Appeals from forcible entry and detainer actions are common and we do not ordinarily report on them, but it has been some time since we last noted a summary of key principles. A good one appears in the recent case of McCall v. Fannie Mae, in which the appellant alleged improprieties about the relevant foreclosure sale. “But,” noted the Fifth Court, “the deed of trust expressly created a landlord and tenant-at-sufferance relationship when the property was sold by foreclosure. This provided an independent basis to determine the issue of immediate possession without resolving the issue of title. As we have explained, any defects in the foreclosure process . . .  may be pursued in a suit for wrongful foreclosure or to set aside the substitute trustee’s deed, but they are not relevant in this forcible detainer action.” No. 05-16-00010-CV (Jan. 20, 2017) (mem. op.)

The Dallas Court of Appeals was pulled into one of the wide-ranging disputes concerning the prosecution of Texas Attorney General Ken Paxton, this one concerning the payment of private attorneys appointed to prosecute Paxton. The Dallas Court determined that it lacked jurisdiction because the claims were moot and were not yet ripe.

Attorneys were appointed to prosecute Paxton after the Collin County Criminal District Attorney recused his office. The appointed attorneys were to be paid $300 per hour, which was more than fixed $1000 for most court appointed attorneys for indigent defendants under the Collin County local rules, which also apply to appointed prosecutors. However, the local rules also provided “Payment can vary from the fee schedule in unusual circumstances or where the fee would be manifestly inappropriate because of circumstances beyond the control of the appointed counsel.”

On December 11, 2015, the appointed prosecutors sought an interim payment of $254,908.85 from Collin County. Three weeks later, Collin County taxpayer Jeffory Blackard sued seeking a temporary restraining order and injunction preventing payment, asserting that as a taxpayer he had standing to seek to enforce the local rules fixing most fees at a flat $1000. The Collin County judge recused himself, and the taxpayer suit was assigned to County Court at Law No. 5 in Dallas County.

A week after Blackard filed his taxpayer suit, the presiding judge over the criminal prosecution, a Tarrant County judge, approved the payment of the request for interim fees and ordered that the fees be presented to the Collin County Commissioner’s Court for payment. The next day, Blackard filed a supplemental application for temporary restraining order in the Dallas County taxpayer suit, which was denied one day later. Three days after that, only one month after the initial request for interim fees was made, the Collin County Commissioners Court voted to pay. Blackard then filed an amended petition seeking injunctive relief preventing any future requests for attorney’s fees by the appointed prosecutors. The County Court at Law determined that it lacked jurisdiction and granted the defendants’ pleas to the jurisdiction. Blackard appealed.

The Dallas Court began its analysis by noting that mootness and ripeness are threshold issues that implicate subject matter jurisdiction. Rendering opinions under either circumstance violates the prohibition against rendering advisory opinions because such cases present no justiciable controversy.

The Dallas Court held that Blackard’s claims relating to the interim fees were moot because the fees had already been paid and, under Texas law, taxpayers have standing only to seek to enjoin future payments, not to recover funds that have already been paid. Blackard asserted on appeal that his claims fell within the exception to mootness for claims “capable of repetition, yet evading review” because the appointed attorneys stipulated that they anticipated submitting future invoices. But the Dallas Court rejected that exception, which “applies only in rare circumstances.” It noted that the exception had previously only been used to challenge unconstitutional acts performed by the government, and held that the process by which fees would be requested in the future provided sufficient time for Blackard to seek judicial review prior to payment, pointing to the month between the initial request for interim fees and payment.

In addition, the Dallas Court held that claims relating to future invoices were not yet ripe. While it was stipulated that additional fees would be requested, it was not stipulated that the additional requests would be for $300 an hour or otherwise would be inconsistent with the Collin County fee schedule. So the Dallas Court concluded there was no live controversy concerning future requests for fees.

Blackard v. Attorney Pro Tem Kent A. Schafer, et al.

In the common fact situation of an employee leaving for a new, competing employer, the Fifth Court found no abuse of discretion in denying a temporary injunction when:

• After his termination, Turner did not have access to any confidential information except for the contents of a laptop
• Turner testified that he did not access the laptop following his termination except to examine his girlfriend’s resume and his employment agreement and when he took it to the Apple Store to have his personal photographs removed from the computer.
• Plaintiff had a forensic examination of the computer performed, and it presented no evidence that Turner’s testimony was false.
• When Turner also testified that when he went to work for Gulfstream, he did not contact any of BM Medical’s clients with whom he had worked while employed by BM Medical (although some contacted him to find out what had happened to him); and
• Only one client of BM Medical became a client of Gulfstream, who was a good friend of Turner’s whom Turner had known before he went to work for BM Medical, and who still did business with BM Medical.

BM Medical Management Service LLC v. Turner, No. 05-16-00670-CV (Jan. 10, 2017) (mem. op.)

The first ever Bench-Bar conference for the Northern District of Texas will be held on January 27 at the Four Seasons in Las Colinas. Here is the schedule and registration information; it looks to be a great program and the beginning of a strong tradition.

Governor Abbott has appointed Dallas attorney Jason Boatright to the vacancy on the Fifth Court; more information is available in the official press release.

Enxeco Inc. v. Staley reversed a dismissal for want of prosecution, observing: “[T]he rules of judicial administration provide that civil non-jury cases should be brought to trial or final disposition within twelve months from the defendant’s appearance date. The administrative rules expressly recognize, however, that in complex cases or special circumstances ‘it may not be possible to adhere to these standards.'” (citations omitted). Here, such circumstances were presented by lengthy motion practice about forum and capacity issues. The Court gave little weight to plaintiff’s decision to not pursue discovery, noting that no rule compelled it to do so. No. 05-15-01047-CV (Jan. 9, 2017) (mem. op.)

Heath’s employment agreement incorporated a confidentiality agreement, which in turn required arbitration of “any controversy, dispute or claim arising out of or in any way related to or involving the interpretation, performance or breach of this Agreement . . .” The Fifth Court noted that phrases such as “any controversy” are viewed, by federal and state courts, as “broad arbitration clauses capable of expansive reach.” It rejected the argument that the term “this Agreement” referred only to the confidentiality agreement, even though that agreement had a merger clause, because the arbitration clause refers to both claims “arising out of” and “in any way related to” the agreement. The Court also noted that the employment and confidentiality agreement were executed at the same time, and that its holding would apply fully to Heath’s tort claims as well. Advocare GP LLC v. Heath, No. 05-16-0049-CV (Jan. 5, 2017) (mem. op.)

The trial court granted summary judgment for the employer (oddly enough, a labor union) in a dispute arising from an employee’s benefits. The Fifth Court reversed, finding ambiguity in the underlying disability policy (noting, in particular, its interplay with separately-drafted legal instruments about the employment relationship – a recurring issue in disputes about arbitration clauses), and also finding related fact issues about whether the contract was unilateral or bilateral, and whether the employee had exhausted administrative remedies. The opinion recaps the major authorities about the role of contractual ambiguity in a summary judgment analysis. Videtich v. Transport Workers Union of Am., No. 05-15-01449-CV (Dec. 29, 2016) (mem. op.)

Nations Renovations successfullly sued Hong in quantum meruit for unpaid construction work, and successfully defended against misrepresentation claims. The Fifth Court affirmed based on contract terms. As to the quantum meruit claim, it noted: “Because the four items [at issue] are listed only as recommendations and the other items of Extra Work claimed by Nations are not mentioned in the Contract, we conclude the Extra Work is not covered by the Contract. Therefore, the trial court properly submitted the quantum meruit question to the jury.” As to the misrepresentation claims, applying Italian Cowboy, the Court found this disclaimer of reliance to be effective: “17. ANY REPRESENTATIONS, STATEMENTS, OR OTHER COMMUNICATIONS NOT WRITTEN ON THIS CONTRACT ARE AGREED TO BE IMMATERIAL and not relied on by either party and do not survive the execution of this contract.” Hong v. Nations Renovations LLC, No. 05-15-01036-CV (Dec. 29, 2016) (mem. op.)

Attached, some excellent proofreading advice for your briefs, motions, and letters in 2017! Best wishes for the New Year from 600Commerce. (A tip of the hat to @AnalyticalGrammar)

In Heritage Numismatic Auctions v. Stiel, a dispute about the the sale of rare coins, the Fifth Court affirmed the denial of a motion to compel arbitration, finding that the relevant documents were not adequately proved up by the sponsoring affidavit. The witness “did not testify that the documents in Exhibit F were ‘true and correct’ copies of the contracts or otherwise state that they were the originals or exact duplicates of the originals.” While the affidavit began with the phrase, “The facts contained herein are true and correct,” the Court held that “[t]he trial court could interpret this statement as asserting the factual averments in the affidavit were true and correct but not asserting the documents in Exhibit F were the originals or exact duplicates of the originals as required by Rule 902(10)(B)(2).” Finally, from a general description of the documents as “the various Terms and Conditions . . . ,” the Court held that “[t]he trial court could have concluded that [the witness’s] statement did not constitute testimony that the documents in Exhibit F were the originals or exact copies of the contracts.” No. 05-16-00299-CV (Dec. 16, 2016) (mem. op.)

In a technical but financially critical decision, Eddington v. Dallas Police & Fire Pension System, the Fifth Court held that adjustments to the future interest rate paid on accounts established under a pension plan, sponsored by the beleaguered Dallas Police & Fire Pension system, did not violate the prohibition on benefit reductions contained in article XVI, section 66 of the Texas Constitution. No. 05-15-00839-CV (Dec. 13, 2016). Of general interest, a component of its analysis reviewed when a federal Fifth Circuit opinion about state law matters will be followed in state court.

Yes, it arose in the unusual procedural posture of a Rule 736 home equity loan foreclosure, and no, it is not the recommended practice. That said, the relators in the case of In re: Priester successfully convinced the Fifth Court to reverse direction and, on rehearing, grant a writ of mandamus in their favor “[i]n light of the more developed record and clarified arguments . . . .” No. 05-16-00965-CV (Nov. 21, 2016) (mem. op.)

While affirming a relatively straightforward judgment in a home loan dispute, the Fifth Court observed: “The unjust enrichment doctrine applies principles of restitution to disputes where there is no actual contract and is based on the equitable principle that one who receives benefits which would be unjust for him to retain ought to make restitution.” Ihde v. First Horizon Home Loans, No. 05-15-01084-CV (Nov. 28, 2016) (mem. op.) (emphasis added) A counterpoint in this practical but rarely-visited area of remedies law appears in City of Harker Heights v. Sun Meadows Land Ltd., 830 S.W.2d 313, 317 (Tex. App.–Austin 1992, no writ), which observes: “An action for money had and received may be founded upon an express agreement or one implied in fact, but it is not dependent upon either.” (emphasis added).

I was on the trial team that won a $146 million verdict in Pecos, Texas last week; here is the Dallas Morning News’s recent story on the case.

Plaintiffs won a lawsuit against their landlord about the handling of their security deposit. The Fifth Court affirmed, reversing only as to prejudgment interest. While the parties’ lease said that “[a]ny person who is a prevailing party in any legal proceeding brought under or related to the transaction described in this lease is entitled to recover prejudgment interest,” the plaintiffs recovered based on section 92.109(a) of the Property Code, which allows recovery of statutory penalties in the event of a landlord’s bad faith retention of the security deposit. Because “[p]rejudgment interest does not apply to statutory penalties imposed for wrongdoing,” and the underlying statute did not provide for recovery of prejudgment interest, the interest award could not stand. Frazin v. Sauty, No. 05-15-00879-CV (Nov. 6, 2016) (mem. op.)

GDL Masonry Supply, Inc. v Lopez and Rapid Masonry Supply, Inc. (November 2, 2016) is a handy opinion to hand your clients after they sign a settlement agreement requiring confidentiality.  It is a risk too many clients do not take seriously enough (see, e.g., “Girl costs father $80,000 with ‘SUCK IT’ Facebook post“).

In GDL, the Dallas Court of Appeals affirmed summary judgment in favor of Rapid, the plaintiff, who refused to pay under a settlement agreement because GDL failed to satisfy the confidentiality requirements of the agreement.  The facts were too common.  GDL brought suit against Rapid, which settled by way of an agreement that required confidentiality and Rapid to make a series of $10,000 payments totaling $60,000 to GDL.  GDL then told a third party that Rapid had stolen from it, that GDL won the lawsuit, and that Rapid owed GDL money as a result. When Rapid discovered what GDL said about their litigation, it sued asserting that it had no obligation to make the remaining settlement payments and also seeking attorney’s fees for breach of the confidentiality language.  The trial court granted summary judgment to Rapid, holding that the confidentiality provision was breached, that Rapid had no obligation to make further payments, and awarding attorney’s fees.

GDL’s argument on appeal did not deny the disclosure of the settlement, but instead challenged the materiality of the confidentiality provision.  The Dallas Court of Appeals made swift work in rejecting this argument, noting that the settlement agreement itself stated that the confidentiality paragraph “is a material provision of this Agreement and that any breach of the terms and conditions of [the paragraph] shall be a material breach of this Agreement.”  The Court held that the contract’s language was binding.

GDL Masonry Supply, Inc. v Lopez and Rapid Masonry Supply, Inc.

From sister blog 600Camp – celebrate Halloween with these Five Recent Fifth Circuit Cases to Know. And don’t forget to vote for Super Lawyers by this Friday, October 28!

A classic example of a “too soon” appeal appears in Bolden v. Fidelity Nat’l Title: “In the original petition, appellee sought both damages for breach of warranty of title and attorney’s fees. The trial court signed a default judgment awarding damages for breach of warranty of title. The default judgment is silent as to appellee’s claim for attorney’s fees. Because the claim for attorney’s fees remains pending, the judgment is not final.” No. 05-16-00398-CV (Oct. 14, 2016) (mem. op.)

The relator in the case of In re: Schindler Elevator complained that the trial court “refused to issue findings of fact and conclusions of law explaining the court’s reasoning for denying relator’s motion for leave to designate responsible third parties.” The Fifth Court found no abuse of discretion, noting that the RTP proceeding was not a “trial” within the meaning of the applicable rule, and that the relator had a remedy by direct appeal. No. 05-16-01172-CV (Oct. 10, 2016) (mem. op.)

If ever a case illustrated a trap for the unwary, it is IDA Engineering v. PBK Architects, in which the plaintiff sued exactly four years after the termination of its contractual relationship. Unfortunately, the invoices upon which its damage claim relied were issued before the contract termination, and the contracts contained this language about payment: “Invoices will be issued monthly, per percentage of completion or per phase and will be due upon issuance date.” (emphasis added). Accordingly, the claim was barred by limitations.  No. 05-15-01418-CV (Oct. 4, 2016) (mem. op.)

Axiomatic, but like many other basic mandamus concepts, worth remembering:

1. If the trial court does not have jurisdiction to rule on relator’s motion, the motion cannot be categorized as “properly filed” for purposes of a potential writ of mandamus to compel a ruling;
2. And if the the trial court does not have jurisdiction to rule on the motion, “it logically follows that it does not have a ministerial duty to rule on the motion.”

In re: Guzman, No. 05-16-01109-CV (Sept. 29, 2016) (mem. op.)

In In re: Douglas D. Halofitis, No. 05-16-01047-CV (Sept. 27, 2016) (mem. op.), the Fifth Court gives a helpful roadmap for parties who seek to challenge a judgment of which they were given late notice.  We know that trial courts usually lose plenary jurisdiction over a judgment within 30 days after the court signs the judgment, which is also the deadline for filing an appeal. But what if you don’t receive notice of the judgment?

Under Rule 306a, when a party does not receive notice or acquire actual knowledge of judgment within twenty days, the deadlines begin to run not from the signing of the judgment, but instead from the sooner of the date the party received notice or acquired actual knowledge of the judgment or 90 days after the judgment was signed. A few pointers to keep in mind:

1. the 306a motion must be sworn and must establish the date of first notice or knowledge of the judgment and that this date was more than 20 days after the judgment was signed;
2. the 306a motion, including any evidentiary supplements necessary to satisfy the procedural requirements of 306a(5), must be filed within the court’s plenary period as calculated from the date of first notice or knowledge of the judgment;
3. the movant should seek an immediate evidentiary hearing on the 306a motion and obtain a finding of fact of the date of first notice or actual knowledge of the judgment;
4. in no event will the periods begin to run more than 90 days after the judgment is signed, meaning that if you receive notice more than 90 days after the judgment is signed, your only avenue may be a restricted appeal or bill of review; and
5. the 306a motion should be coupled with a post-judgment motion, e.g. motion for new trial, motion to reinstate, or motion to modify judgment. If you wait for a decision on your 306a motion, your post-judgment motion may end up being untimely even if your Rule 306a motion is successful because post-judgment motions must still be filed within 30 days of the date found to be the date of first notice or actual knowledge of the judgment.

A basic point, but one that bears frequent repetition, and the Court of Criminal Appeals concurrence ultimately cited by the Fifth Court is a quick and worthwhile read.: “As the party seeking relief, the relator has the burden of providing the Court with a sufficient record to establish his right to mandamus relief.” In re: Johnson, No. 05-16-01094-CV (Sept. 27, 2016) (mem. op.) (citing In re: Jones, No. 05-16- 00230-CV, 2016 WL 836835 (Tex. App.—Dallas March 4, 2016, orig. proceeding) (mem. op.) (citing Lizcano v. Chatham,  416 S.W.3d 862, 863 (Tex. Crim. App. 2011) (orig. proceeding) (Alcala, J. concurring))).

In its order denying a mandamus petition in the case of In re: Adelphi Group, the Fifth Court reminds: “Although parties may expend time and money if they are ordered to arbitration improperly, delay and expense—standing alone—will not render the final appeal inadequate. Further, mandamus as a remedy for review of orders compelling arbitration should be limited to the comparatively rare cases where the legislature has through statute expressed a public policy that overrides the public policy favoring arbitration.” No. 05-16-01060-CV (Sept. 22, 2016) (mem. op.)

The Fifth Court is the first appellate court in Texas to offer an extension of TAMES that allows attorneys to see non-public documents; here is the official announcement.

Beasley v. Richardson, while involving facts unique to pro se litigation, provides a valuable reminder about preservation with relation to the handling of a nonsuit: “Error in dismissing a case with prejudice cannot be raised for the first time on appeal and must be presented to the trial court. To preserve a complaint of error in a judgment for appellate review, Beasley was required to inform the trial court of his objection by a post-judgment motion to amend or correct the judgment or a motion for new trial.” (citations omitted). No. 05-15-01156-CV (Sept. 20, 2016) (mem. op.)

Happy fifth birthday to the sister blog, 600 Camp, which follows commercial litigation in the U.S. Court of Appeals for the Fifth Circuit.

Henry S. Miller Commercial Co. lost a trial on a fraud claim but succeeded in a later malpractice claim against its trial counsel. The Fifth Court resolved two issues – (1) postjudgment assignment of malpractice claims as part of a reorganization was acceptable where “Here, HSM asserted its own malpractice claim against the Lawyers in its own name. It pursued its own claim through trial and judgment. Under these circumstances, HSM’s right ‘to bring [its] own cause of action for malpractice is not vitiated’ by the assignment to its judgment creditors” (applying Tate v. Goins, Underkofler, Crawford & Langdon, 24 S.W.3d 627, 629 (Tex. App.—Dallas 2000, pet. denied)); and (2) the trial court erred in dismissing HSM’s claim for gross negligence based on the failure to designate a key responsible third party. Accordingly, because a new trial was required on punitive damages, it was also required on compensatory damages, and thus liability as well. Henry S. Miller Comm’l Co. v. Newsom, Terry & Newsom LLP, No. 05-14-01188-CV (Sept. 14, 2016) (mem. op.)

Here is my PowerPoint from my “Fifth Circuit Update” presentation at the Advanced Civil Appellate Course in Austin. Note that it includes some initial notes on Globeranger-AG v. Software AG, a major intellectual property opinion released by the U.S. Fifth Circuit earlier this week.

“Legal-malpractice damages are the difference between the result obtained from the client and the result that would have been obtained with competent counsel. Here, the result obtained, foreclosure, was inevitable concerning [Plaintiff’s] failure to pay her mortgage in her past and her refusal to pay in order to bring the loan current. Under these circumstances . . . there is no evidence of damages resulting from any alleged legal malpractice.” Sheetz v. Slaughter, No. 05-14-00982-CV (Aug. 31, 2016) (mem. op.)

The Fifth Court has now joined the line of cases stating that CPRC § 38.001 only allows an award of attorneys fees against certain kinds of business entities (although bypassing the actual application of that statement on the specific, conflicting facts presented about the defendants’ business structure): “Under the plain language of section 38.001, a trial court cannot order limited liability partnerships (L.L.P.), limited liability companies (L.L.C.), or limited partnerships (L.P.) to pay attorneys’ fees.” Varel Int’l Indus., LP v. PetroDrillBits Int’l, Inc., No.  05-14-01556-CV (Aug. 30, 2016) (mem. op.)

Ten Hagen Excavating, Inc. v. Castro-Lopez presents a detailed review of the evidence about a serious truck accident, involving issues of tort law beyond the usual scope of this blog. As a matter of style, the opinion is notable for deftly using accident photos in its description of and analysis of the issues, as well as a diagram of how the accident happened. No. 05-15-00902-CV (Aug. 29, 2016).

Despite a contract between Texas Instruments and Volt, an employment agency, saying that Volt was an independent contractor, the Fifth Court reversed a jury verdict on the issue of whether Udell – a worker supplied by Volt – was an employee for purposes of workers compensation. Reviewing the record in detail, the Court concluded that “Udell was working on TI’s premises, in furtherance of TI’s day-to-day business, and the detail
s of Udell’s work that gave rise to his injury were directed by TI.” Texas Instruments v. Udell, No. 05-14-01042-CV (Aug. 24, 2016) (mem. op.)

In Cooper v. Campbell, the Fifth Court reviewed the key principles that govern “equitable remedies such as disgorgement and forfeiture to remedy a breach of fiduciary duty” —

• “The central purpose of forfeiture as an equitable remedy is not to compensate the injured principal, but to protect relationships of trust by discouraging disloyalty.
• “Disgorgement is compensatory in the same sense as attorney fees, interest, and costs, but it is not damages. . . . In fact, a claimant need not prove actual damages to succeed on a claim for forfeiture because they address different wrongs. In addition to serving as a deterrent, forfeiture can serve as restitution to a principal who did not receive the benefit of the bargain due to his agent’s breach of fiduciary duty. . . .”
• “The amount of disgorgement is based on the circumstances and is within the trial court’s discretion.”

The Court then remanded for more fulsome consideration of factors identifed in ERI Consulting Engineers v. Swinnea, 318 S.W.3d 867 (Tex. 2010). No. 05-15-00340-CV (Aug. 24, 2016) (mem. op.) On the general subject of disgorgement, other useful references from the Fifth Court are its recent opinion in Premier Pools Management Corp. v. Premier Pools Inc., and McCullough v. Scarbrough, Medlin & Associates, 435 S.W.3d 871, 904 (Tex. App.-Dallas 2014, pet. denied).

In some detail, the district court ordered Altesse Healthcare not to deplete the assets of a business, whereupon: “Altesses’s actions in failing to comply with the TRO resulted in destroying the value of the company over which the lawsuit was based. In essence, Altesse took over running the company and then failed to make the scheduled payments when due, leaving the Wilsons without the company or payment. After the trial court ordered Altesse to return the company to the Wilsons, Altesse delayed and by the time it returned the necessary assets to run the business, there was little left to run.” The Fifth Court affirmed the trial court’s detailed order awarding “death penalty” sanctions and other penalties, including contempt. Altesse Healthcare Solutions v. Wilson, No. 05-15-00906-CV (Aug. 23, 2016) (mem. op.)

We all too easily forget that the requirements of a good appellate brief are defined by law, as recently noted in Lau v. Reeder, No. 05-14-01459-CV (Aug. 16, 2016) (mem. op.)

As to the issues presented, “a brief must state concisely all issues for review and reveal the legal questions we are called upon to decide. See TEX. R. APP. P. 38.1(f); Bolling v. Farmers Branch Indep. Sch. Dis., 315 S.W.3d 893, 896 (Tex. App.—Dallas 2010, no pet.).”

As to the record citations that accompany the argument, the Justices “have no right or obligation to search through the record to find facts or research relevant law that might support an appellant’s position because doing so –4– would ‘improperly transform this Court from neutral adjudicators to advocates.’ Chappell v. Allen, 414 S.W.3d 316, 321 (Tex. App.—El Paso 2013, no pet.)”

And as to good draftsmanship, a brief does not violate the rules but is notably unhlepful when the table of contents “indicates that the argument portion of the brief for all nine issues is located on pages 18 to 94 without any indication or notation as to where specific issues are addressed,” and the 77-page argument section “also does not denote where each of the nine issues is discussed and the only arguable headings in this section do not identify the issues to which they are attached.”

My colleagues Michael Hurst and Jonathan Childers recently spoke at the Dallas Bar Association Oil & Gas Update; here is their powerpoint, which provides a great summary of the law today on the key topics in oil and gas cases.

While affirming a $4 million judgment related to a truck accident – most of which involved a series of Daubert challenges — the Fifth Court provided some rare appellate guidance about the use of video animation in the courtroom. Specifically, Smith – the plaintiff’s accident reconstruction expert – prepared an animation to accompany and illustrate his testimony about how the accident occurred.

The Court found no error. As to foundation, it said: “As to the video animation, we note the video was not admitted into evidence but was shown during Smith’s testimony for demonstrative purposes. Defense counsel objected ‘on the grounds of 403.’ Smith testified he measured Gaston’s truck and two similar trailers ‘in order to get data to fill in the animation.’ It was not possible to ‘match tire to track,’ but Smith made a generalized analysis of marks on the roadway he described as an ‘approximation.’ Smith testified the animation was not a simulation and ‘not an exact replication of what happened,’ but it was ‘an accurate representation of what occurred.’”

As to admissibility and waiver, it held: “Earlier in the trial, Smith was allowed to express his underlying opinion without objection when the testimony was presented to the jury. Since the animation was a graphic depiction of the opinion admitted into evidence without
objection, Greenwood’s trial objection to the video depiction of that opinion was waived. Video animation and other demonstrative evidence that ‘summarize, or perhaps emphasize, testimony are admissible if the underlying testimony has been admitted into evidence, or is subsequently admitted into evidence.'” (citations omitted) Greenwood Motor Lines v. Bush, No. 05-14-01148-CV (Aug. 17, 2016).

Plaintiffs sued for libel, based on four articles in the Korea Town News (N.B. – Dallas has the largest Korean-American community in Texas). Unfortunately, the TCPA “anti-SLAPP” statute applied, because the articles dealt with “the proposed sale of an office building . . . for use as a community center, which would be purchased “in part with funds raised by the public.” And the statements at issue were not actionable, as they “the majority of these statements concern the value of the building . . . the appraisal value of the building, the purchase price, and its market value.” Accordingly, the Fifth Court affirmed the dismissal of Plaintiffs’ claim — and the resulting award of attorneys fees under the TCPA. Mansik & Young Plaza LLC v. K-Town Management LLC, No. 05-15-00353-CV (Aug. 15, 2016) (mem. op.)

In Premier Pools Management Corp. v. Premier Pools Inc., the Fifth Court found that a successful trademark plaintiff had established sufficient evidence of secondary meaning for the phrase “Premier Pools,” noting — in particular — the plaintiff’s proof about its advertising about and long use of the name, as well as the testimony of nine impartial witnesses about the issue of confusion. Similar evidence supported the findings for liability, damages, and disgorgement. The Court reversed the related declaratory judgment (and with it, the attorney’s fees award), finding that the “claim added nothing and provided access to no remedy that was not otherwise available . . . ” No. 05-14-01388-CV (Aug. 12, 2016) (mem. op.)

Most people will know the origin story of this appeal. In 2014, Nina Pham was working at a nurse at Texas Health Presbyterian Hospital Dallas, a hospital in the Texas Health Resources (“THR”) hospital system. She was tasked with caring from Thomas Duncan, who was diagnosed with Ebola. Pham cared for Duncan for several days. After treating Duncan, Pham was also diagnosed with Ebola. She and her adorable dog became well known the world over, but Pham claimed that THR was negligent in its policies, allowing her to contract Ebola.

In Texas Health Resources, et al. v. Pham, (August 3, 2016), the Dallas Court of Appeals considered an interlocutory appeal of a temporary injunction prohibiting THR from moving forward in a parallel administrative proceeding in the Texas Department of Insurance to determine if Ms. Pham was an employee of THR for purposes of the workers’ compensation statute. If she was an employee of THR, then workers’ compensation would be her exclusive remedy. The trial court issued a temporary injunction barring THR from proceeding before the Texas Department of Insurance because a decision in favor of THR would deprive the trial court of jurisdiction over Ms. Pham’s claims.

The Dallas Court of Appeals reversed the temporary injunction in an opinion that focuses solely on the issue of Ms. Pham’s probable right to recovery. Ms. Pham had argued that expert testimony establishing that she contracted Ebola as a result of THR’s negligence was unnecessary at the temporary injunction stage, pointing to evidence of inadequate training and procedures relating to the treatment of Ebola. She also pointed to statements by an insurance adjuster suggesting that Ms. Pham contracted Ebola due to inadequate policies and procedures. But the Court of Appeals was not persuaded. It noted that evidence of a probable right of recovery must be evidence that “under applicable rules of law, establishes a probable right of recovery.” It held that under the circumstances presented, the “applicable rules of law” would require expert testimony establishing causation, a requirement that was not excused at the temporary injunction stage. Without expert testimony of causation, Ms. Pham could not establish a probable right of recovery necessary to support a temporary injunction, allowing the Court of Appeals to avoid deciding whether a trial court can enjoin a parallel administrative proceeding.

Texas Health Resources, et al. v. Pham, (August 3, 2016)

In Southampton Ltd. v. Four Horseman Auto Group (July 20, 2016), the Dallas Court of Appeals considered whether a plaintiff who fails to file an interlocutory appeal of an order granting a special appearance as to some but not all defendants may later appeal the special appearance after a final judgment. It held that interlocutory appeal is permissive and the decision not to pursue an interlocutory appeal does not waive the right to appeal the order after final judgment. There are indeed second chances.

This was an issue of first impression for the Dallas Court of Appeals. A majority of courts had reached a similar conclusion, but at least one court has reached the opposite result.

Addressing the merits, the court also concluded that the special appearances were improperly granted. Each defendant had entered into agreements with a forum selection clause designating Dallas County, Texas as the forum for all disputes. The defendants argued they did not authorize the execution of those agreements, which were signed by a director who owned a 25% interest in each of them, but the bylaws of each entity stated that a single member constituted a quorum of the directors of the companies. Moreover, that single member had effectively conducted all the business of each of the entities without any approvals from any other members. Thus, the court concluded that the executing director had apparent authority to bind the defendants.

Southampton Ltd. v. Four Horseman Auto Group (July 20, 2016)

In KLZ Diamond Tools, Inc. v. TKG General Agency, Inc. (July 18, 2016), the Dallas Court of Appeals considered an appeal of summary judgment granted in favor of TKG, the insurer defendant, against KLZ, the plaintiff insured. KLZ claimed that the insurer failed to pay the full amount owed under a policy relating to approximately $400,000 in stolen merchandise. The insurer advanced half, but requested additional documentation relating to the merchandise. KLZ contended that the request was just stalling, and after the insurer failed to pay the full amount of the claim, sued for breach of contract, insurance code violations, deceptive trade practices, among other claims. The insurer filed a motion for summary judgment. The district court struck KLZ’s responsive summary judgment evidence due to the failure to properly prove up the attached documents and said at the hearing that it had no choice but to grant summary judgment in the absence of responsive evidence. The district court did tell KLZ’s counsel that it would allow KLZ to supplement. But the district court entered an order granting summary judgment before the deadline it gave to KLZ for the supplement, which was timely filed.

The first issue on appeal was whether the trial court erred by orally stating that KLZ was permitted to supplement an affidavit but then granting summary judgment before the deadline given. Recognizing that the summary judgment rule anticipates a party’s summary judgment evidence may not initially be properly presented and allows supplementation, the Dallas Court of Appeals held that it was an abuse of discretion to grant summary judgment without waiting for the supplemental affidavit and without explaining its ruling after having initially granting leave to supplement. Considering the supplemental evidence, the Court further concluded that summary judgment was improper because KLZ had offered summary judgment evidence creating a question of fact as to whether the insurer had improperly refused to pay the entire claim.

KLZ Diamond Tools v TKG General Agency (July 18, 2016)

In Mitchell v. Freese & Goss, PLLC (July 15, 2016), the Dallas Court of Appeals considered an appeal of the denial of a special appearance by Mitchell, a Mississippi attorney sued in Dallas County by a Texas law firm, Freese & Goss. Mitchell and Freese & Goss had a joint venture to represent Mississippi clients in litigation in Mississippi. After the cases settled, there was a dispute over attorney’s fees. Mitchell sued Freese & Goss in Mississippi and Freese & Goss brought this suit in Dallas County alleging wrongful conduct by Mitchell adversely affecting the joint venture. Mitchell filed a special appearance, which was denied. Mitchell then filed an interlocutory appeal.

On appeal, Freese & Goss asserted that the trial court had personal jurisdiction over the claims against Mitchell because the dispute arose out of Mitchell’s contacts with Texas. Specifically, Mitchell had a business relationship with Freese & Goss for the purpose of litigating the Mississippi claims, Mitchell participated in meetings and phone calls with Freese & Goss, the suit concerned payments to be made by Freese & Goss, Mitchell solicited clients to sue Freese & Goss, and those acts were specifically directed toward causing injury to appellees in Texas.

The Dallas Court of Appeals reversed and rendered a judgment that the Court lacked personal jurisdiction over the claims asserted against Mitchell. It held that merely contracting with Freese & Goss, a Texas resident, is insufficient for jurisdictional purposes. The relationship focused on activities in Mississippi, where the litigation was to be conducted, and Freese & Goss’s unilateral activities in Texas were not relevant to the analysis. Nor did the fact that some of the clients eventually moved to Texas render Mitchell susceptible to suit in Texas because “the mere existence of an attorney-client relationship unaccompanied by other sufficient contacts with the forum, does not confer personal jurisdiction….” Finally, the fact that Mitchell might have caused their shared clients to sue Freese & Goss did not confer jurisdiction because his alleged activities took place in Mississippi, and it is not enough that the effects of a tort will be felt in Texas to confer personal jurisdiction. Because Mitchell did not purposefully avail himself the privilege of doing business in Texas, the Dallas Court of Appeals reversed and rendered judgment.

Mitchell v. Freese & Goss, PLLC (July 15, 2016)

In J.A. Green Development Corp. v. Grant Thornton, LLP, et al., the Dallas Court of Appeals held that limitations begin to run for claims arising from professional negligence in an IRS administrative proceeding as soon as the client learns the IRS disagrees with the advice.

The allegations were that Green hired Grant Thornton and Akin Gump in an IRS audit concerning Green’s participation in a “distressed debt strategy” that was sold to Green by prior advisors. Green alleged that Grant Thornton and Akin Gump told Green that the strategy was likely to be upheld as legal, causing Green to reject a settlement offer by the IRS. In December 2008, the IRS disagreed and issued a report disallowing the loss and imposing substantial penalties. Green alleged that Grant Thornton and Akin Gump then backed away from their prior advice. Six months later, Green sued the original advisors who sold it the tax strategy, but Green continued to retain Grant Thornton and Akin Gump to handle the appeal of the IRS decision. When it later became clear the appeal of the IRS decision would go poorly, Green settled with the IRS for more than the offer it rejected. It then sued Grant Thornton and Akin Gump.

The Dallas Court of Appeals affirmed summary judgment in favor of the defendants. The question was whether limitations started running in December 2008, when the IRS issued its first report indicating that the loss would be disallowed, or in November 2009, when it became clear the appeal of the IRS decision would fail. “[A] cause of action accrues when a wrongful act causes some legal injury, even if the fact of injury is not discovered until later, and even if all resulting damages have not yet occurred.” Green had to concede that it was first injured when it was sold the tax strategy because it had sued the promoters of the strategy before the administrative appeal failed. Green claimed the injury caused by Grant Thornton and Akin Gump was distinct from that caused by the original advisors, but the Court of Appeals held that Green suffered a single continuous injury that Green knew of when it received the IRS report disallowing the claimed loss. The Court of Appeals also held that the Hughes Tolling Rule, which tolls limitations in legal malpractice cases arising from litigation until the litigation is resolved, does not apply to administrative proceedings.

Congratulations to 600commerce’s own David S. Coale, who argued the case on appeal for Akin Gump, and to Trey Cox and Chris Patton, who were trial counsel.

JA Green Development v Grant Thornton

In Brinson Benefits v. Hooper (July 7, 2016), the Dallas Court of Appeals considered whether a plaintiff who wins a Texas Theft Liability Act (“TTLA”) claim nonetheless can be ordered to pay prevailing party attorney’s fees to the losing defendant if that defendant defeats at least one theory asserted by the plaintiff.

Brinson sued Hooper, a former employee, after it discovered that Hooper had taken confidential information and diverted a business opportunity to her new employer. During litigation, Brinson discovered that Hooper had developed and served several clients on the side, keeping the commissions for herself. One of Brinson’s clients also moved with Hooper to her new employer, which Brinson alleged was the result of the theft of confidential information . At the close of evidence, the trial court granted a directed verdict in favor of Hooper on a claim related to a specific former client and then the jury found against Hooper on theft claims for her retaining commissions for her work on the side while still employed by Hooper. The trial court then awarded Brinson its attorney’s fees for the theft claim arising from the stolen commissions but awarded Hooper her attorney’s fees for defending against claims arising from the client she took with her to her new employer.

The Dallas Court of Appeals reversed. It held that no, if you have been found liable for theft under the TTLA, you are not a prevailing party, even if you were not liable for all the damages the plaintiff asserted. A prevailing party is “[t]he party to a suit who successfully prosecutes the action or successfully defends against it, even though not necessarily to the extent of his original contention.” Thus, to recover fees, a defendant must prevail on the merits of the claim, which at least one court has held requires the defendant to “establish [she] did not commit theft.” The Court held that the fact that Brinson prevailed in recovering one set of damages, but not another, does not convert Brinson’s suit for theft into two separate claims.

Brinson Benefits v. Hooper (July 7, 2016)

In Kartsotis v. Bloch (July 7, 2016), the Dallas Court of Appeals reversed summary judgment and rendered judgment for the appellee where the issue was the proper interpretation of a Contribution and Indemnity Agreement allocating the duty to reimburse the other parties for payments made on several obligations of co-owned businesses. A core dispute is whether the defined term “Existing Obligations” in the parties’ agreement meant the primary debtors’ financial obligations listed as “Existing Obligations” on Exhibit A to the agreement, as Kartsotis contended, or whether “Existing Obligations” meant the parties’ secondary liabilities, such as guaranties and indemnities, related to the Exhibit A obligations, as Bloch asserted.

Bloch argued that a statement in the agreement’s recitals supported his broader interpretation of Existing Obligations because it evidenced an intent to “effect an equitable sharing of their risk and liability in respect of the Obligations.” The trial court agreed and granted Bloch summary judgment on cross-motions seeking to construe the agreement.

The Court of Appeals reversed. It rejected Bloch’s argument because recitals are not strictly part of the contract and do not control the operative phrases of the contract unless they are ambiguous, the intent of the recital was vague and provided no guidance, and the recital was not as specific as the operative definitions. Exhibit A thus resolved the question of what the parties objectively intended when they agreed to that defined term, they meant only the obligations listed.

Kartsotis v. Bloch (July 7, 2016)

In Watson v. Hardman, the Dallas Court of Appeals reversed a trial court’s refusal to dismiss defamation claims under the Texas anti-SLAPP statute.

The facts were tragic. A car accident took the lives of a married couple, who both had children from prior marriages. The Hardmans, relatives of the husband, set up “go fund me” pages to benefit the surviving children. Watson, the father of one of the surviving children, filed a Rule 202 petition to investigate claims that the Hardmans had stolen some of the donations. The Hardmans then sued Watson for defamation for statements in the 202 petition and alleged rumors in the community suggesting the Hardmans stole donations. The trial court denied an anti-SLAPP motion to dismiss, which asserted that any alleged statements were protected as an exercise of the right to petition or right to free speech.

The Dallas Court of Appeals reversed, holding that allegations in the 202 Petition were the “exercise of the right to petition” because they were “a communication in or pertaining to … a judicial proceeding,” which are subject to an absolute privilege. The Court specifically rejected arguments that the statements in the judicial proceeding had to concern anything of public interest.

In addition, allegations outside of the 202 Petition were also protected “exercise of the right of free speech” because they related to community well-being, specifically the well-being of people who made donations and of the intended beneficiaries. The Dallas Court of Appeals remanded to the trial court for consideration of a motion by the Hardmans to conduct additional discovery relating to other statements outside of the 202 Petition pursuant to § 27.006(b). So the Hardmans may yet have the opportunity to discover and respond with a prima facie case for defamation showing when, where, and what was said, the defamatory nature of the statements, and how they damaged the Hardmans.  

Watson v. Hardman

Due to recent events, the courthouse is closed today. Let us think of the brave men and women of our police forces.

1. “A statement that makes up the parties’ contact is an operative fact, a necessary part of a cause of action, and is not hearsay.”
2. “A document created by one business may become a record of a second business if the second business determines the accuracy of the information generated by the first business.”
3. A document is not hearsay when “it represents the legally operative fact of demand, a necessary part of [a] breach of contract case.”

Humphrey v. Yancey, No. 05-15-00653-CV (June 30, 2016) (mem. op.)

In Freedom LHV, LLC v. IFC White Rock, Inc., the Dallas Court of Appeals reversed a temporary restraining order, reminding us yet again that under Rule 683, a trial court must state the specific reasons for issuing a temporary restraining order or temporary injunction, or the order is void. As the Dallas Court of Appeals wrote: “Even if a sound reason for granting relief appears elsewhere in the record, the Texas Supreme Court has stated in the strongest terms that rule of civil procedure 683 is mandatory.”

Practice pointers for those drafting a temporary restraining order or temporary injunction:

DO INCLUDE

• specific and legally sufficient reasons for granting the TRO or temporary injunction finding all three necessary elements:  (1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim; and
• if it is a temporary injunction, a trial setting.

DO NOT INCLUDE

• conclusory statements, e.g. “plaintiff will be irreparably injured” without a description of that specific injury and why it is probable, imminent, and irreparable; or
• statements that merely reference the complaint or other document.

Freedom LHV, LLC v IFC White Rock, Inc.

The appeal of an eviction case was resolved largely by the lack of a reporter’s record in Lyons v. Polymathic Properties, Inc. The opinion reminds of several basic principles triggered when a reporter’s record is required, which are worth remembering when considering whether to obtain a record, and in responding to an argument if an opponent has not obtained one:

• The judgment of the trial court implies all necessary findings of fact to sustain the judgment; “[i]n other words, we must presume the missing reporter’s record supports the decisions of the trial court”;
• Attaching a partial transcript to a brief is not a substitute for a formal reporter’s record; and
• Statements in a brief that are unsupported by the record cannot be accepted as facts.

No. 05-15-00408-CV (June 29, 2016) (mem. op.)

Celebrate summer with 600 Summer Camp and five good cases to know from the Fifth Circuit in 2016 — and one special bonus!

In review of a Dallas case, in In re J.B. Hunt Transport, the Texas Supreme Court clarified the standards for mandamus review of a plea in abatement based on a “dominant jurisdiction” dispute between two Texas courts with jurisdiction over similar cases. The Court confirmed that “[In re: Prudential, Ins. Co., 148 S.W.3d 124 (Tex. 2004) indeed abrogates [Abor v. Black, 695 S.W.2d 564 (Tex. 1985)]’s inflexible understanding of an adequate remedy by appeal. Permitting a case to proceed in the wrong court necessarily costs ‘private parties and the public the time and money utterly wasted enduring eventual reversal of improperly conduct proceedings.'” On the merits, the Court found that there had not been a sufficient factual showing to “estop the plaintiff in the prior action from asserting his plea in abatement. No. 15-0631 (May 27, 2016).

Texas’s far-flung and complicated court system produces a stream of litigation about conflicts between different jurisdictions. In Enexco v. Staley, the Fifth Court took the unusual step of granting a writ of prohibition against a district court in Nacogdoches County, finding that “the Nacogdoches proceeding must be stayed to prevent interference with this Court’s jurisdiction in deciding this pending appeal.” No. 05-15-01047-CV (June 21, 2016) (mem. op. & order)

. . . a seemingly academic question, but one of great significance to the guarantor whose liability rested on whether a transfer occurred. Acknowledging the Texas Supreme Court’s broad definition of a “transfer” as “Any mode of disposing of or parting with an asset or an interest in an asset, including a gift, the payment of money, release, lease, or creation of a lien or other encumbrance. . . . every method—direct or indirect, absolute or conditional, voluntary or involuntary—of disposing of or parting with property or an interest in property,” the Fifth Court held that standard release language in a settlement agreement did not create a transfer, even though the overrarching goal of the settlement was to bring an end to one development project, so a new one could proceed. Argent Development LP v. Las Colinas Group LP, No. 05-15-00626-CV (June 20, 2016) (mem. op.)

Over the weekend, I participated in a DAYL skills seminar, making a mock appellate argument against my friend, the capable Chad Baruch. Judge Martin Hoffman led the seminar, and Justices Molly Francis, Ada Brown, and Bill Whitehill presided over the argument.

Alpha Omega alleged that a law firm breached its responsibilities as an escrow agent. In ts findings of fact and conclusions of law, the trial court said: “11. Alpha Omega, Inc. did not prove by a preponderance of the credible evidence that a fiduciary relationship existed between it and the Defendants.” The Fifth Court disagreed, and then found harm because the trial court “did not evaluate the remaining elements of fiduciary breach under the proper legal standards” and “there was some evidence of the remaining elements of fiduciary breach, such that the trial court could have reached the opposite result had it not erred in finding 11.” Accordingly, it reversed and remanded. Alpha Omega CHL, Inc. v. Min, No. 05-15-00124-CV (June 16, 2016) (mem. op.)

I recently spoke at the University of Texas appellate course to provide an update on recent Fifth Circuit cases, here is my PowerPoint from that presentation.

Rainier Income Fund I, Ltd. v. Gans presented an appeal from the district court’s confirmation of the rulings of a “special judge” appointed under chapter 151 of the Texas Civil Practice & Remedies Code. The appellant moved for a new trial before the district court; the appellee contended that it was not effective to extend the appellate deadline, as the district court’s power to grant a new trial in this posture is significantly limited by chapter 151. After a thorough review of the statute and the general principles surrounding the motion for new trial in Texas, the Fifth Court concluded that the motion was effective and the deadline was extended. In particular, it noted the Texas Supreme Court’s reminder in Old Republic Ins. Co. v. Scott, 846 S.W.2d 832, 833 (Tex. 1993) that: “The filing of a motion for new trial in order to extend the appellate timetable is a matter of right, whether or not there is any sound or reasonable basis for the conclusion that a further motion is necessary.” No. 05-00460-CV (June 7, 2016) (mem. op.)

The appellate bar is still getting used to section 51.014(d) of the Civil Practice & Remedies Code, under which a “permissive” interlocutory appeal may proceed under certain circumstances. In Hartford Accident & Indemnity Co. v. Seagoville Partners, after initially granting leave to appeal under that section, the Fifth Court reconsidered whether the trial court had in fact made “a substantive ruling on a controlling question of law” as required by the statute. After thoroughly reviewing the procedural posture of the case, the Court concluded that the trial court could have also decided on the basis of whether the evidence was sufficient to raise a fact issue under the legal standard advocated by the appellant. Accordingly, it dismissed the appeal. No. 05-15-00760-CV (June 9, 2016) (mem. op.)

In Durham v. Children’s Medical Center of Dallas, the Dallas Court of Appeals decided an issue of first impression: If a 12-year-old receives medical treatment and dies more than two years after that treatment because of the negligence of the health care providers, does the Texas Constitution’s Open Courts Clause prevent the running of limitations for survival and wrongful death claims? The Dallas Court of Appeals concluded that the answer is no because the Open Courts Clause does not apply to statutorily created claims.

The facts are plainly tragic. A 12-year-old girl was injured in a car accident in Hawaii. During treatment, the doctors also diagnosed a dilation of the ascending aorta, which apparently was not related to the accident itself. The doctors recommended a follow-up with a cardiologist. The girl was transferred to Children’s Medical Center of Dallas for a short time before then being transferred to Scottish Rite, where she was treated for her injuries resulting from the accident. Unfortunately, there was not a follow-up on the information about her enlarged aorta. A little more than two years later, the girl died because her aorta ruptured. She was only 15 years old. The girl’s mother and the administrator of her estate brought wrongful death and survival claims. Summary judgment was granted based on the 2-year statute of limitations.

The Dallas Court of Appeals affirmed. It held that Civil Practice and Remedies Code § 74.251 applied, which requires claims to be filed within 2 years of the treatment that is the subject of the claim unless the child is younger than 12. Because the girl was 12 at the time of treatment, the exception did not apply and limitations began to run on the date of treatment for statutory causes of action, including wrongful death and survival claims. The Court then distinguished the Texas Supreme Court’s decision in Weiner v. Wasson, which held that limitations are unconstitutional as applied to minors under the Open Courts Clause of the Texas Constitution because they would cut off the minor’s cause of action before he reaches majority. The Dallas Court of Appeals held that the Open Courts Clause and Weiner v. Wasson could not save the survival and wrongful death claims because the Open Courts Clause does not apply to statutory claims, which include survival and wrongful death claims. As a result, the survival and wrongful death claims arising from the girl’s death were already barred by limitations months before her death.

Durham v. Children’s Medical Center of Dallas

Last Friday, blog publisher David Coale spoke about recent federal cases on sanctions and professional responsibility issues; for some ethics CLE self-study, here is the handout that he used.

LPCH partner Britta Stanton, vice-Chair of the Dallas Bar Association Trial Skills Association, recently published this good article about Impeachment in Five Simple Steps under the Texas Rules of Evidence.

The oral argument in the high-profile partnership dispute of Enterprise Products Partners LP v. Energy Transfer Partners LP will proceed at 3:00 on Wednesday, April 20, 2016. (LPCH represents Appellee ETP.)

“How many legs does a dog have if you call his tail a leg? Four. Saying that a tail is a leg doesn’t make it a leg.” — Abraham Lincoln.  The same can be said for usurious loans.

In Koch v. Boxicon, LLC, the Dallas Court of Appeals considered the appeal of Koch, a chiropractor, who was sued by Boxicon for breaching an agreement for the “purchase of future business income.”  Boxicon had financed Koch’s business by paying Koch $96,000 over six months. In exchange, Koch was required to make “pay back payments” to Boxicon totaling $192,000 over two years. The defendant claimed agreement was a usurious loan while the defendant claimed the agreement wasn’t a loan at all because the recitals expressly stated the agreement “is NOT a loan.”  The trial court allowed the jury to decide and entered a judgment in favor of the plaintiff. The Dallas Court of Appeals reversed and held that the agreement was usurious as a matter of law. Noting that courts look to the substance rather than the form of a transaction, the court held that agreement met the statutory definition of a loan and provided for an absolute obligation to repay the principal. Though the agreement stated it was a “purchase of a portion of the future cash stream generated by the business” and “is NOT a loan,” the agreement went on to state that “This is NOT an agreement to buy a percentage of the business, but for a fixed return upon capital invested by Buyer as per this agreement.” So, what is a loan agreement if you agree it isn’t a loan?  A loan.  Saying that it isn’t a loan doesn’t make it not a loan (regardless of your use of all caps).

Koch v. Boxicon

In Tour de Force, Ltd. v. Barr, the plaintiff, Tour de Force, was a Russian tour operator that entered into an agreement by email with Gordon Barr, CEO of Port Promotions. There wasn’t a separate written contract. When Tour de Force stopped receiving payments, it sued Barr individually. The trial court found after a bench trial that Tour de Force did not prove that a contract existed with Barr in his individual capacity. Tour de Force appealed, arguing that the trial court applied the wrong standard because agency is an affirmative defense. The Dallas Court of Appeals affirmed.

On the issue of whether it was the defendant’s burden to prove agency or the plaintiff’s burden to prove a contract with the defendant in his individual capacity, the Court noted that the defendant disclaimed any reliance on an agency defense during closing, meaning he had no burden to establish an affirmative defense. “Rather, the burden remained squarely with [Tour de Force] to prove a ‘meeting of the minds’ between it and Barr to enter into a contract.” The emails forming the contract included a signature line of Gordon Barr as CEO of Port Promotions, invoices were directed at Port Promotions, and payments were made from an account owned by Port Promotions. Thus, though the plaintiff testified that he believed he had contracted with Barr, there was no evidence of a “meeting of the minds” between Tour de Force and Barr in his individual capacity to enter into a contract.

Tour de Force, Ltd. v. Barr

Continuing its skepticism of expert opinions about how third parties would act under hypothetical situations (see Experts, show your work or it isn’t summary judgment evidence), the Dallas Court of Appeals affirmed a directed verdict in favor of the defendant in Axess International, Inc. v. Baker Botts, LLP based on the legal insufficiency of causation evidence. In that case, the plaintiff alleged that if Baker Botts had disclosed that it was pursuing similar patents on behalf of a competitor as well as the plaintiff, the plaintiff would have obtained different counsel, resulting in more favorable business terms in a deal with the competitor when conflict over the competing patents later came to a head.

At issue was an expert opinion from a patent attorney offered to show causation. He opined that the plaintiff would have initiated an interference proceeding and would have expanded its patent claims if the conflict had been disclosed, and that the result would have been a more favorable resolution between the plaintiff and the competitor. While noting that whether those two steps would have been taken was not clear, the Dallas Court of Appeals focused instead on whether there was evidence that those two steps would have resulted in a more favorable deal between the plaintiff and the competitor. The Court noted that because the expert offered no evidence of a similar case that was resolved favorably, there was no basis for the expert opinion that the plaintiff would have prevailed in the interference proceeding (heard this one before?). As to the expanded patent claims, the court held that the expert offered no factual basis to support his opinion as to how the USPTO would have responded to the hypothetical patent applications, again focusing on the lack of evidence regarding similar cases. And the court suggested it would be layering speculation upon speculation to assume that the mere threat of an interference proceeding or expanded patent claims would have resulted in a more favorable deal for the plaintiff without an indication as to the result of either. Thus, there was insufficient proximate cause evidence against Baker Botts and the trial court was affirmed.

Lesson learned (again): anytime your expert is saying what someone else would have done under alternative circumstances, the expert should identify specific similar factual scenarios that were considered by that third party that had the desired outcome. Otherwise, the expert’s testimony may be no evidence at all.

Axess International, Inc. v. Baker Botts, LLP

In University of Texas Southwestern Medical Center v. Munoz, the Dallas Court of Appeals for the second time considered whether sovereign immunity barred the plaintiff’s claims. At the interlocutory stage, the answer was “no.” After a trial on the merits, the Dallas Court of Appeals said “yes,” and judgment was rendered for the University.

The issue in the case was whether the University had sovereign immunity from a suit arising from an injury caused by an air handling unit. If the air handling unit was personal property, the Texas Legislature waived immunity under the Texas Tort Claims Act. If it was a fixture attached to real property, then there was no waiver and the suit was barred because the plaintiff was aware of the danger.

In the first interlocutory appeal, the Dallas Court of Appeals held that the air handling unit was personal property, and thus the trial court had jurisdiction because sovereign immunity was waived. The plaintiff argued on the appeal of the final judgment that this was the law of the case. It was, after all, the same air handling unit discussed in the opinion from the interlocutory appeal.

The Dallas Court of Appeals disagreed. Noting that “[i]f the record in one appeal on a plea to the jurisdiction differs from the record on a second appeal following trial, we review the evidence challenging the existence of jurisdictional facts.” The court held that it was logical to assume the facts were better developed by the time of trial, and so it would consider those better developed facts. After reviewing those facts, the Dallas Court of Appeals concluded that the air handling unit was actually a fixture and reversed the final judgment in favor of the plaintiff. So governmental entities, despair not if you lose your interlocutory appeal, because it may turn out that the court trying your case does not have jurisdiction after all.

University of Texas Southwestern Medical Center v. Munoz

The unfortunate plaintiff in K.W. Ministries v. Auction Credit Enterprises had trouble responding to the defendant’s summary judgment motions. They were set for hearing on September 15, 2014.  On September 8, the plaintiff filed a response that addressed only one of the claims and included no evidence. Three days before the hearing, it filed a “Document Supplement” to its response, but not a motion seeking leave to file that supplement.  Then, on the morning of the hearing, the plaintiff filed an amended response accompanied by an affidavit and other materials. At the hearing, its counsel asked the court to “receive my oral motion for leave to amend and accept our response to the summary judgment that was filed this morning.” Asked why he had not provided an affidavit to support the response on the day it was due instead of that morning, counsel answered: “I don’t have a satisfactory answer for that, Your Honor.”  The response was thus not considered, and the Fifth Court affirmed, using the plain language of the relevant rule of procedure to reject plaintiff’s arguments about why it should have been.  No. 05-14-01392-CV (March 21, 2016) (mem. op.)

Celebrate St. Patrick’s Day with five recent cases to know from the Dallas Court of Appeals; click here to access the list and analysis.  And watch out for leprechauns!

In Starwood Management, LLC v. Swaim, the Dallas Court of Appeals affirmed a summary judgment in favor of the defendant by holding that the plaintiff’s evidence of causation, an opinion from their expert witness, was conclusory and therefore not admissible summary judgment evidence. The opinion is a reminder that expert opinion evidence on summary judgment must be more than mere conclusions.

The facts of the case arose from plaintiff hiring the defendants, an attorney and his law firm, to recover an aircraft that was seized by the DEA for an allegedly illegal registration. The defendants were late in filing a claim with the DEA’s Forfeiture Counsel to recover the aircraft, causing the plaintiff’s federal claim for the aircraft to be dismissed. The affidavit offered by the plaintiff as evidence of causation was that of an attorney who had successfully represented the plaintiff in five previous aircraft seizure cases. His opinion was that if the plaintiff had timely filed its claim with the DEA such that the federal lawsuit would not have been dismissed, the DEA would have returned the aircraft as it had in those prior five case. The district court excluded the opinion and granted summary judgment in favor of the defendants.

The Dallas Court of Appeals affirmed because it held the expert’s opinion of causation was conclusory. Inexcusably passing on an opportunity to use one of this blogger’s favorite Latin phrases, ipse dixit, the Dallas Court of Appeals instead described the legal standard in less colorful but ultimately more helpful terms. “To avoid being conclusory, ‘[t]he expert must explain the basis of his statements to link his conclusions to the facts.’ An expert must also ‘[e]xplain how and why the negligence caused the injury.’” Or as I was told in math class, the expert must show his work. This expert failed to do that because, although he had past experience in other aircraft seizure cases in which the outcome was positive, he failed to describe the facts of those cases. As a result, he failed to link those cases to the one at hand, rendering his causation opinion a mere conclusion.

Starwood Management v. Swaim

In In re Michelin North America, Inc., the Dallas Court of Appeals conditionally granted a writ of mandamus to protect Michelin from being forced to produce certain discovery.  The district court ordered Michelin to produce specifications for tires similar to the allegedly defective tire at issue in that case in addition to financial information for the decade prior to the litigation.

The court of appeals held that Michelin satisfied its burden under Texas Rule of Evidence 507 to resist the discovery of trade secrets through the affidavit of an engineer who worked in Michelin’s legal department but that Michelin failed to satisfy its burden of proving its financial data was a trade secret because it failed to offer an affidavit until after the hearing on the motion to compel (helpful hint: it should be filed 7 days before the hearing under TRCP 193.4(a) if it is in affidavit form).  The court also held that the plaintiffs failed to meet their burden under Rule 507 to show “with specificity” exactly how the lack of information would impair the presentation of the case on the merits “to the point that an unjust result is a real, rather than a merely possible, threat.”  On the issue of financial information, though Michelin failed to timely prove its trade secrets privilege, Michelin was saved by a secondary argument that the district court’s order was too broad because the discovery included financial information from several years earlier and only current financial information is relevant for calculation of punitive damages.

In re Michelin

AdvoCare filed a petition to take a Rule 202 deposition from Michael Moussa; Moussa, joined by Shereef Kamel, counterclaimed.  AdvoCare obtained a $3,500 sanctions award against Kamel and his counsel related to that filing.  They appealed, arguing that “AdvoCare never asserted any affirmative claim for relief in the suit, the rule 202 petition has been ‘superseded and rendered moot’ by the institution of arbitration proceedings initiated by AdvoCare against Moussa and Kamel, and their counterclaims are no longer pending because they have nonsuited the counterclaims.”  The Fifth Court disagreed because no written order confirmed the nonsuit; accordingly, it dismissed for lack of appellate jurisdiction over an appealable final order. Kamel v. AdvoCare Int’l, L.P., No. 05-15-01295-CV (March 4, 2016) (mem. op.)

Edwards Sims paid A-1 $5,000 for an engine he claimed was faulty, and A-1 refused to provide a refund. Sims filed a petition in justice court seeking total damages of about $7000, within the $10,000 jurisdictional limit. After A-1 failed to appear for trial, the justice court entered a judgment for $7155.

A-1 then appealed the judgment to county court. Sims amended his petition to seek additional damages, including rental fees incurred due to the passage of time, and attorney’s fees in county court. After A-1 failed to respond to requests for admission, which were deemed admitted, county court entered a judgment for $35,730, including $21,206 in damages, including additional damages “due to the passage of time,” and $14,384 in attorney’s fees.

On appeal, A-1 claimed that the county court’s judgment exceeded the jurisdiction maximum of $10,000 for small claims cases. The court of appeals recognized that when a case is originally filed in justice court and is appealed to the county court, the county court’s appellate jurisdiction is also restricted to the $10,000 maximum. But the court held that additional damages accrued “due to the passage of time” do not deprive the court of jurisdiction. The damages incurred after the justice court judgment and the attorney’s fees incurred in county court were due to the passage of time. Thus, the Dallas Court of Appeals affirmed a $35,730 judgment on a claim that when filed was subject to a $10,000 jurisdictional maximum.

A-1 Parts Stop, Inc. v Sims

In the otherwise unexceptional case of In re Thorpe, the Fifth Court augmented its customary citation when denying mandamus relief [“Ordinarily, to obtain mandamus relief, a relator must show both that the trial court has clearly abused its discretion and that relator has no adequate appellate remedy. In re: Prudential Ins. Co., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding)”] with an additional one: “Mandamus is not a substitute for appeal.  In re: Bernson, 254 S.W.3d 594, 596 (Tex. App.–Amarillo 2008, orig. proceeding).”  No. 05-16-00148-CV (Feb. 25, 2016) (mem. op.)

Appellants filed a bill of review about the dismissal of their case, but could not prove a lack of fault: “Because appellants failed to pursue all adequate legal remedies when they did not appeal the denial of [the] motion to reinstate, appellants could not plead and prove the third element of a bill of review.” McCurdy v. Oeftering, No. 05-14-01353-CV (Feb. 19, 2016) (mem. op.)

Appellees sued Pak for breach of contract and won a judgment in their favor after a bench trial.  Pak requested findings of fact and conclusions of law.  Then, in a series of unfortunate events: the trial judge did not enter findings or conclusions; Pak filed a notice of past due findings and conclusions on December 31 — the judge’s last day in office — and the successor judge did not enter findings until January 12, after the period specified by the Rules.  The panel majority reasoned that the successor judge (who did not participate in the trial) had no authority to make findings and conclusions, and that Pak did not have to object at the time to preserve his appellate complaint about them. It then found harm, reversed the judgment against Pak, and remanded for proceedings consistent with the opinion.  A detailed dissent would have found a waiver on the specific facts and circumstances of the case, noting the original judge’s continued availability.  Pak v. Ad Villarai, LLC, No. 05-14-01312-CV (Feb. 16, 2016) (mem. op.)

Schultz, owner of a chain of movie theaters, did not want to pay Banowsky, a licensed Texas attorney, for helping Schultz find a theater location.  Schultz won summary judgment based on the Texas Real Estate Licensing Act,  primarily because Banowsky admitted that his work did not involve legal services.  The Fifth Court reversed: “[Schultz] argues that Banowsky’s construction of the Act is both unreasonable and favors the individual interest of an attorney over the interest in protecting the public from unlicensed, unscrupulous, or unqualified persons.  But the fact remains that the plain language of the statute exempts attorneys from all requirements of the Act.”  Banowsky v. Schultz, No. 05-14-01624-CV (Feb. 10, 2016) (mem. op.)

DFW Advisors sued its former bookkeeper, Ervin, alleging misappropriation.  She responded to a request for disclosure by saying that she did acted with consent.  At trial, she sought to introduce evidence of consent, in the form of testimony of an affair with DFW’s principal.  The trial court allowed the testimony, over DFW’s objection, and the Fifth Court affirmed “[T]his response sufficiently disclosed Ervin’s basic defense, which was that she had consent to take the money.  [Tex. R. Civ. P.] 194.2 only requires disclosure of a party’s basic assertions and did not require Ervin to disclose the details of how consent was given.”  DFW Advisors Ltd. v. Ervin, No. 05-14-00883-CV (Feb. 11, 2016) (mem. op.)

The wrenching facts of the paternity dispute in In re: H.H. provide a rare example of when a finding of legally insufficient evidence can justify remand rather than rendition.   The underlying rule, Tex. R. App. P. 43.3, requires that “When reversing a trial court’s judgment, the court must render the judgment that the trial court should have rendered, except when: (a) a remand is necessary for further proceedings; or (b) the interests of justice require a remand for another trial.”  Under the rule, in the Fifth Court: “Remand is appropriate when, for any reason, a case has not been fully developed below.”

Here, the child “was barely a year old when the trial court entered the decree of termination and had been in the custody of TDFPS for almost her entire life, never at any time living with Father. . . . Father has been incarcerated since before learning he was potentially the biological father of H.H. and admits in his appellate brief that he remains incarcerated. However, there is no evidence in the record regarding when Father will be released or his ability to care for H.H. in a manner consistent with her interests.  Additionally, neither Father nor his attorney appeared at the hearing[.]” Accordingly, ” a remand of the case against Father is appropriate to further develop the record and is in the interest of justice.”  No. 05-15-01322-CV (Feb. 12, 2016) (mem. op.)

Tunnell sued Archer for negligence after a truck accident involving Archer’s cattle.  The trial court declined to dismiss Tunnell’s claim for failure to file an expert report under a statute related to claims against health care providers (Archer was a doctor), and Archer  appealed that denial.  After a Texas Supreme Court opinion clarified the underlying statute,Tunnell contended that Archer’s appeal not only no longer had merit, but had become frivolous and sanctionable.

After Archer continued with the appeal on other grounds, the Fifth Court agreed with Tunnell and sanctioned Archer and his counsel for the costs of the motion to dismiss: “After the supreme court’s opinion in Ross, there were no reasonable grounds for an advocate to believe the case could be reversed. However, appellants did not dismiss this frivolous appeal. Instead, appellants’ counsel filed a brief on the merits asserting ERISA preemption based on non-existent orders that this Court lacked jurisdiction to consider. No reasonable counsel could believe the ERISA-preemption argument was a reasonable ground for reversal in this case when there was no written order on a motion asserting the argument and no statute permits an interlocutory appeal from such an order. In these circumstances, we conclude that appellants and their counsel’s actions are so egregious as to warrant the award to Tunnell of just damages from appellants and their counsel for their pursuit of this frivolous appeal.”  Archer v. Tunnell, No. 05-15-00459-CV (Feb. 9, 2016) (mem. op.)

Dharma and Hahn divorced.  The trial court entered a final decree. Dharma appealed the trial court division of property; primarily, an interest in her medical practice.  Hahn argued that she accepted the benefits of the decree by selling a related entity and encumbering the practice’s assets, and the Fifth Court agreed, finding that she “exercised control over substantial assets she received in the trial court’s property division.”  The Court rejected an argument that the “acceptance of benefits” doctrine did not apply, based on her view of what would likely happen on remand, because that did not establish an “unquestionable” right as required by the limits on that doctrine.  In re S.B.H., No. 05-14-00585-CV (Feb. 5, 2016) (mem. op.)

Self-explanatory: “Here, the record shows the trial court set the show cause hearing for November 12. The record does not contain any notice for any other hearing that day, nor does it contain notice of a final trial setting. Thus, while Pollard had reasonable notice that the issue before the trial court on November 12 was whether the independent executor should be removed, he had no notice that the hearing would result in a final determination of his homestead rights. To the extent the trial court considered and ruled Pollard abandoned his homestead rights in the Beverly Drive house or on any issues other than the show cause, the trial court erred. Because Pollard did not receive proper notice, his due process rights were violated, and we must reverse the trial court’s order.”

Echoing Justice Marshall’s classic head fake in Marbury v. Madison about jurisdiction, the case of In re Ralston Outdoor Advertising Ltd. offered a similar maneuver about Texas mandamus standards.  After first expanding the Fifth Court’s usual citation to In re: Prudential Ins. Co., 148 S.W.3d 124 (Tex. 2004) to include its discussion of balancing (“An appellate remedy is ‘adequate’ when any benefits to mandamus review are outweighed by the detriments.”), the Court then denied mandamus relief based on longstanding pre-Prudential precedent : “Texas courts have long held that a plaintiff denied a default judgment has an adequate appellate remedy.” (citing Jackson v. McKinsey, 12 S.W.2d 1044, 1045 (Tex. Civ. App.—Fort Worth 1928, no writ)).

The Fifth Court continues to carefully police the boundaries of judicial admissions.  In a family law case, it observed: “In her original motion to modify, Mother did not request the amount of child support be modified; rather she requested only that the order be modified to impose greater restrictions on Father’s access to [Child].  Therefore, Mother’s statement there had been a material and substantial change in circumstances was directed toward possession of and access to J.C.J., not the previously ordered child support.  Accordingly, Mother did not make a ‘clear, deliberate, and unequivocal’ statement in her original motion to modify that there had been a material and substantial change in circumstances relating to Father’s financial condition or to the amount of child support Father had been ordered to pay.”  In re JCJ, No. 05-14-01449-CV (Jan. 28, 2016) (mem. op.) (applying Horizon/CMS Healthcare Corp. v. Auld,  34 S.W.3d 887, 905 (Tex. 2000)).

A high-profile fee dispute led to holdings that (1) an attorney can recover in quantum meruit in connection with an oral contingent fee agreement, notwithstanding the other legal problems with such agreements; (2) legally sufficient evidence of the attorney’s “valuable compensable global settlement services” supported the verdict on his quantum meruit theory; (3) claimed error on the narrow scope of a fiduciary duty instruction was not preserved without a specific objection to the scope issue; and (4) the trial court did not abuse its discretion in refusing a spoliation instruction, when evidence showed that the destruction of the relevant emails resulted from a routine upgrade process.  Shamoun & Norman, LLP v. Hill, No. 05-13-01634-CV (Jan. 26, 2016).  The Court rendered judgment on quantum meruit.

It really can happen in the appeal of a temporary injunction — “If, while on appeal of the granting or denying of the temporary injunction, the trial court renders final judgment, the case on appeal becomes moot.”   Santiago v. Bank of New York (Jan. 25, 2016) (mem. op.) (citing Isuani v. Manske-Sheffield Radiology Group, P.A., 802 S.W.2d 235, 236 (Tex. 1991) (per curiam)).

Graman v. Graman involved a contentious dispute about the operation of a family restaurant business.  On a fraud claim related to a loan, a witness testified to a conversation with the defendant: “We ended up talking about his loans his parents made to him and he told me that he never intended to pay his parents back at that point in time . . . He told me that he never intended on paying them back — and that’s why he never signed on what I recall him telling me was approximately $850,000.  Finding that the first statement was not evidence of the defendant’s intent at the time of the loans, the Fifth Court then found: “As for the second statement, a fact finder could determine that statement showed Jason’s intent at the time of all the loans,” and reversed a no-evidence summary judgment on this claim.  No. 05-14-01254-CV (Jan. 20, 2016) (mem. op.)

The issue in Tempay, Inc. v. Tanintco, Inc. was whether a notice of assignment, required to be sent to an account debtor as part of a factoring arrangement, satisfied section 9.406 of the UCC.  That provision requires that the notice “reasonably identify the rights assigned,” and courts have divided about exactly what it requires, and whether summary judgment is appropriate.  Here, in an analysis of broader interest about the appropriate standards for summary judgment, the Fifth Court found fact issues about the adequacy of the notice and whether it had been revoked.  No. 05-15-00130-CV (Jan. 15, 2016) (mem. op.)

Highland Capital sued the Looper Reed law firm, who represented a former employee in litigation with Highland, alleging that the firm committed several torts against Highland during the course of that representation.  The Fifth Court affirmed the dismissal of those claims on immunity grounds: “[T]he actions themselves—acquiring documents from a client that are the subject of litigation against the client, reviewing the documents, copying the documents, retaining custody of the documents, analyzing the documents, making demands on the client’s behalf, advising a client to reject counter-demands, speaking about an opposing party in a negative light, advising a client on a course of action, and even threatening particular consequences such as disclosure of confidential information if demands are not met—are the kinds of actions that are part of the discharge of an attorney’s duties in representing a party in hard-fought litigation.”  Highland Capital Management LP v. Looper Reed & McGraw, PC, No. 05-15-00055-CV  (Jan. 14, 2016) (mem. op.) (applying Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015)).

After a deadly 18-wheeler accident, the trucking company “decided to have the remains of the tractor and part of the trailer cut in half and crushed.”  The district court allowed a spoliation instruction in the subsequent litigation, and the Fifth Court affirmed, noting: “the severity of the crash, [the CEO’s] years of experience in the industry, his previous dealings with obtaining police reports, and his awareness to preserve the [electronic control mechanism].”  That said, particularly given the company’s protection by the workers’ compensation statutes, the death penalty sanctions entered by the district court did not have a “direct relationship” to that destruction.  In re: J. H. Walker Inc., No. 05-14-01497-CV (Jan. 15, 2016) (mem. op.)  This opinion presents a thoughtful application of the Texas Supreme Court’s recent analysis of spoliation in Brookshire Brothers, Ltd. v. Aldridge, 438 S.W.2d 9 (Tex. 2014).

In recently dismissing an appeal, the Fifth Court reminded that as a “fictional legal person,” “a corporation may only appear through an attorney” in court proceedings, and summarized the cases on this point.  Temple of the Supreme Mother Goddess Mahadevi Shakit of America, Corp. v. Wells Fargo Bank N.A., No. 05-15-01289-CV (Jan. 8, 2016) (mem. op.)

After the Texas Supreme Court’s reversed the Fifth Court’s analysis of a shareholder oppression claim in Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014), it remanded for consideration of a parallel “informal fiduciary duty” claim.  On remand, the Fifth Court rejected that claims, concluding: (1) standing alone, “evidence of domination and control” by the majority shareholder would not establish the necessary duty, and (2) the various familial and business relationships between the plaintiff and the defendants were not enough to establish a relationship of trust and confidence, notwithstanding the interaction of various family trusts over the years.  Ritchie v. Rupe, No. 05-08-00615-CV (Jan. 12, 2016) (mem. op.)

Plaintiffs sought damages for losing a telecommunication contract with DISD.  The defendants argued that, in the absence of any evidence of acts of fraudulent concealment, limitations should run from 2006 when Plaintiffs received their last payment.  The Fifth Court agreed, rejecting Plaintiffs’ counterargument that limitations did not begin to run until the federal agency overseeing the contract had completed its investigation of the situation. Lazo Technologies v. Hewlett-Packard, No. 05-14-01060-CV (Jan. 7, 2016) (mem. op.)

After the second mediation of a wrongful death case failed to yield a settlement, the trial judge ordered the Chief Claims Officer (a resident of Alabama not otherwise involved in the case) of the defendant’s carrier (a nonparty) to appear at a show cause hearing.  The Fifth Court granted a mandamus petition about that order: “[W]e conclude the judge lacked jurisdiction to order Thomas, a non-party who did not attend either mediation and who lives outside the trial court’s subpoena range, to appear and explain why ProAssurance should not be sanctioned.”  In re ProAssurance Ins. Co., No. 05-15-01256-CV (Jan. 4, 2016) mem. op.)

A business involved in the fuel purchases of a convenience store (right) obtained a $344,000 default judgment against an individual involved with the store’s operations. The Fifth Court set aside the judgment under the Craddock factors.  As to the first factor (conscious indifference), the Court reminded of the importance of evidence rulings: “Although Quik-Way objected to the affidavits and other evidence filed in support of the motion for new trial, it did not secure any rulings on its objections; thus, we consider all the evidence in support of the motion for new trial”  On the merits, the defendant “explained that her sister  . . . handled the financial and personnel matters in the business and was the day manager of the store. After they were sued, [the sister] said she would handle the lawsuit. According to [the defendant], [the sister] was more educated and did not have a full-time outside job. [The defendant] said she relied on her sister and believed a lawyer had been hired and that an answer had been filed.”  The sister filed a confirming affidavit.  This showing sufficed: “A party’s belief that she had taken the appropriate steps to hire counsel is not consciously indifferent conduct, nor does it show [the defendant] knew she was being sued but did not care.”  Khwaja v. Quik-Way Retail Associates II, Ltd., No. 05-14-01090-CV (Dec. 28, 2015) (mem. op.)

“Branch” Warren, a noted professional bodybuilder, tore a leg muscle when he slipped on a rainy ramp outside a TGI Friday’s restaurant.  He proffered expert testimony from an architect named Peter Combs who, after inspecting the ramp roughly three months after the accident, opined that it was unsafe.  The Fifth Court affirmed summary judgment for the defendant: “[A] fatal problem with the Combs affidavit is that Combs did not say what the ramp’s condition was when Warren fell. Combs did not say that the ramp was probably as slippery on August 20 (when Warren fell) as it was on December 4 (when Combs inspected the ramp). He did not say that the lapse of time and exposure to the elements made the ramp more slippery, less slippery, or had no effect on the ramp’s slipperiness. In short, Combs’s affidavit addressed the ramp’s condition only on the day he examined it.”  Warren v. Carlson Restaurants, No. 05-14-01232-CV (Dec. 30, 2015) (mem. op.)

Appellant complained that the trial judge had further proceedings after a nonsuit.  While also affirming as to whether a nonsuit occurred (finding that one did not happen), the Fifth Court reminded of the importance of timely objection: ” Generally, to preserve a complaint for appellate review, a party must timely present the complaint to the trial court and seek a ruling on the complaint . . . .  In this case, not only did appellants not object when the case was reinstated, they affirmatively indicated that they did not object. As a result, this issue was not preserved for appellate review.”  Gonzalez v. Gonzalez, No. 05-14-01361-CV (Dec. 29, 2015) (mem. op.)

In a companion to the high-profile libel case of Tatum v. Dallas Morning News, the Fifth Court addressed the “anti-SLAPP” dismissal of the Tatum’s suit against Julie Hersh, a book author who allegedly discussed the subject of the offending column with columnist Steve Blow. For purposes of the motion, the Court assumed that “Hersh admitted talking with Blow about suicide and secrecy in general, but . . . denied making the alleged statements that the Tatums based their claims on—statements about [their son’s] death and obituary that encouraged Blow to write critically about those facts.”  Based on those facts, the Court reversed dismissal, finding that its holding in Pickens v. Cordia, 433 S.W.3d 179 (Tex. App.–Dallas 2014, no pet.), controlled when “the defendant’s motion admits participating in a conversation generally but denies making the specific relevant statements in particular.”  Tatum v. Hersh, No. 05-14-01318-CV (Dec. 30, 2015).

In a detailed analysis, the Fifth Court reversed a summary judgment for the Dallas Morning News and columnist Steve Blow as to this 2010 column in the case of Tatum v. Dallas Morning News, No. 05-14-01017-CV (Dec. 30, 2015).  In a nutshell, the plaintiffs took issue with Blow’s suggestion that they were untruthful about the circumstances of their son’s suicide.  The Court found genuine issues of material fact about whether the column was about the Tatums (it did not expressly name them); whether it was defamatory, substantially true, or privileged; whether it solely involved opinion; and whether Blow acted with malice.  The News’s own coverage of the opinion appears here.

While the Wilburns submitted the highest price at a real estate auction, it was below the reserve price set by the bank who was auctioning the property. They nevertheless sought to enforce a right to the property.  The Dallas Court affirmed a take-nothing verdict for the defendants.  As to the auctioneer’s actual authority, the Court noted the instructions about reserve price in the “Agreement to Conduct Auction Sale.”  As to his apparent authority, the Court noted the auctioneer’s statements at the start of the auction and the Wilburns’ signatures on two cards that said what a reserve price was and referenced the auctioneer’s contract: “None of the bank’s actions or inactions clothed the auctioneer with the indicia of authority to sell the Property at a price below the reserve without Valliance’s consent.”  Wilburn v. Valliance Bank, No. 05-14-00965-CV (Dec. 21, 2015) (mem. op.)

Tervita LLC unsuccessfully disputed Sutterfield’s workers compensation claim in a contested hearing; afterwards, Sutterfield sued Tervita for various torts relating to its handling of his claim.  The trial court denied Tervita’s motion to dismiss under the new Texas anti-SLAPP statute.  The Dallas Court of Appeals reversed as to Sutterfield’s claims based on Tervita’s participation in the agency hearing, concluding that those claims were based on Tervita’s exercise of its right to petition.  It otherwise affirmed, concluding that Sutterfield’s claims about a hostile work environment and wrongful discharge “are based on Tervita’s actions and statements outside of the TDI-WC proceeding.”  Tervita LLC v. Sutterfield, No. 05-15-00479-CV (Dec. 18, 2015).

The Hales sued their homebuilder for fraud and violation of the DTPA, alleging serious problems with the foundation of their Rockwall home (right).  They substantially succeeded at trial, and the Dallas Court of Appeals affirmed in large part in Bishop Abbey Homes, Ltd. v. Hale, No. 05-14-00137-CV (Dec. 16, 2015) (mem. op.)  In particular, the Court affirmed as to limitations – a significant issue in this long-simmering dispute – noting that “each time the Hales raised a concern about the foundation, they were assured by one of appellants’ experts that the foundation was not the cause of the problems the Hales observed.”  The court also affirmed as to sufficiency challenges to liability, several claims of improper closing argument, and a challenge to the the basis of the exemplary damages award based on constitutional and Kraus factors. The court requested a remittitur as to (a) mental anguish damages (for sufficiency reasons) above $208,856 per plaintiff; and (b) a portion of the additional/exemplary damages award, based on the applicable cap and the conclusion that the total award “exceeds the guidelines set forth in [Bennett v. Reynolds, 315 S.W.3d 867 (Tex. 2010)] and [Tony Gullo Motors I, LP v. Chapa, 212 S.W.3d 299 (Tex. 2006)] for the type of harm suffered by the Hales as a result of appellants’ conduct.”

In the mandamus case of In re Fort Apache Energy Inc., the relators sought relief from a trial setting in Dallas County, alleging that it interfered with the dominant jurisdiction (and slightly later trial setting) of the Kendall County Court.  No. 05-15-00159-CV (Dec. 16, 2015).  The Dallas Court of Appeals denied the petition, finding that the setting did not “amount[] to the kind of direct interference . . . that warrants mandamus relief under currently governing law.”  (citing, inter alia, Abor v. Black, 695 S.W.2d 564, 566 (Tex. 1985) (orig. proceeding).  In a classic disagreement about the scope and role of mandamus proceedings, a dissent would grant relief, arguing that “refusal to correct the trial court’s clear abuse of discretion by mandamus presents a strong likelihood of wasted public and private resources alike.”  The Texas Supreme Court has since accepted a mandamus petition in, and set oral argument for, a similar case, also from Dallas.

One Technologies (“OT”) sued Profinity and a former OT employee for breach of a noncompetition agreement. Profinity counterclaimed for violations of the Texas antitrust statute.  The jury found against OT and for Profinity; the trial judge adopted the verdict as to OT’s claims and granted JNOV on Profinity’s.  The Dallas Court of Appeals affirmed, changing only the basis for resolution of the antitrust claim.  Profinity LLC v. One Technologies, LP, No. 05-14-00403-CV (Dec. 17, 2015) (mem. op.)

As to OT’s claim, the Court found no conclusive proof the element of damage, noting that Profinity’s damages expert had squarely clashed with OT’s expert at trial.  As to the antitrust claims, the Court expressed considerable skepticism about Profinity’s damages model, which calculated the value of lost customers nationwide.  Under Coca-Cola Co. v. Harmar Bottling Co., 218 S.W.3d 671 (Tex. 2006), because “remedying extraterritorial injury . . . would provide no benefit to consumers ‘in state,'” even allegations of anticompetitive conduct in Texas toward a company based in Texas are likely not actionable under the Texas statute.  The Court did not rule on this basis, however, instead finding a lack of jurisdiction under the Noerr-Pennington doctrine, as the alleged anticompetitive conduct focused on “conduct ‘incidental’ to the prosecution of a lawsuit respecting [antitrust] redress.” (citing Noell v. City of Carrollton, 431 S.W.3d 682, 708 (Tex. App.–Dallas 2014, pet. denied).

While otherwise affirming the plaintiffs’ victory in an easement dispute, the Dallas Court of Appeals struck a portion of the trial court’s declaratory judgment related to the legal rights associated with that easement.  The Court found no request for judgment on that matter in the plaintiffs’ live pleading or summary judgment motion, and also found that general discussion of the applicable city regulations had been offered for other purposes.  The Court reminded: “[A]n issue is not tried by consent when evidence relevant to the unpleaded issue is also relevant to a pleaded issue because admitting that evidence would not be calculated to elicit an objection and its admission would not prove the parties’ ‘clear intent’ to try the unpleaded issue.”  United Services Pyramid Group v. Hurt, Noi. 05-14-00108-CV (Dec. 7, 2015) (mem. op.)

Defendant won summary judgment, with a combination of no-evidence and traditional grounds, on fraudulent transfer claims.  Renate Nixdorf v. Midland Investors LLC, No. 05-14-01258-CV (Dec. 8, 2015) (mem. op.)  The Dallas Court of Appeals reversed, finding problems with what defensive matters were appropriately addressed by a no evidence summary judgment motion and what specific transactions were at issue, as well as proof of “reasonably equivalent value” that was conclusory.

Cross moved for summary judgment on limitations, submitting this affidavit: “My name is John K. Cross. I am at least 18 years of age and of sound mind. I have personal knowledge of the facts alleged in Defendant’s Second Motion for Summary Judgement. I hereby swear that the following statements in support of Defendant’s Second Motion for Summary Judgment are true and correct.  The mortgage at issue in this case was a secondary mortgage on a home I owned in Massachusetts. The primary holder foreclosed on the property, and it was sold  at foreclosure sale on July 14, 2010 per the correspondence I received from the mortgage holder’s attorney on May 28, 2010.”

Unfortunately for Cross, “[a]n affidavit that, on its face, establishes the affiant’s lack of personal knowledge is a defect of substance that may be raised for the first time on appeal.”  Here, “Cross’s affidavit affirmatively demonstrates his lack of personal knowledge on its face with respect to the date of the foreclosure sale. Cross attested only to what the May 28th letter told him.”   Old Republic Ins Co. v. Cross, No. 05 14-01204-CV (Dec. 7, 2015) (mem. op.) (The opinion is not completely clear on the identity of the parties, but it appears that the “mortgage holder” in the letter was not Cross’s party-opponent in this litigation, so that doctrine was not discussed.)

Dickson, an attorney, alleged interference with his contingent fee contract that led to the abandonment of a promising appeal.  The Dallas Court of Appeals affirmed summary judgment for the defense, noting: “Dickson’s summary judgment response below that the appeal was a ‘slam dunk’ is conclusory because it does not provide the underlying facts to support it.”  Dickson v. American Electric Power, Inc., No. 05-14-00690-CV (revised Jan. 15, 2016) (mem. op.)

Highland Capital won a judgment for over $20 million based on the alleged breach of a contract by RBC Capital to sell a package of notes.  RBC Capital Markets, LLC v. Highland Capital Management, LP, No. 05-13-00948-CV (Dec. 4, 2015) (mem. op.) The Dallas Court of Appeals reversed, finding no enforceable contract.  The Court first reviewed the protean doctrines of judicial admissions and judicial estoppel, ultimately concluding that statements made by RBC in other litigation were not preclusive in this case, noting that RBC did not ultimately prevail in the other matter.  It then rejected Highland’s argument that a contract was formed when the parties agreed upon “price and principal,” noting that RBC’s acceptance was expressly subject to further documentation (specifically, a written trade confirmation and purchase agreement). The Court noted that, as alleged by Highland, the claimed breach involved matters that remained to be resolved in those subsequent documents.  (Another “conditional agreement” case is discussed today on sister blog 600Camp.)

Does a limitation of liability provision include gross negligence claims?  This basic question of contract drafting finds surprisingly little answer in Texas authority.  A recent article by LTPC attorneys David Coale and Mallory Biblo summarizes the opinions and where the Dallas Court of Appeals falls.

Not too early . . . Gast v. Tinsley, No. 05-15-00498-CV (Nov. 24, 2015, mem. op.) (unresolved claims remained in the trial court against other defendants)

Not too late . . . In re: S.A.W., No. 05-15-00876-CV (Nov. 25, 2015, mem. op.) (notice untimely after nunc pro tunc order revised judgment to a significantly earlier date)

It’s worth remembering the shorthand that the Dallas Court uses, in its short memorandum opinions denying mandamus relief, to describe the requirements for the writ: “Ordinarily, to obtain mandamus relief, a relator must show both that the trial court has clearly abused its discretion and that relator has no adequate appellate remedy. In re: Prudential Ins. Co., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding). Having carefully reviewed the petition and record in support of the petition, we conclude relator has failed to establish a right to relief.”  E.g., In re Duncan, No. 05-15-01318-CV (Nov. 23, 2015, mem. op.)  While this succinct phrase is not controversial, it is worth noting that Prudential is still the “go-to” cite, and the basic two-factor test still the standard reference, despite the more exotic formulations of the Texas mandamus standards by other cases and commentators in the decade-plus since Prudential.

Property located in Louisiana was foreclosed upon in Orleans Parish.  Subsequent litigation in Texas about the appropriate credit for that sale was not filed in the right place, waiving that issue: “[Texas Property Code] Section 51.004 . . .   provides that any person obligated on the debt, including a guarantor, may bring an action in the district court in the county in which the real property is located for a determination of the fair market value of the real property as of the date of the foreclosure sale.”   State Bank v. Granbury Hospitality, No. 05-14-01306-CV (Nov. 20, 2015, mem. op.) (emphasis added).

Zive, the president of a partner in a real estate development venture, sought to testify about the value of the relevant property at various times, in the context of a dispute about the value received at a foreclosure sale.  The Court affirmed his exclusion, reminding that while “an owner is qualified to testify to property value,” the testimony must “meet the same requirements as any other opinion evidence.”  (quoting Natural Gas Pipeline Co. of America v. Justiss, 397 S.W.3d 150, 156, 159 (Tex. 2012)).  Here, although Zive relied upon an appraiser’s report, Zive “provided no substantiation for his opinion that the fair market value of the property would have increased by approximately $2 million by the 2011 foreclosure sale date,” and thus did not meet the standard.  Grapevine Diamond v. City Bank, No. 05-14-00260-CV (Nov. 10, 2015, mem. op.)

While outside the usual coverage of this blog, the high-profile products liability case of Johnson & Johnson v. Batiste provides a powerful illustration of “no evidence” review. The plaintiff alleged personal injuries from defective vaginal mesh, the jury found for her, and the Dallas Court reversed:

“It is undisputed the implantation of a [product] for the treatment of [urinary incontinence] can cause a number of complications, including erosion of the mesh into the vagina and urethral, pelvic, and groin pain. It is also undisputed that Batiste suffered from these complications. However, ‘[t]he law of products liability does not guarantee that a product will be risk free.’  Rather, to recover on her product liability claim based on an alleged design defect in the [product], Batiste was required to prove a specific defect in the [product], and not simply the device itself, was the producing cause of her injuries. . . . Although Batiste alleged the [product] was defective based on its use of mechanically cut, heavyweight, small-pore mesh that was subject to degradation and particle loss, she failed to produce more than a scintilla of evidence that any of these alleged defects caused her injuries. Accordingly, the evidence is legally insufficient to support the jury’s verdict.”

No. 05-14-00864-CV (Nov. 5, 2015, mem. op.)  (citations omitted).  Coverage of the case has recently appeared in the Dallas Observer and Dallas Morning News.

Pinkus, visiting Dallas on business, suffered fatal injuries in a car accident while driving to dinner with his son.  The Fifth Court affirmed summary judgment for his employer’s workers compensation carrier, finding (1) that the “continuous coverage” doctrine did not apply when his trip “merely placed him in a position to take advantage of an opportunity for a ‘distinct departure’ on a ‘personal errand,'” and (2) for the same reasons, the “dual purpose travel” doctrine did not apply either.  A concurrence would have analyzed the dual-purpose doctrine differently, but reached the same result. Pinkus v. Hartford Casualty, No. 05-14-00892-CV (Nov. 5, 2015).

A personal injury case led to an award of $4500 in attorney fees against the defendants’ attorneys after they lost a motion to compel. Among other things, the defendants sought to designate certain documents as “ATTORNEYS EYES ONLY” and objected to 14 of 21 document requests on the basis of trade secret privilege — in a car wreck case. The county court at law overruled the vast majority of the defendants’ objections, and awarded the $4500 to the plaintiff. On appeal, the defendants’ attorneys argued that the award was a sanction that could not be justified by any offensive conduct. The Dallas Court of Appeals disagreed, pointing to the trial court’s order stating that the award of fees and costs was granted for securing orders overruling the defendants’ objections to the plaintiff’s discovery requests. That made it an award of expenses on a motion to compel, which is required (but rarely observed) by TRCP 215.1(d). Reviewing the course of the proceedings in the trial court, the Court of Appeals could not conclude that the trial court had abused its discretion in determining that the defendants’ resistance to the discovery had not been “substantially justified.”

MacDonald Devin, PC v. Rice, No. 05-14-00938-CV

An opinion denying mandamus relief features one of the more awesome opening sentences in recent history:

“This case involves a gun in exchange for the design of a website deal gone badly.”

Who could have foreseen this becoming problematic? In any event, Thoroughbred Rifles, LLC failed to deliver the rifle promised for the design of its website, so Thomas King filed suit in a Harris County justice court for damages of less than $10,000. Thoroughbred subsequently filed suit in Collin county for damages between $100,000 and $200,000. The district court denied King’s plea in abatement and motion to transfer to Houston, and the Court of Appeals denied King’s mandamus petition. Because Thoroughbred’s damages exceeded the jurisdiction of the Harris County justice court, that court could not acquire dominant jurisdiction over them, making transfer of the claims impossible.

Good on Justice Schenck for the epic opening.

In re King, No. 05-15-01035-CV

While the slow season for opinions continues at the Dallas Court of Appeals, a short memorandum opinion provides a procedural lesson that could prove useful for any appellate attorney dealing with a pro se opponent. In this case, the appellant filed an affidavit of indigence with the trial court, seeking to avoid prepayment of costs under TRAP 20.1. The clerk challenged the appellant’s indigent status on September 15, and the court reporter contested the affidavit on September 17. But when multiple challenges to an affidavit of indigence are filed, the trial court still has to rule within 10 days of the first challenge. The trial court signed an order sustaining the court reporter’s challenge on October 6, well outside the 10-day period that should have run from September 15. Accordingly, the Court of Appeals held that the trial court had abused its discretion, reversed the order sustaining the contest to the pro se appellant’s indigence, and held that he could proceed with the appeal without advance payment of costs.

Bell v. Harris, No. 05-15-01117-CV

After an automobile collision, the Gomez family sued Sol Ly for negligence. Ly was represented by the Herald law firm, which also employed attorney Tim Brandenburg. But while the suit was pending, Brandenburg left Herald to join the law firm of Domingo Garcia, which represented the plaintiffs. Based on the defendant’s oral objection, the trial court granted a mistrial and ordered the defendant to file a motion to disqualify, which was subsequently granted. The plaintiffs failed to obtain substitute counsel, and the case was dismissed for want of prosecution. The Court of Appeals affirmed. The plaintiffs’ pro se motion to reinstate the case following the dismissal challenged only the disqualification, and not the plaintiffs’ failure to appear at the new trial setting. Without a showing that the failure to appear was adequately justified, the Court of Appeals could not conclude that the trial court had abused its discretion in denying the motion to reinstate.

Gomez. v. Sol, No. 05-14-00893-CV

Jenner & Block took on the representation of Parallel Networks in patent infringement litigation. Their contingency fee agreement provided that Parallel was responsible for the payment of expenses, but Parallel ran up a $500,000 deficit before expenses were finally paid out of proceeds from settlement in another lawsuit. Jenner withdrew from the case, citing a termination clause that allowed it to withdraw if continuing was not in its economic interest. After the patent cases settled under successor counsel, Jenner invoked arbitration and sought to recover $10 million in fees. The arbitrator ruled that Jenner’s withdrawal was justified and awarded $3 million as an “appropriate and fair” portion of the contingent fee recovery, as provided in the parties’ contract. The trial court confirmed the award, and the Dallas Court of Appeals affirmed. The Court declined Parallel’s invitation to declare that the fee agreement was against public policy, holding that the statutory grounds for vacating an award under the FAA are exclusive, and that public policy therefore could not serve to vacate the award.

Parallel Networks, LLC v. Jenner & Block LLP, No. 05-13-00748-CV

Deutsche Bank has won a restricted appeal to set aside a no-answer default judgment. The petition named the defendant as “DEUTSCHE BANK NATIONAL TRUST COMPANY, herein sued in its capacity as the Trustee for the Morgan Stanley ABS Capital 1 Inc., Trust 2006-NC5, Mortgage Pass Through Certificates, Series 2006-NC5.” But the clerk’s office issued a citation addressed to “Deutsche Bank National Trust Company as Trustee Company,” and that name was also used on the affidavit of service. Because the citation was addressed to the wrong party, the attempted service of process was invalid and the default judgment had to be set aside.

Deutsche Bank Nat’l Trust Co. v. Kingman Holdings, LLC, 05-14-00855-CV

One thing every lawyer in Texas learns early on is that if you want to challenge personal jurisdiction, you have to file a special appearance before you answer the petition. Critter Control, Inc. sought to avoid that waiver point by filing a motion to withdraw its original answer in favor of a subsequently filed special appearance, which the trial court denied. Critter Control filed for interlocutory appeal, and Galt Strategies, LLC filed a motion to dismiss for lack of appellate jurisdiction. The Court of Appeals dismissed the appeal because it did not challenge the denial of the special appearance, but the Court notably did not foreclose the stratagem of moving to withdraw the answer in order to assert the untimely special appearance.

Critter Control, Inc. v. Galt Strategies, LLC, No. 05-15-01011-CV

After a night of drinking in Uptown, Shawn Strumph was found by a jogger the next morning in a creekbed beneath a bridge owned by CC-Turtle Creek. Medical records contained several versions of how he ended up there, including assault, jumping, or simply falling. Shawn and his parents sued for dram shop and premises liability, but the trial court granted no-evidence summary judgment on the element of proximate cause. Because Shawn remembered nothing of how his injuries happened, and because there were no witnesses to the incident, the plaintiffs could not carry their burden under any theory of liability.

Stumph v. Dallas Lemmon West, Inc., No. 05-14-01044-CV

A group of plaintiffs collectively named as Nemaha Water Services moved to compel arbitration before FINRA. In a cross-motion, Esposito Securities moved to compel arbitration before the AAA. The trial court denied Nemaha’s motion and granted Esposito’s, sending the case to AAA arbitration. In a hybrid interlocutory appeal and mandamus proceeding, the Dallas Court of Appeals reversed and sent the case to FINRA. Nemaha had signed a letter agreement in which it had agreed to pay Esposito 5% of the total consideration received in a qualifying investment or merger. The contract included a AAA arbitration provision, but the Court of Appeals held that clause was trumped by the FINRA rules, at least in this instance. The case turned on the question of whether Nemaha was a “customer” of Esposito, which would entitle it to invoke arbitration under the FINRA rules. Applying the ordinary meaning of “customer,” the Court held that Nemaha qualified even though it had not paid Esposito the contractual commission. Because Nemaha had contracted with Esposito — a member of FINRA — to purchase financial services for a fee, the Court concluded that Nemaha was entitled to invoke FINRA arbitration. The Court noted, however, that there is authority for the proposition that FINRA arbitration can be superseded by contract, although that was not the case this time.

Morford v. Esposito Sec., LLC, No. 05-14-01223-CV

Last year, we reported on the Dallas Court of Appeals’ decision to affirm the trial court’s denial of the Office of Attorney General’s plea to the jurisdiction in a Whistleblower Act case. Today, the Texas Supreme Court has reversed and rendered, holding that the whistleblower’s report to her superior at OAG was not made to “an appropriate law enforcement authority,” as required by the Whistleblower Act. The plaintiff’s pleadings therefore failed to properly invoke the Act, meaning that OAG’s sovereign immunity was not waived.

Office of the Attorney Gen. v. Weatherspoon, No. 14-0582

On July 10, the district court orally denied the special appearance of Ann Stokley. The court did not sign a written order, however, which left Stokley unable to pursue an interlocutory appeal. On September 15, Stokley filed a petition for writ of mandamus with the Dallas Court of Appeals. Two days later, that Court has issued a brief memorandum petition denying relief. Although a trial court abuses its discretion when it fails to rule within a reasonable time, the Court could not conclude that the trial court had done so here in light of “the trial court’s actual knowledge of the motion, whether its refusal to act is overt, the state of the court’s docket, and the existence of other judicial and administrative matters which must be addressed first.” Ms. Stokley will presumably pursue an interlocutory appeal sometime after the trial court issues a written order.

In re Stokley, No. 05-15-01110-CV

The Texas Supreme Court granted a baker’s dozen worth of petitions for review this morning, including two cases that first made their way through the Dallas Court of Appeals. In CTMI, LLC v. Fischer, the Court of Appeals held that the earn-out provision in an asset purchase agreement was unenforceable because it left the percentages to be used in calculating the earn-out subject to a future agreement. And in Staley Family Partnership v. Stiles, the Court of Appeals rejected an attempt to impose an easement by necessity because one of the two tracts of land was not being used at all when they were severed from each other in 1866.

For over a decade, Sun Tec Computer has been tied up in litigation with its officers and shareholders in Tarrant County. At least one of those former officers formed Tax Debt Acquisition Company and used it to purchase an unpaid judgment against Sun Tec, then filed an application for a turnover order in Dallas County to enforce the judgment. The turnover order was not appealed, and the receiver auctioned off Sun Tec’s claims against the Tarrant County litigants to TDAC. That act of legal jujitsu meant that Sun Tec could no longer proceed with its claims against the shareholders and officers. Sun Tec filed a new suit for a declaratory judgment that the turnover order and the sale of its claims were invalid, but the trial court granted summary judgment for the defendants. The Court of Appeals affirmed, holding that the declaratory judgment was an invalid collateral attack on the turnover order, and that the order itself was not void.

Sun Tec Computer, Inc. v. Recovar Group, LLC, No. 05-14-00257-CV

In 2013, D Magazine published an article that labeled Janay Bender Rosenthal as “The Park Cities Welfare Queen,” based on her receipt of benefits under the Supplemental Nutriotional Assistance Program. Rosenthal sued for libel, and the trial court denied the magazine’s anti-SLAPP motion to dismiss. The Court of Appeals affirmed, over the dissent of Justice Brown. The majority held that Rosenthal had established a prima facie case for defamation because the “gist” of the article was an accusation of welfare fraud, which the opinion backs up with a colorful history of the term “welfare queen.” Justice Brown disagreed, arguing that the article was a satirical critique of a welfare system “that allows a woman with a criminal history of theft, living in a million-dollar home, and taking advantage of the highly rated school system of a wealthy enclave, to collect food stamps.”

D Magazine Partners, L.P. v. Rosenthal (majority), No. 05-12-00951-CV

D Magazine Partners, L.P. v. Rosenthal (dissent)

Starting off our review of Friday night’s wave of opinions is a hedge fund securities case arising out of the 2008 financial crash. Plaintiffs contended that the defendants had falsely misrepresented that other investors’ redemption requests “were not significant,” leaving them in the lurch when the fund imploded. The trial court granted summary judgment for the defendants, and the Court of Appeals affirmed. Plaintiffs sought to avoid a “scheme of arrangement” issued by the Bermuda Supreme Court that established how the fund was to be liquidated, but the Court of Appeals held that the plaintiffs were bound by that instrument as a foreign judgment. The Court also held that there was no evidence of reliance by the plaintiffs on the defendants’ alleged misrepresentations, concluding that their testimony was speculative on what they would have done if they had been informed of the true rate of redemption.

LV Highland Credit Feeder Fund LLC v. Highland Credit Strategies Fund, LP, No. 05-13-01118-CV

On the one hand, we’re totally in favor of whoever is running txcourts.gov making opinions appear the same day they’re issued. It hasn’t happened for the last 2+ years, but yay for timeliness.

And we’re also okay with seeing it happen sometime other than 3-6 am the next day (a time we’ve noted due to the general unlikelihood of being awake during those hours).

But if you want to see ~150 pages of substantive opinions made public at one time, please allow us to introduce you to the last Friday in August.

Gonna read ’em. Just not right now.

150 pages of opinions because it’s August.

In early 2012, the Dallas Court of Appeals reversed a temporary injunction that would have prevented BB&T from foreclosing on a pair of properties secured by a $10 million promissory note. Two and a half years later, matters have not improved for the borrowers, as the Court has now affirmed summary judgment for the bank.

In responding to the no-evidence summary judgment motion, the borrowers had “relied entirely on evidence presented at the temporary judgment hearing” to show that they had a valid contract with BB&T that superseded the bank’s right to foreclose. Because the Court had previously held that this evidence amounted to nothing more than an unenforceable “agreement to agree,” the law of the case doctrine prevented the outcome from being any different in this subsequent appeal. The same evidence was also held to be insufficient to support the borrowers’ claims for fraud and declaratory judgment, while a money had and received claim failed because the borrowers had made a $1.8 million payment with full knowledge of the facts and without fraud or duress. Finally, the trial court had not abused its discretion by striking the borrowers’ fifth amended petition because it had been filed outside the deadline in the court’s scheduling order, was not filed with leave of court, and was prejudicial to the bank because it sought to add a claim that “would effectively inject new substantive matters into the litigation by reinjecting old ones.”

TCI Luna Ventures, LLC v. Branch Banking & Tr. Co., No. 05-13-01221-CV

Almost a year after the Ebola virus and dozens of news crews arrived in Dallas, the Court of Appeals has conditionally granted mandamus to prevent Texas Health Resources’ insurer from being required to produce a privileged note regarding a plaintiff’s Ebola-related claims. Nina Pham, who contracted the disease while working as a nurse at Presbyterian Hospital, has sued THR on a variety of tort claims for the injuries she sustained from the disease. The single document at issue reflects a conversation among the insurer’s claims adjuster, THR’s associate general counsel, and its risk manager. Although the insurer and its claims adjuster were not parties to the lawsuit, the Court nevertheless held that the communications reflected in the document were privileged. Because the note was made in the course of investigating Pham’s claim, and because the insurer represents the employer rather than itself on claims involving the employer’s liability policy, the note reflected a confidential communication within the scope of the attorney-client privilege.

In re Texas Health Resources, No 05-15-00813-CV

After a bidding process, TXU entered into a contract with Fort Bend I.S.D. in 2010 to supply electricity for one year. The following year, the parties extended the contract period to 2014. But in 2012, the school district decided not to continue purchasing electricity because the extension has not been competitively procured as required by the Texas Education Code. TXU sued, but the trial court granted the school district’s plea to the jurisdiction based on governmental immunity. The Court of Appeals affirmed. Because the extension had not gone through a competitive bidding process, it was not “authorized by statute,” and therefore there was not waiver of governmental immunity under the Local Government Contract Claims Act.

TXU Energy Retail Co. L.L.C. v. Fort Bend Indep. Sch. Dist., No. 05-14-01515-CV

The guarantors of a construction loan agreement and promissory note sought to avoid a deficiency judgment by disputing a successor bank’s summary judgment evidence that it was the holder of the note. The Dallas Court of Appeals was having none of that oft-repeated claim. In the absence of controverting evidence, affidavit testimony and a copy of the note are sufficient to prove it up for summary judgment purposes, and an affidavit is likewise sufficient to establish ownership or assignment of the note. Because none of the summary judgment evidence contradicted the bank’s affidavit testimony, summary judgment for the deficiency was properly granted. The Court went on to rule that the bank was not required to include a complete history of payment activity on the account as part of its summary judgment evidence, and that the guarantors’ own affidavits did not create a fact issue on the issue of the property’s fair market value.

Cha v. Branch Banking & Trust Co., No. 05-14-00926-CV

Glen Stover was assaulted by two judgment-proof college students at a party in 2010, resulting in multiple surgeries, a shattered wrist and face, stitches, and broken teeth. He signed a contingency-fee agreement with John H. Carney & Associates, which provided for a 33% fee if the matter was settled before suit was filed. In the meantime, a criminal case proceeded against at least one of the assailants, Drew McClure, who agreed to accept a plea deal that included $100,000 in restitution to the victim. When that check was tendered to Carney by McClure’s father, Carney retained funds that he claimed as his contingency fee. A Dallas County district court disagreed, and the Dallas Court of Appeals affirmed, holding that the restitution was paid in satisfaction of McClure’s deferred adjudication order, not in settlement of any civil claim. The Court did not reach the question of whether an attorney could ever legally claim a fee from a criminal restitution payment, but noted in dicta that “we strongly discourage attorneys from engaging in such practices.”

John H. Carney & Assocs. v. Office of Attorney General, No. 05-13-01325-CV

Sylvester Davis sued TexPro Construction Group after the contractor failed to complete a backyard construction project. When TexPro failed to file an answer, Davis sought and obtained a partial default judgment on liability. TexPro then answered, but Davis moved forward with a hearing to establish damages. TexPro did not appear at the hearing, and the trial court awarded judgment for $117,230 in compensatory damages, treble damages under the DTPA and $350,000 in exemplary damages. After blowing through the deadlines for an ordinary appeal, TexPro hired new counsel and filed a restricted appeal. The Court of Appeals held that there was no error on the face of the record just because TexPro’s registered agent had been served at a location different from the address listed on the citation. The Court also held that there was no error in the trial court’s decision to move forward with the damages hearing, since the filing of TexPro’s answer did not negate the previously-signed default judgment on liability. However, Davis’ testimony on damages was the full amount of the money paid to TexPro, without accounting for the value of the work that TexPro had actually performed. Because his affidavit testimony was conclusory in alleging that the work done was valueless, the Court of Appeals reversed and remanded for a new trial on damages.

TexPro Constr. Group, LLC v. Davis, No. 05-14-00050-CV

Law360 writer Jess Davis takes a look at five Texas Supreme Court cases on the court’s argument calendar for this fall, and we were happy to pitch in with some punditry on a couple of them. The TV Azteca case is a really interesting mix of personal jurisdiction, defamation, pop superstardom, and international sex scandal, while BCCA has the potential to reshape the balance between the state legislature and home-rule municipalities. And while we’ll conspicuously refrain from comment on a couple of the other cases, all five are well worth following.

As our colleague 600Camp noted earlier today, the ABA Journal is sponsoring a “Blawg 100″ list recognizing law blogs (Bob Loblaw’s and otherwise). Since campaigning is actively encouraged, we’d really appreciate it if any of our readers would put in a good word for either (or preferably both) of our 600’s. Just click here to fill out the ABA’s short form.

JPMorgan, as Trustee of the Red Crest Trust, signed a letter of intent for Orca Assets to lease oil and gas properties in the Eagle Ford Shale. Unfortunately, JPMorgan had leased those same properties to GeoSouthern Energy six months earlier. GeoSouthern recorded its lease three days after Orca signed the letter of intent with JPMorgan, but Orca did not conduct any forward-looking title searches after the letter of intent. Orca proceeded to sign the leases a month later and promptly recorded them. GeoSouthern then contacted JPMorgan about the duplicate leases, and the bank promptly offered to refund Orca’s $3.2 million lease payment. Instead, Orca sued for $400 million in lost profits. At a Rule 166 pretrial conference, the trial court dismissed all of Orca’s claims, ruling that the leases unambiguously disclaimed any warranties, and that Orca could not establish justifiable reliance as a matter of law. The Dallas Court of Appeals reversed in part, holding that the disclaimers in the leases foreclosed Orca’s breach of contract claim, but not fraud and negligent misrepresentation.

Under the express language of the contractual disclaimer, Orca was to be “without recourse” under the lease if title to the oil and gas interests failed. That was sufficient to negate contract liability for JPMorgan’s failure to convey good title, but not fraud and negligent misrepresentation. Noting that the leases did not also include any provisions disclaiming reliance on any extra-contractual representations, the Court held that Orca could proceed with claims based on an oral representation that the properties in question were “open” for lease. In the course of that holding, the Court analyzes a number of other recent fraudulent inducement cases, leaving the distinct impression that courts are going to continue drawing some pretty narrow distinctions in the wake of the Texas Supreme Court’s Italian Cowboy opinion.

Orca Assets, G.P., LLC v. JPMorgan Chase Bank, N.A., No. 05-13-01700-CV

The owner of an apartment complex sued the builder for construction defect claims. The defendant moved for summary judgment on limitations and lack of notice, which is an element of the plaintiff’s express warranty claim. The trial court granted the summary judgment motion without specifying the grounds. For reasons that are not clear from the opinion, the appellant limited its issues on appeal to the express warranty claim, but only addressed the limitations argument. That resulted in affirmation of the summary judgment ruling.  Because the appellant failed to challenge the other ground — i.e., lack of notice — on which summary judgment could have been granted, the Court of Appeals upheld the judgment based on the unchallenged ground.

ZZ&Z Props., Ltd. v. ZCC-ZPL,LLP, No. 05-14-00812-CV

A guarantor ignored the efforts of a court-appointed receiver to collect on an agreed judgment and subsequent turnover orders. The debtor eventually paid the judgment, but Frost Bank sought recovery of additional attorney fees incurred in enforcing the judgment. The trial court awarded $160,000 in attorney fees and approved the receiver’s fee of $129,000. The Court of Appeals reversed as to the attorney fees, holding that fees could not be recovered based on the contractual guarantee because the bank’s claims under that instrument were merged with and extinguished by the final judgment. Nor could post-judgment attorney fees be awarded under the turnover statute because the defendant had actually paid the judgment. However, the trial court did not abuse its discretion in approving the receiver’s fee — calculated as 10% of the sale proceeds from the defendant’s stock — as the court had conducted a hearing and determined that the fee was fair, reasonable, and necessary.

Evans v. Frost Nat’l Bank, No. 05-12-01491

“The parties are owners of adjoining property whose homes overlook a golf course. The Roses built a fence that blocked the view from the Bonvinos’ home. The ensuing legal dispute has lasted almost a decade.” That description begins a memorandum opinion affirming a Collin County trial court’s order enforcing a permanent injunction requiring the Roses to reduce the maximum height of their fence to 6 feet. The case hinged on the trial court’s finding that the “2012 Fence” exceeded 6 feet when measured from the “unaltered and unimproved grade.”

And thus, peace and tranquility were restored to Far North Dallas.

Rose v. Bonvino, No. 05-14-007020-CV

A Republican primary battle for the office of Kaufman County commissioner (precinct 2) resulted in a defamation claim against the challenger’s media consultant. It seems that two days before the election, a website went up that strongly implied the incumbent, Ray Clark, had intervened in multiple child molestation cases brought against his “nephew,” Stoney Adams. resulting in the charges being dismissed. A series of mailed-out fliers made similar allegations. In reality, Adams was only distantly related through a series of marriages on Clark’s wife’s side of the family, and Clark averred that he had never done anything to support or assist Adams in any criminal case. Based on those facts, the trial court denied the defendants’ motion to dismiss under the TCPA, finding that Clark had established a prima facie case for each element of his defamation claims. The Dallas Court of Appeals affirmed, rejecting the defendants’ argument that the statements were protected as “rhetorical hyperbole.” Similarly, the statements were not protected as non-actionable opinions just because they were attributed to Adams’ ex-wife, but were instead capable of being defamatory because they implied knowledge that Clark really had intervened in Adams’ child molestation cases. As for actual malice, the Court of Appeals credited Clark’s argument that the defendants had “carefully attempted to distance themselves” from the defamatory statements, which in turn demonstrated that they “entertained serious doubts” about them.

Campbell v. Clark, No. 05-14-01056-CV

The appeal of an oil and gas dispute has led to a multi-million dollar swing in favor of the appellants. The district court had granted a $14 million summary judgment in favor of the seller of oil and gas interests located in New Mexico. The fact scenario is somewhat complex, but the essence seems to be that Three Rivers Operating Co. offered to sell its interests in five properties to MRC Permian Co. pursuant to a preferential purchase right provision in their joint operating agreement. MRC accepted that proposal, for a purchase price of just under $7 million, and further wrote that it was exercising a preferential right to purchase “one hundred percent (100%) of Three Rivers’ interest in the land comprising the Contract Area . . . .” Three Rivers responded to say that there were actually 10 properties for sale for approximately $14 million. MRC then wrote back that it was ready to move forward on Three Rivers’ original offer, but Three Rivers nevertheless concluded that MRC had agreed to buy all ten properties. On cross-motions for summary judgment, the district court entered judgment for Three Rivers, requiring MRC to specifically perform the $14 million deal. The Court of Appeals reversed and rendered judgment for MRC that there was only a $7 million contract for the original five properties.

Three Rivers argued that the initial $7 million offer had been made under a mistaken interpretation of the preferential purchase right clause, and that MRC did not accept that offer in any event because its acceptance letter was actually a counteroffer to buy all of Three Rivers’ interests covered by the JOA. The Court of Appeals disagreed, holding that MRC did not condition its acceptance of the $7 million offer on Three Rivers’ assent to sell any additional properties. So long as it is clear that the acceptance is positive and unequivocal, a contract is formed regardless of whether the offeree makes additional requests at the same time. And when Three Rivers offered to sell all 10 of its properties, that was not an acceptance of an offer by MRC to purchase “100%” of Three Rivers’ interests. MRC had not stated the essential terms of a contract, including purchase price, nor did MRC’s letter indicate any acceptance of a prior offer by MRC. Instead, Three Rivers’ $14 million offer letter was an independent offer of its own, and MRC did not accept it in the manner specified by Three Rivers. The Court of Appeals therefore reversed the trial court’s judgment, rendered judgment for MRC on the $7 million contract, and remanded for consideration of MRC’s costs and attorney fees.

MRC Permian Co. v. Three Rivers Operating Co., No. 05-14-00353-CV

Attorney Robert Cole failed to pay a court reporting service, Gwendolyn Parker, Inc., for the transcripts of two depositions. The Court of Appeals affirmed judgment in favor of the court reporter. Cole argued that Tex. Gov’t Code § 52.059 only allowed individual court reporters to sue for their fees, but the Court rejected that argument. Under that statute, the attorney who takes the deposition and his firm are jointly and severally liable for the court reporter’s charges unless other arrangements are stated on the record. Because nothing in the language of the statute limits the payment obligation to individual court reporters, Cole could not escape from his statutory liability to GPI. The Court also held that Cole could not prevail on the affirmative defense of failure of consideration or a counterclaim for damages because the record did not show that he pleaded either matter in response to the court reporter’s suit.

Cole v. Gwendolyn Parker, Inc., No. 05-13-01655-CV