DALLAS COURT OF APPEALS CONTINUES TO REIN IN THE TCPA’S APPLICABILITY TO BUSINESS DISPUTES

Palladium Metal Recycling, LLC v. 5G Metals, Inc.

Dallas Court of Appeals, No. 05-19-00482-CV (July 28, 2020)

Justices Bridges, Molberg (Opinion, linked here), and Partida-Kipness

Woods Capital Enterprises, LLC v. DXC Technology Services, LLC

Dallas Court of Appeals, No. 05-19-00380-CV (July 29, 2020)

Justices Pedersen, III, Reichek (Opinion, linked here), and Carlyle (Concurrence, linked here)

Ken Carroll

In a pair of opinions this week, the Dallas Court of Appeals continued its trend of holding the TCPA inapplicable to many private business disputes. Palladium arose from a disagreement regarding a joint venture to acquire and re-sell scrap metals. Woods Capital grew out of a failed agreement for the sale of a large tract of commercial real estate. In each case, the Court of Appeals held the TCPA’s free-speech and right-of-association protections did not apply to communications and conduct focused on the business dealings of the parties involved. In each case, the Court referenced the stated purpose of the TCPA to protect “public participation” and drew upon the Supreme Court’s decision last year in Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC, 591 S.W.3d 127 (Tex. 2019). A sampling of the Court’s observations in the two cases:

• “The TCPA’s purpose of curbing strategic lawsuits against public participation is not furthered by a construction finding a right of association based simply on communications between parties with a shared interest in a private business transaction.”

• Rejecting a TCPA free-speech attack, the Court held the allegations targeted by the motion “lack any communications regarding matters of public concern as opposed to private pecuniary interests and thus do not implicate the TCPA’s protection of Palladium’s exercise of the right of free speech.”

• Acknowledging that the TCPA defines “matters of public concern”—the linchpin of TCPA free-speech protection—to include “issues related to health or safety; environmental, economic, or community well-being; the government; a public official or public figure; or a good, product, or service in the marketplace,” the Court cautioned that “not every communication related to one of the broad categories set out in [the statute] always regards a matter of public concern.” Because the record was “devoid of allegations or evidence that the dispute had any relevance beyond the pecuniary interests of the private parties involved,” the Court refused to find TCPA free-speech protections applicable.

• “This Court has consistently held that to constitute an exercise of the right of association under the TCPA, the nature of the communication between individuals who join together must involve public or citizen participation.”

Beyond its pronouncements on the applicability of the TCPA to business disputes, each decision also included an additional holding to which litigants should be alert. In Palladium, the Court held the TCPA movant had waived its objections to the non-movants’ evidence because it had not obtained a ruling on those objections and had not objected to the trial court’s failure to rule.

In Woods Capital, the Court ruled that the movant had “forfeited its [TCPA] motion” by failing to schedule a hearing within the period prescribed by statute. The TCPA allows the parties to delay a hearing by agreement for up to 90 days after service of the motion. A hearing may be delayed up to 120 days only if the court, upon a showing of good cause, “allows” limited discovery related to the TCPA motion. Reaffirming its ruling earlier this summer in Walker v. Pegasus Eventing, LLC, the Court held that the parties’ agreement to conduct discovery and the court’s acquiescence does not equate to “allowance” by the court that triggers the extra 30 days. Consequently, failure to schedule a hearing within the 90-day period, without court “allowance” of discovery, resulted in forfeiture of the motion.

EYE OF THE BEHOLDER: DOMINANT JURISDICTION AND PRIMARY VS. ANCILLARY RELIEF

In re Ahmed Zidan

Dallas Court of Appeals, No. 05-20-00595-CV (July 15, 2020)

Justices Bridges (Dissent, linked here), Osborne (Opinion, linked here), and Reichek

Ken Carroll

Ahmed Zidan and his uncle Alex had a falling out about their joint business venture. Ahmed sued Alex in Collin County. A couple months later, Alex sued Ahmed in Harris County. The Collin County court directed the parties to brief whether that court or the Harris County court had dominant jurisdiction. Ahmed argued Collin County acquired dominant jurisdiction because that case was first filed and venue was proper there. Alex responded that first-filed rules didn’t apply because venue was mandatory in Harris County and Ahmed lacked a bona fide intent to prosecute the Collin County suit. The Collin County trial court sided with Alex and abated and administratively closed that case. On mandamus, however, a divided panel of the Dallas Court of Appeals agreed with Ahmed that dominant jurisdiction lay with the Collin County Court.

The appeals court explained, “When two inherently interrelated suits are pending in two counties, the court in which suit is first filed generally acquires dominant jurisdiction to the exclusion of other courts if venue is proper there.” The Court had no difficulty concluding the two lawsuits were logically and “inherently interrelated,” because “the same facts will be dispositive in both suits.” It also brushed aside Alex’s argument that the “first-filed” rule should not apply because Ahmed had engaged in “inequitable conduct” and had no “bona fide intention to prosecute the [Collin County] suit.” Ahmed had excercised ample diligence in pursuing his lawsuit, the Court held, and brief delays in seeking citation and effecting service did not show otherwise.

The major point of contention was venue. In his Collin County action, Ahmed had sought injunctive relief against Alex, a Harris County resident, as well as the appointment of a receiver for the businesses, one of which allegedly was domiciled in Harris County, albeit ostensibly to protect real estate held by the company in Collin County. Section 65.023 of the Civil Practice and Remedies Code—regarding injunctions—and sections 11.401 and 11.402(b) of the Business Organizations Code—regarding receiverships—would seem to make venue in Harris County mandatory for such claims. But, the panel majority said, those mandatory venue provisions do not apply unless the request for injunctive or receivership relief is the “primary” focus of the lawsuit. Here, it reasoned, because Ahmed’s live pleadings sought a receiver only with respect to real property in Collin County and that and his request for injunctive relief were “simply to maintain the status quo pending resolution of the lawsuit,” those requests were “ancillary” and not the “primary” relief sought. Venue therefore was not mandatory in Harris County.

The dissent took a different view of Ahmed’s pleadings and requests for relief. It argued that Ahmed’s live pleading expressly sought permanent as well as temporary injunctive relief, and that the request for a receivership, even if focused on Collin County real property, extended to the Harris County entity that apparently owned that property. Neither request for relief, therefore, could be regarded as “ancillary,” the dissent contended, and therefore the statutes mandating venue in Harris County applied, supporting the trial court’s decision and rendering mandamus relief inappropriate.

GOVERNMENT HOSPITAL NOT IMMUNE FROM SUIT FOR MISPLACED SURGICAL SPONGE

University of Texas Southwestern Medical Center v. Rhoades

Dallas Court of Appeals, No. 05-19-00445-CV (June 30, 2020)

Justices Molberg, Partida-Kipness (Opinion linked here), and Bridges (Concurring and Dissenting Opinion linked here)

Lyndon Bittle

A divided Dallas Court of Appeals panel held the University of Texas Southwestern Medical Center (UTSW) does not have governmental immunity in a lawsuit arising from a medical team’s failure to remove a sponge during surgery.

As a breast reconstruction operation neared conclusion, the medical staff reported one of the surgical sponges used to absorb blood during the operation was missing. After a visual search of the surgical field did not reveal the location of the sponge, the doctor ordered x-rays with a portable x-ray machine. The missing sponge did not appear on x-rays of the chest and abdomen. The patient’s position did not allow x-rays of the pelvic area, but the doctor was confident the sponge would not have been there, and concluded the sponges must have been miscounted. The surgery was concluded and the patient was sent to intensive care for recovery. The search for the missing sponge added several hours to what normally would have been a six-hour surgery.

While the patient was recovering, an x-ray of her pelvic region revealed the missing sponge, which was then removed in a second surgery. The patient developed post-operative complications that required four additional surgeries. The patient sued UTSW for medical negligence. UTSW filed a plea to the jurisdiction on the grounds that as a governmental hospital, it is immune from the patient’s suit. The trial court denied the plea, finding immunity was waived under the Texas Tort Claims Act. UTSW appealed.

On appeal, the dispositive issue was whether UTSW’s governmental immunity was waived because the alleged injuries were caused by the negligent “use of tangible personal … property” under the TTCA, TEX. CIV. PRAC. & REM. CODE §101.021(2). Two separate items were at issue—the surgical sponge and the x-ray machine. UTSW argued that the claims “arise from the surgeons’ allegedly negligent medical judgment, for which immunity is not waived.” The Court affirmed the trial court’s holding as to both items, after a painstaking review of cases applying the “use of personal property” waiver of immunity, including University of Texas M.D. Anderson Cancer Center v. McKenzie, 578 S.W.3d 506 (Tex. 2019). Justice Partida-Kipness’s majority opinion, rejecting UTSW’s argument, emphasized that the doctor’s “erroneous decision to call off the search and close the remaining incisions followed the allegedly negligent use of the sponge.” Likewise, according to the majority, immunity was waived by the allegation and jurisdictional evidence that “UTSW used the machine negligently by failing to x-ray the entire surgical field.”

Justice Bridges joined the majority’s conclusion that UTSW waived immunity “for negligent use of the sponge during the operation.” He dissented, however, from the holding concerning use of the x-ray machine, arguing that the majority improperly expanded the Texas Supreme Court’s holding in McKenzie “to create jurisdiction where none exists.” Offering a detailed rebuttal to the majority’s review of the case law, Justice Bridges concluded the “negligence claims alleging misuse of the x-ray machine are artfully pleaded complaints about UTSW surgeons’ and radiology staff’s medical judgments, rather than use or misuse of tangible personal property.”

CONCLUSORY OPINIONS ARE NOT COMPETENT EVIDENCE

NexBank, SSB v. Winstead, PC
Dallas Court of Appeals, No. 05-18-01345-CV (April 21, 2020)
Justices Bridges, Partida-Kipness, and Nowell (Opinion, available here)

Kelli Hinson

In this legal malpractice case, the Dallas Court of Appeals confirmed that an expert’s conclusory causation opinion cannot create a fact issue to defeat summary judgment. NexBank filed suit against its former lawyers, alleging the lawyers were negligent in connection with a loan and subsequent non-judicial foreclosure. The foreclosure resulted in a deficiency, and NexBank claimed the lawyers’ negligence prevented it from fully recovering the deficiency from the loan guarantor and forced NexBank to settle with the guarantor for less than it should have.

The lawyers filed a no-evidence summary judgment motion arguing, among other things, that NexBank had no evidence of causation. In response, NexBank offered the affidavit of an expert witness who opined that the lawyers should have taken several identified steps to ensure a valid foreclosure and that, because of the lawyers’ alleged negligence, NexBank would have lost the litigation against the guarantor had that case gone to trial. The Court of Appeals agreed with the trial court’s determination that this testimony was conclusory and constituted no evidence of causation. It held the expert did not “explain how an invalid foreclosure would have caused NexBank to lose the Guarantor Litigation had that case gone to trial.” “Instead, without linking any facts to his conclusion, he summarily announces it is more likely than not that NexBank would not have prevailed.” An expert’s “conjecture, guess, or speculation will not suffice” as proof of what would have occurred had the litigation against the guarantor proceeded to trial. Summary judgment for the lawyers, therefore, was appropriate.

BE CAREFUL: THE MANDAMUS CLOCK MAY START TICKING SOONER THAN YOU THINK

In re Yamaha Golf-Car Co.
Dallas Court of Appeals, No. 05-19-00292-CV (April 8, 2019)
Justices Bridges, Osborne, and Carlyle (Opinion, linked here)

Ken Carroll

Can a judge’s email to her court administrator start the clock on mandamus review?

Turns out, it can. In a personal-injury case, Yamaha designated the paramedics who transported the victim to the hospital as responsible third parties under Chapter 33 of the Civil Practice and Remedies Code. Plaintiffs later moved to strike that designation because Yamaha had not adduced evidence that the paramedics “engaged in willful and wanton negligence,” which Plaintiffs contended was the proper standard for assessing their conduct. After a hearing held shortly before the scheduled trial date, the judge sent an email to her court administrator, listing all the motions that had been addressed at the hearing, stating her ruling on each motion, and asking for orders to be supplied for each. The email showed the motion to strike the responsible-third-party designation as “Granted.” The administrator forwarded the email to counsel, asking them to submit proposed orders. Meanwhile, trial was postponed for about 9 months. The judge didn’t sign an order striking the responsible-third-party designation until about 7 weeks before the new trial date. Yamaha filed its mandamus petition about 4 weeks later—only 3 weeks before trial and 8 months after the email that stated the trial court’s ruling on the motion to strike.

The Dallas Court of Appeals denied the petition, finding Yamaha had “waived through delay” its right to pursue mandamus relief. The Court held that, even though no formal order was signed until months later, “the trial court’s e-mail ruling was sufficiently clear and direct to be reviewed through mandamus,” and that signing a formal order “was merely a ministerial act.” The lesson: A party concerned about a “clear and direct” adverse ruling cannot sit back and wait for a formal order before pursuing mandamus relief—particularly not until right before trial. Rule 52 does not require a formal written order before relief can be sought. It requires only “a concise description of the [trial court’s] action from which the relator seeks relief” and directs the relator to attach to its petition a “certified or sworn copy of any order complained of, or any other document showing the matter complained of.”

The pain of “waiver through delay” here was perhaps softened somewhat here by an alternative ruling. The Court held that, even if the mandamus petition had been timely filed, it posed “an issue of first impression not appropriate for mandamus review.” Issues of first impression can be addressed on mandamus, but only if the principle of law on which the relator relies is “positively commanded and so plainly prescribed under the law as to be free from doubt.” The question presented here—the standard by which the paramedics’ conduct should be measured—did not rise to that level of clarity or certainty.

WHAT’S HAPPENING WITH MY APPEAL? TCPA CASE SHEDS LIGHT ON COURT’S PROCESSES

U.S. Anesthesia Partners of Texas, P.A. v. Whitney Kelley Mahana
Dallas Court of Appeals, No. 05-18-01414 (August 27, 2019)
Justices Bridges (Dissent, linked here), Brown, and Nowell (Opinion, linked here); Dissent from Denial of En Banc Rehearing by J. Whitehill (linked here)

Brent Rubin

Mahana, a nurse anesthetist, alleged that her supervisor at U.S. Anesthesia Partners sent text messages falsely stating that she tested positive for drugs and was being fired. Mahana sued the employer for intentional infliction of emotional distress. The employer moved to dismiss under the TCPA and appealed after the trial court denied the motion.

In a split decision, the Dallas Court of Appeals concluded that because the text messages did not address Mahana’s job performance, they were not “communications related to the provision of medical services by a health care professional.” Therefore, the text messages were not an exercise of the employer’s right to free speech, which the TCPA defines to include communications on an “issue related to health or safety,” and the TCPA did not apply. Justice Bridges dissented, arguing that any drug use that could impair Mahana’s ability to do her job had a sufficient relationship to issues of health and safety, such that the TCPA applied to the text messages.

Notably, at the same time the majority opinion and dissent issued, Justice Whitehill also issued an opinion dissenting from the denial of reconsideration en banc, arguing that the majority opinion conflicted with the Court’s own precedent. Justice Whitehill’s dissent sheds light on some of the Court’s behind-the-scenes practices:

How did the opinion and the dissent from the denial of en banc reconsideration issue on the same day? Did U.S. Anesthesia Partners request en banc reconsideration before the Court issued its opinion?

No, U.S. Anesthesia Partners never moved for reconsideration en banc. TRAP 49.7 allows a “majority of the en banc court may…, with or without a motion, [to] order en banc reconsideration of a panel’s decision.” And the Court’s own Internal Operating Procedures note that it will “on occasion” sit en banc without a request from the parties. So, Justice Whitehill requested en banc consideration sua sponte.

But doesn’t the en banc process start after the opinion issues?

No, TRAP 49.7 allows en banc consideration to occur at any time the Court has plenary power. In fact, a Court can order the case to be heard en banc in the first instance. See TRAP 41.1(a), 41.2(a). For example, the Court might order en banc consideration at the outset when an appeal directly challenges binding precedent from the Court, which a panel cannot overrule.

I still don’t understand why the vote on en banc happened before the Court issued an opinion in the case. 

Although we can’t know the precise reasons why Justice Whitehill requested en banc review when he did, a few considerations appear to be at play. First, the Court has a practice, which some Justices have mentioned but which does not appear to be formally memorialized for the public, of circulating opinions in certain cases to the entire Court before an opinion issues. This will occur, among other times, when there will be a dissent in a case heard by a three-justice panel, as occurred here. Second, the Court has an internal goal of issuing opinions in all cases that have been argued (or submitted without argument) before the start of its new fiscal year on September 1. The opinions here issued on August 27. Both of these factors could have led to the decision to address en banc review at the same time the panel was issuing its opinions.

INSURANCE COVERS DAMAGES AWARDED AGAINST MAJORITY OWNER WHO WRONGFULLY FIRED BUSINESS PARTNER

Prophet Equity LP v. Twin City Fire Ins. Co.
Dallas Court of Appeals, No. 05-17-00927-CV (August 19, 2019)
Justices Bridges, Brown, and Whitehill (Opinion linked here)

Lyndon Bittle

A majority partner wrongfully fired his partner, and paid the judgment entered against him. After the first $10 million of insurance coverage was exhausted, he sued an excess insurer for another $4 million. Reversing the trial court, the Dallas Court of Appeals held the excess insurer must pay the balance of the judgment and additional attorney’s fees, summing up its decision in a nifty flow chart:

LACHES IN THE CYBER AGE: WHEN THE JUDGE SAYS “GRANTED” BY EMAIL, CAN YOU WAIT FOR A SIGNED ORDER BEFORE PURSUING MANDAMUS?

In re Yamaha Golf-Car Co.
Dallas Court of Appeals, No. 05-19-00292-CV (April 8, 2019)
Justices Bridges, Osborne, and Carlyle (Opinion, linked here)

Neil R. Burger

In this mandamus proceeding, the Dallas Court of Appeals held that the relator waived its right to pursue mandamus relief by failing to timely challenge a trial court ruling contained in an email to the parties, even though no signed, written order was issued until months later.

The underlying lawsuit involved injuries to a child caused by a golf-car accident. The defendant, Yamaha, moved to designate emergency medical care providers as responsible third parties under Chapter 33. Plaintiffs filed a motion to strike, asserting that Yamaha had failed to meet the pleading and proof requirements of Chapter 74 concerning medical-care providers in emergency situations.

A month after the court held a hearing on that and other motions, the Judge sent an email to the court administrator stating that she needed “the following orders,” and listing the pending motions with an indication as to the court’s ruling on each, including that the motion to strike was “Granted.”  The court administrator forwarded the Judge’s email to all counsel, and requested orders be submitted.

The court did not sign a formal order denying the motion to strike for another seven months. Yamaha filed its mandamus petition one month after that, only three weeks before trial. Without considering the merits of the order striking the designation, the Court of Appeals determined that Yamaha’s mandamus was barred by laches because it had waited eight months after the Judge’s email announcing her decision before seeking mandamus relief. The Court rejected Yamaha’s argument that the Judge’s email was not sufficiently specific, and found that “signing the order was merely a ministerial act.”

So, the next time a court announces a ruling orally, in an email, or in some other informal fashion, think twice about waiting for a signed, written order before pursuing mandamus.