Supreme Court of Texas, No. 16-0588 (April 27, 2018)
Justice Blacklock (opinion available here)
In this case, Lujan acquired a wholesale flower company and purchased five new delivery trucks from Navistar. Lujan sued Navistar, alleging repeated mechanical problems with the trucks, and a dispute arose about whether Lujan or his company, Texas Wholesale Flower Co., Inc., actually owned the trucks. Based on prior testimony, statements on the record by Lujan’s counsel, and documents such as corporate tax returns, Navistar filed a motion for summary judgment against Lujan on the grounds that Lujan did not own the trucks and did not have standing to bring suit. Lujan responded with an affidavit stating that “he did not transfer ownership of the trucks to the Corporation and that the Corporation had no assets or liabilities and ‘never conducted business.’” The trial court found that the statements regarding the Corporation’s assets and liabilities and that it never conducted business were demonstrably false and that the statement that Lujan never transferred ownership of the trucks to the Corporation contradicted other testimony and evidence in the case, a contradiction for which Lujan gave no explanation. So the trial court struck the affidavit as a “sham” and granted summary judgment. Lujan appealed. A divided panel of the 14th Court of Appeals affirmed and “adopt[ed] the sham affidavit doctrine,” which had never been explicitly recognized by that court.
The Texas Supreme Court granted review, adopted the sham affidavit rule, and affirmed the summary judgment. It acknowledged that sometimes a contradictory affidavit is warranted, but an explanation for the contradiction is required—for example, that new evidence was discovered or the witness was confused when originally answering the question. While a trial court must not weigh evidence at the summary judgment stage, the rules of procedure require the court to determine whether a proffered fact issue is “genuine,” which means “authentic or real.” A “sham” is, by definition, “not genuine.” And so the sham affidavit rule merely recognizes the authority of a trial court to require litigants to explain conflicting testimony that appears to be a sham designed to avoid summary judgment. The Court cautioned that “most differences between a witness’s affidavit and deposition are more a matter of degree and details than direct contradiction. This reflects human inaccuracy more than fraud.” The sham affidavit rule only provides that where the circumstances point to the likelihood of a sham rather than legitimate questions of fact, the trial court may insist on a sufficient explanation and may grant summary judgment if none is forthcoming.
