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 

Neil R. Burger

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.

Preserving Objections to Arbitration, and the Limited Scope of the FAA Exemption for “Workers Engaged in Foreign or Interstate Commerce”

Gordon v. Trucking Resources, Inc.

Dallas Court of Appeals, No 05-21-00746-CV (November 15, 2022)

Justices Myers (Opinion, linked here), Pedersen III, and Garcia 

Ken Carroll

Gordon and Trucking Resources compete in recruiting truck drivers for transportation companies. Two of Trucking Resources’ employees—each of whom had signed a non-compete that included an arbitration agreement—resigned and went to work for Gordon’s competing company. Trucking Resources sued the employees for breach of their agreements and sued their new employer, Gordon and his company, for tortious interference and conspiracy. It then moved to compel arbitration of that dispute. One of the former employees objected, but Gordon and his company did not. The trial court granted the motion to compel arbitration. After the arbitrator ruled for Trucking Resources, Gordon and his company asked the trial court to vacate the arbitration award, arguing (1) Section 1 of the FAA expressly exempted this dispute from arbitration and (2) Gordon and his company could not be compelled to arbitrate because they were not signatories to the arbitration agreement. But the Court of Appeals rejected both challenges.

The FAA states that it does not “apply to contracts of employment of … workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. Drawing from recent U.S. Supreme Court decisions, the appeals court explained that, for this exemption to apply, the workers in question “must at least play a direct and ‘necessary role in the free flow of goods’ across borders”—they “must be actively ‘engaged in transportation.’” While the truck drivers they recruited likely would fit that description, the recruiters themselves would not. And so the exemption did not apply here.

Beyond that, however, the Court stated that “an objection to arbitration under the 9 U.S.C. § 1 exemption from arbitration must be raised before the trial court rules on a motion to compel arbitration.” Here, Gordon and his company did not raise their objection until after the arbitration had concluded and the award had been confirmed. Because “they did not assert the exemption from arbitration before the arbitration took place, they [did] not preserve[] the argument for appellate review.”

Similarly, the Court explained, the “opportunity for the trial court to cure any error from requiring nonsignatories to arbitrate is before the court rules on the opposing party’s motion to compel arbitration, not after the arbitration proceeding.” Here, Gordon and his company didn’t raise this and other arbitrability arguments until after the arbitrator had rendered his award. Consequently, they failed to preserve error on those issues, and the Court of Appeals could not address them.

Fifth Court: Twenty-Plus Years of Precedent on Bankruptcy Trustee’s “Exclusive Standing” Implicitly Overruled by SCOTX

Moser v. Dillon Investments, LLC 

Dallas Court of Appeals, No. 05-21-00204-CV (August 2, 2022) 

Justices Myers (Opinion, linked here), Osborne, and Nowell 

 Brent M. Rubin 

Mason claimed that, while staying at a hotel on June 30, 2017, she was taking a shower and the bathtub floor shifted, causing her to fall and hit her head. On June 13, 2019, Mason sued the hotel in state court for negligence. But in April 2018, Mason had filed for Chapter 7 bankruptcy without listing her potential claim against the hotel on her schedule of assets. By the end of 2018, Mason had received a discharge and the bankruptcy case had terminated.

The hotel initially sought summary judgment, alleging Mason lacked standing to assert the claim and that she was judicially estopped from bringing the claim. The hotel argued that because Mason had not disclosed the claim in her bankruptcy schedules, the claim remained with the bankruptcy estate and was not returned to her upon the bankruptcy’s termination. Mason then filed a motion in bankruptcy court to reopen the bankruptcy to amend her schedules to add the negligence claim, which the bankruptcy court granted. 

In January 2021, Moser, the bankruptcy trustee, filed an amended petition in the state court case on behalf of Mason’s bankruptcy estate, alleging the same negligence claim against the hotel. The hotel moved for summary judgment, arguing the amended petition was filed after the two-year statute of limitations had run. The trial court granted the motion. 

Moser’s appeal centered on the relation-back doctrine. Section 16.068 of the Texas Civil Practice and Remedies Code provides that when a party initially brings a timely claim, “a subsequent amendment or supplement to the pleading that changes the facts or grounds of liability or defense is not subject to a plea of limitation unless the amendment or supplement is wholly based on a new, distinct, or different transaction or occurrence.” But the relation-back doctrine does not apply to an amended petition when the trial court lacked subject-matter jurisdiction over the original petition. 

Mason first brought her negligence claim within the two-year statute of limitations, and Moser’s amended petition on behalf of the bankruptcy estate alleged the same facts as Mason’s original petition. So, to determine whether the relation-back doctrine applied, the court of appeals considered whether the trial court had jurisdiction when Mason first sued. 

The court of appeals explained that for the trial court to lack jurisdiction based on a lack of standing, Mason had to lack “constitutional” standing. The Court noted that courts have, at times, blurred the distinction between standing and capacity—a critical if sometimes confusing distinction, because standing is jurisdictional, while capacity is not. In 1999, the Texas Supreme Court held in Douglas v. Delp that a bankruptcy trustee had “exclusive standing” to bring claims on behalf of the estate, quoting a 1994 Fifth Circuit decision that did not expressly address the question of constitutional standing. After an extensive analysis of later Fifth Circuit cases on a bankruptcy trustee’s authority to bring claims on behalf of the estate as well as later Texas Supreme Court decisions addressing the distinction between standing and capacity, the court of appeals concluded the Texas Supreme Court had implicitly overruled Douglas and the various intermediate appellate decisions—including those of the Fifth Court—that had followed it. 

 Accordingly, the Court said, Mason had standing to bring her claim in 2019; she merely lacked capacity to assert it. Therefore, the trial court had subject-matter jurisdiction in 2019, Moser’s amended petition in 2021, in his capacity as bankruptcy trustee, related back to Mason’s timely 2019 petition, and the trial court erred in granting summary judgment based on the statute of limitations.

Finality Bites—Again

JMJ Development, LLC v. Ramolia

Dallas Court of Appeals, No. 05-21-01100-CV (July 27, 2022) 

Justices Myers, Molberg (Opinion, linked here), and Garcia 

Ken Carroll 

Another appeal down the drain because of confusion about whether a judgment was final. 

Ramolia sued JMJ and Barton for breach of contract. They counterclaimed. Ramolia sought and secured summary judgment on his breach-of-contract claim. Even though Ramolia had not moved for summary judgment on JMJ and Barton’s claims against him, the court’s summary judgment order was titled “Final Judgment.” And it included the “magic” finality language blessed by the Texas Supreme Court in Lehmann v. Har-Con: “All relief requested in this case and not expressly granted herein is denied. This judgment finally disposes of all parties and claims and is appealable.” JMJ and Barton timely moved for a new trial but did not file their notice of appeal until after the deadline had expired, including the time for an extension.

Faced with the prospect that the tardy notice of appeal would bar their appeal altogether, JMJ and Barton argued the judgment was not final and appealable because Ramolia’s summary judgment motion had not sought disposition of their claims against him. Tex. R. Civ. P. 166a(c). The Court of Appeals disagreed. 

A judgment is final, the Court said, “if it actually disposes, or ‘clearly and unequivocally’ states it disposes, of all claims and all parties.” The summary judgment order did that, whether it should have or not. “A judgment that grants more relief than a party is entitled to is subject to reversal”—assuming it is timely appealed—“but it is not, for that reason alone, interlocutory,” and therefore non-appealable. “If it is clear, then the order is final and appealable, even though the record does not provide an adequate basis for rendition of the judgment.” In this case, the Court held, the judgment “was clear and unequivocal, the record is irrelevant, and further analysis is prohibited.” Because JMJ and Barton didn’t file their notice of appeal on time, therefore, the Dallas Court dismissed the appeal, and JMJ and Barton are stuck with a judgment that might have been “subject to reversal,” at least in part, had they recognized that judgment was final and filed their notice on time.

“Taking Responsibility” ≠ Negligence as a Matter of Law

Yedlapalli v. Jaldu

Dallas Court of Appeals, No. 05-20-00531-CV (June 28, 2022)

Justices Myers, Partida-Kipness (Opinion, linked here), and Carlyle

Brent M. Rubin

While Yedlapalli was stopped at a stop sign, Jaldu rear-ended her. Yedlapalli testified that, from her rear-view mirror, she saw Jaldu on her cell phone and that Jaldu never slowed down. Jaldu, in contrast, claimed she was at a complete stop behind Yedlapalli and reached down to get a piece of paper on the floor, which caused her foot to slip off the brake and her car to roll forward and tap Yedlapalli’s car.

Yedlapalli sued Jaldu, claiming not only damage to her car but also bodily injury. On cross-examination, Yedlapalli’s attorney asked Jaldu if she was “taking one hundred percent responsibility for the crash.” Jaldu agreed that her car hit Yedlapalli’s when her foot slipped from the brake. Jaldu also admitted she told Yedlapalli at the scene that it was her “mistake,” making her responsible for the damage to Yedlapalli’s car. But Jaldu refused to take responsibility for Yedlapalli’s purported injuries, claiming everyone was “completely fine” immediately after the accident. Jaldu also explained to the jury that it was “fishy” that Yedlapalli sued only after Yedlapalli did not pay her medical bills.

Yedlapalli moved for a directed verdict based on Jaldu’s purportedly “taking one hundred percent responsibility” for the accident. The trial court denied the request for directed verdict. The jury later answered “no” on the question whether Jaldu’s negligence caused the occurrence in question. So, the trial court entered a take-nothing judgment against Yedlapalli.

Yedlapalli appealed, challenging the denial of the motion for directed verdict and the factual sufficiency of the evidence supporting the jury’s finding on negligence. On the directed verdict, the court of appeals explained that acceptance of responsibility, standing alone, does not establish negligence as a matter of law. The court observed that a jury could have concluded a person of ordinary prudence, sitting at a complete stop a safe distance behind Yedlapalli, could have reached down to pick up a piece of paper, as Jaldu testified. On factual sufficiency, the court similarly explained that a rear-end collision, standing alone, does not mean a jury’s failure to find negligence is not supported by sufficient evidence. The jury could have credited Jaldu’s account and concluded that a reasonably prudent person would have acted in the same way. Or, the jury could have concluded Yedlapalli failed to meet her burden of proving negligence by a preponderance of the evidence. Therefore, the court of appeals affirmed.

Mandamus: If Not Now, When?

In re Holland

Dallas Court of Appeals, Nos. 05-22-00368-CV, -00369-CV, and -00378-CV (May 27, 2022)

Before Justices Myers, Nowell (Opinion), and Goldstein

Neil R. Burger

In three identical rulings, the Dallas Court of Appeals rejected three identical petitions for writs of mandamus as having been filed prematurely. The petitions complained that the trial court had not ruled on motions to compel discovery in three criminal cases concerning the same incarcerated individual. The convicted defendant “filed his motions on January 7, 2022, reminded the trial court that they were pending by letter dated March 7, 2022, and filed his petition[s] seeking mandamus relief on April 20, 2022.” The Court denied all three petitions, saying the Relator had not “shown he is entitled to mandamus relief after such a short period of time.”

Although it is not clear that a hearing on the motions was ever requested or set, we now have guidance that 103 days from filing a motion without getting a ruling is not long enough to warrant mandamus relief compelling the trial court to rule.

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

Brent Rubin

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.

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)

Kelli Hinson

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.

Post-Petition Developments Derail Mandamus

In re Am Re Syndicate, Inc.

Dallas Court of Appeals, No. 05-21-00358-CV (February 23, 2022)

Justices Myers (Opinion, linked here), Partida-Kipness, and Carlyle

Ken Carroll

Ordinarily, an appeal or mandamus is decided on the basis of the record before the trial court at the time it issued the order challenged in the appellate court. But not always.

Plaintiff TEXCAZ sued Am Re and its CEO, Barder, alleging breach of contract, fraud (for entering into a contract they didn’t intend to perform), tortious interference, and conspiracy. Am Re and Barder moved to dismiss, because the contract at issue specified that the forum for determining “any controversy arising out of this Agreement, or any breach thereof, shall be in Oklahoma County, Oklahoma.” Am Re and Barder were not parties to that contract—Am Re’s principal, GIC, was—but Am Re and Barder contended TEXCAZ was estopped to deny it was bound by the Oklahoma forum-selection clause by virtue of its claims of breach of the contract containing that provision and fraud regarding the lack of intent to perform that contract. The trial court denied the motion to dismiss. Am Re and Barder sought mandamus to enforce the forum-selection clause.

Several months after Am Re and Barder filed their mandamus petition, TEXCAZ amended its petition in the trial court to drop its claims for breach of contract and fraud. In addition, GIC revoked Am Re’s agency authority. Based on these post-petition developments, the Dallas Court of Appeals concluded “that the controversy does not arise out of the contract and that relators lack capacity and standing to assert the forum- or venue-selection clause.” It therefore denied mandamus.

Two Practice Pointers: Redacting Fee Statements and Post-Judgment Interest Rates

THB Construction, LLC v. Holt Texas, Ltd.

Dallas Court of Appeals, No. 05-20-00020-CV (January 13, 2022)

Justices Myers, Partida-Kipness (Opinion, linked here), and Carlyle

Ken Carroll

The opinion of the Dallas Court of Appeals in THB Construction included two important reminders, the first for those practitioners proving up attorney’s fees, and the second for those seeking the maximum post-judgment interest allowed by law:

First, when seeking attorney’s fees, don’t go overboard in redacting the fee statements you submit to prove up those fees. Redactions are customary and necessary to avoid revealing confidential information protected by privilege or to eliminate time and expenses for tasks not covered by the fee request. But in THB Construction, the Court found the plaintiff’s redactions to be so extensive for one period of time that those billing records did not constitute “evidence identifying the specific tasks performed, the individual who performed the tasks, and the time each task took,” as required under Rohrmoos. That led to the reversal or remittitur of a significant portion of the fees awarded by the trial court. So, redact as necessary, but be careful and don’t overdo it. And supplement with other evidence if need be.

Second, remember that the Finance Code sets different levels of maximum post-judgment interest, depending on the basis for the judgment. In most circumstances, the post-judgment interest rate is 5%, unless the prime rate is higher. Tex. Fin. Code § 304.003. If the judgment is based on a contract “that provides for interest or time price differential,” however, post-judgment interest accrues at the “rate specified in the contract,” as one would expect. Tex. Fin. Code § 304.002. But, if the contract provides for interest but doesn’t specify a rate, then the court should order post-judgment interest at “18 percent a year.” Id.

Foreign Finality

Moreno v. Halperin

Dallas Court of Appeals, No. 05-20-00858-CV (December 14, 2021)

Justices Myers and Garcia (Opinion, linked here) [Burns, C.J., recused]

Ken Carroll

Filing a “foreign” judgment for domestication in Texas under the Uniform Enforcement of Foreign Judgments Act “instantly creates a Texas judgment that is enforceable.” The clock therefore immediately begins ticking on a potential appeal (limited though that may be in scope) and any post-judgment motions.

A federal court in Delaware entered judgment against Moreno and in favor of a bankruptcy trustee based on Morenno’s wrongful diversion of funds from the debtor in bankruptcy. The court awarded the trustee several million dollars and imposed a $10 million constructive trust on Moreno’s home in Highland Park, which allegedly had been purchased with the diverted funds. On January 22, 2020, the trustee domesticated that judgment in Dallas County in accordance with the UEFJA by filing it in a state district court. And then the fun began.

Moreno promptly filed a motion to vacate the judgment, arguing the Texas homestead exemption precludes enforcement of the constructive trust on his Highland Park home. Soon thereafter, Moreno’s wife intervened to assert her interest in the Highland Park property, and the trustee then asserted claims against Moreno’s wife and sister for fraudulent transfer and sought judicial foreclosure with respect to the property. The trial court denied Moreno’s motion to vacate on September 10, 2020, and Moreno filed his notice of appeal a few days later.

The Dallas Court of Appeals dismissed Moreno’s appeal for want of jurisdiction, finding his notice of appeal untimely. While his motion to vacate functioned as a motion for new trial, extending the initial deadline to appeal, even that extended deadline expired April 21, 2020—90 days after the foreign judgment was domesticated and became a final Texas judgment. The trial court’s September 10 order denying that motion to vacate did not resurrect Moreno’s right to appeal, because that order was void. The trial court had lost plenary jurisdiction months earlier, 105 days after the creation of the Texas judgment (30 days after Moreno’s motion was denied by operation of law, 75 days after the judgment). But, Moreno argued, the pendency of his sister’s intervention and the trustee’s fraudulent transfer and foreclosure claims surely made the “judgment” non-final, because it did not dispose of all issues and all parties. Alas, no. Those claims and issues pertained only to enforcement of the judgment. They did not alter the finality of the judgment at the time it was domesticated and therefore did not extend Moreno’s time to appeal.

No Evidence? No Problem! Court Takes Judicial Notice of Property Records to Dismiss Based on Mootness

Courtney D. Alsobrook v. MTGLQ Investors, LP

Dallas Court of Appeals, No. 05-20-00400-CV (October 26, 2021)

Justices Myers, Partida-Kipness (Opinion, linked here), and Garcia

Brent Rubin

        Alsobrook stopped making mortgage payments on her house, and MTGLQ, the mortgagee, gave notice that it planned to foreclose. Alsobrook obtained a temporary restraining order stopping the foreclosure sale, but she never obtained a temporary or permanent injunction stopping future foreclosure proceedings. The trial court eventually granted MGTLQ’s motion for summary judgment. Alsobrook appealed.

        In its response brief on appeal, MTGLQ argued the appeal was moot because Alsobrook’s property had been sold at a foreclosure sale after the trial court entered judgment. But MTGLQ did not file a copy of the foreclosure sale deed or any other tangible proof of the sale. Nevertheless, the Court explained that it had the power to take judicial notice, for the first time on appeal, of facts that are a matter of public record and not subject to reasonable dispute.

        Rockwall County Central Appraisal District’s online records showed that the house was conveyed away from Alsobrook by foreclosure sale and identified someone other than Alsobrook as the current owner. Therefore, the Court took judicial notice of the sale. Because the property at issue had been sold, the Court held Alsobrook’s case had become moot and dismissed the appeal without considering the merits.

Beyond Mandamus: Writ of Injunction Secures Relief from Trial Court Order Pending Appeal

In re David Mu

Dallas Court of Appeals, No. 05-21-00323 (October 12, 2021)

Justices Myers, Partida-Kipness, and Carlyle (Opinion, linked here)

Brent Rubin

The trial court issued a protective order requiring Mu to complete a Batterer’s Intervention and Prevention Program (BIPP) no later than 30 days before the first anniversary of the order. Mu appealed and asked the trial court to stay the BIPP requirement pending that appeal, arguing that it violated his Fifth Amendment right against self-incrimination, because the course would require him to discuss his alleged bad acts before the statute of limitations had expired. The trial court denied Mu’s request to stay the BIPP requirement. So, Mu sought a writ of injunction against the BIPP requirement from the court of appeals.

An appeals court can grant writs of injunction only in limited circumstances, one being to prevent an appeal from becoming moot. Here, the Dallas Court of Appeals concluded that if Mu had to complete the BIPP course before the appeal was resolved, any relief on appeal could be ineffectual. Therefore, the court of appeals granted a writ of injunction enjoining the trial court from enforcing the BIPP requirement pending the appeal.

Law Firm Cannot Avoid Agreement to Litigate Rather Than Arbitrate

Fee, Smith, Sharp & Vitullo, LLP v. Strunk

Dallas Court of Appeals, No. 05-21-00003-CV (September 30, 2021)

Justices Myers, Partida-Kipness (opinion available here), and Carlyle

Kelli Hinson

        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.”

        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.

Appraisal Based on Non-Comparable Sales Fails Reliability Test

Bank of Texas v. Collin Central Appraisal District

Dallas Court of Appeals, No. 05-19-00568-CV (June 22, 2021)

Justices Myers, Nowell (Opinion linked here), and Goldstein

Lyndon Bittle

        Bank of Texas appealed a judgment denying its challenge to CCAD’s tax appraisal of two properties. The bank argued the trial court abused its discretion by striking the bank’s appraisal experts for not properly applying the “income method,” one of three appraisal methods recognized by the Tax Code. The Dallas Court of Appeals affirmed, holding the trial court could reasonably have concluded “that the comparables relied on by the [bank’s] appraisers, rents for office buildings and retail properties, were not comparable to the property being valued, branch banks.” This “analytical gap” failed the reliability test articulated by the Texas Supreme Court in Gammill v. Jack Williams Chevrolet (1998) and its progeny.

        The appeals court rejected the bank’s argument (a common refrain of proponents of expert opinions) that CCAD’s complaints went “to the weight of the evidence, not its admissibility.” The court explained that whether an “appraisal is based on non-comparable sales is an issue for the trial court in determining admissibility,” and thus within its discretion. The appeals court also rejected the notion that “real estate appraisers are unique and somehow different from other experts; that their testimony is for the jury and not subject to reliability requirements.” To the contrary, the court said, “Courts must act as gatekeepers of expert testimony; appraisers do not get a free pass.”

THE NARROWED SCOPE OF “MATTERS OF PUBLIC CONCERN” UNDER THE TCPA, AS AMENDED

Vaughn-Riley v. Patterson

Dallas Court of Appeals, No. 05-20-00236-CV (December 2, 2020)

Justices Myers, Nowell, and Evans (Opinion, linked here)

Ken Carroll

In 2019, the Texas Legislature amended the TCPA “with the intent to narrow its scope” for actions filed on or after September 1 of that year. In Vaughn-Riley, the Dallas Court of Appeals provided an early glimpse of how it regards the amended version of the TCPA to limit the “matters of public concern” that trigger coverage under the Act. And while the plaintiff surely welcomed the result here, the appeals court’s reasoning probably stung a bit for someone, like her, in show biz.

Lawainna Patterson’s play, Sleeping with the Enemy, was set for back-to-back performances in Tyler. After the matinee, a dispute arose between the actors and crew and the producers, leading to cancellation of the evening show. Terri Vaughn-Riley, one of the actors (identified as “Vaughn” in the opinion), posted a video on Instagram voicing her frustrations with the situation. Patterson and others associated with production of the play sued Vaughn and the other actors, alleging breach of contract and “defamation, slander, and libel.” Vaughn moved to dismiss under the TCPA, arguing that “Patterson’s legal action was ‘based on or is in response to’ Vaughn’s exercise of the right of free speech or right of association” regarding the play and Patterson, its author. Specifically, Vaughn argued that “her communications and actions relate to matters of public concern because they (1) pertained to Patterson, who she claims is a limited purpose public figure, (2) involved the quality and timeliness of the public performance of a theatrical work, and (3) concerned a service in the marketplace.” The trial court denied the motion, and the Court of Appeals affirmed.

The appeals court began by noting that the Legislature had redefined “matters of public concern” before this lawsuit was filed, with the intention of narrowing the applicability of the TCPA. Drawing on legislative history, the Court reasoned that whether something qualifies as a “matter of public concern” is to be measured by the United States Supreme Court’s formulation in Snyder v. Phelps: “communications are matter[s] of public concern when they can ‘be fairly considered as relating to any matter of political, social or other concern to the community’ or when it ‘is a subject of legitimate news interest; that is, a subject of general interest and of value and concern to the public.’” 562 U.S. 443, 453 (2011). The Dallas Court concluded “there is nothing to suggest that the cancellation of the second performance of a play in Tyler, Texas, was the subject of general interest and of value and concern to the public.” Ouch. Further, the Court said, “Patterson’s status as cowriter and producer of the play,” coupled with a brief public interview about the dispute, do not “make Patterson a limited purpose public-figure.” Ouch, again. The Court then rejected Vaughn’s final argument—that the dispute related to a service in the maketplace, i.e., the play—because “the legislature’s 2019 amendments to the Act specifically removed issues related to ‘a good, product, or service in the market place’ from the definition of ‘matter of public concern.’”

CONTINUING TRESPASS IS NOT NECESSARILY AN IRREPARABLE INJURY

WBW Holdings, LLC v. Clamon

Dallas Court of Appeals, No. 05-20-00397-CV (November 12, 2020)

Justices Myers, Nowell (Opinion available here), and Evans

Kelli Hinson

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.

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.

UNDERESTIMATING WORK DOESN’T MAKE CONTRACT AMBIGUOUS

Bright Excavation, Inc. v. Pogue Construction Co., L.P.
Dallas Court of Appeals, No. 05-18-00820-CV (April 21, 2020)
Justices Myers, Osborne, and Nowell (Opinion linked here)

Lyndon Bittle

The Dallas Court of Appeals affirmed summary judgment for a general contractor, holding its subcontractor was bound by the contract price, even if the subcontractor underestimated the amount of work required to complete the project.
Lancaster ISD hired Pogue Construction to build two elementary schools. Pogue subcontracted the excavation work on one of the sites to Bright Excavation for $945,000. The subcontract required Bright to “excavate to the top of the tan limestone as verified by the geotechnical representative.” The bid package had instructed bidders to “assume six feet of remove and replace would be necessary.” After reviewing the initial geotechnical report of subsurface conditions, Bright estimated only between two and four feet of excavation would be required, and priced its bid accordingly. Unfortunately, this estimate proved to be inadequate, and Bright claimed it incurred over $325,000 in expenses beyond what it had projected. Pogue rejected Bright’s request for a change order increasing the contract amount, and Bright sought unsuccessfully to recover over $760,000 from Pogue’s payment bond surety, Hartford Insurance.

Bright sued Pogue and Hartford for breach of contract, payment on the bond, and assorted torts. Pogue counterclaimed to recover its attorney’s fees under the terms of the subcontract. The trial court entered summary judgment for Pogue and awarded its fees.

On appeal, Bright argued summary judgment was improper because the subcontract was ambiguous regarding the depth to which Bright was required to excavate within the $945,000 subcontract price. The Court of Appeals summarized Texas law governing the determination of contractual ambiguity, and reviewed the terms of the subcontract and related documents on which Bright relied. The Court concluded the subcontract was not ambiguous: “Bright, not Pogue or the school district, assumed the risk of the conclusions and interpretations Bright made based on the subsurface information contained in the geotechnical report.” Absent a breach of contract, Bright’s claim on the payment bond and tort claims against Pogue also failed.

COMPANY MANAGER PERSONALLY LIABLE FOR CONTRACT BREACH

PMC Chase, LLP v. Turnbow
Dallas Court of Appeals, No. 18-01383 (January 28, 2020)
Justices Myers, Schenck, and Carlyle (opinion linked here)

Lyndon Bittle

This is a cautionary tale for anyone who signs contracts or purchase orders for their company: Unless you want to be personally responsible for performing the contract, be sure the document clearly indicates you’re signing as the company’s representative.

BSS contracted to perform structural steel construction at PMC’s business. The one-page contract was directed to “Attention: Steve Turnbow,” and Turnbow, PMC’s manager, signed it. After substantial completion, BSS sent its invoice to Turnbow at PMC’s address. When it did not receive payment, BSS sued both Turnbow and PMC for breach of contract and (alternatively) quantum meruit. At trial, BSS abandoned its contract claim against PMC, insisting “the contract was with just Mr. Turnbow individually.” BSS retained its quantum-meruit claim against PMC.

PMC and Turnbow argued Turnbow acted only as an agent for PMC and was not, therefore, individually liable for any breach. After a bench trial, the court entered judgment against Turnbow for breach of contract and against PMC for quantum meruit, awarded the same damages and attorney’s fees for both causes of action, and held the defendants jointly and severally liable. The Dallas Court of Appeals affirmed the judgment.

Citing the “well-settled [principle] that the law does not presume agency,” the Court of Appeals held that because the contract “bears Mr. Turnbow’s signature and does not mention PMC Chase or indicate representative capacity in any way … it unambiguously shows it is the obligation of Mr. Turnbow personally.” This conclusion could not be altered, the Court held, by parol evidence of the parties’ intent, including both signatories’ testimony “that they understood Turnbow to have signed the contract for PMC Chase.”

The Court also affirmed the quantum-meruit judgment against PMC, holding that “appellants’ position that ‘there can be no recovery under quantum meruit where the same transaction is covered by a valid contract’ is contrary to established construction contract law,” citing Gentry v. Squires Construction, Inc., 188 S.W.3d 396, 402-03 (Tex. App.—Dallas 2006, no pet.). Finally, the Court noted that the judgment imposing joint and several liability for the same damages under the two causes of action precluded a double recovery.

LIMITATIONS: NO FRAUDULENT CONCEALMENT BASED ON NONDISCLOSURE AFTER PHYSICIAN-PATIENT RELATIONSHIP ENDS

Tarrant v. Baylor Scott & White Medical Center-Frisco
Dallas Court of Appeals, No. 05-18-01129-CV (January 15, 2020)
Justices Myers, Carlyle (Opinion, linked here), and Evans

Ken Carroll

Stephen Courtney, an orthopedic surgeon, performed back operations on plaintiffs Tarrant and Kendrick at Baylor-Frisco, a physician-owned hospital in which Courtney holds an interest. During the surgeries, Courtney used devices and monitoring services supplied by entities that also were largely owned by him. Alleging Courtney performed the operations improperly and used inappropriate products and services to increase his profits, Tarrant and Kendrick sued. Although their lawsuit was filed after the statute of limitations had expired, plaintiffs contended Courtney and his associated entities should be barred from asserting a limitations defense because Courtney had fraudulently concealed his wrongdoing.

The Dallas Court of Appeals agreed that under the equitable doctrine of fraudulent concealment, “a defendant who conceals his wrongful conduct, either by failing to disclose it when under a duty to disclose or by lying about his conduct, is estopped to assert the statute of limitations.” But, the Court explained, silence constitutes fraudulent concealment only when there is a duty to disclose. And, although the physician-patient relationship gives rise to fiduciary obligations by the physician, including the duty to make certain disclosures, that duty ends when the physician-patient relationship ends. Here, the plaintiffs’ fraudulent-concealment argument rested entirely on Courtney’s alleged silence and failure to disclose. But the physician-patient relationships ended shortly after the surgeries, beyond the limitations period. The appeals court, therefore, affirmed summary judgment for the defendants.

In so doing, the Court rejected plaintiffs’ argument that the tolling of limitations in a fraudulent-concealment case like this one should extend until the plaintiff discovers or reasonably could have discovered the physician’s fraudulent nondisclosure, rather than having the limitations clock begin ticking when the physician-patient relationship ends. The Court acknowledged the “logical force” of the argument but could find no authority to support it, and therefore declined to adopt that approach here.