No Sealed Record on Appeal Without 76a Order

Orca Assets, GP, LLC v. J.P. Morgan Chase Bank, N.A.
Dallas Court of Appeals, No. 05-22-00292-CV (March 1, 2023)
Justice Molberg (Order, linked here)
In the most recent episode in this long-running saga, Orca Assets appealed from the trial court’s $2.4 million award of fees and costs against it. Because this particular aspect of the dispute had been severed years ago, Orca asked that two volumes of the sealed 12-volume clerk’s record from a 2013 substantive appeal in the main case be imported into this current fees and costs appeal. In January, Dallas Court of Appeals Justice Ken Molberg issued an order (linked here) granting that request, but noting that “the clerk’s record in [the earlier appeal] appears to have been filed under seal in accordance with an agreed protective order rather than a sealing order under Texas Rule of Civil Procedure 76a.” So, he further ordered that the imported volumes would “remain under seal only temporarily to allow the parties an opportunity to obtain a sealing order in compliance with rule 76a.” The order warned the parties that the Court would unseal those volumes unless they obtained that sealing order. They didn’t. So, Justice Molberg kept his promise and issued an order striking the sealed volumes of the record and ordering the district clerk to refile them “without seal.” Not long ago, Justice Craig Smith filed a concurrence to an en banc decision (in a different case) for the express purpose of addressing documents sealed on appeal and the application of Rule 76a. Surveying the relevant authorities, he concluded:
  • Rule 76a governs the sealing of records or documents filed in the court of appeals, so the appellate record should not be sealed unless and until the trial court has entered a sealing order after following the procedures of Rule 76a.
  • If the trial court has not entered a Rule 76a sealing order, the appellate court will abate the appeal or temporarily seal the filed documents only to allow the trial court to conduct a hearing to determine whether the requirements of Rule 76a have been satisfied and to make findings on whether the contents of the record should be sealed. 
  • The parties may not enter a Rule 11 agreement or agreed protective order to skirt the requirements of Rule 76a.
In re Cook, 629 S.W.3d 591, 608 (Tex. App.—Dallas 2021, orig. proceeding) (en banc). Justice Molberg’s orders in Orca Assets follow the path mapped out by Justice Smith. They confirm parties cannot be casual about complying with Rule 76a on appeal.

Gone, But Not Forgotten: Broker Entitled to Commission After Its Listing Terminated

Ebby Halliday Real Estate, Inc. v. Giambrone
Dallas Court of Appeals, No. 05-22-00386-CV (February 28, 2023)
Justices Reichek, Nowell, and Garcia (Opinion, linked here)
On September 2, 2020, Giambrone and Ebby Halliday Real Estate executed an exclusive listing agreement that provided Halliday a 6% commission if Giambrone’s property sold. After five months, Giambrone had not received any serious offers, so Giambrone and Halliday entered into a “Termination Agreement.” The Termination Agreement provided, in pertinent part, that 3% of the sales price would go to Halliday if Giambrone sold the property by December 31, 2021.


In June 2021, Giambrone had Compass list the property, and it promptly sold. Giambrone refused to pay Halliday the 3% fee prescribed in the Termination Agreement—$167,250. Halliday sued for breach of contract. The parties filed cross-motions for summary judgment. The trial court granted Giambrone’s motion. Halliday appealed.

The Court of Appeals reversed and rendered judgment, holding Halliday was entitled to the 3% fee. The appeal focused largely on the “producing cause” doctrine. This doctrine, which dates back to the Texas Supreme Court’s decision Goodwin v. Gunter, 185 S.W. 295, 296 (Tex. 1916), provides that a broker’s entitlement to a commission vests by procuring the sale. Here, Compass, not Halliday, found the buyer. But the producing cause doctrine is only a default rule, and parties can displace it through the terms of their agreement.

After observing that it is “not uncommon” for a broker to receive a commission by agreement after having its listing terminated, the Court of Appeals concluded the Termination Agreement overrode the producing cause doctrine. Because the termination agreement provided Halliday a 3% fee if Giambrone agreed to “sell or lease the Property” to “anyone” on or before December 31, 2021, Halliday did not need to procure the sale to receive the fee. Therefore, the Court of Appeals rendered a $167,250 judgment for Halliday and remanded for the trial court to determine Halliday’s attorneys’ fees on its breach-of-contract claim.

Thou Shalt Not Delay Trial for Appeal of a Temporary Injunction

Bienati v. Cloister Holdings, LLC
Dallas Court of Appeals, No. 05-22-00324-CV (February 10, 2023)
Justices Carlyle (Opinion, linked here), Goldstein, and Kennedy
Appellate courts often say the most efficient way to deal with a trial court’s decision granting or denying a temporary injunction is just to promptly go to trial. The Dallas Court of Appeals recently put teeth into that admonition.

Bienati and others pursued an interlocutory appeal from a temporary injunction. Although it had set a trial date in the injunction order, the district court first continued the trial and then abated the case entirely pending resolution of the temporary injunction appeal. Appellant’s counsel explained that the case was abated “because the probable right to recovery issue could impact the merits of the entire case, [and so] the trial court ‘abated it until this Court [of Appeals] weighed in on the merits of the temporary injunction and whether there’s a probable right to recovery.’”

The appeals court did not take kindly to that. Invoking Rule 683’s directive that “the appeal of a temporary injunction shall constitute no cause for delay of the trial,” the Dallas Court dismissed the appeal without addressing the merits. “The proceedings in the trial court have been stayed in an effort to obtain an advisory opinion from this Court,” it explained. “Judicial economy dictates that we not reward this behavior.”

… And That’s Final!

Patel v. Nations Renovations, LLC
Supreme Court of Texas, No. 21-0643 (February 10, 2023)
Per Curiam Opinion (linked here)
Another cautionary tale regarding the finality of judgments from the Supreme Court of Texas: Don’t hesitate if finality is in doubt.

Nations sought to confirm an arbitration award against Huntley Construction. Before the trial court rendered judgment confirming that award, Nations added Patel and others as defendants, alleging they were alter egos of Huntley. Soon after, the trial court entered judgment confirming the arbitration award, using language proposed by Nations. That judgment provided “[i] that Nations have all writs and processes to aid in execution of this judgment[,] ... [ii] that all relief not granted herein is denied[,] ... [and] that this is [iii] a final judgment and [iv] appealable.” Months later, Nations asked the trial court to “clarify” that judgment, to state that it was interlocutory rather than final. The trial court did so, but promptly certified for appeal the question whether it had jurisdiction to modify the judgment.

After the court of appeals declined to act, the Supreme Court—treating the PFR as a mandamus petition—ruled the trial court did not have jurisdiction to modify the judgment months after its issuance. The judgment was final, not interlocutory, and Nations had waited too long to ask the trial court to modify the judgment. The Court reiterated that no particular “magic words” are required to make a judgment final. But, taken together, the recitations in the judgment here “form a clear indication of finality,” even though none of them standing alone would be sufficient to do so. Further, although the claims against the new defendants Nations added after arbitration had not been resolved when the trial court issued the judgment, “the reviewing court cannot review the record” to assess whether a judgment is in fact final if, as here, that judgment is final on its face. “If the order contains a ‘clear and unequivocal’ finality phrase disposing of the entire case, the order is final, and the failure to actually dispose of all claims and parties renders the order erroneous but not interlocutory.” If the parties do not timely seek to modify or appeal such an “erroneous” final judgment, they’re stuck with it.

Finally, the Supreme Court rejected Nations’s suggestion that the judgment could be final as to some parties and interlocutory as to others. “Chaos would follow from such a rule,” the Court said, declaring that a “judgment is either final or it is not.”

Clause Preserving “All Remedies” Does Not Conflict with Agreement to Arbitrate

Kirk v. Atkins
Dallas Court of Appeals, No. 05-21-00639-CV (February 1, 2023)
Justices Nowell, Smith, and Miskel (Opinion, linked here)
Atkins sued Kirk for breach of contract, fraudulent misrepresentation, and conversion in connection with her investment in his company. The parties’ “investor agreement” included a broad ADR provision that required “[a]ny disputes or controversies arising out of or relating to” that agreement to be resolved through AAA arbitration. That agreement also contained a fairly standard “Remedies” provision stating that, “The parties shall have all remedies for breach of this Agreement available to them provided by law or equity.” Kirk sought to compel arbitration of the parties’ dispute. In response, Atkins did not contest the validity or scope of the arbitration provision, but argued that the agreement’s express reservation of “all remedies” conflicted with the agreement to arbitrate and rendered that ADR provision ambiguous. The trial court agreed and denied the motion to compel arbitration. But the Dallas Court of Appeals reversed.

The appeals court held the ADR and “Remedies” provisions of the agreement could and should be reconciled. “The ADR paragraph, in which the arbitration clause is found, controls the process of resolving disputes between the parties,” the Court explained, “while the remedies paragraph describes the substantive relief that may flow from decisions on those controversies.” The two provisions therefore were not in conflict, the ADR provision was not ambiguous, and the motion to compel arbitration should have been granted.

Distribution Center Deemed “Principal Office” Under Venue Statute

Deere & Co. v. Bernal
Dallas Court of Appeals, No. 05-22-00916-CV (January 17, 2023)
Justices Pedersen (Opinion, linked here), Goldstein, and Smith
Bernal had a fatal accident in Comanche County, Texas while he was operating a tractor manufactured by Deere. Bernal’s next of kin sued Deere and Bernal’s employer in Dallas County. They pleaded venue was proper in Dallas County under section 15.002(a)(3) of the Civil Practice and Remedies Code, which provides for venue in a county where at least one defendant has a “principal office.” Plaintiffs alleged that Deere has a principal office in Dallas County. Deere moved to transfer venue, denying that it had a principal office in Dallas County and arguing the case should be transferred to Comanche County, where the accident occurred, or Lamar County, where Bernal’s employer purportedly had its principal office. The trial court denied the motion to transfer, and Deere brought an interlocutory appeal.

When a defendant challenges venue, the plaintiff has the burden of presenting a prima facie case that venue is proper in the county in which it brought the lawsuit. Any venue facts pleaded by the plaintiff and not specifically denied by the defendant are treated as true. As to venue facts the defendant has specifically denied, the plaintiff must submit affidavits and documents authenticated by its affidavits to support its pleaded venue facts. Deere specifically denied the plaintiffs’ pleaded venue facts, so the plaintiffs had the burden of establishing a prima facie case that Deere had a principal office in Dallas County.

The venue statute defines “principal office” as the “a principal office of the corporation … in this state in which the decision makers for the organization within this state conduct the daily affairs of the organization.” A principal office must have decision makers for the company who have at least substantially equal authority and responsibility to other company officials in Texas. The plaintiffs submitted evidence that Deere operates a 230,000-square-foot regional distribution center in Dallas County that distributes parts to dealers in several states. The manager of the distribution center supervises over fifty-five employees, including several employees who themselves have supervisory responsibilities, and the manager does not report to anyone above him in Texas. The court of appeals concluded that these facts established that the Dallas County distribution center was “a principal office” in Texas and therefore affirmed the trial court’s denial of the motion to transfer.

Court Lacked Jurisdiction to Enter Declaratory Judgment Because It Was Uncontested

In re Banigan
Dallas Court of Appeals, No. 05-22-01084-CV (January 12, 2023)
Chief Justice Burns and Justices Partida-Kipness and Smith (Opinion, linked here)
After her husband filed for divorce in 2021, Cynthia Banigan moved to vacate a 2015 declaratory judgment establishing that the parties’ agreed partition of community property was valid and enforceable. The husband had filed the declaratory judgment action on the same day the partition agreement was signed. In her response, the wife confirmed the facts set forth in the petition and expressed her consent to entry of an order declaring the partition agreement to be valid. At the hearing, the husband testified as to the validity of the agreement, and the wife testified that she agreed with everything the husband had said.

The wife’s tune changed, of course, after the husband filed for divorce six years later. She argued that she did not voluntarily sign the partition agreement and that it was unconscionable. The trial court referred the matter to arbitration based on an arbitration provision in the partition agreement.

The wife then filed a mandamus proceeding arguing the declaratory judgment was void for lack of subject matter jurisdiction. The Dallas Court of Appeals agreed, holding there was no justiciable controversy between the parties when the trial court entered the declaratory judgment. The Uniform Declaratory Judgments Act allows a person interested under a written contract to have determined any question of construction or validity arising under the contract and to obtain a declaration of “rights, status, or other legal relations.” But a declaratory judgment is only appropriate if (1) a justiciable controversy exists as to the rights and status of the parties and (2) the controversy will be resolved by the declaration sought. Lack of a justiciable controversy results in a lack of subject matter jurisdiction. Because the wife confirmed the facts set forth in the petition, consented to the entry of the declaratory judgment, and “agreed with Husband’s position entirely” at the hearing, there was no live controversy between the parties. The trial court therefore lacked jurisdiction to enter the requested order, and so the Court of Appeals vacated the declaratory judgment as void.

Witness’s “Understandings” and Belief She Was “Deceived” Are Too Conclusory to Defeat Summary Judgment

Orange Cup Drive In LLC v. Mid-Continent Casualty Co.
Dallas Court of Appeals, No. 05-21-00448-CV (January 5, 2023)
Justices Nowell, Smith, and Rosenberg (opinion available here)
Orange Cup Drive In lost summary judgment on its contractual coverage claims against Mid-Continent Casualty Company. Undeterred, Orange Cup tried to pursue extra-contractual claims, alleging that the insurance company took advantage of Orange Cup’s lack of expertise to misrepresent that Orange Cup had more insurance coverage than it did. The insurance company moved for summary judgment on these claims as well, and the motion was granted.

On appeal, Orange Cup argued the trial court erred in disregarding the affidavits of one of its principals, Shanta Barua, regarding her understandings and beliefs regarding the insurance coverage purchased by Orange Cup. Barua had conducted all of the negotiations with the insurance company, and she stated in her affidavit that she “understood” and “was under the impression” that the policy would cover third-party claims against Orange Cup. She further stated the insurance company “deceive[d] me into believing that I obtained third party liability coverage for [Orange Cup].”

The Dallas Court of Appeals affirmed the trial court’s decision to disregard these statements because, without any explanation of how Barua was allegedly misled or how she came to her alleged understanding about the policy, her statements were “conclusions unsupported by any factual detail” and were not admissible. In the absence of any other evidence to support Orange Cup’s fraud and other extra-contractual claims, summary judgment was appropriate.

Rule 165a(3) Motion to Reinstate: "Verified" Really Does Mean What It Says

In re Briseno
Dallas Court of Appeals, Nos. 05-22-01174-CV (December 14, 2022)
Before Justices Myers, Nowell (Opinion), and Goldstein 
Rule 165a(3) states that a motion to reinstate after dismissal for want of prosecution must be “verified by the movant or his attorney.” The Dallas Court of Appeals applied that requirement literally (and some might say harshly) in In re Briseno. There, following a dismissal for want of prosecution, plaintiff’s counsel timely filed a motion to reinstate within 30 days explaining that he failed to appear for the dismissal hearing due to a “calendaring error.” And he attached a “Verification” swearing that the facts in the motion were “true and correct.” But, the “purported verification d[id] not reflect it was made in the presence of an authorized officer such as a notary public.” Nevertheless, the trial court granted the motion and reinstated the case.

The Court of Appeals ruled that the trial court’s order granting the motion to reinstate was void for lack of jurisdiction because it was not properly verified and did not extend the court’s plenary power beyond 30 days of the judgment. A verification must be sworn to before an authorized officer. In addition, the “verification” here did not meet the requirements of an unsworn declaration under CPRC § 132.001, such as containing the declarant’s birthdate and address. Accordingly, the Court granted mandamus relief and ordered the trial court to set aside the case’s reinstatement.

Morale of the story: Follow the rules, especially when dismissal is on the line.

SCOTx Establishes Protocol for Compelled Disclosure of Cell-Phone Use

In re Kuraray America, Inc.
Supreme Court of Texas, No. 20-0268 (December 9, 2022)
Per Curiam Opinion (linked here)
A chemical reactor at Kuraray’s manufacturing plant became over-pressurized and released ethylene vapor that caught fire, resulting in multiple injuries. In a lawsuit based on that incident, plaintiffs alleged that the ethylene-vapor release may have been caused in part by “cell phone usage and abuse by board operators” who monitored the reactor. In response to a motion to compel, the trial court ordered Kuraray to produce usage data for the company-issued cell phones of five such employees, for periods ranging from six weeks to four months before the incident. On mandamus, the SCOTx held this to be an overly intrusive abuse of discretion. It articulated “key principles that should guide trial courts’ careful management of cell-phone-data discovery,” and a two-step process for dealing with requests for such data: 
First, to be entitled to production of cell-phone data, the party seeking it must allege or provide some evidence of [i] cell-phone use by the person whose data is sought [ii] at a time when it could have been a contributing cause of the incident on which the claim is based. If the party seeking the discovery satisfies this initial burden, the trial court may order production of cell-phone data, provided its temporal scope is tailored to encompass only the period in which cell-phone use could have contributed to the incident. In other words, a trial court may not, at this stage, order production of a person’s cell-phone data for a time at which his use of a cell phone could not have been a contributing cause of the incident.
The Court then went on to explain step two of the process: “Only if this initial production indicates that cell-phone use could have contributed to the incident may a trial court consider whether additional discovery regarding cell-phone use beyond that timeframe may be relevant”—for example, to show the employer’s negligent supervision or training. 

Here, the record before the trial court actually negated, or at best did not demonstrate, that cell-phone use by the five employees was a contributing factor to the accident. The SCOTx therefore directed the trial court to vacate its order compelling production of the requested cell-phone usage data.
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