By John Barnes and Andrew Nelson, Wright & Close, LLP

Can a preliminary letter to the court lead to waiver of a special appearance?

Skinner v. Skinner, No. 01-12-00515-CV, 2013 WL 6729837 (Tex. App.—Houston [1st Dist.] Dec. 19, 2013, no pet.)

Issue Presented: Does an unsworn letter to the court from a pro se litigant asking the court to dismiss a case cause waiver of a special appearance?

Relevant Issues: Michael Skinner and his wife Pamela Skinner lived in Florida. Michael moved to Texas and filed for divorce in Texas. After being served with citation, Pamela wrote a letter to the court asking the court to dismiss the case in Texas on the grounds that she lived in Florida. After sending the letter but prior to her answer date, Pamela retained an attorney and filed a special appearance. Michael responded to the special appearance arguing that Pamela’s letter constituted a general appearance, meaning the special appearance was waived. The trial court granted the special appearance, and Michael appealed.

Legal Summary: On appeal, Michael argued that 1) the letter was a motion to dismiss and not a special appearance, 2) the letter was unsworn, 3) the letter was an answer, and 4) the letter sought affirmative relief. For all these reasons, Michael argued that the special appearance should have been denied.

The First Court of Appeals rejected Michael’s arguments. The court first noted that the nature of a pleading is not determined by its title or language, but by reviewing the pleading as a whole. Using this standard, the court determined that Pamela’s letter challenged the Texas court’s jurisdiction over her, even if it did not do so in as many words. Therefore, the court treated the letter as a special appearance. The fact that the letter was unsworn did not change the analysis, as Rule 120a of the Texas Rules of Civil Procedure permits parties to amend a special appearance to cure defects.

Next, the court held that whether the letter also constituted an answer was irrelevant. Parties are permitted to file answers at the same time they file a special appearance. Finally, the court held that, even though the letter sought dismissal, the dismissal was consistent with the grounds of her special appearance, namely that the court lacked jurisdiction over her.

The impact of signing an order granting a new trial outside the court’s plenary power when the court has orally granted a new trial within its plenary power.

In re Kenny Bates, No. 01-13-00037-CV, 2014 WL 576171 (Tex. App.—Houston [1st Dist.] Feb. 13, 2014, orig. proceeding)

Issue Presented: When a court purports to orally grant a new trial within the court’s plenary power, but does not sign the order granting the new trial until after the plenary power has expired, is the grant of the new trial valid?

Relevant Facts: A jury returned a verdict in favor of Walker in his case against Bates. Walker timely moved for a new trial, and the court held a hearing on the motion. At the close of the hearing, the court orally granted a new trial, but did not sign the order at that time. Rather, the court made a docket entry indicating that it had granted the motion for new trial. The court later signed an order, but the order was undisputedly outside the court’s plenary power. After Bates filed a petition for writ of mandamus, Walker filed a motion to stay all proceedings in the trial court pending the First Court’s resolution of the mandamus. After the First Court issued the stay, the trial court entered an order granting “nunc pro tunc” relief, stating that it signed a new trial order within the plenary power that was mistakenly not ordered.

Legal Summary: The First Court of Appeals conditionally granted Bates’ petition for writ of mandamus. The court noted that courts have repeatedly held that Texas Rule of Civil Procedure 329b requires a signed written order to grant a new trial. Further, docket entries and orders setting the case for a trial are not acceptable substitutes for an order granting a new trial. With these principles in mind, the court reiterated that if a trial court does not sign a specific written order granting a new trial within seventy-five days of the filing of a motion for new trial, the motion is overruled, and the trial court’s plenary power expires thirty days after that.

The court next dealt with Walker’s argument that the trial court signed a new trial order within its plenary power but the order was simply not filed. Walker supported his argument with an affidavit from his counsel’s legal assistant indicating that court staff told her that the order had been signed. The First Court rejected this argument. The court reiterated that the rule requiring a signed order within the plenary-power period was a “bright-line rule.” Because the only order in the record was signed outside that period, the order was invalid.

Finally, the court addressed the issue of the “nunc pro tunc” order stating that the written order had been signed within the plenary-power period. The First Court held that the nunc pro tunc order was of no effect because it was issued in contravention of the stay issued by the First Court pending the outcome of the mandamus.

Does a party waive a right to arbitrate by filing third-party claims against other defendants and engaging in some discovery?

Tuscan Builders, LP v. 1437 SH6, LLC, No. 01-13-00685-CV, 2014 WL 346454 (Tex. App.—Houston [1st Dist.] Jan. 30, 2014, no pet. h.)

Issues Presented: When a defendant files third-party claims against other defendants and engages in some discovery, does it waive its right to later demand arbitration?

Relevant Facts: The owners of a commercial building sued a builder for breach of warranty in connection with alleged construction defects. Early in the litigation, the builder filed a third-party claim against its subcontractors. The parties engaged in extensive written discovery, including designation of experts, and filed an agreed motion for continuance. Approximately one month from the end of the discovery deadline, the builder moved to compel arbitration. The trial court denied the builder’s motion.

Legal Summary: On appeal, the builder argued that the evidence did not establish that it waived its contractual right to arbitrate by substantially invoking the judicial process. The First Court began by noting that “[a] party substantially invokes the judicial process if it takes specific and deliberate actions that are inconsistent with the right to arbitrate or if it actively tries, but fails to achieve, a satisfactory result through litigation before turning to arbitration.” Whether a party has waived the right to arbitrate is a question of law. The court must look at whether the party seeking to compel arbitration engaged in the “aggressive litigation strategy” that substantially invokes the judicial process.

The court next noted that the mere act of filing third-party claims does not always indicate an intention to waive a contractual right to arbitration. However, in the case before it, the builder’s filing of its third-party claims was not accompanied or shortly followed by a motion to compel arbitration. Rather, the builder litigated for several months after filing its third-party claims. That fact weighed in favor of finding a waiver of the builder’s arbitration rights.

Further, the builder’s right to arbitrate arose from an industry form that was referenced in the contract but not attached to it. The plaintiff claimed that it was not aware of the arbitration clause before the builder purported to invoke it. Additionally, the builder’s contract with at least one of its subcontractors expressly excluded any obligation to arbitrate. Any arbitration between the builder and the plaintiff would, therefore, have resulted in inefficient, piecemeal adjudication.

These factors, combined with the substantial discovery in which the builder engaged, led the court to determine that “the timing of [the builder’s] motion to compel [is] more consistent with a late-game tactical decision than an intent to preserve the right to arbitrate.” The First Court affirmed the trial court’s denial of the builder’s motion to compel arbitration.

Memorial Hermann Hospital System d/b/a Memorial Hermann Southwest Hospital v. Galvan, No. 14-13-00120-CV (Tex. App.—Houston [14th Dist.] January 28, 2014)

Issue Presented: The central issue in this appeal was whether a non-patient slip-and-fall claim against a hospital is a health care liability claim under the Texas Medical Liability Act

Relevant Facts: Appellee Sylvia Galvan (“Galvan”) brought a slip-and-fall negligence suit against Appellant (the “Hospital”), alleging that, while visiting a relative who was a patient at the Hospital, she slipped and fell on water in a hospital hallway, which water was coming from a men’s restroom. In its answer, the Hospital invoked the protections of subchapter G of chapter 74 of the CPRC, which applies to health care liability claims. Galvan did not serve any document on the Hospital to satisfy the expert report requirements of CPRC section 74.351, and the Hospital moved to dismiss on that basis. The trial court denied the Hospital’s motion to dismiss, and the Hospital filed this interlocutory appeal.

Outcome/Holding: The Court of Appeals reversed and remanded with instructions that the trial court dismiss Galvan’s case and conduct further proceedings to determine the amount of and award the Hospital its reasonable attorney’s fees. Relying upon the Texas Supreme Court’s opinions in Texas West Oaks Hosp., LP v. Williams, 37 S.W.3d 171 (Tex.2012), and Psychiatric Solutions, Inc. v. Palit, No. 12-0388, — S.W.3d —-, 2013 WL 4493118 (Tex. Aug. 23, 2013), the Court concluded that Galvan’s claim was a “health care liability claim” within the meaning of section 74.351, as it involved a “departure from accepted standards of … safety[.]” Consistent with its own prior holdings in Glassman v. Goodfriend, 347 S.W.3d 772 (Tex. App.—Houston [14th Dist.] 2011, pet. denied), CHCA Bayshore, LP v. Salazar, No. 14-12-00928-CV, 2013 WL 1907888 (Tex. App.—Houston [14th Dist.] May 7, 2013, pet. denied), and Ross v. St. Luke’s Episcopal Hosp., No. 14-12-00885-CV, 2013 WL 1136613 (Tex. App.—Houston [14th Dist.] Mar. 19, 2013, pet. filed), but in contradiction to opinions issued by other intermediate Texas appellate courts, most notably Good Shepherd Med. Ctr.-Linden, Inc. v. Twilley, No. 06-12-00098-CV, 2013 WL 772136 (Tex. App.—Texarkana Mar. 1, 2013, pet. denied) the Court further concluded that health care liability claims based upon alleged departures from accepted safety standards must involve an alleged departure from standards for protection from danger, harm, or loss, but need not involve an alleged departure from standards that involve health care or are directly or indirectly related to health care. Consequently, under the Court’s broad interpretation of the judicial dicta in Williams, Galvan’s claim was a health care liability claim under section 74.351, and she was therefore required to serve an expert report in order to avoid dismissal and the award of attorneys’ fees to the Hospital pursuant to that section. Galvan pointed out in her brief on appeal that the specifics of the expert report requirement in the statute (the report must include a fair summary of the expert’s opinions regarding “the manner in which the care rendered by the physician or health care provider failed to meet the standards, and the causal relationship between that failure and the injury, harm, or damages claimed.” Section 74.351(r)(6)) effectively prevented compliance in a case such as hers, where there was no physician-patient relationship between her and the Hospital, but the Court reasoned that this merely went to the scope of statutory definition of a health care liability claim, not the statute’s applicability.

Justice Boyce filed a concurring opinion, in which he recognized that the majority was bound in its disposition by the existing precedent from prior panels of the Court, but, expressing concern over the absence of any quality to Galvan’s claim other than locus of occurrence that might distinguish it from similar incidents occurring at a gas pump, store entrance, or in a produce aisle, urged the Court to “retrace its steps” and revisit the issue of whether Galvan’s claim should properly be considered a health care liability claim at all.

D.R. Horton-Texas, Ltd. v. Bernhard, No. 14-12-01150-CV (Tex. App.—Houston [14th Dist.] February 20, 2013)

Issue Presented: The issues presented in this appeal were (a) whether the trial court erred in failing to vacate an arbitrator’s award of attorneys’ fees in light of language in the underlying contract that made each party responsible for their own attorneys’ fees and expenses; and (b) whether the trial court erred in awarding appellate attorney’s fees.

Relevant Facts: Appellees William and Nadia Bernhard (the “Bernhards”) sued Appellant D.R. Horton-Texas, Ltd. (“Horton”) for damages resulting from a construction defect in the home they purchased from Horton. Pursuant to the sales contract, the trial court referred the case to arbitration. The arbitration provision of the sales contract provided that “[e]ach party shall bear the fees and expenses or 9sic.] counsel, witnesses and employees of such party, and any other costs and expenses incurred for the benefit of such party.” The Bernhards included a request for attorney’s fees in their original petition, and the trial court did not except this request from arbitration in its order of referral to arbitration, nor did Horton ask the trial court to except this issue when it moved to compel the arbitration. The arbitrator awarded the Bernhards a total of $114,477.45 in damages, which included $31,027.93 as “economic damages” under the Residential Construction Liability Act (RCLA).

Horton moved to vacate the arbitrator’s award of attorney’s fees, but the trial court signed a final judgment that awarded the relief included in the arbitrator’s award, as well as a further $18,500 for attorneys’ fees for an appeal to an intermediate appellate court and $25,000 for an appeal to the Texas Supreme Court. Horton appealed.

Outcome/Holding: The Court of Appeals modified the trial court’s judgment by striking the award of appellate attorney’s fees, and affirmed the judgment as modified. Because the Texas Arbitration Act authorizes the vacation of an arbitrator’s award if the arbitrator exceeded his powers (see CPRC § 171.088(a)(3)(A)), Justice McCally, writing for the Court, concluded that, since Bernhard’s request for attorney’s fees was included in the trial court’ s referral to arbitration, the award of attorneys’ fees was within the arbitrator’s authority. Moreover, because, consistent with existing precedent, an arbitrator does not exceed his authority simply because he misinterprets the contract or misapplies the law, the Court held that the fact that the arbitrator’s award may conflict with the attorney fee allocation provision of the sales contract was not grounds for vacating the award. Further, because RCLA authorizes an award of attorneys’ fees as “economic damages,” the requirements of the TAA provision authorizing an award of attorneys’ fees where provided under a cause of action on which any part of the award is based were met.

However, because the referral to arbitration did not include the issue of appellate attorney’s fees, the Court concluded that the trial court erred in modifying the arbitration award to include the same. The Court therefore struck the portions of the trial court’s judgment awarding appellate attorney’s fees, and affirmed the remainder of the judgment.

Kaldis v. Aurora Loan Services, No. 14-12-00542-CV (Tex. App.—Houston [14th Dist.] February 25, 2014)

Issue Presented: Several issues were presented in this appeal from a summary judgment on Appellants’ wrongful foreclosure action. Most of these were not preserved for appeal, however, and the central issue on appeal was the proof of statutory notice of the foreclosure sale and whether the evidence was sufficient to negate a fact issue as to the existence of a defect in the non-judicial foreclosure proceedings.

Relevant Facts: Appellants Eleftherios and Monica Kaldis (the “Kaldises”) took out a mortgage on the real property located at 2920 Pasadena Boulevard in Pasadena, Texas (the “Property”), and subsequently defaulted on the mortgage. At the time of the default, the servicer was Appellee Aurora Loan Services (“Aurora”). Aurora gave notice of default and acceleration and began non-judicial foreclosure proceedings against the Property. The foreclosure proceedings were referred to the law firm of Brown & Shapiro, LLP n/k/a Shapiro Schwartz (“B&S”). The Property was auctioned and sold at non-judicial sale on November 4, 2008.

In their suit, the Kaldises alleged, amongst several other things, that they never received notice of the foreclosure sale, as required under section 51.002(b) of the Texas Property Code. Aurora moved for summary judgment. Aurora’s motion included an affidavit by Kirk Schwartz, in which he testified that two exhibits attached to his affidavit are business records of B&S. The exhibits in question were a pair of letters, each dated October 13, 2008 and each addressed to one of the Kaldises. Each of the letters also enclosed a document entitled “Notice of Trustee’s Sale,” which gave notice that the Property was to be foreclosed on November 4, 2008. Each of the letters was accompanied by a single page that appeared to be a printout of the “Receipt for Certified Mail” (PS Form 3800) and a return receipt (i.e., “green card”) (PS Form 3811). These documents were not separated from each other, nor did they contain postmarks showing their date of mailing. Aurora’s summary judgment evidence also included an affidavit made by Cheryl Clede (“Clede”), in which she attested (a) that, on October 13, 2008, her title with B&S was “Foreclosure Processor,” (b) that she was familiar with the usual and customary practice of B&S as it then existed for mailing notices, and (c) that it was the usual and customary practice of B&S to generate and mail a “Notice of Acceleration and Posting” and “Notice of Trustee’s Sale upon receipt of a foreclosure referral. In their response, the Kaldises included affidavits made by them, in which they attested that they had no knowledge of the foreclosure sale, and had received no notices of such. The trial court granted Aurora’s motion, and the Kaldises appealed.

Outcome/Holding: The Court of Appeals sustained the Kaldises’ sufficiency of the evidence point, and reversed and remanded as to that issue. The Court concluded that the testimony concerning the usual and customary practice of B&S was insufficient to negate a fact issue as to whether the notices of foreclosure had been timely sent, if at all, where there was no corroborating documentary evidence (e.g., a postmark) or affidavit testimony that affirmatively demonstrated that that practice was followed in regard to the notices to the Kaldises. Consequently, the trial court had erred in granting summary judgment on the Kaldises’ wrongful foreclosure claim.