Vice Principals, the Fifth Amendment, and Negative Inferences

 Lurks v. Designer Draperies and Floors, Inc. 

 Dallas Court of Appeals, No. 05-21-00908-CV (July 27, 2022)

 Justices Schenck (Opinion, linked here), Osborne, and Smith 

 Ken Carroll 

While Lurks was attending to a disabled car in the right lane of the I-20 frontage road, Heitzman struck that car from behind, seriously injuring Lurks. Heitzman failed a field sobriety test at the scene, was arrested, and then tested well above the legal limit for blood alcohol. Lurks sued Designer Draperies and Floors (“DDF”), arguing that when Heitzman became intoxicated and decided to drive anyway, he was acting as a “vice principal” of DDF. “In other words, Lurks urge[d] that DDF step[ped] into the shoes of Heitzmann and is, therefore, directly liable for Lurks’s injuries.” 

The trial court, however, granted summary judgment to DDF, and the Court of Appeals affirmed. There was some evidence—and potential inferences from Heitzman’s invocation of his Fifth Amendment rights in his deposition—that Heitzman “consum[ed] alcoholic beverages at DDF’s workplace, that he was drinking with employees of DDF, and, perhaps, that someone encouraged him to drive.” But none of this was sufficient even to raise a fact question that Heitzman’s conduct was “referable to DDF’s business,” which the Court ruled was essential to a “vice principal” theory of liability against DDF. 

Along the way, the Court assumed, without deciding, that “a jury would be allowed to draw negative inferences regarding Heitzmann’s assertion of his Fifth Amendment privilege.” Because of the Court’s determination that Lurks had failed to adduce any evidence that Heitzman’s alleged misconduct was “referable to DDF’s business,” indulging this assumption didn’t matter. But it wades into murky waters. Heitzman was not a party to the lawsuit, even though his actions were a focus of the case. The question whether a witness’s invoking the Fifth will give rise to a negative inference against someone else is difficult, to say the least. The answer may differ depending on whether the issue arises in Texas or federal court, and whether the witness can be said to have been acting for the other party such that his or her invocation of privilege can be attributed to that party as his words would have been under Tex. R. Evid. 801(e)(2)(D). Compare, e.g., P.C. as next friend of C.C. v. E.C., 594 S.W.3d 459, 461-65 (Tex. App.—Fort Worth 2019, no pet.), with Wil-Roye Inv. Co. II v. Washington Mut. Bank, FA, 142 S.W.3d 393, 403-07 (Tex. App.—El Paso 2004, no pet.).

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.

Duty Not to Distract a Driver Applies Only to Others in the Vehicle?

Gamble v. Anesthesiology Associates, P.S.C.

Dallas Court of Appeals, No. 05-20-01024-CV (July 21, 2022)

Justices Schenck, Osborne, and Smith (Opinion, linked here)

Ken Carroll

While driving on I-35 with her cruise control set to 80, Blain struck and killed two people who had stopped on the side of the highway to change a tire. At the time, Blain was engaged in a 20-minute hands-free cellphone conversation with Richter, a friend who had called Blain from Kentucky to tell her he was retiring. Blain and her employer—she was on a business trip at the time—settled. But Richter and his employer secured summary judgment against the various theories of direct, vicarious, and joint liability asserted against them. The Court of Appeals ultimately reversed and remanded on a joint-enterprise theory of liability—not on the merits, but because Richter and his employer had not moved for summary judgment on that particular issue. See Tex. R. Civ. P. 166a(c). But it was the Court’s ruling on another ground that stands out.

Plaintiffs claimed Richter was negligent because he distracted Blain while he knew she was driving. But the appeals court agreed with Richter that he “had no duty to exercise reasonable care to avoid distracting Blain once he realized she was driving.” The Court acknowledged a “recognized legal duty that a person must exercise reasonable care to avoid distracting a driver while [that driver is] operating a vehicle.” But it determined that duty applies only to passengers in the vehicle, or perhaps to others in “close proximity” like those in an adjacent vehicle. “A remote cellphone caller” like Richter, the Court held, “owes no duty to the general public to control the conduct of the call recipient as a matter of law.” The appeals court therefore affirmed summary judgment on that score.

One has to wonder how far this principle extends. What if the caller asked the driver to “FaceTime” or to “Zoom” or engage in other conduct that the caller knew or reasonably should know would have the driver focus on his or her phone instead of the road? What if, instead of a call, the defendant had engaged the driver in a text or instant-message exchange, or had sent a photo or a video with the message, “You gotta see this!”—all while knowing the recipient was driving? None of these situations were present in Gamble, of course. But it’s hard to see why a “remote cellphone user” who contacts someone, knowing that other person is driving (as Richter did here), should owe any less “duty to the general public” not to distract the driver than a backseat passenger who similarly asks the driver to look at a text, photo, video or otherwise knowingly draws the driver’s attention away from the road.

What's so Special for a Special Master?

In re Alford

Dallas Court of Appeals, No. 05-22-00240-CV (May 16, 2022)

Before Justices Osborne (Opinion), Partida-Kipness, and Smith

Neil R. Burger

In re Alford concerns the sua sponte appointment of a Special Master to determine a pending plea to the jurisdiction and rule on future discovery disputes. Concluding that the appointment was not supported by findings from the trial court that “good cause” existed or that the case was “exceptional” under Texas Rule of Civil Procedure 171, the Fifth Court of Appeals conditionally granted the petition for writ of mandamus.

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

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

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.

Don’t Sleep on Mandamus in Dallas

In re Ruff, No. 05-21-00886-CV (Tex. App.—Dallas February 15, 2022) Justices Molberg, Reichek (Opinion, linked here), and Garcia

In re Perez-Merino, No. 05-22-00082-CV (Tex. App.—Dallas February 14, 2022) Justices Schenck, Reichek (Opinion, linked here), and Carlyle

In re Tekin & Associates, LLC, No. 05-21-00219-CV (Tex. App.—Dallas February 9, 2022) Justices Osborne, Pedersen, III (Opinion, linked here), and Goldstein

Ken Carroll

There is no hard and fast deadline for filing a mandamus petition. But, although mandamus is not technically “an equitable remedy,” it is guided by principles of equity—including laches. And in the last week alone, the Dallas Court of Appeals has summarily denied three mandamus petitions for what it deemed to be excessive delays in filing. In each opinion the Court said, “[A]n unexplained delay of four months or more can constitute laches and result in denial of mandamus relief,” citing Rivercenter Associates v. Rivera, 858 S.W.2d 366 (Tex. 1993) (orig. proceeding), and decisions from the Dallas Court of Appeals and others to the same effect. With these three short, substantially identical opinions in a single week, the Court would seem to be signaling that, absent a good explanation, a delay of four months in filing for mandamus relief can (will?) trigger denial of a petition irrespective of the merits. Moral of the story: if you’re considering filing a mandamus in the Dallas Court of Appeals, get on with it.

Whose Card Is It Anyway?

American Express National Bank v. Sherwood

Dallas Court of Appeals, No. 05-20-00153-CV (January 27, 2022)

Justices Osborne (opinion available here), Reichek, and Carlyle

Kelli Hinson

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.

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.

Abandoning Prior Acceleration Avoids Statute of Limitations on Foreclosure

Florey v. U.S. Bank, N.A.

Dallas Court of Appeals, No. 05-20-00306-CV (June 22, 2021)

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

Ken Carroll

        Where a borrower defaults on a loan secured by real estate and the noteholder accelerates that loan, foreclosure must occur within four years after acceleration—unless the noteholder abandons that acceleration, which resets the limitations clock.

        The Floreys defaulted on their home equity loan. Nationstar Mortgage, the holder of the note, sent the Floreys a notice of default and then a notice accelerating the debt, both in 2013. But for many months after those notices, Nationstar said nothing further about acceleration and continued to send the Floreys monthly mortgage statements seeking only the current and past due amounts rather than the full amount of the loan, and even offering them the option to pay off the loan with no “prepayment penalty.” Those monthly notices made no reference to the acceleration. In August 2017, Nationstar filed an application for expedited foreclosure under Tex. R. Civ. P. 736, expressly relying on the 2013 notice of default, but not the notice of acceleration. But the trial court denied that application, and Nationstar then sold the note to U.S. Bank, which in 2019 sent the Floreys a new notice of default and acceleration and again sought to pursue expedited foreclosure under Tex. R. Civ. P. 736. The Floreys opposed that request and sought to quiet title, arguing that “U.S.Bank’s attempt to foreclose the lien was not timely brought within the four-year limitations period” and “[b]ecause the limitations period had expired, … the lien was no longer valid.” The trial court, however, granted summary judgment to U.S. Bank and the Court of Appeals affirmed. 

        “The pivotal issue,” the appeals court said, was “whether the 2013 acceleration of the Floreys’ note [by Nationstar] was abandoned.” If it was, then “the contract [was] restored to its original condition, including restoring the loan’s original maturity date and resetting the statute of limitations.” “Once a debt has been accelerated, the note holder may unilaterally waive or abandon the acceleration so long as the borrower neither objects to the abandonment nor detrimentally relied on the acceleration. … Abandonment can occur either expressly through a clear repudiation of the right, or impliedly through conduct inconsistent with a claim to the right.” Where the facts are undisputed, whether acceleration has been abandoned is a question of law. Here, Nationstar’s repeated monthly notices, sent after its notice of acceleration, that sought only monthly payments and made no mention of acceleration—and in fact, were inconsistent with acceleration—were sufficient to establish Nationstar’s abandonment of the 2013 acceleration. The foreclosure limitations clock, therefore, was re-set and didn’t start ticking again until U.S. Bank served its own notices of default and acceleration in 2019. U.S. Bank’s foreclosure, therefore, was not time-barred.

THE JOSH BRENT CASE: “APPARENT” INTOXICATION IS AN OBJECTIVE TEST FOR DRAM-SHOP-ACT LIABILITY

Beamers Private Club d/b/a Privae Lounge v. Jackson

Dallas Court of Appeals, No. 05-19-00698-CV (April 21, 2021)

Justices Osborne, Pedersen III (Opinion, here), and Goldstein

Ken Carroll

In the wee hours of the morning on December 8, 2012, after a night of drinking, Dallas Cowboys defensive lineman Josh Brent crashed his car while speeding. Brent’s best friend and teammate, Jerry Brown, was a passenger in the car and died in the accident. Brown’s mother, Stacey Jackson, sued Brent and Beamers d/b/a Privae, the club where Brent had been drinking immediately before the crash, securing multi-million-dollar judgments against each. Brent did not appeal. Beamers did, challenging, among other things, the legal and factual sufficiency of the evidence to support the judgment against the club under the Texas Dram Shop Act.

Under the Act, providing an alcoholic beverage to someone can lead to statutory liability if, “at the time the provision occurred it was apparent to the provider that the individual being sold, served, or provided with an alcoholic beverage was obviously intoxicated to the extent that he presented a clear danger to himself and others.” Focusing on the requirement that it be “apparent to the provider” that the person being served “was obviously intoxicated,” Beamers pointed to testimony from servers and other club employees, as well as from some of Brent’s teammates who were present, that Brent did not appear to them to be “obviously intoxicated.” The jury, of course, disagreed.

The Dallas Court of Appeals affirmed the verdict and judgment, holding that “the test for liability under the Act is an objective one.” The Court explained that “the requirement that intoxication be ‘apparent to the provider’ does not mean that the provider must actually observe such signs of intoxication; if it did, any provider of alcohol could escape liability by turning a blind eye to signs of intoxication that would otherwise be plain, manifest, and open to view.” Here, Brent failed a series of “roadside intoxication tests” at the accident scene, and a video showed Brent—who “was quiet and reserved by nature”—dancing at the club while drinking from two open bottles of alcohol. Especially viewed in the light most favorable to the verdict, the evidence was legally and factually sufficient to satisfy the Act’s objective test.

One procedural note, highlighting the recent turnover on the Dallas Court: Both the late Justice David Bridges and former Justice David Evans had participated in this case through submission. Justices Osborne and Goldstein, having studied the briefs and record, replaced them in the final determination of the appeal.

NO FORMAL PLEADING REQUIRED FOR ATTORNEYS’ FEES IN ARBITRATION

Ninety Nine Physician Services, PLLC v. Brian Murray

Dallas Court of Appeals, No. 05-19-01216-CV (February 22, 2021)

Justices Schenck (Opinion), Osborne, and Partida-Kipness (Concurring)

Neil R. Burger

In Ninety Nine Physician Services, the Dallas Court of Appeals reversed the judgment of the trial court and enforced an arbitrator’s award of attorneys’ fees even though there was no pleading in the arbitration seeking such an award.

The parties’ arbitration agreement provided that all disputes would be governed by the AAA’s Commercial Rules, but it was silent about any award of attorneys’ fees. The AAA rules permit an arbitrator to award fees in three circumstances: (1) if all parties request fees, (2) if fees are authorized by law, or (3) if fees are authorized by the agreement.

Appellant did not assert a claim that supported an award of attorneys’ fees as a matter of law. Nor did it formally plead for fees. But both Appellant and Appellees filed post-hearing submissions, including expert affidavits, seeking an award of fees. The panel majority agreed that this post-hearing briefing was sufficient for the arbitrator to conclude that all parties had requested their fees, despite the absence of any formal pleading on the issue. The AAA rules therefore authorized the arbitrator to award them.

In a concurring opinion, Justice Partida-Kipness would have concluded that awarding attorney’s fees in the absence of a pleading for such an award violated Texas’s fair notice requirements. Nevertheless, she concluded that the arbitrator’s award was a mistake of law, which would not constitute grounds to vacate the award.

ANDERS AND THE SECOND MILE

In the interest of J.L.B., a child

Dallas Court of Appeals, No. 05-20-00526-CV (October 15, 2020)

Justices Whitehill (Opinion, linked here), Osborne, and Carlyle

Ken Carroll

In Anders v. California, 386 U.S. 738 (1967), the United States Supreme Court established a procedure for how appointed counsel for a criminal defendant must deal with the client’s request to pursue an appeal when that lawyer knows that any appeal would be frivolous. In short, that lawyer must file the appeal as requested, but prepare and file a brief that examines the law and the record in detail and explains why there are no arguable grounds for reversal. Anyone who has ever written an “Anders brief” knows it is a soul-crushing experience, contrary to every advocate’s basic instincts. Because the client understandably feels betrayed by the lawyer’s performance of his duty to the legal system under Anders, the brief is accompanied by a motion to withdraw as counsel for that client. And in the federal criminal system, when the appeals court agrees with the lawyer’s analysis and decides the appeal lacks merit, that motion to withdraw is routinely granted. But there’s a twist in Texas.

Texas courts have extended Anders to parental termination cases. See In re D.D., 279 S.W.3d 849, 850 (Tex. App.—Dallas 2009, pet. denied). In J.L.B., the counsel appointed for a mother in a parential rights dispute duly followed the Anders procedure and filed a brief that “professionally evaluate[d] the record and demonstrate[d] that there are no arguable grounds for reversal.” The appeals court affirmed the ruling the mother had sought to overturn. But it denied the attorney’s motion to withdraw. The Court reminded us that here, an appointed counsel’s obligations extend through a potential petition for review to the Supreme Court of Texas. “If Mother, after consulting with counsel, desires to file a petition for review, counsel must file a petition for review that satisfies Anders.” Counsel must walk the second mile. “[T]he appeal’s frivolousness … is not sufficient good cause for withdrawing” before that task is done.

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

In re Ahmed Zidan

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

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

Ken Carroll

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

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

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

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

BUYING A TRAIN TICKET ISN’T “PAYING FOR USE” OF THE TRAIN STATION

City of Dallas v. Kennedy

Dallas Court of Appeals, No. 05-19-01299-CV (June 18, 2020)

Justices Whitehill (Opinion available here), Osborne, and Carlyle

Kelli Hinson

Ms. Kennedy tripped and fell in Union Station train station and sued the City of Dallas for premises liability. The Texas Tort Claims Act waives a city’s governmental immunity for personal injuries caused by a real property condition if the city would, were it a private person, be liable to the claimant under Texas law. Whether the City could be held liable depends on whether Kennedy is treated as a licensee or an invitee. The City’s duty is that owed by a private person to a licensee “unless the claimant pays for the use of the premises,” in which case the City’s duty is elevated to that owed to an invitee. This is critical because a premises owner only owes a licensee the duty not to injure her (i) by willful, wanton, or grossly negligent conduct or (ii) by failing to use ordinary care to warn of or make safe a dangerous condition of which the owner is aware and the licensee is not. By contrast, an invitee must prove only that the owner knew or should have known about the dangerous condition.

Kennedy alleged she paid for use of the Dallas train station because she purchased a train ticket to travel from Kilgore to Dallas. The Dallas Court of Appeals disagreed. Kennedy paid a fee to Amtrak to ride the train, but did not pay a separate fee to the City of Dallas for use of Union Station, and a fee must be paid “specifically for entry onto and use of the premises” in order to trigger invitee status. Because Kennedy did not pay a fee to use the train station, she was a mere licensee and had to produce evidence the City was actually aware of the allegedly dangerous condition, which she failed to do. Kennedy testified that a man wearing “a gray top and blue pants” told her that “they should’ve have had that fixed a long time ago.” But this testimony did not raise a fact issue regarding the City’s knowledge of the allegedly dangerous condition because there was no evidence the man worked for the City or ever reported the condition to the City. The Court therefore rendered judgment granting the City’s plea to the jurisdiction and dismissing Kennedy’s claim.

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.

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

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

Ken Carroll

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

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

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

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

MAILING CHAPTER 74 NOTICE TO HOSPITAL IS NOT “NOTICE”

Thornton v. Columbia Medical Center of Plano Subsidiary, LP
Dallas Court of Appeals, No. 05-18-01010--CV (September 12, 2019)
Justices Myers (Opinion available here), Osborne, and Nowell

Kelli Hinson

Plaintiffs in a medical malpractice case sued Columbia Medical Center of Plano Subsidiary, LP two years and sixty-two days after the patient’s death. Under Civil Practices & Remedies Code, Chapter 74, providing notice of a health care liability claim to a “physician or health care provider against whom such claim is being made” tolls the 2-year statute of limitations for 75 days. Here, plaintiffs mailed their notice to the hospital’s physical address, rather than an authorized agent for service of process.

The Dallas Court of Appeals held that a Texas limited partnership receives notice when it is served on its registered agent or a general partner. Columbia’s registered agent was CT Corporation System. The Court held that, even though the Medical Center of Plano at 3901 W. 15th Street, Plano, Texas, 75075 “was the physical place at which the treatment occurred,” “it was not the health care provider Thornton sued.” So mailing notice to “Medical Center of Plano” at the hospital’s physical address did not provide notice to Columbia, and the statute of limitations was not tolled. Summary judgment in favor of Columbia was affirmed.

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

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

Neil R. Burger

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

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

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

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

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