TEXAS SUPREME COURT REVERSES AND REMANDS SANCTIONS AWARD FOR FAILURE TO ADEQUATELY CONSIDER ALL RELEVANT FACTORS

Nath v. Texas Children’s Hospital
Supreme Court of Texas, No. 12-0620 (August 29, 2014)
Justice Guzman (Opinion), Justice Green (Dissent)
In a five-to-four decision, the Texas Supreme Court reversed and remanded a $1.4 million sanctions award based on the trial court’s failure to adequately consider all of the relevant Low factors. The Court reversed what it described as “one of the highest reported monetary sanctions awards in Texas history stemming from baseless pleadings and one of the largest such awards in the United States.”

The Court acknowledged that the party’s conduct in “filing groundless pleadings in bad faith and with an improper purpose” was subject to sanctions under Chapter 10 of the Texas Civil Practice and Remedies Code and Texas Rule of Civil Procedure 13 and that the evidence supported the trial court’s finding that the party—rather than his counsel—was the true offender. But the Court held that the trial court abused its discretion in determining the amount of the sanctions because it failed to adequately consider all the relevant factors articulated in 2004 in Low v. Henry. The Court held that “when a factor is relevant to a party being sanctioned, that factor must inform the issuance of the award.” In awarding sanctions based on the attorneys’ fees spent in defending against Nath’s meritless claims, the trial court in this case failed to consider “the degree to which the offended person’s own behavior caused the expenses for which recovery is sought.” Specifically, the Court held that the trial court did not consider whether the defendants had some responsibility for the amount of attorneys’ fees they incurred because they litigated “a host of merits issues for nearly a half-decade” before successfully moving for summary judgment. So the Court remanded the case to the trial court for consideration of that issue.

The dissent, led by Justice Green, argued that the trial court actually did consider the defendants’ conduct, but mistakenly referred to “Nath’s own behavior” instead of the defendants’ own behavior in its findings of fact. The dissent also argued that the trial court has discretion in determining which Low factors to consider and that its failure to consider any one factor is not an abuse of discretion.

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