No Standing for Taxpayer Challenging Removal of Statue

Robinson v. Scripps
Dallas Court of Appeals, No. 05-21-00349-CV (May 19, 2022)
Justices Carlyle, Smith (Opinion, available here), and Garcia
    Eugene Robinson filed suit against the City of Dallas and Jennifer Scripps, its Director of the Office of Cultural Affairs, alleging the City was in the process of disassembling a Confederate War memorial even though its Certificate of Demolition (CD) had expired. The trial court denied Robinson’s application for temporary restraining order, and the Court of Appeals denied mandamus. By that time, the monument had already been removed and placed in archival storage, and the contractor had been paid for the work. The defendants therefore filed a plea to the jurisdiction on the grounds that Robinson’s case was moot. The trial court agreed and dismissed the suit. Robinson appealed.

        In order to have standing to pursue a claim, a plaintiff must allege facts that affirmatively demonstrate the court has jurisdiction to hear the case. As a general rule, a taxpayer does not have standing to contest government decision-making because “[g]overnments cannot operate if every citizen who concludes that a public official has abused his discretion is granted the right to come into court and bring such official’s public acts under judicial review.” However, a taxpayer does have standing to sue to enjoin the illegal expenditure of public funds, and that was Robinson’s hook. He claimed the City could not expend public funds for the disassembly, removal, and transfer of the monument if it did not have a valid CD. By the time the City filed its Plea, however, the work had already been done and the money had been spent. Once the government has spent the funds the taxpayer seeks to enjoin, there is no longer a case or controversy between the parties, and the case becomes moot.

        The Court of Appeals rejected Robinson’s argument that the City’s payment of storage fees created a continuing controversy between the parties, because such fees were not alleged to be “illegal” given that they were unrelated to the expired CD. It also rejected Robinson’s argument that the “capable of repetition, yet evading review” exception to the mootness doctrine applied, finding there was no evidence the City routinely demolishes or removes property without a valid CD. The Court therefore affirmed the dismissal based on lack of jurisdiction.

What's so Special for a Special Master?

In re Alford
Dallas Court of Appeals, No. 05-22-00240-CV (May 16, 2022)
Before Justices Osborne (Opinion), Partida-Kipness, and Smith
In re Alford
concerns the sua sponte appointment of a Special Master to determine a pending plea to the jurisdiction and rule on future discovery disputes. Concluding that the appointment was not supported by findings from the trial court that “good cause” existed or that the case was “exceptional” under Texas Rule of Civil Procedure 171, the Fifth Court of Appeals conditionally granted the petition for writ of mandamus.

Without a request or consent from the parties, the trial court appointed a Special Master under Rule 171. The Order required the parties to compensate the Special Master at $500 per hour, and granted him broad authority, including the ability to have ex parte communications with the court, parties, and witnesses. Although the Order stated that “good cause exists in this exceptional case” for a Special Master, it did not specify facts or circumstances in support.

The Court of Appeals determined that the appointment did not meet the requirements of Rule 171. There were no pending discovery disputes. In addition, the record did not demonstrate that the case was “unusually complicated” or required “special knowledge.” As such, without the consent of the parties, the appointment of the Special Master was a clear abuse of discretion, and mandamus relief was warranted.

Not So Fast: Trial Court Cannot Compel Discovery While Plea to Jurisdiction Attacking Pleadings Is Pending

In re Dallas County, Texas and Dallas County Constable Bill Gipson
Dallas Court of Appeals, No. 05-21-01144 (May 10, 2022)
Justices Myers, Partida-Kipness (Opinion, linked here), and Carlyle
After Gipson was elected constable, he told deputy constables Woodard and Yarbrough that they would not be re-sworn as deputy constables after he took office. Woodard and Yarbrough sought to pursue grievances with Dallas County. But the County concluded they were not covered by the civil-service grievance system because they had been hired after August 19, 2003; it therefore denied them a grievance hearing.

Woodard and Yarbrough then sued, claiming they were denied their property rights in employment and denied equal protection because they were not allowed to access the grievance procedure available to those hired before August 19, 2003. The County and Constable Gipson answered and filed pleas to the jurisdiction based on governmental immunity. After the jurisdictional pleas were filed, Woodard and Yarbrough moved to compel discovery. The trial court ordered the County and Constable Gipson to respond to discovery requests and to appear for depositions.

The County and Constable Gipson sought mandamus relief, arguing discovery was improper while their pleas to the jurisdiction were pending.

The Court of Appeals explained that there are two types of pleas to the jurisdiction: an attack on the sufficiency of the pleadings and an evidentiary attack on the existence of jurisdictional facts. When a plea to the jurisdiction is based on evidence, a trial court has discretion to decide the plea at a preliminary hearing or later, after the case is more fully developed. If the trial court delays determination, the trial court can also allow targeted discovery on issues relevant to the plea to the jurisdiction. In contrast, when a plea to the jurisdiction is based on the pleadings alone, discovery is not proper while the plea is pending.

The Court of Appeals concluded the County’s and Constable Gipson’s pleas to the jurisdiction were based on the pleadings, so the trial court was obligated to hear and decide the pleas to the jurisdiction before compelling discovery. Further, the Court of Appeals noted that even if this were a scenario where the court could compel targeted discovery, the trial court erred by failing to confine the compelled discovery to jurisdictional issues. The Court of Appeals therefore granted mandamus relief, directing the trial court to vacate its order compelling discovery.

Going Paperless in a Spoliating World

Power v. Power
Dallas Court of Appeals, No. 05-19-01557-CV (May 3, 2022)
Justices Molberg, Nowell (Opinion), and Goldstein
In Power v. Power, the Fifth Court confronted a spoliation jury instruction given after a company went paperless and destroyed a decade’s worth of invoices central to the fiduciary duty claims in the lawsuit. Finding error, the Court reversed and remanded the case for a new trial.

Brothers Craig Power and Braden Power developed real estate together. Craig operated the business, and Braden designed and oversaw the business’s construction activities. In 2013, Craig decided the company would adopt a paperless recordkeeping system and authorized the destruction of ten boxes of invoices dating back to 2003. The brothers later sued each other over finances and distributions.

At trial, the court admitted evidence that Craig gave permission for a payroll employee to shred old invoices when they converted to electronic billing. Braden’s counsel also stated in opening and closing arguments that Craig ordered the destruction of the documents and that that “alone is a breach of fiduciary duty.” The trial court subsequently instructed the jury on spoliation without naming the offending party:
Invoices and documents which would demonstrate or reflect expenses relating to Craig Power and Braden Power [sic] real estate transactions have been destroyed.
You may consider that the invoices, documents, and records destroyed would have been unfavorable to the party who destroyed the invoices, documents, and records on the issues of whether the party complied with the party’s legal duties and the failure to properly account for money under the party’s care and control.
The jury returned a verdict in favor of Braden awarding damages against Craig. This appeal followed.

The Court first addressed whether the jury charge constituted a spoliation instruction when it did not name the party responsible for the destruction of documents. It did. There was no evidence or argument that Braden had destroyed evidence, while Braden’s counsel put on testimony and made arguments that Craig had. Therefore, not naming Craig as the spoliating party was “not determinative.”

Next, the Court analyzed whether the “severe spoliation sanction” of a jury instruction was an abuse of discretion that probably caused the rendition of an improper judgment. It was and it did. To sanction a party for spoliating evidence, the trial court must, outside the presence of the jury, find that (1) the spoliating party had a duty to preserve evidence, and (2) the party intentionally or negligently breached that duty. The trial court did not do that here. Because of the closely contested nature of the issues at trial, the emphasis Braden’s counsel placed on spoliation, and the harshness of a spoliation instruction, the Court of Appeals found harm, reversing and remanding for a new trial.

Splitting with Sister Courts, the Dallas Court of Appeals Holds Post-Judgment Interest Applies to Judgments Confirming Arbitration Awards

Bluestone Resources, Inc. v. First National Capital, LLC
Dallas Court of Appeals, No. 05-20-00776-CV (April 29, 2022)
Justices Reichek (Opinion, linked here), Nowell, and Carlyle
First National secured an award in arbitration against Bluestone. When First National sought confirmation of the award, it requested post-judgment interest under the Finance Code. The trial court issued a final judgment confirming the award and ordering post-judgment interest on all sums awarded in the judgment. On appeal, Bluestone argued the trial court’s award of post-judgment interest was an impermissible modification of the arbitration award.

The Dallas Court of Appeals held chapter 304 of the Finance Code requires post-judgment interest on a judgment confirming an arbitration award. The Court cited section 304.003, which states that post-judgment interest accrues on any “money judgment of a court of this state.” Because the trial court’s judgment confirming First National’s arbitration award was a “money judgment of a court of this state,” First National was entitled to post-judgment interest.

The Court acknowledged that its decision departed from a line of cases holding that a court may award post-judgment interest only if the arbitrator awards it. The Court observed that those cases failed to differentiate between post-award interest (accruing from the date of the arbitration award) and post-judgment interest (accruing from the date of final judgment). Post-award interest ordered by a trial court but not the arbitrator amounts to an impermissible modification of an arbitration award. Post-judgment interest, on the other hand, accrues automatically under the Finance Code even if a court’s judgment does not specifically reference it. Awarding post-judgment interest in this context, therefore, is completely consistent with the general rule that courts may not modify arbitration awards, because the post-judgment interest applies to the judgment and not the award.

Given the split among the courts of appeals, and absent reconsideration en banc, the availability of post-judgment interest in arbitration confirmation proceedings appears bound for the Texas Supreme Court. Until then, Bluestone clarifies it’s available (and mandatory) in the Fifth District.

PSA—Ask for Permission, Not Forgiveness!

In re D.M.
Dallas Court of Appeals, No. 05-21-00185-CV (April 21, 2022)
Justice Goldstein (Concurring Opinion linked here)
In a public service announcement to the bar, written to “draw attention to a disturbing trend,” Justice Goldstein pleaded for Texas lawyers to file timely notices of appeal rather than wasting their time and the courts’ resources with after-the-fact motions for extension. This “pattern and practice of the legal profession to seek forgiveness rather than permission is one that cannot stand without comment and caution.” Justice Goldstein noted that a “notice of appeal is not labor intensive, extensive, or in-depth.” Nevertheless, too often, lawyers miss the deadline to file “what is essentially a rote, perfunctory notice” and then have to file a much longer motion for extension of time, which requires the Court “to consider a myriad of excuses to determine whether the motion’s rationale meets the generous latitude mandated by the Texas Supreme Court.” Justice Goldstein’s advice: “if you file a timely motion for new trial, a two-sentence notice of appeal should follow shortly thereafter.”

Mandamus Relief for Denial of Advancement of Defense Costs

In re DeMattia
Dallas Court of Appeals, No. 05-21-00460-CV (April 12, 2022)
Justices Schenck, Nowell (Opinion, linked here), and Garcia
Mark DeMattia co-owned Restoration Specialists, LLC and served as its managing member. In 2018, he sold the company. But a few days before the closing, he allegedly copied or deleted certain files. Under its new owners, Restoration later sued DeMattia, alleging breach of fiduciary duty and misappropriation of trade secrets.

DeMattia, in turn, demanded that Restoration indemnify him and advance his defense costs, pursuant to Restoration’s corporate regulations. The Texas Business Organizations Code allows LLCs to indemnify and advance defense costs, through their organizing documents, to both current and former officials and governing persons. After Restoration denied his demand for advancement, DeMattia counterclaimed and moved for summary judgment. Restoration responded that the advancement provision in the company regulations, by its terms, did not apply to former managers like DeMattia. The trial court denied DeMattia’s motion.

DeMattia sought mandamus relief in the Dallas Court of Appeals. Applying contract interpretation principles, the Court held that the advancement provision in Restoration’s corporate regulations did cover former managers like DeMattia, so the trial court erred by denying DeMattia’s motion for summary judgment. The Court also rejected Restoration’s argument that DeMattia’s “unclean hands”—his alleged misappropriation and breach of fiduciary duty—barred advancement as a matter of public policy. The Court explained that every lawsuit involves allegations of wrongdoing, so denying advancement based mere allegations of unclean hands would render the right to advancement a nullity.

Finally, the Court held DeMattia did not have an adequate remedy by appeal, a requirement for mandamus relief. The right to advancement can be satisfied only during proceedings in the trial court, so proceeding to trial without advancement, when a party is entitled to advancement, would defeat the right to advancement. Therefore, the Court ordered the trial court to vacate its denial of summary judgment and issue an order granting DeMattia’s motion.

Beware the TRAP: The Deadline to Appeal after Filing a Post-Judgment Motion

Nur Ali v. Spectra Bank
Dallas Court of Appeals, No. 05-21-01113-CV (April 6, 2022)
Chief Justice Burns, Justice Molberg (Opinion, linked here), and Justice Goldstein

A to Z Wholesale Wine & Spirits, LLC, v. Spectra Bank
Dallas Court of Appeals, No. 05-21-01149-CV (April 6, 2022)
Chief Justice Burns, Justice Molberg, and Justice Goldstein (Opinion, linked here)
In substantially identical opinions in two related cases, the Dallas Court of Appeals made appellants painfully aware of an anomaly in the Texas rules. Under TRAP 26.1, a notice of appeal ordinarily must be filed “30 days after the [trial court] judgment is signed.” But if an appellant timely files a qualifying motion, such as a motion for new trial, TRAP 26.1(a) extends the deadline for the notice of appeal to “90 days after the judgment is signed”—but not to 30 days after the motion is overruled or denied, as one might expect and as is prescribed by the corresponding federal rule governing notices of appeal, FRAP 4(a)(4). This anomaly can prove especially treacherous where, as in these two cases, the post-judgment motion in the trial court is overruled by operation of law.

In both Ali and A to Z the appellant timely filed a motion for new trial. In each case, the motion was overruled by operation of law 75 days after the judgment was signed, pursuant to TRCP 329b(c). Instead of filing a notice of appeal within the next 15 days—that is, within 90 days after the judgment was signed—the appellants waited until 30 days after the motions were overruled, making the notices 15 days late under TRAP 26.1(a). That still gave each appellant a last-gasp, post-deadline opportunity to seek an extension under TRAP 26.3, provided they could show their delay in filing “was not deliberate or intentional, but was the result of inadvertence, mistake, or mischance.” Trying to meet that standard, each appellant argued the delay was justified to allow for “disposition of the entire case below,” i.e., for the trial court’s plenary jurisdiction to expire under TRCP 329b(e). The Court of Appeals didn’t buy it, saying it had “repeatedly held that delay caused by waiting for the trial court to rule on a post-judgment motion or for the trial court’s plenary power to expire is unreasonable as it reflects an awareness of the deadline for filing a notice of appeal but a conscious decision to ignore it.” In other words, a “deliberate [and] intentional” decision, exactly the opposite of “inadvertance, mistake, or mischance.” In each case, therefore, the Court denied the appellant’s motion to extend time to file a notice of appeal and dismissed for want of jurisdiction.

Standing to Challenge Zoning Decisions

City of Dallas v. Homan
Dallas Court of Appeals, No. 05-20-01111-CV (March 31, 2022)
Justices Carlyle, Smith, and Garcia (Opinion available here)
Katherine Homan filed a declaratory judgment action claiming that an amended zoning ordinance was invalid. The City of Dallas filed a plea to the jurisdiction, arguing Homan had no standing to challenge the ordinance. The trial court disagreed, denied the plea to the jurisdiction, and granted summary judgment in favor of Homan on her declaratory judgment claim that the ordinance is invalid. The City appealed.

The Dallas Court of Appeals agreed Homan had standing to contest the ordinance. Standing to challenge a government action requires a showing that the plaintiff suffered a particularized injury apart from the general public. So, in the context of a zoning decision, a plaintiff has standing “when the zoning affects the plaintiff differently than other members of the general public.” The Court noted that the Texas Legislature has created a mechanism for parties living within 200 feet of a proposed zoning change to receive notice and have the opportunity to protest the change. The Court found this to be a recognition that property owners within 200 feet of a proposed zoning change face a greater risk of injury to the use, enjoyment, and value of their property than the general public. This is a sufficient interest in the process to confer standing.

Must-Read Opinion Regarding Return-of-Service Affidavits

Mesa SW Management, LP v. BBVA USA
Dallas Court of Appeals, No. 05-20-01091-CV (February 24, 2022)
Justices Myers, Osborne, and Nowell (Opinion available here)
Hanging on to a no-answer default judgment is hard. And it may have just gotten harder. In this restricted appeal, the appellants sought reversal of the default judgments against them, arguing BBVA failed to strictly comply with multiple requirements governing service of process. The Dallas Court of Appeals agreed. In particular, the Court took issue with the Affidavit of Service regarding each appellant. The affidavits provided in relevant part:

The Court held the affidavits failed to comply with Rule 105, which states: “The officer or authorized person to whom process is delivered shall endorse thereon the day and hour on which he received it, and shall execute and return the same without delay.” By its language, the rule requires the same person to whom process is delivered to then execute and return the process without delay. Because the affidavits indicated that Austin Process LLC received the process and Roger Bigony served it, the affidavits did not strictly comply with Rule 105. Failure to show strict compliance with Rule 105 renders attempted service invalid and of no effect. So the default judgments were reversed, and the case was remanded back to the trial court. The Court did not reach appellants’ other complaints about service, including whether an entity such as Austin Process LLC is an “authorized person” to receive the process under the rules.
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