by Lucy Forbes, The Forbes Firm, PLLC, and Jessica Zavadil, Wright & Close, LLP
Pitts & Collard, L.L.P. v. Schechter, No. 01-08-00969-CV, 2011 Tex. App. LEXIS 3580 (Tex. App.—Houston [1st Dist.] May 12, 2011, no pet.).
Issue: Whether Plaintiff Pitts waived his complaint about the absence of an instruction on actual malice in the charge.
Relevant facts: Plaintiff brought an action against Defendant for breach of contract, alleging that he failed to pay referral fees from lawsuits that Plaintiff referred. Defendant filed a counterclaim for defamation, breach of contract, and abuse of process. The trial court entered a take-nothing judgment against Plaintiff on his breach of contract claim. The trial court awarded a partial judgment to Defendant on his counterclaims. On appeal, the court found that the evidence was sufficient to show that Plaintiff breached the contract first. However, the evidence was legally insufficient to establish that Plaintiff acted with the actual malice required for him to be liable on a claim of defamation against a public figure. Defendant Schechter argued that Pitts waived his complaint about the absence of an instruction on actual malice. Pitts did not object to the malice instruction that was submitted to the jury, which constitutes a waiver under application of the ordinary procedural rules. He did not request that the jury be instructed on actual malice, offer a substantially correct question, or in any other way indicate that he thought the charge was improper because Schechter was a public figure.
Outcome/holding: In an ordinary case, the lack of an objection by Pitts would require the appellate court to evaluate the sufficiency of the evidence with respect to the court’s charge, and not some other law that was not identified to the trial court. Even when fundamental constitutional rights are at stake, the rules of appellate procedure bar review of unpreserved error except in very narrow circumstances. However, the free-speech implications of this case required the court to find waiver only in circumstances that are “clear and compelling.” To the extent such a waiver is even possible by procedural inaction, Pitts’s complete failure to expressly raise the issue of actual malice after a three-week jury trial may represent the strongest possible case. The court continued to hold that even if it concluded that waiver has occurred, it was still required to “consider whether those procedural grounds are adequate as a matter of substantive federal constitutional law to protect the constitutional interests at stake.” In First Amendment cases, the court is obligated to “make an independent examination of the whole record” so as to ensure that “the judgment does not constitute a forbidden intrusion on the field of free expression.”
Christus Health v. Quality Infusion Care, Inc., No. 01-09-00591-CV, 2011 Tex. App. LEXIS 4578 (Tex. App.—Houston [1st Dist.] June 16, 2011, no pet. h.)
Issue: Whether the trial court erred in awarding judgment for Quality on the jury’s quantum meruit finding because the express contract rule barred such a recovery, given the jury’s implied finding that a contract existed, and the express finding that Christus’s failure to comply was excused, along with evidence that Quality failed to do as the parties’ agreement required.
Relevant facts: Christus manages a network of medical and healthcare providers in east Texas and western Louisiana. The health plan is for active and retired members of the Armed Services, their families, and survivors. Quality provided medical services to several Christus members referred to it by a specialist in Christus’s network. Quality itself, however, was not part of the network. Christus paid some of Quality’s invoices, but denied others on the basis that Quality had not complied with the terms of the medical plan. Quality sued Christus to collect the unpaid invoices, claiming that Christus breached its duty to pay or, alternatively, owed it an equitable recovery on a quantum meruit theory.
Outcome/holding: An express contract between the parties precludes a plaintiff from recovering for services rendered in quantum meruit if the contract covers those services or materials and if no exception to the general rule applies. The equitable remedy of quantum meruit is therefore unavailable when the party seeking compensation has a legal remedy under the contract. Quality argued that Christus waived the express contract defense by failing to plead it or cite it as a ground for summary judgment, motion for directed verdict, or motion for judgment notwithstanding the verdict. The trial court disagreed and concluded that it was Quality that invoked rights under the contract, and submitted both theories of relief to the jury. In its answer, Christus invoked the contract defenses of failure to meet a condition precedent, anticipatory repudiation, prior material breach, and failure to mitigate. The jury heard evidence on these issues and made affirmative findings on the questions of breach and excuse. These findings necessarily refer to the existence of a contract. The court reversed the trial court’s judgment and held that the express contract rule barred Quality from a quantum meruit recovery.
Trevino v. Reese, No. 01-10-00717-CV, 2011 Tex. App. LEXIS 4558 (Tex. App.—Houston [1st Dist.] June 16, 2011, no pet. h.)
Issue: Whether the appellate court had jurisdiction to review the challenged order authorizing ad litem fees because it “did not dispose of all claims and parties and was merely part of the pending guardianship and divorce proceedings.”
Relevant facts: The trial court signed an order granting authority to pay attorneys’ fees and expenses and discharging attorney ad litem. It approved the ad litem’s fees, taxed them as costs, and ordered that he be paid in accordance with its order approving the settlement agreement. In its order approving the settlement agreement, the trial court authorized Reese to fulfill the settlement agreement, and it ordered that the ad litem fees be “taxed as costs” and be paid.
Outcome/holding: Generally, parties may appeal only from final judgments. However, probate proceedings give rise to a recognized exception to the general rule since multiple judgments may be rendered on discrete issues before the entire probate proceeding is concluded. Not all probate orders are appealable. Determining whether sufficient attributes of finality exist to confer appellate jurisdiction over an order arising from a probate proceeding depends on whether the order resulted from the adjudication of a substantial right or disposed of all issues in a particular phase of the proceeding. In this case, the trial court’s order not only required appellant to pay the ad litem fees, but also released Smith as the ad litem. Therefore, for the purposes of Smith’s fees, the order concluded a discrete phase of the probate proceedings and the order was thus final and appealable.
Chupp v. Chupp, No. 01-10-00197-CV, 2011 Tex. App. LEXIS 4928 (Tex. App.—Houston [1st Dist.] June 30, 2011, no pet.)
Issue: Whether entering a default judgment on a divorce decree was error because of lack of personal jurisdiction based on defective service of process.
Relevant facts: Appellee husband filed his first amended petition for divorce. Because the return of service of citation was signed by a licensed private process server, TEX. R. CIV. P. 107 required that the return of service of citation be acknowledged before a notary public which was not done. Although the process server signed the return and indicated her license number, this was not sufficient to satisfy the requirements of Rule 107; therefore, the service of process was invalid and of no effect. The trial court did not have personal jurisdiction over the wife and erred in rendering the default divorce decree.
Outcome/holding: The default judgment against the wife was reversed.
Ansell Healthcare Prods. v. United Med., No. 01-10-00541-CV, 2011 Tex. App. LEXIS 5358 (Tex. App.—Houston [1st Dist.] July 14, 2011, pet. filed)
Issue: Whether the trial court erred by not making the award of appellate attorney’s fees dependent on which party prevailed on appeal.
Relevant facts: The underlying products liability suit involved two manufacturers. After it was settled, the manufacturer contended that the seller had incurred excessive attorney’s fees and that this amount was attributable to the other manufacturer’s product under Chapter 82. The court found the evidence sufficient to show that the costs the seller sought to recover were incurred in relation to the manufacturer’s product, even if the seller also incurred some costs relating to the other manufacturer’s product.
Outcome/holding: The award of appellate attorney’s fees should be dependent on which party prevails on appeal. However, an unconditional award of appellate attorney’s fees does not require reversal; instead, the appellate court may modify a trial court’s judgment to make the award of appellate attorney’s fees contingent upon the receiving party’s success on appeal. The appellate court in this case affirmed the trial court’s judgment as modified to provide that the award of appellate attorney’s fees was contingent upon success on appeal.
Branckaert v. Otou, No. 01-08-00637-CV, 2011 Tex. App. LEXIS 6286 (Tex. App.—Houston [1st Dist.] Aug. 11, 2011, no pet. h.)
Issue: Whether a party waives his special appearance when his retained counsel files a motion for continuance for the purpose of obtaining DNA testing.
Relevant facts: The mother had filed suit to establish a parent-child relationship between the individual, who lived in Italy, and the mother’s child. The trial court entered a judgment adjudicating the individual to be the child’s father. The individual filed a new trial motion, which was denied. Because the individual never verified his special appearance, he never adequately challenged personal jurisdiction, and his motion for continuance recognized that an action was properly pending, such that the individual entered a general appearance.
Outcome/holding: Relying on Dawson-Austin, the father argued that a motion for continuance will never constitute a general appearance. Dawson-Austin, however, is distinguishable. In that case, the defendant filed a special appearance, contemporaneously with a motion to quash service, plea to the jurisdiction, and plea in abatement. In contrast, in his motion for continuance, the father expressly denied paternity and argued to the court that the trial should be reset in order to give the parties time to conduct paternity testing. The issues raised in the father’s motion have nothing to do with the court’s jurisdiction, but indicate his intention to defend the case of the merits by obtaining DNA testing to disprove paternity. The father’s motion for continuance, with its request for time to perform DNA testing, “recognizes that an action is properly pending” and “seeks affirmative action from the court.” Thus, he has entered a general appearance in the case and waived his previously filed special appearance.
Wilkerson v. RSL Funding, L.L.C., No. 01-10-01001-CV, 2011 Tex. App. LEXIS 6282 (Tex. App.—Houston [1st Dist.] Aug. 11, 2011, no pet. h.)
Issue: Whether internet activity or postings on a third-party “website” is enough to establish personal jurisdiction.
Relevant facts: In this interlocutory appeal, Jerry Wilkerson appealed the trial court’s order denying his special appearance. Appellee RSL Funding, L.L.C. sued Wilkerson for defamation, libel, and business disparagement, all based upon statements made by Wilkerson on third-party internet sites. In his sole issue, Wilkerson argued the trial court erred in denying his special appearance and objection to jurisdiction.
Outcome/holding: The appellate court agreed with Wilkerson, and noted that for purposes of analyzing personal jurisdiction over an individual in a case arising from his internet activity, the standard of purposeful availment should be applied. The company presented no evidence about how the resident posted his comments in a way directed at Texas. The evidence did not support the company’s factual allegation, factually refuted by Wilkerson, that he deliberately used a website oriented towards, aiming at, or otherwise specifically targeting Texas. Jurisdiction could not be exercised over a nonresident user based on his use of a website based upon the mere evidence that the website incorporated Texas-related content of an unknown origin. Nothing in the record showed that Wilkerson sought any benefit, advantage, or profit by availing himself in Texas, as was required for personal jurisdiction.
Thompson v. Ace American Ins. Co., No. 01-10-00810-CV, 2011 Tex. App. LEXIS 6902 (Tex. App.—Houston [1st Dist.] Aug. 25, 2011, no pet. h.)
Issue: Whether the trial court erred in including a “date of injury” in its question to the jury on the issue of whether Ace had proven that Thompson did not sustain a compensable injury.
Relevant facts: Thompson challenged the trial court’s judgment entered, after a jury trial, in favor of Ace in its suit for judicial review of a decision of the Texas Department of Workers’ Compensation (“DWC”) in favor of Thompson. Thompson argued that the trial court erred in including a date of injury in its question to the jury on the issue of whether Ace had proven that Thompson did not sustain a compensable injury, and in the alternative, that if a date of injury was properly included in the question, the trial court erred in not submitting to the jury a definition of the term “date of injury” in regard to an occupational disease.
Outcome/holding: The appellate court found that, at trial, the insurer presented extensive evidence that the employee was not at work on March 18, 2007, and the insurer asserted that this evidence established that the employee could not have suffered a compensable injury. The insurer did not dispute that neither it nor the employee appealed the issue of the date of his injury, March 18, 2007. Because the insurer had failed to appeal the issue of the date of the employee’s injury to the DWC Appeals Panel, the issue was not properly before the trial court, and the trial court erred in including the date in its question to the jury. This error was also harmful because it had the probable effect of misleading and confusing the jury.
In re Swift Transportation Co., No. 14-11-00535-CV, 2011 Tex. App. LEXIS 7435 (Tex. App.—Houston [14th Dist.] September 13, 2011, orig. proceeding).
In this negligence case, plaintiff sued defendant, Swift, a national trucking company, and its employee, for injuries she sustained from an accident with a Swift tractor-trailer. Plaintiff sought to take the deposition of a risk manager or person most knowledgeable about any and all injury or death claims for the ten years before the accident that made the basis of the suit. Swift’s counsel filed an objection, motion to quash, and motion for protective order. Plaintiff filed a motion to compel. After a hearing, the trial court signed an order denying Swift’s motions. Swift filed a petition for writ of mandamus.
The court conditionally granted the petition for writ of mandamus. It explained that orders requiring discovery covering an unreasonably long time period or distant and unrelated locales are impermissibly overboard. Because discovery is limited to matters that are relevant to the case, requests for information that are not reasonably tailored as to time, place, or subject matter amount to impermissible “fishing expeditions.”
The court agreed with Swift that the lower court abused its discretion because it required that a national company produce a corporate representative to testify about all injury and death claims asserted against it during the ten years before plaintiff’s accident. Swift asserted that it opened more than 1,000 auto liability claims related to accidents involving its vehicles in 2010 alone. Plaintiff responded that the information sought “might well show” that Swift had engaged in a pattern of negligent hiring and supervising that would support her gross negligence claim. The appellate court disagreed, holding instead that the information sought amounted to an impermissible “fishing expedition.”
Yuen v. Gerson, No. 14-09-00635-CV, 2011 Tex. App. LEXIS 4538 (Tex. App.—Houston [14th Dist.] June 16, 2011, pet. filed) (on reh’g).
In this legal malpractice case, a former client and his new attorneys sued the former lawyer. The issue was whether the new attorney and his law firms are subject to sanctions, when the attorney did not actually sign the pleading at issue? The Fourteenth Court of Appeals answered in the negative as to whether the law firm could be liable, thereby causing a split in authority between the First and Fourteenth Courts of Appeals.
James Gerson is an attorney who represented Paul Koik-Wah Law in a suit. After Gerson withdrew from representation, Law sued Gerson for, among other causes of action, negligence and breach of contract related to Gerson’s allegedly deficient representation. Appellants, Xenos Yuen, Siegal, Yeun & Honore, PLLC, and Law Office of Xenos Yuen, P.C. then began representing Law in the underlying and malpractice suits. Gerson filed a counterclaim against Law alleging his claims were frivolous in violation of Chapter 9 of the Texas Civil Practice and Remedies Code. The trial court granted a no-evidence summary judgment in favor of Gerson on all of Law’s claims. Then, after a bench trial on Gerson’s counterclaim for sanctions, the court orally announced its finding that Gerson incurred attorney’s fees in defending against Law’s frivolous claims. Gerson follow up with a written motion requesting sanctions against Law and Appellants under Texas Rule of Civil Procedure 13, Chapters 9 and 10 of the Texas Civil Practice and Remedies Code, and section 17.50(c) of the Texas Business and Commerce Code (a section of the Texas DTPA). After a hearing scheduled on the motion, where Law and Appellants did not appear, the trial court admitted evidence and several days later signed a final judgment that Law take nothing on his suit, determining that Appellants brought a groundless lawsuit in violation of Rule 13, Chapters 9 and 10, and section 17.50(c), and awarding Gerson $16,675 in attorney’s fees against Law and $25,000 against Appellants. Appellants filed a motion for new trial, alleging they did not receive notice of the sanctions hearing, which was denied without a hearing.
Only the Appellants appealed, Law did not. Neither Yuen nor his law firms signed the frivolous pleadings. The issue was whether there was legally sufficient evidence to support a finding that Appellants signed the objectionable pleadings. Yuen did not sign the challenged pleadings. Yuen’s name was on the pleadings, but they were signed by associate attorneys at Yuen’s law firms. Rule 13 and Chapters 9 and 10 provide for sanctions against the signatory of a groundless pleading. The express language of Rule 13 limits sanctions for groundless pleadings to the attorney who actually signed the pleadings and a represented party. Because the language in sections 9.012 and 10.004 is substantially similar to the language of Rule 13, the court concluded that under Rule 13, the same is true. Therefore, the court concluded that the evidence was legally insufficient to support sanctions against Yuen under Rule 13 and sections 9.012 and 10.004 because he did not sign the objectionable pleadings and was not a party to the pleadings. For the same reasons, the court held the evidence was legally insufficient to support sanctions against Yuen’s law firms because the objectionable pleadings were not signed on behalf of either firm. Thus, the appellate court held that the evidence was legally insufficient to support sanctions against the law firms. Also, the court explained that only licensed persons, not entities such as law firms, may practice law.
On this latter point, the Fourteenth Court of Appeals diverges from the First Court of Appeals. The First Court has held that law firms are sanctionable under sections 9.012 and 10.004. The Fourteenth Court concluded that the trial court erred by awarding Gerson a $25,000 sanction against Appellants under Rule 13 or Chapter 9 or 10. With respect to the award of attorney’s fees under section 17.50(c), the court reversed that award as well, holding that the trial court lacked jurisdiction over Appellants because a pre-appearance default judgment was effectively taken against them on a third-party claim.