s arbitrability.

Baylor Univ. Med. Ctr. v. Greeson, No. 05-14-01342-CV

A nasty Zillow review of a real estate agent prompted a defamation lawsuit, which these days pretty much inevitably leads to a motion to dismiss under the Texas Citizens’ Participation Act. In this instance, the agent had listed the seller’s house as “temporarily off market” instead of “active.” The Collin County trial court denied the seller’s motion to dismiss, but the Dallas Court of Appeals reversed. The seller’s claim that the agent had listed the house as being off market for “over 100 days” was incorrect, but the Court held that the falsity of that statement was immaterial because the agent had actually listed the property that was for 64 days instead. The plaintiffs also failed to establish that listing the house as off market was in accordance with the seller’s instructions, as her complaint that she “did not want her property shown” was not the equivalent of asking it to be listed as “temporarily off market.” Finally, the plaintiffs could not base their defamation case on the seller’s statement that the agent was “incompetent, mentally unstable, or raging from rejection” because those were non-actionable statements of opinion. The Court therefore rendered judgment for the defendant and remanded for a determination of her costs and recoverable attorney fees.

Ruder v. Jordan, No. 05-14-01265-CV

Readers may recall the recent dust-up over a collection of movie posters held by an auction house. In a new case, the disputed collection consists of Broadway theater window cards, which a Texas resident had shipped to an Internet reseller in Vermont. The owner filed suit in Dallas, alleging the reseller had breached the parties’ oral contract by failing to pay him for the cards sold, failing to return the unsold cards to him, and failing to safeguard the cards. The defendants filed a special appearance, which the trial court granted and the Court of Appeals affirmed. Although the primary defendant had made payment to the plaintiff in Texas, an agreement to make payments in the forum state does not weigh heavily in the “calculus of [minimum] contacts.” Although there were multiple conflicts in the parties’ accounts of their dealings, the Court of Appeals deferred to the trial court’s resolution of the factual discrepancies, and the remaining, undisputed facts did not demonstrate purposeful availment of Texas as a forum for the transactions at issue.

Klug v. Wickert, No. 05-14-00080-CV

A premises liability case between tenant and landlord highlights a potential problem in obtaining a proper waiver of trial by jury. Concerned that the jury would be unable to understand the pro se defendant’s broken English, the trial court first requested a translator. After being informed that no translator would be available for another week, the court continued the trial, then asked the defendant whether he would agree to waive a jury. The defendant agreed, but was not asked to confirm his waiver a week later when the case proceeded to a bench trial with the aid of an interpreter. The trial court awarded $70,000 in damages to the plaintiff. On appeal, the defendant (now also represented by counsel) argued that the jury waiver was invalid because it was made before he had obtained the services of the court-appointed interpreter. The Court of Appeals agreed, holding once the trial court has exercised its discretion to appoint an interpreter, the defendant was entitled to have that interpreter for all purposes, including the decision whether to waive his constitutional right to a jury trial. Without the interpreter, the Court of Appeals could not conclude that the defendant had knowingly waived that right.

Trejo v. Huy, No. 05-14-00310-CV

In this case involving corporate infighting, the defendant filed a third-party claim against Troy Brown.  Mr. Brown filed a special appearance asserting that the court did not have personal jurisdiction, which the trial court denied.  Mr. Brown appealed.

The Court of Appeals reversed, determining that Brown did not have minimum contacts with Texas such that he was subject to personal jurisdiction here.  The Court specifically found that several emails Brown sent to people in Texas did not “constitute a contact demonstrating purposeful availment.”

Brown v. Pennington

While we’ve skipped blogging about most of the Dallas Court of Appeals’ forcible detainer cases — long story short, lenders routinely evict residents when the mortgage hasn’t been paid — this one is not exactly routine. The trial court awarded possession of a Burger King restaurant to the landlord, Huge American Real Estate after the tenant remodeled the restaurant without obtaining Huge American’s consent. The Court of Appeals sustained the trial court’s finding that the remodel was a material breach of the lease agreement, holding that Fritz Management’s continued payment of rent did not obviate the contractual requirement of consent to any renovations.

Fritz Mgmt., LLC v. Huge Am. Real Estate, Inc., No. 05-14-00681-CV

Bruce Bernstein wrecked his Porsche, then sued his insurer for violations of the Insurance Code and DTPA. An appraiser valued the car at $4900, and Safeco had tendered a check for $5287.50. The trial court granted summary judgment for Safeco, and the Court of Appeals affirmed. Bernstein could not recover under the prompt payment provisions of the Insurance Code because Safeco had timely paid the appraisal award, nor could he recover for bad faith because he did not appeal the adverse judgment on his breach of contract claim. Bernstein also could not recover on his fraud claim because he could not identify any misrepresentation by Safeco that would have led him to believe the insurer would cover “the true value of the car,” which he apparently claimed to be “the investment he made to the Porsche beyond the basic value of the car.”

Bernstein v. Safeco Ins. Co. of Ill., No. 05-13-01533-CV

Jacque Evans and her new husband, Guy Gilliland, formed Nine Syllables, LLC for the purpose of purchasing a note signed by Jacque and her previous husband, Gary Evans. When Jacque and Gary divorced, the note went into default, and the lender sought to foreclose. Jacque joined the lender to the divorce proceeding to enjoin the foreclosure sale, arguing (based on law that has since been amended) the note was an impermissible lien against the homestead, and that the penalty for an illegal lien was forfeiture of all principal and interest due under the note. In the meantime, the lender filed a separate lawsuit against Jacque for payment of the note, and she took the same position in that case. The divorce case eventually settled, with Jacque taking the alleged homestead and Gary assuming liability for the note. The collections case also settled, with Nine Syllables agreeing to purchase the note from the lender. Nine then sought to collect on the note from Gary, despite Jacque’s consistent position in the previous lawsuits that it was illegal and unenforceable. After a bench trial, the trial court agreed with Gary that Nine’s claim was barred by judicial estoppel, and the Court of Appeals affirmed. Although Nine Syllables had not been a party to the previous lawsuits, Jaque was in privity with Nine and had consistently testified and argued that the note was unenforceable.

Nine Syllables, LLC v. Evans, No. 05-13-01677-CV

Former GOP Senate candidate Chris Mapp sued the Dallas Morning News for defamation after it published an editorial stating Mapp had told the editorial board “that ranchers should be allowed to shoot on sight anyone illegally crossing the border on their land, referring to such people as ‘wetbacks,’ and called the president a ‘socialist son of a bitch.'” Mapp claimed that the “shoot on sight” comment had been taken out of context because he had actually said ranchers should be permitted to shoot when they were in “fear for their life” or in defense of property, the same as anybody else. The News filed a motion to dismiss under the TCPA, but the 30-day statutory period after the hearing passed without a ruling by the trial court. That caused the motion to be overruled by operation of law, and the newspaper perfected an interlocutory appeal. The trial court then issued an order granting the motion to dismiss, albeit outside the prescribed time period.

This raised two questions for the Dallas Court of Appeals: What was the effect of the late-issued dismissal order, and should the case have been dismissed on the merits in any event? As to the first question, the Court held that the untimely dismissal order was a nullity. On the merits, the Court held that Mapp (who was a public figure) had not met his prima facie burden of showing that the newspaper had published the allegedly defamatory statements with constitutional malice. Paraphrasing or deliberately altering another person’s words does not establish actual malice unless there is evidence the defendant misinterpreted the remarks on purpose or in circumstances so improbable that the mistake could only have been recklessly. The Court concluded that the newspaper’s paraphrase of the statements Mapp had made in his tape-recorded interview was a rational interpretation of what he had said, and Mapp had not submitted any evidence to contradict the reporter’s affidavit explaining his subjective intent. The Court of Appeals therefore concluded that the trial court had erred by allowing the motion to dismiss to be overruled by operation of law, rendered judgment that Mapp’s case be dismised, and remanded to the trial court for a determination of the DMN’s costs, fees, and other recoverable expenses.

The Dallas Morning News, Inc. v. Mapp, No. 05-14-00848-CV

A long-running suit over a 1999 contract for the sale of a house resulted in a mistrial, followed by cross-motions for death penalty sanctions. The seller sought sanctions for discovery abuse and fraud, while the buyer claimed the seller had testified falsely at trial. The trial court granted both motions, striking everyone’s pleadings. Both sides appealed, and the Court of Appeals reversed and remanded. As to the buyer, the trial court had not considered the availability of lesser sanctions, and the fabrication of one construction estimate did not give rise to a presumption that other claims not based on that document were meritless. As to the seller, the death penalty sanction was disproportionate to the seriousness of the offense. The seller had testified that she paid a property tax bill with a credit card when records showed it was actually paid with cash and a check. Although the trial court found that misstatement was intentional, the Court of Appeals did not consider the discrepancy to be material enough to warrant the striking of her entire case.

Kim v. Hendrickson, No. 05-13-01024-CV

The U.S. Supreme Court may be poised to decide the validity of same-sex marriage bans nationwide, but the Texas Supreme Court has managed to have its voice heard to declare that it doesn’t have anything to say. Because the State of Texas was too late in seeking to intervene in a same-sex divorce, the Supreme Court held (5-3) that it could not appeal that decree. Justice Willett authored the lead dissent, which would have had the Court address the matter on the merits, while Justice Devine dissented on the merits of same-sex marriage under Texas law. So with that out of the way, everyone can turn their eyes back to 1 First St., NE.

State v. Naylor

Boyd concurrence

Willett dissent

Devine dissent

A memorandum opinion setting aside a default judgment highlights one of the more forgiving standards for obtaining a new trial. FelCor/CSS Holdings sued Culinaire of Florida for failing to indemnify it in two personal injury suits. Culinaire received a courtesy copy of the lawsuit and put its insurer on notice. The insurer in turn hired defense counsel. But when the actual citation arrived, Culinaire’s CFO somehow forgot to forward it to the company’s insurance agent. Culinaire moved for a new trial under the familiar Craddock factors, but the trial court denied the motion. The Court of Appeals reversed and remanded, holding that losing paperwork is precisely the kind of “accident or mistake” that negates “conscious indifference” to the lawsuit.

Culinaire of Florida, Inc. v. FelCor/CSS Holdings, LP, No. 05-14-00832-CV

After a jury awarded millions of dollars in damages and the Court of Appeals affirmed, the defendants in that case decided to become plaintiffs by suing their lawyers at Andrews Kurth. The county court at law granted summary judgment for the defendants, and the Dallas Court of Appeals affirmed. In a malpractice case based on an attorney’s conduct in connection with litigation, the plaintiff has to demonstrate that it would have prevailed in the prior case but for the lawyer’s negligence. Concluding that the plaintiffs’ proof on that point was conclusory and speculative, the Court held that there was no evidence in the summary judgment record to establish causation of any injury to the plaintiffs.

Rogers v. Zanetti, No. 05-14-00733-CV

Three of four defendants filed motions to dismiss under the Texas Citizens Participation Act, all of which were granted by the district court. The plaintiffs sought interlocutory review of those rulings, but the Dallas Court of Appeals concluded that it did not have jurisdiction to review the rulings. Because the claims against the fourth defendant were still pending, there was no final, appealable judgment in the case. Under the 2013 version of CPRC § 51.014(a)(12), only orders denying a TCPA motion to dismiss are subject to interlocutory appeal, and the current version of the TCPA itself only authorizes interlocutory appeals when the motion has been overruled by operation of law due to the trial court’s failure to rule within 30 days. The plaintiffs will therefore have to wait until final judgment before appealing the TCPA dismissals.

Horton v. Martin, No. 05-15-00015-CV

A car fell on David Fusaro at the house of his friend, Christopher Becherer. The car was owned by Becherer’s mother, and the pair were working on her brakes. Becherer’s homeowner’s insurer denied coverage, relying on an exclusion for injuries “arising out of the ownership, maintenance, operation, use, loading or unloading of: Motor or engine propelled vehicles or machines designed for movement on land . . . which are owned or operated by or rented or loaned to an insured.” After Fusaro obtained a $1.1 million judgment, Becherer assigned his coverage claim to Fusaro, who lost the coverage case on summary judgment. Fusaro argued that Becherer’s mother’s case was not “owned or operated by or rented or loaned to” Becherer, but the Court of Appeals affirmed. Construing the words in light of their ordinary meaning, Becherer’s mother had loaned the vehicle to her son, and he was operating the vehicle by performing ordinary acts of maintenance on it.

Fusaro v. Trinity Universal Ins. Co., No. 05-14-00481-CV

For 15 years, Steven Anderson was a route driver for Greenville Automatic Gas Co. Anderson quit and went to work for Automatic Propane Gas & Supply, leading Greenville to invoke an employment agreement that it claimed included both a a covenant not to compete and a nonsolicit provision. Anderson and Automatic Propane sued for a declaratory judgment, alleging (after a series of amendments to the pleadings) that Anderson had only signed a shorter contract that contained neither of the terms claimed by Greenville. The jury found that Anderson has not agreed to the terms claimed by Greenville and awarded him approximately $75,000 in attorney fees. The Dallas Court of Appeals reversed, holding that Anderson and Automatic Gas could not dispute the validity of Greenville’s contract because they had failed to timely file a verified pleading denying its validity, as required by TRCP 93. The Court of Appeals also affirmed summary judgment against Greenville on its tort-based counterclaims and remanded the case for further proceedings.

Greenville Automatic Gas Co. v. Automatic Propane Gas & Supply, LLC, No. 05-13-01405-CV

The builder of a nursing facility sued the City of Kemp for breach of contract and con-tort claims, alleging that the city had failed to honor a tax abatement deal agreed upon before construction. The city promptly obtained dismissal of the case on grounds of governmental immunity. On appeal, the builder’s first issue claimed that “the concept of governmental immunity — even if not otherwise specifically waived — simply does not apply to the proprietary actions that form the basis of [the builder’s] claims.” The Court of Appeals disagreed. While a municipality is not immune from torts committed in the performance of “proprietary functions,” the assessment and collection of taxes is a quintessentially governmental function.

Douglas v. City of Kemp, Texas, No. 05-14-00475-CV

Among other issues in this case, the Court reversed the trial court’s award of $15,000 in attorney’s fees on summary judgment.  The moving party submitted an affidavit that $53,714 was the reasonable amount of fees for the legal services rendered, but the opponent submitted an affidavit in which their expert stated that a reasonable fee would be no more than $15,000.  Because neither party offered uncontroverted evidence of an amount certain, the trial court improperly made a factual finding in awarding $15,000 in fees.

Myers v. HCB Real Holdings, LLC

In this insurance fraud case, the Court of Appeals rejected the insured argument that the insurer could not have relied on fraudulent representations as a matter of law because the insurer conducted its own investigation into the claim.   The Court found that the plaintiff could show reliance because the defendant had undertaken a “systematic campaign to hinder or hamper the investigation” by, among other things, “covering up the physical evidence that the roof was not damaged when or as [the defendant] claimed, by directing employees to lie to [the insurer’s] claims specialist, and by creating fraudulent invoices to support his claimed cost of repair.”

Fulgham v. Allied Prop. & Cas. Ins. Co.

After obtaining a judgment against the guarantor of a $250,000 debt, plaintiff Elexis Rice sought a turnover order for certain intangible items of property, including internet domain names and website registrations using the name “cre8stone.” Cre8 International — which was not the judgment debtor — appeared in court to contest the turnover, contending that the domains were its own property. The trial court concluded otherwise, and the Court of Appeals affirmed that aspect of the turnover order. Although a trial court cannot ordinarily adjudicate third parties’ ownership rights in a turnover proceeding, the appearance of that third party in court rendered it subject to the trial court’s ruling on the matter. However, Cre8 managed to retain its email addresses and telephone number, as there was no evidence in the record showing that they were actually owed by the judgment debtor.

Cre8 Int’l, LLC v. Rice, No. 05-14-00377-CV

In this post-judgment litigation, the plaintiff sought to collect on a judgment against the defendant.  During the course of the litigation, the plaintiff filed pleadings and made assertions that the defendant felt were false.  Consequently, the defendant successfully moved for sanctions under Chapter 10 of the Texas Civil Practice and Remedies Code.

The plaintiff appealed and raised nearly every possible argument for overturning the sanctions award, but the Court of Appeals rejected them all, affirming the award.

Powell v. Penhollow, Inc.

One of the questions appellate lawyers get from time to time is “What’s our deadline to file for mandamus?” The answer is that there is no formal deadline under the rules, but if you wait too long you may end up waiving your right to mandamus. A short opinion from the Dallas Court of Appeals exemplifies the latter principle. On June 6, 2014, the county court at law granted a motion for new trial. On May 27, 2015, a mandamus petition was filed, seeking to require the trial judge to explain its reasons for setting aside the jury verdict and granting a new trial. With the new trial now scheduled for July 8, the Court of Appeals held that the unexplained delay of almost one year to challenge the new trial ruling was too long to justify mandamus relief.

In re Stembridge, No. 05-15-00672-CV

One of the messiest cases in recent memory has resulted in a 79-page opinion and judgment that disposes of the case in almost every way imaginable: “Our decision in this case is to vacate, in part, affirm, in part, dismiss, in part, and reverse and remand to the trial court, in part.” The case arose out of a lease executed by Fitness Evolution, its subsequent acquisition by Headhunter Fitness, a series of personal guarantys, assignments, representations, and just about everything else one might find in a bar exam essay question. Since this one pretty much defies summary, we will instead report that while summary judgment was affirmed on some claims, the end result is that most everybody involved will be remanded to the Collin County trial court for additional proceedings.

Fitness Evolution, LP v. Headhunter Fitness, LLC, No. 05-13-00506-CV

A surveying company named TBE Group contracted with a competing surveying company, Lina T. Ramey & Associates, to locate utility lines for transportation and construction projects. After one lawsuit, the parties entered into a “Strategic Alliance Agreement” that would govern their ongoing relationship. But Ramey did not generate the amount of business required by the agreement, and the parties sued one another for breach of contract. The trial court granted TBE’s motion for summary judgment and the Court of Appeals affirmed, holding that Ramey had failed to come forward with more than a scintilla of evidence that it had fulfilled its part of the contract. Although Raney’s summary judgment affidavit referenced checks that were supposed to demonstrate Raney’s performance, the checks were not attached to the affidavit. That failure rendered the affidavit conclusory and of no evidentiary value.

Lina T. Ramey & Assocs., Inc. v. TBE Group, Inc., No. 05-13-01711-CV

A settlement agreement between two groups of real estate partners released all of the parties claims in connection with two named lawsuits, but did not include any release for a third lawsuit. The third case proceeded in litigation for another two years before the defendants decided that the plaintiffs’ decision to continue the lawsuit was a breach of the prior settlement agreement. So the defendant filed a fourth lawsuit for declaratory judgment, breach of contract, and related tort claims. On the first day of trial in lawsuit #4, the court ruled that the settlement agreement did not include the third lawsuit, then granted directed verdict on all of the plaintiff’s claims. The Court of Appeals affirmed, holding that the settlement language unambiguously referred  to lawsuit #1 and # 2, not to lawsuit #3.

Mikob Props., Inc. v. Joachim, No. 05-13-01613-CV

On Thursday, Progressive Insurance filed a mandamus petition complaining that the trial court has not ruled on its motion to allow the late designation of a medical expert. On Friday, the Dallas Court of Appeals denied mandamus, holding that there was nothing in the record demonstrating that the trial court did not intend to rule on the matter before trial. Trial is set to commence today.

In re Progressive County Mut. Ins. Co., No. 05-15-00622-CV

Homeowner Sheila Larry failed to pay her HOA fees.  Eventually, the HOA took legal action to collect the unpaid dues.  Like most HOA fees, they were secured by a contractual lien on Ms. Larry’s property.  The HOA successfully moved for summary judgment, but the trial court refused to order foreclosure of the lien, and the HOA appealed.

Reversing the trial court, the Dallas Court of Appeals reasoned that the “purchase of property within a deed restricted subdivision carries with it the obligation to pay association fees,” and “the remedy of foreclosure is an inherent characteristic of that property right” — even if it may seem harsh.

Gateway Estates HOA v. Larry

A series of oil and gas investments led to a lawsuit between BV Energy Partners and Richard Cheatham, the managing member of their jointly owned company, Tsar Energy II, LLC. Although Cheatham was initially required to work exclusively for Tsar II, that exclusivity provision was eliminated after the company had languished with only one investment made in three years. Cheatham continued to bring oil and gas opportunities to BV, and also made his own acquisitions, but the parties made no further investments were made through Tsar II. Cheatham’s investments proved to be far more lucrative than BV’s, which led BV to sue Cheatham for breach of fiduciary duty. The jury rejected those claims, and the Court of Appeals affirmed. The Court held that there was no charge error in asking the jury to consider whether the parties had formed a partnership to invest in “all” deals (as opposed to “any”) that Cheatham had an opportunity to acquire in the Marcellus Shale. The Court held that was a proper instruction because the justice’s review of the evidence and arguments at trial showed that BV had tried the case on an all-or-nothing theory.

BV Energy Partners, LP v. Cheatham, No. 05-14-00373-CV

The Texas Citizens Participation Act is becoming a powerful tool for disposing of certain types of lawsuits at an early stage of litigation, but an opinion from the Dallas Court of Appeals recognizes two important limits to the TCPA’s scope. Travis Coleman sued his former employer, ExxonMobil Pipeline, and two former supervisors for defamation and related claims. Coleman contended that the defendants had lied about his alleged failure to measure the level of fluid in a chemical holding tank, which led to his dismissal. The trial court denied Exxon’s motion to dismiss under the TCPA, and the Court of Appeals affirmed.

The Court of Appeals first relied on the Texas Supreme Court’s recent holding in Lippincott v. Whisenhunt (4/25/15) to reject Coleman’s argument that the TCPA did not apply because the speech was purely private. Nevertheless, the Court held that the allegedly defamatory statements did not involve a “matter of public concern” because their contents related to Coleman’s private job performance, not health, safety, the environment, or Exxon’s economic interests. The fact that the potential consequences of Coleman’s alleged failure to check the tank included health, safety, environmental, and economic concerns was not enough to transform the statements into a matter of public concern. The Court also rejected Exxon’s argument that the TCPA applied on free association grounds, holding that communications made in the context of free association had to involve some sort of public or citizens’ participation to fall under the TCPA.

ExxonMobil Pipeline Co. v. Coleman, No. 05-14-00188-CV

Heritage Auctions held a number of items owned by Movie Poster House, Inc. and one of its owners, William Hughes. Hughes owed Kenneth Mauer over $600,000 that was secured by Hughes’ collectibles, and Mauer filed an application for writ of garnishment against Heritage. While that case was pending, Movie Poster House intervened, seeking an accounting to determine which items were owned by Hughes personally and which were owned by MPH. Because MPH’s consignment agreement contained an arbitration provision, the matter was compelled to arbitration. MPH later sought to amend its statement of claims to add additional causes of action for damages, but the arbitrator denied leave to file on the basis that the filing was untimely. The arbitrator ruled in favor of MPH on the original claims, and the trial court subsequently granted summary judgment for Heritage when MPH sought to re-file its additional claims in court. The Court of Appeals affirmed. Because MPH failed to appeal the arbitration award directly, it could not complain about the arbitrator’s decision to deny leave to amend. And because those additional claims arose out of the same set of facts as the claims that were addressed in arbitration, they were barred by res judicata.

Movie Poster House, Inc. v. Heritage Austions, Inc., No. 05-14-01260-CV

The Dallas Court of Appeals has now joined two other Texas appellate courts in holding that “A post-verdict motion requesting attorney’s fees filed before the entry of a final judgment is a sufficient pleading to support an attorney’s fee award.” The Court also disposed of the appellant’s argument that a $50,000 fee award was unreasonable because it far exceeded the $11,000 in damages found by the jury, holding that the issue was waived by failing to request a reporter’s record of the hearing.

Nisby v. Dentsply Int’l, Inc., No. 05-14-00814-CV

A year before trial, Investment Retrievers filed a business records affidavit and attached business records in a suit to recover on an assigned credit card debt. The trial court rendered judgment over the debtor’s objection that the business records affidavit was inadmissible because it was made by a third party. On appeal, new counsel argued that the judgment was not supported by evidence because the business records affidavit was not included in the clerk’s record. That deficiency was quickly cured through the filing of a supplemental clerk’s record, and the Court of Appeals defendant had failed to preserve other arguments by not objecting at the trial court or by not briefing them on appeal.

Parks v. Investment Retrievers, Inc., No. 05-14-00024-CV

In August 2013, the Dallas Court of Appeals held that “viatical settlements” — basically, interests in bought and resold life insurance policies — were securities within the scope of the Texas Securities Act. Likely because of a conflict between that holding and a previous case out of the Waco Court of Appeals, the Supreme Court granted the petition for review and set the case for oral argument. This morning, the Supreme Court unanimously affirmed the Dallas court’s opinion, finally confirming that the trial court had erred in granting summary judgment for the defendants. The case was remanded for further proceedings, presumably including trial on the merits.

Life Partners, Inc. v. Arnold, No. 14-0122

A 1999 divorce decree required Molly Brizendine to pay a $14,477 debt the she and her ex-husband owed to Texans Credit Union. In 2013, Texans sued Richard Brizendine for the balance of the outstanding line of credit. The county court at law granted judgment for the ex-husband, but the Dallas Court of Appeals reversed and rendered. Although it was Molly who had continued to take advances on the line of credit long after the divorce was final, Richard was still liable for the debt because he had signed the original contract as a co-borrower. The Court held that it was “well-settled that a court in a divorce action has no power to disturb rights that creditors lawfully hold against the parties.”

Texans Credit Union v. Brizendine, No. 05-13-01422-CV

Wells Fargo obtained a judgment against Charles Paschall and then sought to collect by garnishing an investment account Paschall held at U.S. Trust. U.S. Trust opposed the garnishment, asserting that the funds it held were subject to a properly perfected security interest held by Inwood National Bank. Inwood then intervened to protect its lien interest in the account. The trial court ultimately ruled that Wells Fargo’s judgment lien trumped Inwood’s security interest and awarded the funds to Wells.

Inwood appealed. The issue before the Dallas Court of Appeals was whether Inwood lost its priority over Wells Fargo by executing a new promissory note with Paschall several months after Wells Fargo recorded its judgment lien. Under Texas law, if this new obligation were considered an “advance” as opposed to a renewal or extension of an existing indebtedness, then Inwood would lose its priority. Relying on several cases interpreting the UCC, the Court determined that the new promissory note was not an advance, reversed the trial court’s ruling, and held that Wells Fargo was not entitled to garnish the funds.

Inwood Nat’l Bank v. Wells Fargo Bank, N.A.

An insurance coverage dispute highlights a key requirement of the venerable mailbox rule — namely, that it doesn’t apply when the filing party (in this case, both pro se and temporarily incarcerated) does not affix sufficient postage to have his summary judgment response delivered by the postal service. In the absence of a properly filed response, the Court of Appeals held that the trial court had correctly granted the insurer’s traditional and no-evidence motions for summary judgment.

Wilson v. Colonial County Mut. Ins. Co., No. 05-14-00220-CV

Update: We did it again!

In February and again in March, the Dallas Court of Appeals held that appellate courts will not conduct merits-based review of orders granting a new trial following bench trials. In a very short opinion denying mandamus review, the Court has now extended that holding to orders granting new trial following entry of a default judgment. So unless the Texas Supreme Court weighs in, it appears that the only new trial orders subject to mandamus review under In re Columbia Medical Center will be those that follow jury trials.

In re Klair, No, 05-15-00462-CV

The owners of a company that owned and operated three ASI Gymnastics centers attempted to effectuate a business divorce via a Rule 11 agreement calling for the appointment of a panel of appraisers. A dispute ensued over how the appraisers were to do their work, and that led the parties back to the courthouse to sort out the terms and enforceability of the Rule 11. The trial court ruled that the agreement was valid, and the Court of Appeals affirmed. While the plaintiffs argued that the agreement lacked essential terms as to the interest rate and payment period for the buyout, the Court of Appeals held that the agreement itself (represented in a series of email exchanges between the attorneys) stated that those terms were not the “heart of the proposal,” and the rest of the terms were indeed agreed upon. (Notably, the buyout funds were actually tendered as a lump sum, rendering the interest rate and payment terms moot.) The Court also rejected the plaintiffs’ contention that the Rule 11 was unenforceable because it was not manually signed, ruling that they had not timely objected that the electronic signature blocks on the emails were invalid as signatures for a Rule 11 agreement. However, the Court reversed and rendered an award of attorney fees in favor of the defendants, concluding that the dispute was already before the trial court when the defendants filed a declaratory judgment counterclaim that they had validly complied with the Rule 11 agreement.

Crews v. DKASI Corp., No. 05-14-00544-CV

The owner of “$8,074.68 in United States currency, forty ‘8 liner’ machines, three Walmart gift cards, and miscellaneous paperwork” appealed a judgment of civil forfeiture, challenging the admissibility of the search warrant affidavit that led to the property’s seizure. That police officer’s affidavit was “replete with hearsay,” but the Court of Appeals found that to be no impediment to the validity of the affidavit. Citing a string of Court of Criminal Appeals and Dallas Court of Appeals cases, the Court held that in presenting the facts to support a search warrant, police officers are permitted to rely on the observations of other persons. And because the affidavit had already been relied upon as probable cause by the magistrate who issued the search warrant, the burden was already shifted to the owner to show cause why the property should not be forfeited or destroyed. Thus, as the Court of Appeals memorably states it, “the State did not have a burden to show probable cause at the show cause hearing.”

$8,074.68 in United States Currency v. State, No. 05-13-01502-CV

The United Food & Commercial Workers Union sought to collectively bargain on behalf of the employees of the Texoma Area Paratransit Systems, a rural transit district. TAPS sued for a declaratory judgment that, as a government subdivision, it was prohibited from collectively bargaining by Chapter 617 of the Texas Government Code. A Grayson County trial court granted summary judgment for TAPS and (more than a year later) awarded its attorney fees. The Dallas Court of Appeals affirmed, rejecting the union’s claim that TAPS’s declaratory judgment action was preempted by federal labor law. Despite 12 years of collective bargaining between TAPS and the union, state law still prohibited collective bargaining with a government entity, and that meant that TAPS was indeed entitled to summary judgment on the issue.

United Food & Commercial Workers Union Local 1000 v. Texoma Area Paratransit Sys., Inc., No. 05-12-01556-CV

Banco Popular appealed from an agreed final judgment of garnishment for over $900,000 of its account holder’s money. The same day the court signed that agreed judgment, the bank moved for a new trial on grounds that it was not indebted to the account holder after all. The trial court denied the motion for new trial, and the Dallas Court of Appeals affirmed. The Court first held that Craddock factors did not apply because it was an appeal from an agreed judgment instead of a default. The Court also shut down a pair of creative arguments, holding that trial courts are not required to explain their reasons for denying a new trial, and that they are not required to hold an evidentiary hearing before entering an agreed judgment.

Banco Popular N. Am. v. Am. Fund US Invests. LP, No. 05-14-00368-CV

Under Rule 329b of the Texas Rules of Civil Procedure, the trial court loses its plenary power over a default judgment thirty days after it is signed.  An exception to this 30 day rule is when a party fails to receive notice within 20 days of the signing of the judgment.  In this case, the defendant sought to have a default judgment set aside, alleging that he did not receive notice of the judgment until the 98th day after it was rendered.  The trial court granted his motion and vacated the default judgment.

The Court of Appeals, however, granted the defendant’s mandamus petition, because under Rule 306a(4), “a party who does not have actual knowledge of an order of dismissal within 90 days of the date it is signed cannot move for reinstatement.”

In re Intergas Capital Recovery LLC

The Texas Commission on Human Rights Act preempts many employment-related claims in favor of the TCHRA’s own available remedies. In this case, an employee sued her employer, Steak N Shake, for common law assault after her supervisor committed an act of sexual assault. Because the gravamen of the plaintiff’s “unwanted offensive touching” claim was for sexual harassment, the Court of Appeals followed Texas Supreme Court authority in holding that the common law assault claim was preempted by the TCHRA. The Court also rejected the employee’s claim that the claim did not sound in harassment because it involved only a single incident. The Court therefore affirmed summary judgment for the employer.

B.C. v. Steak N Shake Ops., Inc., No 05-14-00649-CV

Is a party seeking to set aside an arbitration award entitled to take discovery from her opponent’s attorneys and the arbitrator in order to establish a claim of evident partiality? The answer from the Dallas Court of Appeals is a partially qualified yes. Dolores Rodas sued her employer, La Madeleine, for personal injuries sustained during her employment. The case was compelled into arbitration, and the arbitrator issued a take-nothing award in favor of La Madeleine. Rodas moved to set aside the result on the basis of the arbitrator’s evident partiality, claiming that he had failed to disclose two subsequent times he had been appointed as arbitrator in cases involving La Madeleine’s law firm. The trial court confirmed the arbitration award, but the Court of Appeals reversed and remanded. Assuming, without deciding, that Texas law requires a party to make some evidentiary showing of grounds to challenge the arbitration result before discovery is permitted, the Court of Appeals held that Rodas had met that threshold and was therefore entitled to take depositions in support of her claim of evident partiality.

Rodas v. La Madeleine of Tex., Inc., No. 05-14-00054-CV

A short opinion appears to stand for the proposition that mandamus will not issue to prevent the deposition of a lawyer for one of the parties in the litigation because the appellate court can only speculate what questions might be asked of the attorney. The opinion relies on a pair of cases from the Houston [1st] and Corpus Christi Courts of Appeals that held the future possibility of questions being asked on privileged topics does not justify the prior restraint of barring the deposition altogether. It should be noted that the witness here was apparently involved in the facts underlying the plaintiff’s claims, and that the district judge’s order did provide at least a broad definition of the proper scope of inquiry (although neither caveat is included in the Court of Appeals’ opinion).

In re Hydroscience, Inc., No. 05-15-00366-CV

In this simple breach of contract case, the defendant agreed to pay the plaintiff approximately $8,000 through installment payments of $75 per month.  After paying $2,500, the defendant stopped making the monthly payments and the plaintiff brought this lawsuit.  After a trial, a jury awarded the plaintiff the remaining balance on the contract–just over $5,500.

The Dallas Court of Appeals affirmed the jury’s findings, but remitted the damages award to $1,200 because there was no acceleration provision in the contract and the evidence only established that the defendant had failed to make a total of sixteen payments.  The Court reasoned that absent an acceleration clause or a repudiation, the defendant was only entitled to recover the past due payments under the installment agreement, not the entire remaining balance. Consequently, the Court ordered a remittitur.

Eoff v. Central Mut. Ins. Co.

By local ordinance, the City of Plano permits the owner of a billboard that pre-existed the city’s current territorial limits to repair the sign if it becomes “dilapidated and deteriorated.” The owners of one such sign near Highway 75 sued the city after their request to repair the sign after the sign and all but one of its five supporting beams were blown over in a storm. The city refused, arguing that the sign was “destroyed,” not dilapidated and deteriorated. The Court of Appeals disagreed, noting that the ordinance did not contain the word “destroyed,” and that its definition of “dilapidated and deteriorated” included broken support members. The Court ruled against the sign owners on their temporary regulatory taking claim, however, citing recent Texas Supreme Court authority that the pendency of a civil-enforcement procedure, by itself, does not give rise to a taking.

CPM Trust v. City of Plano, No. 05-14-00104-CV

In this products liability case, a distributor of latex gloves sought statutory indemnity from the manufacturer of those gloves.  The Court of Appeals found that the manufacturer was liable under Section 82.002 of the Texas Civil Practice and Remedies Code to the distributor for litigation costs expended in defending two products liability lawsuits related to the gloves brought by healthcare workers because those expenses were “related to” the manufacturer’s gloves, even though other manufacturer’s gloves were at issue in the lawsuit.

United Med. Supply Co. v. Ansell Healthcare Prods., Inc.

The plaintiffs defaulted on their mortgage and were then removed from the house via a forcible detainer action filed in Collin County.  They appealed, arguing that the trial court erred by admitting as a business record several notices of eviction sent to them in the mail.  The plaintiffs’ primary argument was that the witness who laid the foundation through an affidavit was not qualified.  The Dallas Court of Appeals disagreed, noting that “Rule 803(6) does not . . . require a witness laying the predicate for introduction of a business record to be the creator of the document or even an employee of the company keeping the record.” All that is required is that he/she have personal knowledge of the facts contained within the business record.

Singha v. FNMA

Last summer, the Dallas Court of Appeals rendered judgment in favor of television reporter Brett Shipp on a motion to dismiss under the Texas Citizens Participation Act. The plaintiff in that case, Dr. Richard Malouf, is back in the Court of Appeals with another pair of defamation cases involving the TCPA. This time, Malouf and his wife sued AOL, Inc. and its reporter for publishing an allegedly defamatory story concerning a backyard water park being built while Malouf was “charged” with millions of dollars in Medicaid fraud. Malouf claimed that was defamatory because he had never been “charged” with fraud in any criminal proceeding.

Because the statements related to matters of public concern — namely, allegations of defrauding taxpayers and the provision of dental services to the public — the TCPA shifted the burden to the Maloufs to establish a prima facie case for each element of the defamation claim by clear and specific evidence. The Court of Appeals held that they had failed to do so. Because the defendants were acting as members of the media, the Maloufs had to prove that the statements were actually false. The Court of Appeals held that the words “charged” and “stolen’ did not improperly suggest criminal charges or activity when Malouf had been sued under civil law for the alleged conduct several times. Therefore, a person of ordinary intelligence would not perceive the article’s claims to be more damaging to Malouf’s reputation merely because the article omitted to distinguish between civil and criminal proceedings. The Court of Appeals reversed and rendered in favor of AOL, affirmed dismissal as to the reporter, and remanded to the trial court for determination of AOL’s attorney fees and expenses.

AOL, Inc. v. Malouf, No. 05-13-01637-CV

The Texas Citizens’ Participation Act continues to be a powerful tool in certain types of commercial cases. In this instance, the publisher of Petroleum News Bakken managed to obtain and affirm a judgment of dismissal and attorney fees in a business disparagement and tortious interference case. The dispute arose out of a newspaper article that stated no records could be found for wells that Breitling Oil & Gas claimed to have drilled in North Dakota. The publisher moved to dismiss under the TCPA, which shifted the burden to the burden to the plaintiff to come forward with prima facie evidence of each element of its claims. Breitling responded with a notice of nonsuit, but that didn’t stop the trial court from moving forward with the hearing and awarding the defendant $88,444.58 in attorney fees and expenses. The Court of Appeals affirmed, holding that the nonsuit did not moot the pending motion to dismiss because the defendant had already made a “pending claim for affirmative relief” through its request for attorney fees and sanctions. The Court also rejected Breitling’s argument that the attorney fees should have been tried to a jury, noting that the record did not show that Breitling ever objected to the trial court making findings on the reasonableness of the fees awarded.

Breitling Oil & Gas Corp. v. Petroleum Newspapers of Alaska, LLC, No. 05-14-00299-CV

In this complex fraud case involving the purchase of a dry cleaning business, the Court of Appeal upheld the trial court’s granting of a directed verdict in the defendant’s favor because, among other things, the plaintiff did not identify a fraudulent statement.  The plaintiff alleged that, in the course of purchasing a dry cleaning business, the defendant purportedly asserted that the price offered to the plaintiff was “fair, reasonable, and supported by a valid appraisal.”  However, the court found that there was no evidence that the defendant made any such statement.  Indeed, the plaintiff testified that she did not negotiate the price of the business and was simply told that the price of $1.6 million was a take-it-or-leave-it number.

Kwik Indus., Inc. v. Rock Prairie Holdings, Ltd.

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

Bruning v. Hollowell

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

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

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

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

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

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

PlainsCapital Bank v. Martin (majority)

PlainsCapital Bank v. Martin (dissent)

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

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

Iroh v. Igwe

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

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

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

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

In re Dixon, No. 05-15-00242

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

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

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

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

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

Associated Air Ctr. LP v. Tary Network Ltd.

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

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

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

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

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

Manautou v. Ebby Haiilday Real Estate, Inc.

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

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

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

Hodges v. Rajpal

Ehring Enterprises and RD Management were both distributors of a French manufacturer’s skin-care products. Ehring’s exclusive distribution territory was the eastern U.S., while RD distributed product exclusively in the western U.S. After both distributors’ contracts had expired, RD sued Ehring for breach of contract due to sales it had made in RD’s territory. The trial court accepted RD’s argument that it was a third-party beneficiary of the agreement between Ehring and the French manufacturer. The Court of Appeals affirmed that ruling, noting that the sales RD complained of had begun while Ehring was still contractually obligated to stay out of RD’s sales territory.

Ehring Enters., Inc. v. RD Mgmt. Corp., No. 05-13-00711-CV

In this fraud and aiding and abetting breach of fiduciary duty case, the court addressed  the defendant’s no evidence motion for summary judgment.  The court held that the plaintiff had not properly responded to the no evidence motion because it merely stated the elements of the aiding and abetting claim in its response brief, without specifically “pointing out” any evidence to support the contention that the defendant “knowingly assisted” in the breach of fiduciary duty.  Although the plaintiff attached a “large amount of evidence” to its response, the court noted that the plaintiff’s response required specific references to the evidence that would support each element of the claim.

MaximusAlliance Partners, LLC v. Faber

Homeowners Nader and Fariba Daryapayma purchased a $1.5 million house and financed $735,000 of the purchase price with two loans secured by liens on the home.  Shortly thereafter, the Daryapaymas applied for and obtained a home equity loan from Countrywide for $937,500, the purpose of which was to pay off their current mortgage (i.e. the existing $735k loans).   Countrywide funded the home equity loan and the Daryapaymas used the proceeds  to pay off the first two loans.

A few years later, the Daryapaymas defaulted on the home equity loan.  Bank of New York Mellon (BONY), as the assignee of the loan, foreclosed on the Daryapaymas property and then filed a petition for forcible detainer.  The Daryapaymas counterclaimed, contending that the home equity loan violated the Texas Constitution, which limits the amount of home equity loans, when combined with existing mortgages, to 80% of a home’s fair market value.  The Daryapaymas argued that because the $937k home equity loan combined with their outstanding $735k mortgages exceeded 80% of the home’s value, the foreclosure was unenforceable.  The trial court agreed and granted the Daryapaymas summary judgment.

The Dallas Court of Appeals reversed, holding that because the loan documents reflected that the $937k home equity loan was made, in large part, to pay off the existing mortgages, the trial court erred in including the balance of those loans in its calculation of the total amount of indebtedness.

Bank of New York Mellon v. Daryapayama

Since In re Columbia Medical Center, 290 S.W.3d 204 (Tex. 2009), trial courts have been required to specify their reasons for granting a new trial, and the failure to do so has been subject to appellate review by way of mandamus. In a very short opinion arising out of a divorce case, the Dallas Court of Appeals has recognized a notable exception to that rule. When the trial has been to the court instead of a jury, the concerns about transparency in setting aside a jury verdict are not present. Thus, a trial court does not abuse its discretion in granting a new trial without explanation following a bench trial.

In re Foster, No. 05-15-00179-CV

In one of the last opinions of 2014, the Dallas Court of Appeals denied mandamus relief to VERP Investment LLC, which was seeking to overturn a trial court order requiring it to turn over a computer hard drive to a third-party forensic examiner. The Court denied mandamus because VERP had not included transcripts of the trial court’s hearings or a statement that no evidence was taken at them. That left the Court of Appeals unable to determine whether the trial court had abused its discretion in granting the motion to compel. But VERP persisted, filing a second petition that cured the original’s omissions, and that mandamus petition has now been conditionally granted.

On the merits, the Court of Appeals first noted that an order requiring direct access to an electronic device is burdensome because it is intrusive. Due to that intrusiveness, the party seeking direct access must establish via evidence that the opponent is in default of its discovery obligations. In this instance, however, the movant failed to come forward with any evidence, and “[m]ere skepticism or bare allegations” are not enough to warrant direct access to electronic devices. Therefore, the trial court abused its discretion, and the Court of Appeals directed it to vacate the order granting the motion to compel.

In re VERP Investment LLC (VERP II), No. 05-15-00023-CV

BB&T sought to collect a judgment against Brittania Construction by seeking to garnish funds held by an individual named Richard Heath.  BB&T claimed that Mr. Heath owed Brittania $178,000 that it was entitled to collect.

As it turns out, Mr. Heath also had a $185,000 unsecured obligation to a Trust that he had agreed to pay using the same funds BB&T sought to garnish.  The Trust sought to intervene to protect its interest in those funds, but the trial court granted the other parties’ motion to strike its intervention.  The Trust appealed.

On appeal, the Dallas Court of Appeals affirmed, holding that although Mr. Heath may owe the Trust money, the Trust could not “show ownership of or an equitable interest in the money held by Heath such that Trust was entitled to intervene in the garnishment action.”

Gregory B. Baten Trust v. Branch Banking & Trust Co.

In this suit to collect on a promissory note, the Court of Appeals found that the six-year statute of limitations to sue on a “negotiable instrument” did not apply because the note at issue was not, in fact, negotiable.  According to the Court, because the note represented a revolving line-of-credit, permitting the borrower to prepay all or any portion of the amount due without incurring any prepayment penalty, the note did not contain an unconditional promise to pay a sum certain for a fixed amount and was therefore non-negotiable.  Thus, the Court found that the six-year statute of limitations for negotiable instruments did not apply and affirmed the trial court’s decision.

Bank of Am., N.A. v. Alta Logistics, Inc.

In this negligent hiring case, the plaintiff bought a truck that she later discovered had been stolen.  The Court of Appeals upheld the trial courts grant of summary judgment in favor of defendants because the economic loss rule barred recovery of economic damages based on a claim of negligent hiring.  Instead, such a claim requires proof of physical injury from the negligent hiring, which the plaintiff could not establish.

Clark v. PFPP L.P.

In a dispute over an $1,800 monthly rental payment, the Court of Appeals affirmed a judgment in favor of the landlord and rejected several arguments by the tenant that the trial court had erred.  One such argument was the tenant’s contention that because the landlord had altered the memo line of several checks he had sent her, his obligation to pay rent was discharged.  Apparently, the landlord changed the memo line to reflect the month for which she applied the tenant’s payment.

Because the landlord had not acted with fraudulent intent, and because the notation did not change anything material about the check, the Court held that the affirmative defense of discharge did not apply.

Cunningham v. Anglin

Sign Effects Sign Company (the redundancy is sic) obtained a $22,000 default judgment in Ohia against SignWarehouse.com. Six years later, SESC sought to domesticate that judgment in Texas. SignWarehouse argued that the Ohio judgment was invalid because the company was not subject to personal jurisdiction in that state. The trial court and the Dallas Court of Appeals agreed. Relying on Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777 (Tex. 2005), the Court of Appeals held that simply shipping purchased good to another state was insufficient to establish minimum contacts for specific personal jurisdiction, particularly where the parties’ contract specified that venue for any dispute was to be in Grayson County.

Sign Effects Sign Co., LLC v. SignWarehouse.com, No. 05-12-01301-CV

The buyer of a used Inifiniti M45 brought the car to Crest Infiniti and approved nearly $6,000 in maintenance and repair work. But after the repairs were completed, the owner failed to pay for the work or pick up the car. Unsurprisingly, he had also failed to keep up on his payments to the used vehicle company that had financed his purchase, and the seller sent a repo company over to Crest’s lot to recover the car. Crest sued for tortious interference and conversion but lost a bench trial. The Court of Appeals reversed, holding that the undisputed evidence established Crest had a possessory mechanic’s lien on the vehicle, that the mechanic’s lien took priority over the seller’s security interest as a matter of law, and that the seller had converted the car when the repo driver removed it from Crest’s lot without permission. The Court therefore remanded the case to the trial court to enter judgment in favor of Crest and to consider an award of attorney fees to it as the prevailing party under section 70.008 of the Property Code.

Crest Infiniti II, LP v. Texas RV Outlet, No. 05-13-01285-CV

Connie Sigel used a website to book an apartment in Paris (the one in France) for a seven-night vacation. During that stay, an intruder with keys to both the apartment and its safe stole most of Sigel’s possessions. Sigel sued the booking agency on multiple contract and tort claims. The trial court denied My Vacation Europe’s special appearance, but the Dallas Court of Appeals reversed and rendered. The Court held that Sigel’s act of accessing MVE’s website and renting an apartment while she was located in Dallas did not constitute a purposeful availment of Texas by MVE, and there was no evidence that MVE specifically targeted Texas residents for its services. The Court of Appeals also held that there could be no specific jurisdiction in Texas because the claims all arose from a burglary that occurred in France, meaning that the relationship between Texas and the operative facts of the litigation was too tenuous to support jurisdiction.

My Vacation Europe, Inc. v. Sigel, No. 05-14-00435-CV

Update: Threepeat. The dream is alive.

A Highland Park property dispute has resulted in a 30-page memorandum opinion affirming the trial court’s summary judgment ruling that the defendants have title to a strip of land adjacent to their home, but also reversing an attorney fee award of $40,670 against the plaintiff, Armstrong DLO Properties. ADLO filed suit, seeking to establish that (among very many other things) a 1949 warranty deed in the defendants’ chain of title was invalid, which would make the frontage of ADLO’s lot approximately 155 feet wide.

During the summary judgment hearing, the trial court revealed that it had sua sponte discovered that ADLO’s owner had successfully sued the estate of his father seeking reformation to the deed, establishing that the frontage was only 140 feet wide. The court orally stated that it would take judicial notice of that judgment, describing it as an issue of “estoppel.” The court subsequently granted summary judgment for the defendants without identifying the grounds for its ruling. The Court of Appeals rejected ADLO’s claim that the district court had improperly relied on matters outside the record in granting the summary judgment, as there was nothing in the written summary judgment order indicating that the court had actually granted summary judgment on the basis of the prior judgment. Because the grounds otherwise presented in the defendants’ motion were sufficient to justify summary judgment, the Court affirmed it. However, the Court reversed as to the award of attorney fees, holding that fees were not recoverable under the Declaratory Judgments Act because the issue was title to the property, not the location of the boundary between properties. See Tex. Civ. Prac. & Rem. Code § 37.004(c).

Armstrong DLO Props., LLC v. Furniss, No. 05-13-01581-CV

Update: The pressure is now on a for a three-peat next week.

In this bill of review concerning an eviction for unpaid rent, the Court of Appeals found, among other things, that the trial court did not abuse its discretion by not holding a hearing on a motion for new trial.  The Court explained that “a trial court is required to conduct a hearing on a motion for new trial only when the motion presents a question of fact upon which evidence must be heard.”

Carson v. El Capitan Apartments

In this legal malpractice claim, the plaintiff argued that his expert opinion as to proximate causation were sufficient to establish that element of his claim.  But the Court of Appeals found that the plaintiff’s expert opinion had been excluded by the trial court as unreliable and the plaintiff did not assign error to that ruling in his appellate brief.

Kuzmin v. Schiller

The Dallas Court of Appeals has affirmed summary judgment in favor of former state and federal district court judge Joe Kendall and the law firm of Provost & Umphrey. The lawsuit alleged that the plaintiffs had provided Kendall with confidential information for a possible qui tam lawsuit related to the procurement practices of the Dallas and Houston Independent School Districts, and that Kendall and Provost had improperly used that information in filing a successful qui tam lawsuit on behalf of two other clients. Kendall and Provost sought and obtained summary judgment, arguing that no confidential information has been shared, that no duty of loyalty was owed or breached, that there was no evidence of an attorney-client relationship, and that there was no evidence of damages. Among other things, the Court of Appeals held that there was no evidence Kendall had intended to undertake a legal representation of the plaintiffs by meeting with one of them to discuss the “possibility” of a qui tam lawsuit, and that there was no evidence Kendall had actually disclosed any of the plaintiffs’ confidential information in connection with the lawsuit that was actually filed.

Gillis v. Provost & Umphrey Law Firm, LLP, No. 05-13-00892-CV

Marco Calvillo sued the owner of the Kliff Klub — first review on Yelp: “Drinks are very strong”; second review on Yelp: “The drinks are EXTREMELY strong” — for dram shop liability after a patron of the club collided with Calvillo’s truck at 3:30 am, driving the wrong way on I-30. Testing at the hospital more than two hours after the club’s closing time showed the driver still had a .177 BAC. The county court at law granted summary judgment for the club owner, and the Court of Appeals affirmed. The patron’s deposition testimony was that she had never bought a drink at the club that night, but was instead consuming drinks bought for her daughter by various men at the club. Because the driver’s consumption was “twice removed from the provision of alcohol to the men who purchased it and gave it” to the daughter, Calvillo has no evidence that the driver was “served” alcohol within the scope of the Dram Shop Act.

Calvillo v. Frazier, No. 05-14-00013-CV

Update: Woo hoo!  We’re betting it was the on-the-nose Yelp reviews that put it over the top with the judges.

Dr. Erwin Cruz sued his former business partners, claiming, among other things, that he was a limited partner in an entity called Plano AMI, L.P.  Before trial, the trial court granted Dr. Cruz’s motion for partial summary judgment establishing his ownership interest as a limited partner, based in large part upon the fact that Plano AMI’s tax returns listed Dr. Cruz as a limited partner.

On appeal, the Dallas Court of Appeals reversed that decision, finding that the partnership agreement was ambiguous and that because Plano AMI had later amended its tax returns to list Dr. Cruz as a general partner, Cruz had failed to establish as a matter of law that he was a limited partner.

Plano AMI, L.P. v. Cruz

Mandamus, it turns out, will not issue to correct a trial court’s refusal to rule on a motion to dismiss when the movant has not bothered to set a hearing or given notice that the motion would be heard at the pretrial conference. Disappointingly, the Court of Appeals did not reach the novel question of whether Chapter 74 of the Civil Practice & Remedies Code requires a plaintiff to file an expert report when suing a retired physician who owned the cattle that the plaintiff collided with in his vehicle.

In re Archer, No. 05-15-00020-CV

With less than two weeks to go in office, Governor Perry is continuing to fill vacancies across the state. Yesterday, that included appointments to the Second and Third Courts of Appeals, plus the appointment of David Schenck to serve as a Justice of the Fifth Court of Appeals through the 2016 election cycle. Schenck will replace Justice Michael O’Neill, who has served on the Court since first being elected in 1998. Welcome to Justice Schenck, and best wishes to Justice O’Neill in his retirement.

After Kevin White defrauded investors in a foreign currency trading scheme, a federal court appointed Kelly Crawford as receiver over the estates and assets of White and his companies.  One such entity was a fund operating as a limited partnership called the Revelation Forex Fund.  Crawford determined that investors in Revelation had claims against Forex, the company with which Revelation had maintained foreign currency trading accounts.  Consequently, the investors assigned their claims to Crawford and he then filed suit against Forex in Colin County District Court.

Forex sought to dismiss the lawsuit based on an arbitration provision in its contract with Revelation.  When the trial court denied its motion, Forex appealed.  The Dallas Court of Appeals affirmed based on the crucial distinction that Crawford’s claims were brought as an assignee of the investors’ claims, not in his role as trustee.  Because only Revelation (and not the individual investors) had agreed to arbitrate claims against Forex, venue in Colin County was proper.

Forex Capital Markets, LLC v. Crawford

In this insurance coverage lawsuit, the Court of Appeals held that the insurer had no duty to defend the appellant in the lawsuit brought against them for conversion under  when the appellant sold their home’s former (foreclosed-upon) owner’s personal property at a garage sale.  According to the Court, the removal and purported sale of the personal property was “intentional and deliberate,” and thus failed to qualify as an “occurrence” covered by the policy.

Drew v. Texas Farm Bureau Mut. Ins. Co.

A short opinion denying mandamus in an electronic discovery dispute serves as a reminder of the importance of a hearing transcript in the appellate courts. In this case, VERP Investment lost a motion to compel, but the mandamus record did not include a transcript from either the hearing on the motion or VERP’s subsequent motion for reconsideration. Likewise, the record did not include a statement that no testimony was taken at the hearings, as permitted by TRAP 52.7(a)(2). Those failures left the Court of Appeals unable to determine whether or not VERP’s opponent had made the required evidentiary showing to obtain the electronic discovery. Therefore, VERP could not demonstrate that the trial court had abused its discretion in granting the motion to compel.

In re VERP Investment, LLC, No. 05-14-01403-CV

The Court of Appeals has reversed a trial court’s judgment awarding approximately $46,000 in attorney fees in a denial of coverage dispute. The case was brought by a homebuyer who sued his builders for a number of defects.  The buyer obtained a judgment against the builders in arbitration. The builders had tendered the buyer’s claim to their insurer, Oklahoma Surety Co., but OSC denied coverage for both the defense of the case and ultimate liability. After arbitration, the builders assigned their coverage claim to the buyer, who then sued OSC for the builders’ defense costs and for indemnification under the policy. The trial court ruled that OSC had a duty to the defend the case, but had no duty to indemnify for damages. The Court of Appeals disagreed, holding that an exclusion for property damage to “your work” applied under the “eight corners” rule, thereby barring both coverage and the duty to defend.

Oklahoma Surety Co. v. Novielo, No. 05-13-01546-CV

In this memorandum opinion on an attempt to satisfy a judgment, the Court of Appeals held that the judgment creditor could obtain the income paid to appellant, an attorney, by his law firm pursuant to a turnover order issued by the trial court.  Although the appellant argued that this income was “exempt” under the relevant statute because he essentially acted as an independent contractor, the Court rejected this argument given that the appellant failed to offer any evidence concerning right of control.

Karlseng v. Wells Fargo, N.A.

The Dallas Court of Appeals has affirmed a trial court’s award of $3.1 million in attorney fees following the settlement of a shareholder derivative suit against J.C. Penney. The settlement required J.C. Penney to stop guaranteeing the unvested incentive equity awards of certain officers, which the plaintiffs’ evidence showed to be worth $62 million over the four years covered by the settlement. The settlement agreement permitted the plaintiffs to apply for a fee award to “compensate Plaintiff’s Counsel for the results achieved in the Action and the risks of undertaking the prosecution of the Action on a contingent basis.” Although plaintiffs’ evidence showed that the lodestar fee for the case would have been $558,123.50, the Court held that the specific language of the parties’ agreement justified a departure from the lodestar. The Court further held that the $3.1 million award was reasonable because it represented 5% of the monetary value of the settlement, citing a number of shareholder derivative cases that also approved fee awards based on a percentage of the settlement value.

J.C. Penney Co., Inc. v. Ozenne, No. 05-13-01601-CV

In this car accident case, the defendant moved for summary judgment on statute of limitations grounds.  While the plaintiff claimed that a typo in the original petition precluded the process server from locating the defendant before the limitations period expired, the Court of Appeals found that the plaintiff had no explanation for the delay in serving the defendant because the defendant’s correct address, telephone number, driver’s license number, and license plane number were available in the police report describing the accident that is the basis for the lawsuit.

Quezada v. Fulton

In this breach of contract claim, the defendant answered the petition with a general denial, but then failed to show up at trial.  During the subsequent “prove-up” hearing, the plaintiff offered as its only evidence the contract between the parties.  Based on this evidence alone, the trial court entered judgment and awarded the plaintiff $55,000 in damages.  On appeal, the Court held that the award of damages was improper because the plaintiff did not offer proof of each element of her claim, including damages.

Correa v. Salas

The Relator in this mandamus action sought to avoid his obligation to respond to post-judgment discovery requests.  He argued that the trial court abused its discretion in ordering him to respond because he did not receive notice of the trial date and therefore the judgment against him was void.

The Dallas Court of Appeals denied his mandamus petition because procedurally the Relator did not follow the correct steps to challenge the validity of the underlying judgment.  The Court noted that if indeed the Relator did not have notice of the trial setting, the judgment may be voidable.  But the proper procedural path to challenging the judgment was for Relator to file a bill of review in the trial court to set aside the judgment (as it had become final and was no longer appealable).  Then, if the Relator wanted to avoid enforcement of the judgment pending a decision on the bill of review, he could petition the trial court to enjoin its enforcement.

In this case, the Court noted that until it was set aside, the judgment was valid and therefore the trial court did not abuse its discretion in allowing the plaintiff’s post-judgment discovery.  Moreover, because Relator could seek to set aside the judgment and enjoin its enforcement in the trial court, mandamus relief was not appropriate.

In re Lowery

For the last six years or so, the sublessor of a property in Irving has been seeking compensation for loss of the leasehold after it was sold to the state in lieu of condemnation for a highway project. In 2011, the Court of Appeals affirmed the dismissal of the lessor’s claim against the state on jurisdictional grounds. The lessor then sued the former owner of the property, claiming breach of the lease agreement by accepting the state’s offer instead of pursuing the matter in a special commissioners’ hearing. In 2013, the Court reversed summary judgment for the owner and remanded to the trial court, holding that the lessor was not collaterally estopped by its loss of the case against the state. But the third time is not the charm, as the Court of Appeals today affirmed summary judgment in favor of the former owner, holding that the lease only requires payment to the lessor in the event of a “condemnation proceeding,” and the private sale in lieu of condemnation was not such a proceeding.

Continental Foods, Inc. v. Rossmore Enters., No. 05-14-00244-CV

Previously: Inverse Condemnation Action Is No Bar to Recovery for Breach of Contract (March 5, 2013)

In 2013, the Dallas Court of Appeals held that “viatical settlements” — basically, interests in life insurance policies purchased and then resold by Life Partners, Inc. — were securities subject to the Texas Securities Act. Given that the opinion expressly rejected a contrary holding from the Waco Court of Appeals, we predicted that this would be a good candidate for review by the Texas Supreme Court. And in fact, that court granted the petition for review today, consolidating the case for oral argument with another Life Partners case out of the Austin Court of Appeals. The argument has been set for January 15, and we will keep you posted when an opinion is issued.

Previously: Viatical Settlements Are Securities (Aug. 29, 2013)

Several months before the decedent died, he had his attorney prepare an amendment to a trust he had created that would have increased the distributions to his two children.  The attorney drafted the amendment, but the decedent never signed it.  Acting in their capacity as personal representatives for their father’s estate, the children sued the attorney for negligence.  The attorney moved for summary judgment, which the trial court granted based on its finding that the attorney owed no duty to them.

The children appealed, and the Dallas Court of Appeals affirmed, holding that “an attorney owes a duty of care only to his or her client, not to third parties who may have been damaged by the attorney’s negligent representation of the client.”

Donaldson v. Mincey

The Court of Appeals has dissolved a temporary injunction that would have prevented a court in Bastrop County from continuing to oversee a homeowner’s insurance appraisal process. James and Patricia Barrentines’ home in Bastrop was damaged by one the wildfires that plagued that area in 2011. Their insurer, Safeco, demanded an appraisal of the loss, and both parties appointed their own appraisers pursuant to the policy. When the two party-appointed appraisers were unable to agree on an umpire, Safeco went to court in Bastrop County to have one appointed. The court-appointed umpire issued an appraisal favorable to the homeowners, but the Bastrop County court then appointed a different umpire. The Barrentines then refiled in Dallas and obtained a temporary injunction forbidding any reappraisal. The Dallas Court of Appeals reversed that ruling, holding that it disturbed — rather than preserved — the status quo by interfering with the Bastrop County court’s authority to conduct the appraisal under the insurance contract.

Safeco Lloyds Ins. Co. v. Barrentine, No. 05-13-01011

In this memorandum opinion, the Court of Appeals affirmed the trial court’s dismissal of the plaintiff’s breach of contract claim.  According to the Court, the plaintiff failed to present evidence that the defendant breached the contract at issue and thus affirmed the trial court’s decision to grant defendant’s no evidence motion for summary judgment.

Alonso v. Alliance AFT

In this restricted appeal, the plaintiff carried out service on the defendant, a bank with a registered agent in New York, solely though service of process upon the Texas Secretary of State.  On appeal, the Court agreed with the defendant that such service was improper because the plaintiff failed to strictly comply with CPRC 17.028, which permits service upon a financial institution by service to “the president or a branch manager at any office located in the state.”

Bank of N.Y. Mellon v. Redbud 115 Land Tr.

Chandler Management sued First Specialty Insurance after the insurer denied coverage of a claim for wind and hail damage at a Dallas apartment complex managed by Chandler. The insurer moved to dismiss based on a forum selection clause in the policy that provided for exclusive jurisdiction in New York. The Dallas Court of Appeals affirmed the trial court’s dismissal order, without prejudice to refiling in New York. The Court found no error in the trial court’s decision to dismiss the claims against two additional defendants because they had expressly agreed to the insurer’s motion and because the claims against them were also based on the insurance contract. The insurer also established that the policy was procured through a licensed agent, which allowed First Specialty to issue surplus lines insurance in Texas (and therefore allowed it to enforce the contract against its insured). The Court shrugged off a number of claimed failures of the policy under the Insurance Code, holding that noncompliance with those provisions did not affect enforcement of the contract because nothing showed that they were “material and intentional” violations. Finally, the Court rejected Chandler’s arguments that the forum selection clause was overreaching and against public policy.

Chandler Mgmt. Corp. v. First Specialty Ins. Corp., No. 05-13-01044-CV

In this breach of contract suit, the parties disputed the meaning of “sale” in a real estate brokerage contract.  The City of Dallas purchased a portion of the Premises for a public drainage project, but it was disputed whether the City would have taken steps to exercise its power of eminent domain if it had not purchased the Premises.  The Court concluded that the language of the contract was clear in its definition of “Sale,” and that the City did not compel the transfer of the land.  Thus, the broker was entitled to the fee under the contract.

TFO Realty, LLC v. Smith

In a dispute between former business partners, the plaintiff sued the defendant for breach of contract, alleging that the defendant first agreed to reimburse him for certain expenses totaling $75,000, and then, second, when he refused to pay, promised the plaintiff that he would give him a check for $75,000 instead.  The jury found that the defendant breached both contracts and awarded the plaintiff $75,000 for each breach (for a total of $150,000).  Because that amounted to a double recovery, the Dallas Court of Appeals reversed and limited the plaintiff to one recovery of $75,000 for breach of contract.

Kim v. Pak

Legacy Hillcrest Investments is seeking to develop a pair of lots just west of the SMU law School and north of of a single family district. After a series of proposals and counterproposals, Legacy sought a permit for to build a three-story parking garage. The community development staff approved the application, but the Board of Adjustment denied it. That led Legacy to file for a writ of mandamus, which the district court granted. The Dallas Court of Appeals reversed. The city’s zoning ordinance provided that only surface parking lots could be located “adjacent to” a single-family district. The Court held that the ordinance prohibited a parking garage because Legacy’s lots were across the street from the single-family district, making them “adjacent” to one another under the plain meaning of the term.

Bd. of Adjustment v. Legacy Hillcrest Invests., LP, No. 05-13-01128-CV

A memorandum opinion provides a short lesson in the nature of equitable remedies. Monterey Mushrooms sued Majestic Realty Co. and McLane Foodservice after one of Monterey’s employees slipped and fell on ice located on their property, causing Monterey to pay the worker through its ERISA injury benefits plan. Monterey sued the defendants for equitable subrogation, unjust enrichment, and money had and received. The Dallas Court of Appeals affirmed no-evidence summary judgment for the defendants. Although Monterey had evidence supporting an equitable right of subrogation, that subrogation claim only put it in the shoes of its injured worker, and there was no evidence that he would have a claim against the defendants. The Court distinguished between haveing a right of subrogation and having the ability to recover under that right. Monterey’s unjust enrichment claim failed because there was no evidence that the defendants received any benefit from Monterey’s payment of its injured worker’s benefits. Nor was there a claim for money had and received because there was no evidence teh defendants received any money or benefits belonging to Monterey.

Monterey Mushrooms, Inc. v. Majestic Realty Co., No. 05-13-01015-CV

Sky Capital, a single-asset entity, ordered a private jet from Bombardier for a (presumably) wealthy Russian man named Iouri Chliaifchtein.  Unhappy with the jet Bombardier delivered, Sky Capital sued Bombardier for, among other things, breach of the delivery contract.  The case went to trial and the jury returned a defense verdict in favor of Bombardier.

Sky Capital appealed, arguing that the evidence was legally and factually insufficient to support the jury’s verdict because Bombardier clearly breached part of the delivery contract.  On appeal, the Court noted that the jury was instructed that to find a breach, it must be material.  Although, as the Court recognized, materiality instructions are generally presented in the context of when a party is excused from performing under a contract based on the other party’s breach, Sky Capital did not challenge the instruction itself.  Consequently, the Court upheld the verdict on the basis that although Bombardier did breach the delivery contract, the evidence was sufficient to support the jury’s finding that it was not material.

Attorney Baltasar Cruz sued for libel against the operators of the Burnt Orange Report, which published a statement that Cruz had been “thrown out three times, finally by the police, of an Elizabeth Edwards book signing event in Dallas several years ago.” The defendants moved to dismiss on anti-SLAPP grounds. The trial court granted the motion and awarded the defendants their attorney fees. The Court of Appeals affirmed the dismissal of the case, but reversed on the award of attorney fees.

Cruz raised a remarkable 121 issues for appellate review, taking up 25 pages of non-word count briefing. The Court of Appeals did not find that lack of conciseness persuasive — see Tex. R. App. P. 38.1(f) — nor did it care for the absence of headings, divisions, or groupings in the brief’s 69 pages of argument. The Court also noted that the brief lacked legal authority and failed to identify the evidentiary objections Cruz was seeking to vindicate on appeal. As a result, the Court deemed many of Cruz’s “multifarious” issues to be waived. On the merits of the anti-SLAPP motion, the Court quickly disposed of Cruz’s claim that the statement was not a “matter of public concern” because he was a candidate for judicial office at the time the blog post was published and a candidate’s character is relevant to his qualification for public office. Cruz also could not establish that the statement was published with malice just because the defendants had not been present at the book signing incident, while the defendants averred they had relied on several sources for their account.

However, the Court of Appeals vacated an award of $158,521.50 in attorney fees to one group of defendants because they had not actually “incurred” those fees. Since their attorneys had taken the case pro bono, the clients were not personally responsible for payment of the claimed fees. However, the Court sustained a separate fee award of $31,783.75 to another defendant, holding that there was evidence showing that party was personally liable for those fees.

Cruz v. Van Sickle, No. 05-13000191-CV

After Ricky Holland suffered injuries from taking medication, he convinced a law firm to bring a lawsuit on his behalf against the drug manufacturer.  That lawsuit went nowhere, and actually led to the law firm suing the Hollands for fraudulently inducing them to take his case. The Hollands countersued, bringing a claim for intentional infliction of emotional distress based on the lawsuit the law firm filed against them.

The trial court dismissed the Hollands’ IIED claim because it was inapplicable in light of the other claims they had pleaded.  On appeal, the Court of Appeals reversed the trial court because plaintiffs are permitted to plead claims in the alternative.  The Court also refused to consider the law firm’s additional argument that the claim fails because it was based on statements made in its lawsuit and thus protected by an absolute privilege.

Following up on an opinion issued last month that ruled an interlocutory appeal from the denial of a special appearance was frivolous, the Court of Appeals has now awarded the appellee sanctions of $9,650 in attorney fees and $191.25 in expenses as damages from the frivolous appeal. The Court shaved off $2,325 from the appellee’s fee application because some of her attorney’s billing entries either did not relate to the appeal or consisted of block billing that contained a mix of appellate and non-appellate activities.

Estate of Ardyce Deuel-Nash, Deceased (II), No 05-14-00128-CV

An overly-complicated series of transactions led to a dispute over who had valid title to a residential property at 2701 Wickham Court in Plano. The case turned on which of two competing deeds — one filed by the corporation of Quang Dangtran and the second filed by another company that took its deed from his ex-wife, Tuyet Anh Le — was effective. The Court of Appeals affirmed in part and reversed in part. The Court agreed with the trial court’s summary judgment ruling that Dangtran’s deed was not properly acknowledged because it failed to identify the state where the corporate entity was incorporated (see Tex. Civ. Prac. & Rem. Code 121.008(b)(4)). However, the Court also held that there was a genuine issue of material fact whether the second claimant took the deed from Le with notice of her ex-husband’s claim, which would negate her transferee’s status as a bona fide purchaser. Because Dangtran was in unequivocal possession of the property at the time of the second transaction, and because Dangtran was not a member of Le’s family at that time, summary judgment could not be sustained on the second claimant’s bona fide purchaser defense.

Whoa USA, Inc. v. Regan Props., LLC, No.05-13-01412-CV

In 2000, the union representing DART’s employees sued DART, alleging that it was improperly denying its employees’ grievances and requests for appeals.  As a result, the parties entered into a settlement agreement providing that DART was required to modify the employee grievance procedures in its employment manual.

Years later, in 2010, a dispute arose between DART and a former employee (who had been terminated) over DART’s grievance procedures.  The union ultimately sued DART, alleging that it had breached the prior settlement agreement.  DART filed a plea to the jurisdiction, asserting sovereign immunity, which the trial court denied.  On appeal, the Court of Appeals affirmed the trial court’s decision, noting that when “a governmental entity agrees to settle a lawsuit in which it has waived governmental immunity, it cannot claim immunity from suit for breach of the settlement agreement.”  Because DART had waived immunity in the 2000 lawsuit and the union was claiming it had breached that agreement, DART could not claim immunity from the suit.

Dallas Area Rapid Transit v. Amalgamated Transit Union Local No. 1338

In this malicious prosecution case, the Court of Appeals reversed the jury’s award of actual and punitive damages because the evidence introduced at trial was legally insufficient to support the jury’s verdict.  Among other things, the Court found that the defendant did not “initiate the prosecution” by bringing a formal charge to initiate the prosecution.  Instead, the defendant simply provided a “Voluntary Statement” that the law enforcement officer used to formally charge the plaintiff.  Thus, the Court found that the plaintiff could not establish the legal requirement that the defendant “initiated or procured” the underlying criminal prosecution.

Lermon v. Minyard Food Stores, Inc.

The Court of Appeals has granted mandamus relief to direct a Collin County trial court to vacate its order granting a new trial for the plaintiff in a product liability suit. The district court granted the motion based on both factual sufficiency and juror misconduct grounds. The Court of Appeals held that the new trial order could not be sustained on the basis of juror misconduct because the lower court had not conducted an evidentiary hearing — affidavits attached to the motion alone were not sufficient under Rule 327. The Court also concluded that the jury’s verdict for the defense was not contrary to the great weight and preponderance of the evidence, as conflicting testimony from the parties’ design experts adequately supported the jury’s decision that the medical implant at issue was not defective.

In re Zimmer, Inc., No. 05-14-00940-CV

In a prior action, the plaintiff (through counsel) negotiated a settlement through the defendant’s attorney and the attorney then sent the plaintiff a final settlement agreement, which the plaintiff signed.  The defendant, however, refused to sign the agreement and later filed bankruptcy.  The plaintiff then sued the defendant’s attorney for fraud, arguing that the attorney had misrepresented that her client would settle based on the agreed upon terms.

The trial court granted the attorney’s motion for summary judgment, holding that the plaintiff could not establish the justifiable reliance element of his fraud claim.  The Court of Appeals affirmed because the attorney made no express representation that her client had approved or would sign the settlement agreement, and reliance on representations made in business transactions are  not justified when the representation takes place in an adversarial context such as litigation.

Weilbacher v. Craft

In this breach of contract case decided under New York law, the Court of Appeals found (among many other things) that the fact that the contract required the parties to close the underlying distressed debt trade “as soon as practicable” did not mean that “time was of the essence.”  Thus, the Court held that the defendants failure to close the trade within 60 days did not constitute a breach.

Highland Credit Opportunities CDO, L.P. v. UBS AG

In this complex fraud case arising out of the misappropriation of millions of dollars in loan proceeds, one issue before the Court of Appeals was whether the trial court erred in denying the plaintiff’s request for a spoliation instruction.  The plaintiff had moved to compel certain communications from one of the defendants, but that defendant had replaced its servers and did not back up the data.  Because there was no evidence that the defendant had acted with intent to conceal the discoverable evidence or acted negligently to irreparably deprive the plaintiff of “any meaningful ability to present its claims,” the Court of Appeals affirmed the trial court’s decision not to give a spoliation instruction to the jury.

Flagstar Bank, FSB v. Walker

Although medical malpractice usually isn’t this blog’s cup of tea, it is sometimes interesting to see just how broadly the courts will apply the expert report requirement for health care liability claims contained in Chapter 74 of the Civil Practice & Remedies Code. In this case, we learn that a case against a hospital will not be dismissed for failure to file an expert report when the claim is for a slip-and-fall injury. The Court of Appeals distinguished between claims that have an indirect relationship with health care (which require an expert report) and those that are “completely untethered” from health care. Slipping and falling on a wet floor in a hallway, the Court holds, has nothing to do with health care, and so the trial court correctly denied the hospital’s motion to dismiss.

Methodist Hosps. of Dallas v. Searcy, No. 05-14-00375-CV

In this restricted appeal of a default judgment, the Court found (among other things) insufficient evidence to support damages on a suit for breach of contract and on a sworn account.  The Court based its holding on the fact that there was contradictory information among the petition, the documents attached to the petition, and the business records filed.  In particular, the Court noted that there was no evidence of any amount owed by the defendant to the plaintiff.

Diaz v. Multi Service Tech. Solutions Corp.

Under the Texas Tax Code, property taxes are a personal obligation of the person who owns the property on January 1 of each tax year. In this case, the owner purchased her home on February 25 and paid that year’s taxes after closing. She then sought to make the former owner’s lender responsible for the payment of the property taxes because the former owner had been delinquent under the loan. The Court of Appeals rejected that attempt holding that a lienholder is not an owner subject to the property tax obligation. The Court also rejected the buyer’s attempt to make the bank liable to her under a contract theory, noting that her sale agreement was with the seller, and that she had no contract with the bank. Accordingly, the trial court’s summary judgment order was affirmed.

Blume v. Wells Fargo Bank, N.A., No. 05-13-01429-CV

An investor sought to have its shares in a hedge fund redeemed, but the hedge fund made a complex maneuver under Bermuda laws that resulted in the investor receiving less than it anticipated from the redemption.  The investor sued the hedge fund, asserting numerous claims, including a negligence claim.  The trial court granted summary judgment, and the investor appealed.  Addressing the investor’s negligence claim, the Court of Appeals affirmed the trial court’s decision, holding that the hedge fund manager did not owe a duty to the investor.

Mary E. Bivins Found. v. Highland Capital Mgmt., LP

A special appearance in a probate case has led to the exceedingly rare grant of a motion for sanctions for the filing of a frivolous appeal. In this instance, the appellant managed to make a general appearance in the case before filing the special appearance — a fact that the appellant had failed to even address in response to the appellee’s briefing in the probate court. On top of that, the appellant had failed to preserve his argument on appeal that the special appearance was somehow severable from the motion to show cause in which he entered his general appearance, nor had the appellant objected (and thereby preserved error) when the probate judge overruled the special appearance without holding a separate hearing on it. Although the appellee had not submitted any evidence of her damages to support the award of sanctions, the Court of Appeals granted her leave to file such evidence within ten days of the opinion.

Estate of Ardyce Deuel-Nash, Deceased, No. 05-14-00128-CV

In this breach of contract action, the Court of Appeals held that Texas’ four-year statute of limitations barred the defendant’s counterclaim.  The breach of contract counterclaim was based on the plaintiff’s failure to provide account documents within 10 days of the date of the agreement, which was June 28, 2007.  Because the defendant made no legal argument to toll the date of the agreement, the Court held that all of the defendant’s claims under the agreement at issue were barred as a matter of law.

Santander Consumer USA, Inc. v. Palisades Collection, LLC

A fire at a hotel in Duncanville left the property owner unable to continue paying on the $3.4 million promissory note. The lender foreclosed and the property was sold for $500,000, leaving a substantial balance on the defendants’ personal guaranty obligations. The bank prevailed on summary judgment, a result that was not helped by the failure of defendants’ counsel to respond to the motion or appear at the hearing. The Court of Appeals affirmed.

The guarantors challenged the trial court’s denial of their motion for new trial. The Court of Appeals analyzed the case as a post-answer default, applying the Craddock factors of whether (1) the failure to answer or appear was a mistake or accident, (2) the defendant had a meritorious defense, and (3) the motion was filed at a time when granting a new trial would not delay or otherwise injure the plaintiff. In this instance, the motion for new trial failed to establish item (3), as the attorney’s affidavit did not address that factor, Neither the motion nor the affidavit  stated that the defendants were ready, willing, or able to go to trial immediately or offer to reimburse the plaintiff for its expenses. The Court also rejected the defendants’ claim of newly-discovered evidence, given that the affidavits failed to establish the proffered evidence (testimony from friends of the defendants) was actually newly discovered or could not have been discovered earlier through the exercise of due diligence.

Kahrobaie v. Wilshire State Bank, No. 05-13-01459-CV

A chiropractor provided treatment to a patient injured in a car accident and, in return, the patient assigned her right to any proceeds from a settlement, judgment, or verdict.  The patient settled her claim with the other driver’s insurance company, but, instead of sending the payment directly to the chiropractor, the insurance company paid the patient.  The chiropractor then sued the insurance company directly, seeking the amount it had paid to the patient.   The trial court granted summary judgment in favor of the insurance company and the chiropractor appealed.

The Court of Appeals affirmed, rejecting the chiropractor’s argument that it was an “account debtor” under the UCC because there had been no finding of liability.  Rather, the parties had settled and therefore there had been no determination of liability, so the chiropractor was not an account debtor.

Pain Control Institute, Inc. v. GEICO Gen. Ins. Co.

Victor Enterprise, Inc. filed and won a forcible detainer action to collect rent from his tenant, Clifford Holland, for August 2009.  While that action was appealed by Holland, VEI filed another forcible detainer to collect rent for December 2009, which he also won, but the county court signed an order suspending execution of the writ of possession.  VEI then filed a third forcible detainer action to collect rent for January 2010, which he also won, but the county court enjoined VEI from “initiating, prosecuting, or executing any litigation, action or writ that seeks possession of or eviction of the defendant form his residence.”   In the meantime, Holland sought (and obtained) a temporary restraining order in county court requiring VEI to cease prosecuting actions against Holland and to prohibit any sheriff or constable from executing any writ against Holland.  On appeal, the Court granted VEI’s request for mandamus, noting that “the county court lacks jurisdiction to interfere with the enforcement of the justice court’s unappealed judgments.” It also found that, given the history of this case, “the writ will issue instanter.”

In re Victor Enters., Inc.

In what appears to be only the third opinion in the state reviewing a motion to dismiss under Texas Rule of Civil Procedure 91a, the Dallas Court of Appeals has affirmed a trial court’s order that granted in part and denied in part a motion to dismiss on the pleadings. Similar to Federal Rule of Civil Procedure 12(b)(6), Rule 91a allows a party to move to dismiss a cause of action “on the grounds that it has no basis in law or fact,” based solely on the claimant’s pleadings. In this case, the plaintiffs sued the City of Dallas after emergency services failed to respond to a 911 call reporting their son’s drug overdose. The plaintiffs attempted to plead their way around governmental immunity by claiming the City had negligently used or misused the 911 system’s telephone and computer systems. The Court affirmed dismissal of negligence claims that the City had failed to properly respond to the 911 call, but also affirmed the denial of the motion as to claims that the equipment itself had failed or malfunctioned.

City of Dallas v. Sanchez, No. 05-13-01651-CV

Three roommates signed a residential lease for a house in Plano, but a month into the lease one of the parties moved out and stopped paying rent.  Her two former roommates sued her for breach of contract.  The Court of Appeals upheld the trial court’s determination that the plaintiffs had established an implied contract to lease the house jointly based on the acts and conduct of the three roommates.

Pettigrew v. Reeves

Graham Mortgage sued Holmes on a personal guaranty he had signed.  The trial court granted Graham’s motion for summary judgment, and Holmes appealed.  Among other things, he argued that the trial court had erred by refusing to deem his requests for admission admitted because Graham never responded to them. Graham argued that it had no obligation to respond to the requests for admission because they were served by email and the rules (at the time) did not allow service by email.  The Court of Appeals agreed, holding that even though Graham had received the requests for admission, its internal procedures were not structured to receive discovery requests by email, and “attorneys should be able to structure their internal procedures around their opponents’ compliance with the rules of civil procedure in such matters as service of documents.”

Holmes v. Grahma Mortgage Corp.

When a judgment judgment for breach of contract is entered that includes an award of attorney fees, the defendant is generally not required to supersede that fee award in order to suspend judgment. Instead, the defendant only has to supersede post-judgment interest on the award for the expected duration of the appeal. In this case, Highland Capital Management was awarded $2.8 million in attorney fees, but the defendant only bonded out $287,000. Highland moved to increase the supersedeas bond, arguing that the attorney fees were actually compensatory damages because the parties’ contract contained a clause requiring the defendant to pay Highland’s fees in the event of a breach. The Court of Appeals rejected that argument, essentially concluding that an award of attorney fees under the contract was no different than an award of attorney fees under Chapter 38 of the Civil Practice & Remedies Code (which Highland had also sought in its pleadings and at trial).

Highland Capital Mgmt., L.P. v. Daugherty, No. 05-14-01215-CV

The day before trial, the attorney for the defendant in a car wreck case stipulated to her client’s liability. The next day, the plaintiff moved for sanctions under Rules 13 and 215, based on the allegedly late stipulation. After securing a $44,591 jury verdict, the plaintiff re-urged the sanctions issue, which the trial court granted in the form of a $5,000 award of attorney fees. The Court of Appeals affirmed the jury verdict, but reversed and rendered on the sanctions. The Court held that the sanctions could not be justified for discovery abuse under Rule 215 because that rule requires a party who is aware of possible discovery abuse to obtain a ruling prior to trial. As to Rule 13, that rule requires particularized findings of good cause, which were not included in the trial court’s judgment here.

Hernandez v. Hernandez, No. 05-13-01219-CV

In this breach of contract claim, the trial court granted summary judgment on the grounds that the plaintiff had not satisfied the conditions precedent contained in the agreement.  The employment agreement at issue was to hire the plaintiff as President and CEO of the Dallas Housing Authority, but the agreement contained a condition that provided the agreement remained “nonbinding unless signed by the Chairman of the Board of Commissioners of the [DHA] and approved by the Board of Commissioners.”  The Court of Appeals rejected the plaintiff’s argument that a factual issue precluded summary judgment because the Board of Commissions told him, prior to executing the agreement, that they had already approved it.  The Court of Appeals, however, rejected this argument, and affirmed the trial court’s holding because “if the conditions stated in the letter agreement were satisfied before the agreement was presented to [the plaintiff], there would be no need to include such language in the agreement.”

Killingsworth v. Housing Authority

The Plaintiff hired Classic Superoof to build a metal roof for her house, which it did. The appearance of the roof, however, was marred by markings and scuff marks.  As a result, Plaintiff complained to (and ultimately sued) Classic.  At first, Classic thought the problem stemmed from the metal itself and therefore contacted the metal company, who then, in turn, contacted U.S. Steel, the provider of the metals used to make the roof.  Looking to investigate the issue, U.S. Steel sent its own metallurgical engineer to the Plaintiff’s home to inspect the roof.  The engineer performed an inspection and (perhaps not surprisingly) concluded that the coating on the roof was damaged during installation (thus absolving U.S. Steel of any responsibility and pinning the blame on Classic).

At trial, the Plaintiff used the U.S. Steel report and won a judgment against Classic.  On appeal, Classic argued, among other things, that the trial court erred by admitting the report because it was hearsay–specifically, because it was prepared in anticipation of litigation, it fell outside the business records exceptions. The Court of Appeals rejected that argument, noting that the engineer was not contacted by the Plaintiff, there was no lawsuit on file at the time, and that the engineer testified that his job was simply to investigate the cause of the concern.

Classic Superoof v. Bean

G.C. Buildings hired RGS Contractors to build an apartment complex in Oklahoma, funded by a $7 million loan insured by the Department of Housing and Urban Development. The contract provided that the date of final completion was the date that the HUD’s representative signed its final “Trip Report,” which turned out not to be signed until 161 days after the completion of work date called for in the contract. The construction contract contained a liquidated damages clause providing for a daily deduction from the contract price for each day past the construction deadline, but G.C. did not make any such deductions, instead paying the contractor in full. More than two years later, G.C. sued RGS in an attempt to recover either actual or liquidated damages. After a bench trial, the trial court ruled in favor of the contractor, finding that G.C. had not established a proper measure of damages for breach of contract.

G.C. argued that the interest payments it made during the period of the construction delays constituted its damages, but the Court of Appeals rejected that claim because G.C. was obligated to make those payments regardless of when or whether the construction on the apartment complex was completed. As to liquidated damages, the Court held that such damages could not be recovered because G.C. had not followed the procedures of the contract to determine whether a flat $2,101.68 charge or the actual cost of interest, taxes, and other fees should have been deducted from its payments to the contractor. Thus, the trial court’s findings were supported by legally and factually sufficient evidence, and the judgment was affirmed.

G.C. Buildings, Inc. v. RGS Contractors, Inc., No. 05-13-00151-CV

In this petition for for writ of mandamus, the Court of Appeals denied the relator’s petition to vacate the trial court’s order denying leave to file a fourth amended answer and counterclaim.  The Court found that although amendments of a “formal, procedural nature” typically will not result in surprise or prejudice, in this instance the proposed amendment “would have reshaped the case in a way that would require the Court to reopen discovery.”

In re City of Dallas

The grantor to a trust apparently changed his mind and sought to undo the trust.  After litigation on several fronts spanning several decades, the grantor filed a declaratory action seeking a declaration that he is the owner of an oil and gas lease called the Westbrook Lease, which was previously property of the trust he created.  The trustee opposed the grantor’s efforts, arguing that the trust was still intact and that the trust still owned the rights to the Westbrook Lease.

The main issue in the case was the effect of several judgments, dating as far back as 1980.  Specifically, the grantor moved for summary judgment, claiming that res judicata applied in his favor based on one of the prior orders.  The trial court agreed and granted summary judgment.  The Court of Appeals, however, reversed because the judgment upon which the trial court relied had been reversed on appeal.

Schmidt v. Ward

An investor in an office building sued the building’s architect and engineering consulting firm for fraud, negligent misrepresentation, aiding and abetting, and conspiracy. The investor did not file a certificate of merit with the original petition, so the defendants moved to dismiss. The claims against the engineering firm were dismissed without prejudice, and the plaintiff refiled with a new complaint that included a certificate of merit. After consolidating the old and new cases, the trial court granted a motion to dismiss as to all claims against the engineering firm, but only as to the negligent misrepresentation claim for the architects. An interlocutory appeal ensured, and the Court of Appeals ended up siding with the plaintiff. As to the plaintiff’s claim against the engineering firm, the Court held that dismissal without prejudice did not prevent the plaintiff from refiling a new lawsuit — the one under appeal — that included a certificate of merit. As to the claims against the architecture firm, no certificate of merit was required because the plaintiff’s case was based on the allegation that the firm knew of defects in the building due to its occupancy in the building, not in connection with any professional services that the firm had provided. Accordingly, no certificate of merit was necessary, and all of the plaintiff’s claims against the architecture firm were also remanded for further proceedings.

TIC N. Central Dallas 3, LLC v. Envirobusiness, Inc., No. 05-13-01021-CV

In this habeas corpus proceeding, Charles Miller challenged the trial court’s decision to incarcerate him for contempt.  Mr. Miller had failed to produce certain documents required by court order, leading to the contempt finding and his confinement.  Specifically, the trial court found Miller guilty of constructive contempt, which is contemptuous conduct outside the presence of the court.  Miller argued that he was not given proper notice of the contempt charge, and the Court of Appeals agreed, because in cases involving conduct outside the presence of the court, “due process requires that the alleged contemnor receive full and unambiguous notification of the accusation of any contempt and a reasonable opportunity to defend the charges or explain the conduct.”  Because Miller was not afforded that opportunity, the Court granted him habeas corpus relief.

In re Miller

In this breach of contract case, the majority opinion found that the appelle’s no-evidence summary judgment motion was legally insufficient to support the trial court’s summary judgment because it “fails to challenge or even mention a single element of any of [the] claims as to which there is no evidence.”

The dissent, however, disagreed, noting that “a party may challenge a specific element in a breach-of-contract case by filing a no-evidence motion asserting there is no evidence of breach of contract.”  In the dissent’s view, appelle’s motion makes this assertion.

Coleman v. Prospere

Coleman v. Prospere (dissent)

In the wake of the Texas Supreme Court’s decision vacating a $125 million arbitration award that had been reinstated by the Dallas Court of Appeals, the latter court has rejected another claim that an arbitration award should be vacated on grounds of evident partiality. A group of homeowners sought to recover against Meritage Homes after discovering that their houses were smaller than had been represented. At the start of the final hearing, the arbitrator disclosed his participation in “one or two” arbitrations with the claimants’ attorneys since the case had begun, but Meritage had no objection to proceeding with the hearing. That changed after the arbitrator found in favor of the homeowners and awarded damages and attorney fees.

In seeking to set aside the arbitration award, Meritage claimed that the arbitrator had failed to disclose that he had really held three arbitrations with the claimants’ attorneys, plus one additional mediation. The trial court confirmed the award over Meritage’s objections, and the Court of Appeals affirmed. Although the Court noted that the arbitrator’s disclosure was “vague, at best” as to the number of arbitrations he had conducted with the homeowners’ attorneys, the comment was still “clear as to substance” — namely, that he had arbitrated cases with the attorneys while the case was pending. Because the arbitrator had disclosed that substance, and because Meritage had failed to follow up on the disclosure until after it had already lost the arbitration, the failure to disclose one more arbitration and one mediation would not yield a reasonable impression of the arbitrator’s partiality to an objective observer.

Meritage Homes of Texas LLC v. Ruan, No 05-13-00831-CV