Badger Tavern LP v. City of Dallas
Dallas Court of Appeals, No. 05-23-00299-CV (April 20, 2023)
Chief Justice Burns (opinion available here) and Justices Molberg and Goldstein
Showing posts with label Hinson. Show all posts
Showing posts with label Hinson. Show all posts
Rules Are Rules
Court Lacked Jurisdiction to Enter Declaratory Judgment Because It Was Uncontested
In re Banigan
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.
Dallas Court of Appeals, No. 05-22-01084-CV (January 12, 2023)
Chief Justice Burns and Justices Partida-Kipness and Smith (Opinion, linked here)
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.
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.
Dallas Court of Appeals, No. 05-21-00448-CV (January 5, 2023)
Justices Nowell, Smith, and Rosenberg (opinion available here)
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.
Primer on Proving Up Attorneys’ Fees
Canadian Real Estate Holdings, LP v. Karen F. Newton Revocable Trust
The Dallas Court of Appeals provided additional guidance on proving up attorneys’ fees in this declaratory judgment action. After the trial court dismissed the plaintiffs’ claim as moot, it awarded plaintiffs $45,529.13 in incurred attorneys’ fees plus $21,000.00 in conditional attorneys’ fees on appeal. The defendant, Canadian REH, appealed, arguing plaintiffs had failed to prove the amount of reasonable and necessary attorneys’ fees.
Dallas Court of Appeals, No. 05-20-00747-CV (September 29, 2022)
Justices Pedersen, III (opinion available here), Goldstein, and Smith
Canadian REH first argued that plaintiffs were required to provide “hard” or “disinterested” evidence of a reasonable hourly rate, such as affidavits of other attorneys, the State Bar of Texas Hourly Rate Fact Sheet, or fees awarded in similar cases. But the Court disagreed, noting that the affidavit of plaintiffs’ counsel, who testified he was “familiar with the hourly rates and costs customarily charged in and around” Collin County, Texas, was sufficiently detailed to establish reasonable hourly rates. And his experience was sufficient to back up his assertions of familiarity. The Court noted that neither Rohrmoos nor prior Dallas Court of Appeals cases have required additional “disinterested” evidence.
Canadian REH next argued that plaintiffs failed to establish the reasonable hours worked because the billing records were heavily redacted and contained block billing. Again, the Court disagreed. It noted that attorney invoices are “routinely redacted” when offered as evidence, in order to protect the attorney-client and work-product privileges, and that such redactions do not “obscure[e] meaningful review of attorney time” as Canadian REH claimed. The Court also disagreed that plaintiffs’ counsel’s use of “block billing” was a problem, noting that no entry included more than one day’s work for a timekeeper, and many entries included related tasks charged for fractions of one hour.
Canadian REH did get some traction with its complaint about conditional appellate fees, however. Plaintiffs’ counsel did not provide any explanation for his estimated appellate fees of $14,000 in the Court of Appeals and $7,000 in the Supreme Court. The Court reiterated prior holdings that an award of conditional appellate fees must be based on testimony about the services the attorney reasonably believes will be necessary to defend the appeal and a reasonable hourly rate for those services. Counsel’s conclusory opinion provided neither. The Court therefore vacated that portion of the award.
No Standing for Taxpayer Challenging Removal of Statue
Robinson v. Scripps
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.
Dallas Court of Appeals, No. 05-21-00349-CV (May 19, 2022)
Justices Carlyle, Smith (Opinion, available here), and Garcia
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.
PSA—Ask for Permission, Not Forgiveness!
In re D.M.
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.”
Dallas Court of Appeals, No. 05-21-00185-CV (April 21, 2022)
Justice Goldstein (Concurring Opinion linked here)
Standing to Challenge Zoning Decisions
City of Dallas v. Homan
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.
Dallas Court of Appeals, No. 05-20-01111-CV (March 31, 2022)
Justices Carlyle, Smith, and Garcia (Opinion available here)
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
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:
Dallas Court of Appeals, No. 05-20-01091-CV (February 24, 2022)
Justices Myers, Osborne, and Nowell (Opinion available here)
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.
Party Has No Standing to Appeal Sanctions Against Its Attorneys
On Deck Capital, Inc. v. CWO Designer Landscapes LLC
When the day of trial arrived, the plaintiff had not timely responded to or supplemented its discovery responses. It became clear that, if trial proceeded, the court would exclude much of plaintiff’s anticipated evidence because of that failure to respond or supplement. When the trial court refused the plaintiff’s request for a continuance in order to supplement its discovery, the plaintiff filed a motion for non-suit. The parties disagreed about whether the non-suit should be with or without prejudice and whether discovery sanctions should be issued. Ultimately, the trial court dismissed the case without prejudice, but ordered discovery sanctions against the plaintiff’s law firm, “not the client.” The plaintiff appealed.
Dallas Court of Appeals, No. 05-20-00471-CV (February 10, 2022)
Justices Reichek (opinion available here), Nowell, and Carlyle
The Court of Appeals dismissed for lack of jurisdiction, holding that the plaintiff/appellant had no standing to appeal the sanctions order because the sanctions were imposed against the law firm, not the plaintiff. “An appellant is not harmed when sanctions are imposed solely against the appellant’s attorney” the Court explained, “and does not have standing to challenge an order imposing sanctions solely upon his attorney.”
Whose Card Is It Anyway?
American Express National Bank v. Sherwood
American Express brought suit against Christopher Sherwood to collect amounts it alleged were due on two credit card accounts. The trial court entered a take-nothing judgment against American Express, finding the bank had failed to prove it owned the accounts at issue. American Express appealed.
Dallas Court of Appeals, No. 05-20-00153-CV (January 27, 2022)
Justices Osborne (opinion available here), Reichek, and Carlyle
The Dallas Court of Appeals carefully reviewed the evidence presented by American Express to determine whether it conclusively proved its right to recover on the two accounts. Although American Express put on testimony from a custodian of records that the outstanding account balances were owed on accounts opened by Sherwood and owned by American Express, many questions remained. For example, there was no evidence explaining why the account number on one of the cards changed from one ending in 62009 to one ending in 61001. Despite the bank witness’s testimony that he was “one hundred percent” confident the two accounts were for the same card, there was no documentation showing the reason for the change in account numbers. The other card had originated with Citibank. The bank witness testified that American Express “took over the Citibank Hilton portfolio,” but there was no documentation of any transfer or assignment of the account at issue. In addition, there was a balance due when the account was allegedly transferred from Citibank to American Express, and American Express did not have any documentation of the Citibank charges that resulted in that balance. Even though Sherwood testified at trial and did not deny those charges were his, the Court held “Sherwood’s silence does not provide affirmative evidence that was otherwise lacking.”
In the end, American Express could not connect all the dots proving its right to collect on either card, and the take-nothing judgment was affirmed.
Law Firm Cannot Avoid Agreement to Litigate Rather Than Arbitrate
Fee, Smith, Sharp & Vitullo, LLP v. Strunk
The law firm Fee, Smith, Sharp & Vitullo, LLP sued its former clients for payment under a contingency fee agreement. The fee agreement contained an arbitration provision, and the firm initiated an arbitration before the AAA. The clients claimed the arbitration provision was unenforceable. So the firm filed suit in Dallas County, delivered a copy of the lawsuit to the clients’ new attorneys, and asked whether the clients preferred to resolve the dispute in court or arbitration. The letter stated: “Please discuss with your clients and let us know which forum they wish to choose to address this matter. If they choose to litigate in District Court, then please advise if you will agree to accept service of the enclosed petition on behalf of all Defendants effective as of this date and assuming you agree, we will dismiss the AAA arbitration without prejudice.”
Dallas Court of Appeals, No. 05-21-00003-CV (September 30, 2021)
Justices Myers, Partida-Kipness (opinion available here), and Carlyle
The clients chose arbitration, but the attorney responding to the firm’s letter was not their “trial attorney” and was not authorized to accept service. The firm had the clients personally served, and the suit was underway. After the clients answered and filed a motion to transfer venue, the firm moved to compel arbitration. But what about the agreement to proceed in District Court? The firm argued that acceptance of service and maintaining the litigation in Dallas County were conditions to its offer to litigate in court, which conditions the clients did not accept. The trial court disagreed and denied the motion to compel arbitration. The firm appealed.
The Dallas Court of Appeals sided with the clients and affirmed the trial court’s order. It concluded a novation occurred in which the parties extinguished their arbitration agreement and formed a new agreement to litigate in District Court. The Court rejected the firm’s argument that acceptance of service was a condition to accepting the proposed novation. It concluded that allowing the clients to choose the forum for resolving the fee dispute was the only material term of the offer. The sentence “If they choose to litigate in District Court, then please advise if you will agree to accept service” merely provided “alternative subsequent actions to be taken based on the [clients’] forum choice.” The Court found no indication in the letter that the clients’ forum choice was dependent on acceptance of service. This conclusion was bolstered by the fact that the firm moved forward with effecting personal service of the lawsuit. The Court also found nothing to suggest the offer was limited to litigating in Dallas County, so the clients’ attempt to transfer venue did not invalidate the agreement.
Preserve Error—Even in Arbitration
Alia Realty LLC, EED, Inc. v. Alhalwani
The Dallas Court of Appeals reversed a trial court’s judgment vacating the arbitration award in this case and rendered judgment confirming that award, finding that filing a motion for continuance alone was not enough to preserve error.
Dallas Court of Appeals, No. 05-21-00265-CV (September 23, 2021)
Justices Schenck, Smith (opinion available here), and Garcia
Parties involved in a series of real estate investments and construction projects agreed to resolve any potential disputes in an “expedited JAMS arbitration.” The agreement required the arbitration proceeding to occur within three months of a demand for arbitration, or “as close thereto as the parties and arbitrator’s schedule allowed.” Alia Realty filed a claim for arbitration against Alhalwani on July 6, 2020, seeking over $2 million in damages. Alhalwani answered and filed counterclaims.
The deadline for designating expert witnesses was September 1, 2020, and the deadline for supplemental or rebuttal expert reports was September 18. Arbitration was set for October 13-15, 2020. On September 23, Alhalwani filed a motion for continuance, arguing he had attempted in good faith to meet the scheduling order deadlines but needed more time to examine the “thousands upon thousands” of accounting transactions at issue in the suit and present an expert report. The arbitrator denied the continuance, but gave Alhalwani until October 2, 2020 to file a supplemental expert report. Alhalwani met the new deadline, and the parties proceeded to arbitration as scheduled.
After the arbitrator found against Alhalwani and awarded over $500,000 to Alia Realty, Alhalwani filed a motion to vacate the award in district court, arguing the arbitrator violated Civil Practice & Remedies Code § 171.088(a)(3)(B) by refusing to postpone the arbitration. The trial court agreed and vacated the award.
The Dallas Court of Appeals reversed and rendered, confirming the arbitration award. It found that Alhalwani failed to preserve his complaint about the arbitrator’s denial of a continuance. The Court first noted that the preservation requirements of TRAP 33.1 apply to arbitrations. Alhalwani’s filing of a motion for continuance was not sufficient to preserve error as to the timing of the arbitration because, in response to that motion, the arbitrator granted Alhalwani additional time to file a supplemental expert report, which seemed to be Alhalwani’s primary reason for requesting the continuance. The Court held that, once Alhalwani was permitted to and did file a supplemental expert report and then proceeded to arbitration without further complaint, he left the arbitrator with the impression he was ready to proceed with the evidence he had obtained. The Court also noted that it was Alhalwani’s burden to prove error and, without a transcript from the continuance hearing, it was impossible to know who suggested moving the expert deadline or whether the parties agreed with the decision at the time. Because Alhalwani also failed to provide a transcript of the arbitration hearing itself, he had no evidence that he objected to going forward with the arbitration after being given additional time to submit an expert report. “Counsel’s statements in post-arbitration briefing and briefing in this
Court concerning what occurred is not a substitute for a record of those proceedings.” Therefore, Alhalwani failed to preserve the alleged error.
No Implied Ratification Where Contract Required Express Written Consent
BPX Operating Company v. Strickhausen
Ms. Strickhausen’s mineral lease with BPX prohibited pooling her tract with others without her “express written consent.” Nevertheless, BPX pooled several tracts, including Strickhausen’s property, to create a 320-acre unit. Unlike Strickhausen’s lease, her neighbors’ leases permitted pooling. BPX attempted to obtain Strickhausen’s written consent or ratification of the pooling, but Strickhausen consistently refused and repeatedly objected to BPX’s activity. As the parties continued to communicate and discuss a settlement or other resolution, BPX began paying Strickhausen pooled royalties rather than on a “tract participation basis.” When Strickhausen finally sued BPX for breach of contract, BPX alleged Strickhausen had ratified the pooling by cashing her royalty checks. The trial court granted summary judgment in favor of BPX, but the San Antonio Court of Appeals reversed.
Supreme Court of Texas, No. 19-0567 (June 11, 2021)
Justice Blacklock (opinion available here)
Justice Boyd Dissent (available here)
In a 5-4 decision, the SCOTX sided with the appellate court and Strickhausen. The Court acknowledged that acceptance of royalty checks can, in some circumstances, constitute implied ratification. But it noted that Strickhausen—unlike her neighboring lessors and the lessors in prior cases—bargained for a lease that strictly prohibited pooling “under any circumstances” without her “express written consent.” “[A]ll her subsequent actions should be examined in light of both parties’ knowledge of this element of their agreement. A party armed with a lease prohibiting pooling without express, written consent should have less reason to worry about mistakenly giving her implied, unwritten consent than does a party not protected by such a clause.” The communications between the parties also demonstrated that Strickhausen was not consenting to the pooling and was actively trying to reach a settlement agreement with BPX. Strickhausen’s acceptance of royalty checks held less weight than it might in other cases because Strichhausen was entitled to significant royalties with or without pooling. The Court held she reasonably could have viewed the checks as payment towards what she believed she was owed without pooling.
The majority brushed off the dissent’s conclusion that “actions may speak louder than words,” holding that, on questions of contractual intent, “words matter a great deal—especially words in a written agreement that disavows implied unwritten agreements.”
The dissent disagreed. It would have held that Strickhausen’s actions in accepting royalty payments that she should have known were calculated based on production from the pooled unit spoke louder than her words, despite the language of the contract and her prior protests.
Dallas Court Affirms 9-Figure Judgment Against Toyota Even Though Toyota Complied With All Applicable Safety Regulations
Toyota Motor Sales, U.S.A., Inc. v. Reavis
The Reavis family was involved in a violent car accident in their Lexus, which resulted in the parents being propelled into the back seat, where they crashed into their small children, who suffered skull fractures and traumatic brain injuries as a result. The family sued Toyota, asserting design and marketing defects. Even though the vehicle complied with all applicable safety standards, the jury found against Toyota, awarding $242 million in damages, including $144 million in exemplary damages. Toyota appealed.
Dallas Court of Appeals, No. 05-19-00075-CV (June 3, 2021)
Section 82.008(a) of the CPRC provides a rebuttable presumption that a product manufacturer is not liable for injury caused by a product that complied with federal mandatory safety standards. The presumption can be rebutted under § 82.008(b) if the plaintiff proves that the federal standards are “inadequate to protect the public from unreasonable risk of injury” or that the manufacturer withheld or misrepresented information relevant to the federal government’s determination of adequacy of the safety standards or regulations at issue.
Toyota first argued that § 82.008(b) is preempted by federal law because it allows a jury to reject a federal agency’s determination of safety standards, but the Court held Toyota had waived that defense in the trial court.
The Court upheld the jury’s determination that the federal standards are inadequate to protect the public, particularly the standard regarding seat-back strength. It noted that all automakers greatly exceed the mandatory standard—in fact, the Toyota seats at issue exceeded the standard by over 700%—so the standard must be inadequate. The Court also held there was evidence to support a finding that Toyota withheld or misrepresented information relevant to the adequacy of the safety standard. In particular, the Court noted a letter from Toyota to two senators in 2016 in which it stated that Toyota had a “long and robust safety culture.” The Court found this statement misleading in light of a deferred prosecution agreement Toyota had entered into in 2014 over misrepresentations made with regard to sudden unintended acceleration in some of its vehicles. The Court also held the jury could have rationally concluded that Toyota was misleading in claiming that the NHTSA was an “effective regulator” in light of Toyota’s extensive lobbying efforts with the agency. With the § 82.008(a) presumption rebutted, the Court held the evidence was sufficient for the jury to conclude that Toyota’s design was unreasonably dangerous.
The Court also upheld the jury’s finding that Toyota failed to warn of the car’s dangers. Although the owner’s manual “strongly recommended” that children be placed in the rear seat, it did not warn of the danger that front seat occupants might be propelled into the back seat, injuring the children, in a rear-end collision.
Justice Schenck filed a dissent, noting that “the record reflects no evidence of any automobile that has been marketed with both the seatback strength necessary to avoid the injuries here and the proposed seatbelt changes that would protect front seat occupants.” He expressed skepticism that “every car ever marketed and sold to this point could be ‘defective’ and that their manufacturers could all be subject to exemplary damages on this basis.” He also took issue with the Court’s affirmance of a design defect without evidence that fewer injuries and deaths would result from an alternative design taking into account all potential crash scenarios, not just the rear-end collision at issue in this case. He noted that additional protections for rear-end crashes could cause additional injuries in front-end crashes. Justice Schenck would have held the plaintiffs failed to rebut the §82.008(a) presumption of no liability. He characterized the Court’s conclusion that the federal standards were inadequate as ipse dixit and noted that Toyota’s alleged misrepresentations to regulators were unrelated to seatback strength or seatbelt function and so were not relevant to the “safety standards or regulations at issue in the action” under §82.008(b)(2).
With the money at stake and the importance of the § 82.008(a) presumption to auto manufacturers like Toyota, expect this one to go to the Supreme Court of Texas.
SCOTX CLARIFIES IMMUNITY AND PRIVILEGE ISSUES FOR ATTORNEYS
Haynes and Boone, LLP v. NFTD, LLC
The SCOTX issued two long-awaited decisions clarifying the scope of important immunity protections for attorneys—attorney immunity and the judicial-proceedings privilege.
Supreme Court of Texas, No. 20-0066 (May 21, 2021)
Justice Bland (opinion available here)
Landry’s, Inc. v. Animal Legal Defense Fund
Supreme Court of Texas, No. 19-0036 (May 21, 2021)
Justice Blacklock (opinion available here)
First, in Haynes and Boone v. NFTD, the Court expressly confirmed for the first time that the attorney-immunity doctrine applies outside the context of litigation. The doctrine, previously outlined and applied to litigation and “quasi-litigation” matters in Cantey Hanger v. Byrd and other cases, immunizes lawyers from claims by non-client third parties based on actions those lawyers take on behalf of their clients. In clarifying the scope of the doctrine, the Court has now held it operates “in all adversarial contexts in which an attorney has a duty to zealously and loyally represent a client, including a business-transactional context,” assuming the conduct at issue is the kind of conduct the doctrine is intended to protect—that is, “the provision of ‘legal’ services involving the unique office, professional skill, training, and authority of an attorney.”
The Court’s ruling was not unexpected, but will provide welcome certainty among non-litigation attorneys regarding the scope of their immunity. Questions remain, however, about whether the lawyer’s particular conduct on which a claim is based is the “kind of conduct” the doctrine should protect. The Court remanded the NFTD case for the court of appeals to consider whether any of the lawyer’s conduct at issue there was non-lawyerly in nature, so as to remove it from the scope of immunity in light of the other opinion issued by the Court on the same day, Landry’s v. Animal Legal Defense Fund.
In Landry’s, the Court analyzed the scope of attorney conduct subject to protection and held that the attorney-immunity doctrine and the “judicial-proceedings privilege” do not apply to or protect lawyers’ statements to the media about a pending or potential case, or to lawyers’ social media posts about those matters. There, the plaintiff’s counsel delivered a “60-day notice of intended suit” to the opposing party, as required by the applicable statute. But the attorney and his client went further, providing the pre-suit notice letter to the media and issuing a press release and social media posts about it. When Landry’s sued, alleging defamation and other claims, the trial court dismissed. But the Supreme Court reversed.
The judicial-proceedings privilege protects “communications in the due course of a judicial proceeding,” including communications “in serious contemplation of such a proceeding.” Providing the 60-day notice letter to the prospective defendant, as required by statute, therefore is fine and was protected, even if that letter contained defamatory statements. Repeating the allegations to the press and on Facebook, however, is not protected. Similarly, the Court held that providing the notice letter to the media and publicizing it through press releases and social media posts are not covered by the attorney-immunity doctrine either, because that is not the “kind of conduct” the doctrine was meant to protect. That is, “such statements, while sometimes made by lawyers, do not partake of ‘the office, professional training, skill, and authority of an attorney.’” If a publicist and a lawyer issue identical public statements to the press or on social media, why should the publicist be subject to a defamation claim, but not the lawyer? Even though many lawyers do resort to publicity, thinking it will aid their client’s cause, such conduct is not unique to lawyers or a product of legal training or skill. So, they are not protected in doing so by the attorney-immunity doctrine after Landry’s.
The Supreme Court noted that its ruling today falls in line with “the widely adopted rule in other American jurisdictions.” But not all Texas courts, much less all practitioners and commentators, shared that view up to now. The Landry’s ruling likely will prompt many attorneys to revisit their tactics in publicizing allegations made in lawsuits—or at least to think twice before taking to Twitter or Facebook.
THE CONTRACT MEANS WHAT THE CONTRACT SAYS
Anubis Pictures, LLC v. Selig
Dallas Court of Appeals, No. 05-19-00817-CV (March 3, 2021)
Justices Pedersen, III and Reichek (Opinion, available here)*
Anubis argued the trial court should not have granted summary judgment on its NDA claims because fact issues existed regarding whether the defendant had misused confidential information provided to her. The Court of Appeals disagreed. The NDA required that, for written material to be considered confidential, it must be marked confidential on its face. None of the emails or other materials at issue had been explicitly marked confidential when sent to the defendant, and a later email stating “Please do not forward the script” did not retroactively protect the script as confidential.
Anubis also argued that, even if the documents were not marked confidential, the parties treated them as confidential, as evidenced by the defendant’s request for permission to share the script and information about the project with some of her contacts. The Court did not reach the merits of that argument because it noted that, as to the documents the defendant asked for permission to disclose, she had permission to disclose them.
Anubis also complained the trial court erred in granting summary judgment on its claim for breach of a letter of intent, but the Court rejected that argument as well. It was undisputed that the defendant never signed the letter of intent, but Anubis argued the parties had an oral agreement to proceed in accordance with the terms, regardless of whether it was signed. The Court looked back at the NDA, which was the only agreement signed by both parties. It provided that neither party was “bound to proceed with any transaction between them unless and until both parties signed a formal, written agreement setting forth the terms of such transaction.” This “No Obligation to Complete Transaction” provision prevented the formation of an oral contract on the letter of intent as a matter of law.
*Justice Bill Whitehill participated in the oral argument and submission of this case, but not the issuance of the opinion, which occurred after the expiration of his term on December 31, 2020.
CONTINUING TRESPASS IS NOT NECESSARILY AN IRREPARABLE INJURY
WBW Holdings, LLC v. Clamon
Good fences make good neighbors … sometimes. Two parties owning adjoining land became involved in a dispute about whether the boundary between their properties was the center line of the county road between them or to the south of that road. Taking the latter position, the Clamons erected a fence between the WBW property and the county road (allegedly on their property), barring WBW’s access to the road, and WBW cut the fence to regain access.
Dallas Court of Appeals, No. 05-20-00397-CV (November 12, 2020)
Justices Myers, Nowell (Opinion available here), and Evans
Litigation ensued, and the trial court granted a temporary injunction, enjoining WBW from crossing over the boundary asserted by the Clamons. The Clamons argued they had “no adequate remedy, short of injunctive relief, to stop WBW’s representatives from trespassing on their land” and that trespassing on land “is of such a nature that the damage to the Clamon brothers is irreparable; it simply cannot be measured by any pecuniary standard.” The Dallas Court disagreed, holding that trespass alone is not an irreparable injury. The Clamons failed to demonstrate that the alleged trespass would invade the possession of their land, destroy the use and enjoyment of their land, or cause potential loss of rights in real property. With no evidence of a probable, imminent, and irreparable injury, the trial court erred in granting the injunction.
NO CONTINUANCE TO AVOID BENCH TRIAL BY VIDEO
Dallas Court of Appeals, No. 05-20-00574-CV (August 20, 2020)
Chief Justice Burns and Justices Pedersen, III and Reichek (Opinion available here)
The Court held the trial court did not abuse its discretion by overruling the husband’s objection to trial via videoconference. In its emergency orders, the Supreme Court of Texas expressly granted trial courts the discretion, “subject only to constitutional limitations” and “without a participant’s consent,” to require that all participants in hearings, depositions, “or other proceeding[s] of any kind” participate remotely, “such as by teleconferencing, videoconferencing, or other means.” Although the emergency orders do not specify bench trials, the Court held they would fall under the category of “other proceeding[s] of any kind.” The husband did not claim a bench trial by videoconference would violate any of his constitutional rights, so the trial court did not abuse its discretion in requiring him to participate in this manner.
NURSING HOME POLICIES AND PROCEDURES NOT SUBJECT TO CHAPTER 74 DISCOVERY STAY
In re: Kenneth Smith
Kenneth Smith sued the nursing home where his wife had stayed during the months before her death, alleging the facility failed to provide adequate care and supervision to prevent his wife from suffering several falls during her stay. Under Chapter 74, discovery in a health care liability claim is stayed until an expert report has been filed, except for “information, including medical or hospital records or other documents or tangible things, related to the patient’s health care.” Relying on that discovery stay, the trial court denied a motion to compel that sought to require the nursing home to produce several policies and procedures that are statutorily required to be kept and made available to patients and their families.
Dallas Court of Appeals, No. 05-20-00497-CV (August 12, 2020)
Justices Burns, Pedersen (Opinion available here), and Carlyle
The Dallas Court of Appeals conditionally granted mandamus, concluding the trial court abused its discretion in denying discovery of the requested policies. Texas courts have reached different conclusions about whether policies and procedures fall within the exception to the Chapter 74 discovery stay. But the Court noted in this case that the requested policies (1) were required by statute to be publicly available; and (2) were “related to the patient’s health care.” “As there is no dispute that relator’s claims—alleging inadequate supervision and services to meet a nursing home resident’s health care needs and protect her from harm—are health care claims, it logically follows that “training and staffing policies” are “integral components of [the nursing home’s] rendition of health care services.” In particular, the requested policies and procedures were “relevant to assessing the standard of care that should have been given to Mrs. Smith,” and Mr. Smith and his expert should have had access to those documents before having to produce their expert report.
The Court also found that Mr. Smith had no adequate remedy by appeal because, without the requested documents, he would be severely hampered in his ability to file an adequate expert report, which could result in his claims being dismissed. Although he would be able to appeal from the grant of a motion to dismiss, the Court would be limited in its ability to cure the error because it would only be able to remand for the trial court to consider whether to grant a thirty-day extension to file an adequate report. The Court therefore vacated the trial court’s order and directed it to issue an order granting discovery of the requested documents.
SCOTX—DEFAMATION AND BUSINESS DISPARAGEMENT ARE NOT THE SAME!
Innovative Block of South Texas, Ltd. v. Valley Builders Supply, Inc.
The Supreme Court reversed a $2.7 million defamation verdict entered in favor of Valley Builders Supply, concluding it was “not a case of defamation but rather of business disparagement—a cause of action not submitted to the jury.” The case involved two building-supply companies that manufactured and sold concrete blocks and pavers in the Rio Grande Valley. Valley went out of business several years after Innovative entered the market. It sued Innovative for disparagement and defamation, claiming that Innovative disparaged the quality of Valley’s concrete blocks and falsely accused Valley of using “bad” aggregates in its manufacturing process. Ultimately, Valley only went to the jury on the defamation claim, and the trial court entered a judgment against Innovative for $1.8 million in actual damages and $937,000 in exemplary damages based on the jury’s verdict. The judgment was affirmed on appeal.
Supreme Court of Texas, No. 18-1211 (June 25, 2020)
Justice Devine (opinion available here)
Valley did not fare so well at the Supreme Court. The threshold issue for the Court was whether Valley’s allegations and proof supported an action for defamation, business disparagement, or both. The torts of defamation and business disparagement are alike in that “both involve harm from the publication of false information.” But there are important differences between the two, largely explained by the interests the respective torts seek to protect. Defamation serves to protect one’s interest in character and reputation (“dignity harm”), whereas disparagement protects economic interests by providing a remedy for pecuniary losses from slurs affecting the marketability of goods and services (“commercial harm”). In other words, “defamatory communications about a corporation’s reputation are those directed at the character of the owner rather than the underlying business.” To support its defamation claim, then, Valley had to show actual injury to reputation.
Valley attempted to provide that evidence through the testimony of its expert, Kenneth Lehrer. Lehrer used a “Quasi-Monte Carlo method” to quantify the possible harm done to Valley’s reputation. A Monte Carlo simulation can be used to predict a range of values when a precise value is difficult to calculate. It “essentially requires a computer to run millions of possible, randomized scenarios to produce a range of likely values for the number in question.” It is typically used to answer questions for which a massive amount of data is available—for example, the number, intensity, and location of all forest fires in the United States for a given year. A “Quasi-Monte Carlo method” can be used to address questions smaller in scope, like whether a forest fire will happen within a particular county.
Essentially, Lehrer took Valley’s total estimated lost profits over the years in question and multiplied that figure by eight random percentages, allegedly representing the portion of lost profits caused by Innovative’s statements. But the percentages used in the model “had no basis in any underlying data from the case.” He then arbitrarily assigned a “percentage of probability” to each of the eight percentages. Again, the percentages were not derived from any data or evidence in the case. He then averaged these calculations to come up with his range of damages. The Court rejected this alleged expert opinion, finding that it was “largely unmoored from the facts,” and that it should have been excluded by the trial court.
Valley also argued that Innovative’s comments resulted in the loss of a specific customer’s business, which could support an award of special damages. The customer testified at trial that she had been told Valley received a load of bad aggregate and thereafter moved her business from Valley to Innovative. Another expert then calculated Valley’s alleged lost profits from that customer. But such damages could only be damages for business disparagement, not defamation, because the “receipt of bad aggregate does not imply reprehensible conduct or lack of integrity on Valley’s part.”
Without proof of harm to Valley’s reputation, as opposed to its business, Valley’s defamation claim failed.
Subscribe to:
Posts (Atom)
