MANDAMUS GRANTED TO SORT OUT POST-JUDGMENT “PROCEDURAL QUAGMIRE” IN CONDEMNATION PROCEEDING

In re State of Texas
Dallas Court of Appeals, No. 05-18-00685-CV (November 14, 2018)
Justices Lang, Myers (Opinion, linked here), and Whitehill
The State of Texas condemned part of EnergyTransfer Fuel’s pipeline easement, as well as other property, for a TxDOT road-widening project. The State and ETF reached a joint-use agreement that included an agreed dismissal of the condemnation claims against ETF. The remainder of the condemnation case proceeded to a jury trial that ended on May 5, 2017. On that same day, ETF filed a claim for statutory attorney’s fees incurred prior to its dismissal, under Texas Property Code §§ 21.019 & 21.0195. On May 12, the trial court issued its judgment on the jury verdict. That judgment did not specifically address ETF’s request for fees, but it ordered ETF dismissed and contained “magic” finality language: “This Judgment is a final judgment as to all claims of all parties to this action and is appealable. All other relief not expressly granted in this Judgment is denied.” And then the fun began. The “procedural quagmire” went like this:

  • May 5 — Jury verdict and ETF notice of request for fees
  • May 12 — “Final” judgment
  • May 17 —ETF files fee evidence
  • July 5 —ETF files motion to vacate and modify the May 12 judgment
  • July 6 — Trial court issues order denying ETF’s fee request
  • August 4 — Trial court holds hearing on ETF’s motion to vacate and modify
  • August 9 — Trial court issues order granting motion to vacate May 12 judgment and awards fees to ETF
  • August 23–February 1 —Trial court issues six more orders correcting or adjusting the fee award, vacating prior orders, etc.

The State filed a mandamus petition, arguing all orders after the May 12 judgment were void because they were issued after the trial court’s plenary power expired. ETF countered that (1) the May 12 judgment was not final until the trial court ruled explicitly on its fee request, and so the trial court had plenary power to issue its subsequent orders; and (2) the State’s request for mandamus relief was barred by laches. 

The Dallas Court of Appeals took something of a middle road, but in the end granted the State the relief it sought. First, it summarily rejected ETF’s laches argument, observing that the State had tried at every turn to preserve its rights in the trial court. Next, the Court explained that a claim for statutory fees in a condemnation case does not accrue until after the condemnation proceeding is dismissed, and that a post-judgment claim for fees extends the trial court’s plenary power. Here, however, the May 12 judgment contained “finality language” that purported to dispose of all claims—presumptively including ETF’s May 5 fee claim, especially since it followed a jury verdict. So, the Court concluded that ETF’s May 5 request for statutory fees should be treated as a timely, albeit premature, motion to modify the May 12 judgment, which did extend the trial court’s plenary jurisdiction. ETF’s July 5 motion to modify, however, had no such effect, because it was directed to the May 12 judgment, from which plenary power had already been extended, and because it was filed outside the time limit of Rule 329b(a) & (b). When the trial court issued its July 6 order denying ETF’s fee request—effectively denying the premature, de facto motion to modify the May 12 judgment—that started the 30-day clock again. No motions were filed between then and August 7, so plenary power expired. All orders and modified judgments signed after August 7 therefore were void. The Court of Appeals therefore ordered them vacated and the May 12 judgment reinstated as final. No statutory fees for ETF. Moral: Carefully track the timing of final judgments and post-judgment motions to extend plenary power, even in a quagmire.

ARBITRATORS HAVE TO FOLLOW THE CERTIFICATE-OF-MERIT RULES, BUT THERE IS NO INTERLOCUTORY REVIEW IF THEY DON'T

SM Architects, PLLC v. AMX Veteran Specialty Services, LLC
Dallas Court of Appeals, No. 05-17-01064 (November 8, 2018)
Justices Bridges, Francis (opinion linked here), and Lang-Myers

In a court action or arbitration based on the provision of professional architectural services, a plaintiff must file a certificate-of-merit affidavit by a third-party licensed architect in support of its claims. TEX. CIV. PRAC. & REM. CODE § 150.002. If a trial court denies a motion to dismiss the case for failure to comply with this requirement, that ruling is immediately appealable under § 150.002(f). But what is the remedy if an arbitrator refuses to dismiss?

 In this case of first impression, the Dallas Court of Appeals concluded there is no remedy—at least not before the arbitration is over. The courts’ jurisdiction over arbitration proceedings is limited to enforcing the agreement and rendering judgment on an “award.” TEX. CIV. PRAC. & REM. CODE §171.081. An “award” is a “judgment, sentence, or final decision” and does not include interlocutory orders. The Court acknowledged that, by enacting § 150.002(f), the legislature intended to provide parties the right to immediately challenge a trial court’s decision about whether a plaintiff has met the certificate-of-merit requirement, but it found no evidence of an intent to “significantly alter the jurisdictional limitations on courts with respect to arbitration proceedings.” The defendants tried several different approaches and arguments to obtain review of the order denying their motion to dismiss, but the Court concluded “there is no further relief we can grant, or action we can compel the trial court to take, with respect to the panel’s decision.”

 .

JUST PLEADING AN AFFIRMATIVE DEFENSE WON'T DEFEAT SUMMARY JUDGMENT

Matkin v. American Express Centurion Bank
Dallas Court of Appeals, No. 05-17-01438-CV (November 7, 2018)
Justices Bridges, Francis (Opinion linked here), and Lang-Miers



In this brief opinion, the Dallas Court of Appeals affirmed summary judgment for American Express despite the cardholder's affirmative defense of limitations.  In doing so, the Court reminded us of a couple of fundamental rules:


  •  "A plaintiff is under no initial obligation to negate affirmative defenses when moving for summary judgment and the mere pleading of an affirmative defense will not prevent summary judgment in favor of a plaintiff who establishes an absence of fact issues on his own claim for relief"; and

  • The four-year statute of limitations for breach of contract based on credit-card debt begins to run "on the date the last payment on the account is made."

UNCONDITIONAL SEVERANCE ORDER STARTS THE APPELLATE CLOCK, EVEN BEFORE THE NEWLY SEVERED CASE IS DOCKETED

AZS Holding Company LLC v. Khosh-Sirat
Dallas Court of Appeals, No. 05- 18-00845-CV (October 24, 2018)
Justices Stoddart, Whitehill (Opinion, linked here), and Boatright
AZS suffered a default judgment in May of 2017. But because there were other parties to the case, that judgment didn’t become final until August of 2017 when the trial court severed the claims and judgment against AZS. As is common, the severance order directed that those claims and that default judgment be severed from the existing case “into a new cause … which will be docketed as Cause No. ________________.” The filing fee for this new cause was not paid and the new cause was not opened until May of the following year. AZS filed a motion for new trial in the new cause, which was not granted, and then attempted to appeal the default judgment.

The Dallas Court of Appeals, however, dismissed the appeal as untimely. Although the severance order contained a blank for the “new cause” number and despite the fact the new cause was not actually docketed for several months, the order of severance was not conditioned on the opening of that new cause. “Whether the trial court clerk ever creates a physically separate file or assigns a new cause number,” the Court said, “does not affect the finality of an unconditional severed judgment.” Consequently, the appellate clock began ticking when the order of severance was entered. So, AZS’s appeal, filed almost a year later, was untimely.

“SPECIAL DEFECTS” AND GOVERNMENTAL IMMUNITY—SIZE MATTERS

City of Lancaster v. LaFlore
Dallas Court of Appeals, No. 05-17-01443-CV (October 10, 2018)
Justices Bridges, Francis, and Lang-Miers (Opinion, linked here)
While driving in Lancaster, LaFlore ran over a manhole with a partially dislodged cover, causing him to lose control of his car and hit a tree, injuring himself and his children who were passengers. He sued the City, which moved to dismiss, claiming governmental immunity. The trial court denied the City’s motion, but the Dallas Court reversed on appeal.

The Texas Tort Claims Act provides a limited waiver of governmental immunity in personal injury cases caused by “special defects” on roadways and other public premises. Whether a condition is a “special defect” is a question of law that the court of appeals reviews de novo—although “courts consider each case’s ‘unique facts’” in making that decision. Drawing upon opinions from the Texas Supreme Court, the Dallas Court explained that the waiver of immunity for “special defects” on city streets is to be narrowly construed; the condition must “fall[] within the same class as an excavation or obstruction” on a roadway. The characteristics that will guide this determination include “(1) the size of the condition; (2) whether the condition unexpectedly and physically impairs an ordinary user’s ability to travel on the road; (3) whether the condition presents some unusual quality apart from the ordinary course of events; and (4) whether the condition presents an unexpected and unusual danger.”

Winding its way through a number of cases that had found open manholes and uncovered water meter boxes to be “special defects”— where pedestrians or bicycles were involved, but not automobiles—and others that had not, the Court ultimately concluded the condition here did not fall into the class of “excavations or obstructions” on a roadway. The manhole was about two feet wide and was located directly on the center strip of the street. Motorists like LaFlore did not have to alter their “normal course of travel” or leave their lanes of traffic to avoid it. It was, therefore, unlike the much larger potholes and excavations the Court previously had found to be “special defects.” Nor, the Court lamented, was a dislodged manhole cover “some unusual quality apart from the ordinary course of events,” but instead, something drivers should have come to expect nowadays.

In sum, the Court said, “not every hole or hindrance is special.” This one, alas for LaFlore, was not. And so the court of appeals reversed and rendered judgment for the City.

JURISDICTION AFTER MANDATE, OR, “WE REALLY MEANT IT.”

In re F.A. Brown’s Construction, LLC
Dallas Court of Appeals, No. 05-18-00804-CV (September 18, 2018)
Justices Lang-Miers (Opinion, linked here), Fillmore, and Stoddart
The Dallas Court of Appeals granted mandamus when a trial court failed to follow its mandate from an earlier appeal. In the process, it explained the scope of a trial court’s jurisdiction when faced with a mandate, and the scope and duration of both courts’ jurisdiction when the trial court doesn’t follow the mandate.

Brown’s Construction sued Ken-Do Contracting for breach of contract. Brown alleged venue in Dallas; Ken-Do argued for transfer to Ellis County. The trial court sustained venue in Dallas, and the case proceeded to judgment there after a jury trial. On appeal, the Fifth Court found neither party had made the necessary venue showing, reversed the judgment, and remanded with specific instructions for the trial court “to conduct further proceedings on the issue of venue.” The trial court then peremptorily ordered the case transferred to Johnson County—a venue sought by neither party— without “conducting further proceedings,” as directed by the mandate. When Brown filed a motion to reconsider, the trial court acknowledged its transfer order was in error, but denied the motion because, it said, its plenary jurisdiction had expired. Brown then sought mandamus. Ken-Do acknowledged the transfer order was erroneous, but opposed mandamus, arguing that neither the trial court nor the Court of Appeals had jurisdiction to do anything about it—in part because of the trial court’s loss of plenary power and also because Johnson County lies outside the Appeals Court’s territorial jurisdiction, making it impossible for the Court of Appeals to order the transferee court to return the case to Dallas.

What a mess, right? But the Dallas Court promptly cleaned it up.

What is at stake here, the Court of Appeals explained, is an appellate court’s authority to enforce its judgments—in this case, the earlier judgment and mandate directing the trial court to “conduct further proceedings on the issue of venue” and only then to act on the issue. On remand, the trial court’s jurisdiction was limited to effectuating the mandate issued by the Court of Appeals. The appeals court retains jurisdiction for as long as necessary to ensure the trial court follows its instructions. Delays in the trial court—even those that would seem to deprive that court of plenary jurisdiction generally—do not impair the appeals court’s jurisdiction to ensure compliance with its prior mandate, by way of mandamus, or the trial court’s jurisdiction to effectuate that renewed directive. The Court of Appeals therefore granted mandamus, ordering the trial court to vacate its transfer order and to conduct the further proceedings on venue as ordered originally.

SHADE ≠ TREE OWNERSHIP

4415 W Lovers Lane, LLC v. Stanton
Dallas Court of Appeals, No. 05-17-01363-CV (July 12, 2018)
Bridges (opinion linked here), Myers, and Schenck
The Stantons sued 4415 W Lovers Lane, LLC and got a temporary injunction preventing the company from cutting down a large tree growing along the property line between them. The Stantons were building a house on their property, and they claimed the design of the house “was to include a large window to look out on to the large elm tree.” They argued removal of the tree “would diminish the current market and intrinsic value” of their property. The Court of Appeals dissolved the injunction, finding the Stantons had not established a probable right to recovery because they did not own the tree. Mr. Stanton testified that only about one-fifth of the trunk crossed over the property line onto his property, but argued the canopy (and resulting shade) covered half the house, and the tree provided privacy. But the appellate court was not convinced, citing a Texas Supreme Court opinion from 1900 holding that “a tree and all its roots and branches belong to the owner of the soil upon which its trunk stands.” And it noted that trees that start life on one property and grow onto a neighboring property do not automatically become boundary-line trees, and thus joint property, merely by touching a property line.

KMH SCOTX: INSURANCE AGENTS MAY KNOW MORE ABOUT REASONABLE AND NECESSARY MEDICAL EXPENSES THAN DOCTORS AND HOSPITALS

Gunn v. McCoy
Supreme Court of Texas, No. 16-0125 (June 15, 2018)
Justice Green’s opinion linked here
The central issue in this medical malpractice case was whether the plaintiffs put on legally sufficient evidence that the patient’s hypoxic brain injury was caused by the defendant doctor’s failure to administer fresh frozen plasma to counteract the patient’s severe blood loss, as opposed to being caused by naturally-occurring blood clots in the brain. The Court held that the jury could have reasonably accepted the testimony of plaintiffs’ expert over defendants’ expert and affirmed a multi-million judgment against the doctor.

But of more general significance was the Court’s holding regarding medical-expense affidavits. CPRC section 18.001 governs proving expenses by affidavit, and it is common to use section 18.001 affidavits as evidence of the reasonableness and necessity of past medical expenses. Unless a controverting affidavit is served as provided by section 18.001, an affidavit stating that the amount a person charged for a service was reasonable at the time and place that the service was provided and that the service was necessary is sufficient evidence to support a finding of fact that the amount charged was reasonable and that the service was necessary. To comply with this section, an affidavit must be made by “(A) the person who provided the service; or (B) the person in charge of records showing the service provided and the charge made.” Consistent with other parts of the CPRC, the amount listed on the affidavit must be limited to the amount actually paid or incurred, not the amount billed.

Typically, these affidavits are signed by someone in the medical provider’s office and, in this case, the plaintiffs submitted 14 provider affidavits regarding the reasonableness and necessity of the patient’s past medical expenses based on the amounts billed. Plaintiffs later withdrew those affidavits, however, and replaced them with affidavits from subrogation agents for the health insurance carriers that had actually paid the patient’s medical expenses. The new affidavits reflected the amounts actually paid. But defendants objected to these affidavits arguing that section 18.001 limits the proper affiants to providers or the record custodians for those providers.

The Court disagreed. It held that, in today’s complex healthcare marketplace, the “list price” charged by a medical provider bears very little resemblance to the price ultimately paid by an insurance carrier or the federal government through the Medicare or Medicaid programs. Indeed, “it is not uncommon or surprising that a given medical provider may have no basis for knowing what is a ‘reasonable’ fee for a specific service.” By contrast, insurance companies regularly negotiate with providers to agree upon the actual prices and maintain records and databases of both the list prices and the actual prices of specific treatments and procedures. The Court concluded that insurance agents are, therefore, “generally well-suited to determine the reasonableness of medical expenses.” In addition, although the Court acknowledged that doctors are in the best position to determine what medical care is necessary, “for better or for worse, in the context of our health care system, what is ‘necessary’ is often heavily influenced by insurance companies and by what treatments and procedures they are willing to cover.” So, the Court held the subrogation agents’ affidavits were sufficient under section 18.001 to establish the reasonableness and necessity of past medical expenses.

SCOT TWOFER ON “ULTRA VIRES”

Meyers v. JDC/Firethorne, Ltd.
Supreme Court of Texas, No. 17-0105 (June 8, 2018)
Justice Green’s Opinion linked here

City of Houston v. Houston Municipal Employees Pension System
Supreme Court of Texas, No. 17-0242 (June 8, 2018)
Justice Johnson’s Opinion linked here
The Texas Supreme Court issued two opinions on Friday, June 8, dealing with claims of governmental immunity and the concept of “ultra vires” actions. The cases reach different conclusions in applying immunity to different situations. In Meyers, the Court held a developer lacked standing to enjoin a county commissioner’s interference in a construction-application process over which the commissioner had no authority. In the Houston case, a dispute between two governmental bodies, the Court held the City had no discretion to circumvent a pension system’s determination of who was an “employee” for which the City was obligated to make pension contributions.

Meyers v. JDC/Firethorne, Ltd. involved a dispute between a land developer and an individual county commissioner in Fort Bend County. JDC/Firethorne complained that Meyers, the elected commissioner for the precinct in which JDC/Firethorne sought to develop a new subdivision, was improperly interfering with the processing of plat applications and construction plans it had submitted for several sections of the proposed development. The developer sued Meyers in his individual and official capacities, as well the County and its chief engineer. The claim against Meyers in his official capacity was based on the argument that he was acting ultra vires, i.e. outside his legal authority, in his efforts to have the chief engineer delay processing of the plat applications to “exact a concession” on a related project. Meyers filed a plea to the jurisdiction on governmental-immunity grounds, arguing that he was exercising his authority and acting within his discretion, not ultra vires.

The trial court denied the plea to the jurisdiction and entered an injunction ordering Meyers to “cease and desist … from instructing the [engineer] to ‘hold,’ ‘delay,’ or otherwise impede plats and construction plans submitted by JDC/Firethorne.” Meyers filed an interlocutory appeal, and the court of appeals affirmed. On review in the Texas Supreme Court, the parties continued to press their ultra vires arguments. The Supreme Court, however, took a different approach, sua sponte, and decided the core issue was whether the developer had standing to seek the injunction against Meyers.

The Court noted the plaintiff’s standing is essential to a court’s subject-matter jurisdiction, and has three elements: “the plaintiff suffered an injury, this injury is fairly traceable to the defendant’s conduct, and this injury is likely to be redressed by the requested relief.” The Court did not address the first two elements, finding the third dispositive. As the Court explained, “JDC/Firethorne’s insistence that Meyers has acted ‘without authority’ as to the plat-application process betrays the deficiency in standing—if Meyers has no legal power over the processing and presentment of plat applications, then JDC/Firethorne has not shown a substantial likelihood that its requested relief will remedy its alleged injury.” Under the County’s Regulation of Subdivisions, the county engineer was charged with processing plat applications and presenting them to the Commissioners Court. And Meyers “acts only as one member of a five-person body.” The Court noted, however, that the developer had sued “other defendants who could remedy its alleged injury”—the county engineer, the Commissioners Court, and the County. So, although the injunction against Meyers was vacated and the claims against him in his official capacity were dismissed, claims against him as an individual, as well as claims against the other defendants, remain in the trial court.

The second case, City of Houston v. Houston Municipal Employees Pension System, involved a dispute between two governmental entities, which the Court described as “a relationship that is not working out well.” Indeed, this was the Court’s second opinion addressing disputes concerning the Houston Pension System, which was organized and operates under section 6243h of the Texas Revised Civil Statutes. The City was required to contribute specific amounts to the Pension Fund for each City employee. To reduce its payment obligations, the City created three “local government corporations” and transferred many of its employees to those entities. The Pension System deemed all of the transferred individuals “employees” of the City, and a group of affected individuals, joined by the City, sued the Pension System. In Klumb v. Houston Municipal Employees Pension System, 458 S.W.3d 1 (Tex. 2015), the Court upheld the Pension System’s plea to the jurisdiction, holding its board did not act ultra vires when issuing its resolutions defining “employee” because the statute expressly granted that authority to the board.

After Klumb, the Pension System asked the City to provide payroll data and other related information on the transferred employees. The City did not provide the requested information, and did not contribute to the pension fund for those individuals. The Pension System sued for a writ of mandamus against the City, claiming it “acted ultra vires by failing to perform the purely ministerial function of providing the required employee information and by failing to budget for the retirement contributions.” The City filed a plea to the jurisdiction, which the trial court denied. The court of appeals affirmed, as did the Texas Supreme Court.

On the core issues, the Court held its holding in Klumb disposed of any argument concerning the Pension System’s statutory authority to define “employee,” and the statute “leaves no room for the City to exercise its discretion regarding whether the payments must be made” and the information provided. While the City retained discretion to determine how to comply, it had no discretion not to comply. Finally, the Court held the case was not rendered moot by 2017 amendments to the statute allowing the City to amortize its “legacy liability” over a thirty-year period.

UNINSURED MOTORIST COVERAGE REQUIRES LEGAL LIABILITY

Loncar v. Progressive County Mutual Insurance Co.
Dallas Court of Appeals, No. 05-16-00530-CV (May 24, 2018)
Justices Lang, Brown, and Whitehill (Opinion linked here)
Uninsured-motorist coverage protects you when you are injured or your car is damaged by another driver and that driver doesn’t have insurance that will cover your damages. Right? Not necessarily. The Dallas Court of Appeals affirmed a take-nothing judgment against a policyholder whose car was hit by a city fire truck because his claim against the city was barred by governmental immunity, and that precluded uninsured-motorist coverage under the terms of his policy.

Brian Loncar’s car collided with a City of Dallas fire truck in 2008, and Loncar sued the City and the fire-truck driver for personal injuries. The defendants filed a plea to the jurisdiction that was granted in part and denied in part. While the interlocutory appeal of the jurisdictional ruling was pending, Loncar amended his petition to add claims against Progressive, the primary insurer, and Chubb, the excess insurer, for their refusal to pay on his policies. Ultimately, all claims against the City and its employee were dismissed on governmental immunity grounds, and the Texas Supreme Court denied review. The trial court subsequently granted summary judgment for both insurers, and Loncar appealed.

The appeal turned on the language of the uninsured-motorist provisions in Loncar’s policies. A Texas standard form endorsement to the Progressive policy required the insurer to “pay damages which an insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by an insured.” (Emphasis added, internal quotations omitted.) The Chubb excess policy used used a different form, with language similar to that of the primary policy. The Court of Appeals held the plain meaning of both policies was that Loncar could not recover under the uninsured-motorist provisions because he was not “legally entitled to recover” anything from the owner or operator of the fire truck in light of the defendants’ immunity. The Court also rejected several arguments by which Loncar sought to recover under the excess policy even if the primary policy did not cover his damages. (Loncar died of unrelated causes during the appeal; the Court proceeded as if all parties were alive, under Rule 7.1(a)(1) of the appellate procedure rules.)

Print