TIC N. Central Dallas 3, LLC v. Envirobusiness, Inc.
Dallas Court of Appeals, No. 05-13-01021-CV (September 24, 2014)
Justices O’Neill (Opinion), Francis, and Lang-Miers
Section 150.002 of the Civil Practice and Remedies Code requires anyone that commences an “action or arbitration for damages arising out of the provision of services by a licensed or registered professional”—an architect, engineer, land surveyor, or landscape architect—to file with its “complaint” a “certificate of merit” (the affidavit of a third-party licensed professional in the same field as the defendant, attesting to the bases of the claim). Failure to do so “shall result in dismissal of the complaint,” which “may be with prejudice.” The Dallas Court of Appeals concluded that, if a plaintiff’s original lawsuit is dismissed without prejudice for such a failure, he or she can cure that defect by filing a second lawsuit and attaching the required certificate. In so doing, it disagreed with a recent decision by the San Antonio Court of Appeals, setting up a conflict on the issue.
TIC invested in an office building owned by architecture firm Perkins & Will, which was also a tenant in the building. With input from Perkins & Will, Envirobusiness (“EBI”), an engineering consulting firm, prepared and disseminated a report about the building that was relied upon by TIC and others. Problems with the building later surfaced and led to foreclosure and TIC’s loss of its investment.
TIC sued EBI and Perkins & Will, alleging fraud, negligent misrepresentation, and conspiracy. TIC did not file the certificate of merit prescribed by TEX. CIV. PRAC. & REM. CODE § 150.002 with its original petition. So, the trial court dismissed that petition against EBI, but did so without prejudice. The court also dismissed some of TIC’s claims against Perkins & Will, but left the fraud claim in place. Shortly thereafter, TIC filed a new lawsuit against EBI, asserting the same claims as before, but this time with the required certificate. EBI moved for dismissal, arguing that § 150.002 does not allow a plaintiff to “cure” the lack of a certificate of merit by refiling the same claims after dismissal. The trial court agreed and dismissed TIC’s second action against EBI with prejudice. TIC and Perkins & Will both appealed.
On appeal EBI argued that, because § 150.002 has been uniformly construed to require the certificate of merit to be filed with the first petition asserting claims covered by the act, TIC could not escape mandatory dismissal by refiling—this time, with the required certificate—the very same claims previously dismissed for lack of a certificate. The act plainly does not allow for cure by amendment in the same lawsuit, EBI contended, and what TIC had done here was the practical equivalent. The Court of Appeals disagreed. Noting that the statute expressly focuses on the commencement and dismissal of an “action,” and not simply the iteration of a claim, the Court concluded that “when a plaintiff files a new action and includes a certificate of merit with the first-filed petition in that action, the plaintiff has complied with the plain language of the statute.” The Court also observed that the permissive nature of the statute—which says courts “may” dismiss with prejudice—reflects the legislature’s intent to allow trial courts to give plaintiffs a second chance to comply. And so the Court of Appeals reversed the dismissal of TIC’s claims against EBI. In reaching this decision, the Court disagreed with a recent opinion by the San Antonio Court of Appeals interpreting the same statute.
The Dallas Court also reversed the dismissal of TIC’s claims against Perkins & Will. Those claims, it held, were asserted against Perkins & Will in its role as tenant and seller, and did not arise from its provision of professional services. The mere fact that Perkins & Will was an architecture firm, and therefore encompassed by the definition of “[l]icensed or registered professional” under § 150.002, did not change that. Not all claims against such a person or entity are covered by the statute.
