SELECTED CASE SUMMARIES
November 20, 2008 – January 15, 2009
Presented by: Deterrean Gamble
Briefing Attorney-Texas First Court of Appeals
and Karlene Poll, Baker Botts, L.L.P.
Southwestern Bell Tel. Co. v. Mitchell, No. 05-0171 (December 19, 2008) (Justice Hecht).
Significance: The supreme court expressly overrules Continental Downs and clarifies that any pending claims for worker’s compensation made prior to the Texas Legislature’s amendment of the Labor Code but after the court’s decision in Continental Downs are subject to the Texas Workforce Commission rule giving employers 60 days to contest a claim, rather than the 7 days provided for in Continental Downs.
Holding: In light of the recent amendment to Texas Labor Code § 409.021 making clearer that the Texas Workforce Commission rule that a company has 60 days to contest the compensability of an employee’s injury was the rule the legislature believed should be followed, Continental Downs, which concluded otherwise, is overruled as wrongly decided.
Relevant Facts: Louise Mitchell, a clerk-typist for Southwestern Bell (“Bell”) claimed she contracted Legionnaire’s disease at work. Mitchell filed a worker’s compensation claim on August 23, 2000 and died four days later. Her husband pursued death benefits under the worker’s compensation policy. Bell contested the claim with the Texas Workforce Commission October 23, 2000—43 days after receiving notice of the injury. On June 17, 2002, the supreme court affirmed a lower court opinion in a different case holding that a company had only 7 days to contest compensability. In March 2003, a hearing officer with the Commission concluded that Bell’s challenge to Mitchell’s claim was untimely. Bell filed an administrative appeal. The legislature then amended the Labor Code and clarified that the Workforce Commission’s 60-day rule governs. After this amendment, the Commission nonetheless affirmed the decision of the hearing officer and Bell appealed. Both the district court and San Antonio Court of Appeals held that Bell’s challenge was untimely.
FIRST COURT OF APPEALS
Poland v. Ott , No. 01-07-00199-CV (December 19, 2008) (Justice Taft).
Significance: This case clarifies that a party asserting a health-care liability claim against a physician or health-care facility may not rely on an expert-medical report served presuit to comply with the Texas Civil Practice and Remedies Code requirement that an expert-medical report be served within 120 days after filing suit.
Holding: Presuit service of a medical report does not satisfy the requirements of former Texas Civil Practice and Remedies Code section 74.351. The use of the term “serve” in the statute implicitly incorporates the plain language of Texas Rule of Civil Procedure 21a, which generally concerns postsuit service.
Facts: Decedent Jessie Poland (“Decedent”) bled to death during a surgery to repair a faulty heart valve. Her husband (“Poland”) and children alleged that, at the time the surgery was performed, Decedent’s blood contained a blood thinner that made her surgery dangerous. Poland commissioned an expert-medical report from Dr. Dennis Moritz and sent a copy of the report to the professional-liability carrier of Decedent’s physician, Dr. David Ott, nearly three months before filing suit. Poland and the children then sued several parties, including Ott, and served a copy of the report to Ott 123 days after filing suit. Ott filed a motion to dismiss under Texas Civil Practices and Remedies Code section 74.351(b), which requires that, in a health-care liability case, a trial court must grant a motion to dismiss if the plaintiff fails to serve the expert-medical report to the physician or his attorney within 120 days after filing suit. Poland argued that Ott’s professional-liability carrier was his designated representative, and presuit service of the expert medical report to the carrier satisfied the requirements of the Texas Civil Practice and Remedies Code. The trial court granted Ott’s motion to dismiss.
Hunt Constr. Group, Inc., Desert Plains, Inc., Way Engineering, Ltd., and Way Engineering Serv., Ltd. v. Konecny, No. 01-06-01155-CV (December 4, 2008) (Justice Alcala).
Significance: This case clarifies the meaning of the word “provide” in Texas Labor Code section 406.123, which allows a general contractor to be deemed an employer for purposes of worker’s compensation law. To satisfy the statutory provision to “provide” worker’s compensation insurance, a general contractor is not required to purchase insurance but must merely make the insurance available for subcontractors and their employees.
Holding: The court reverses a jury award on grounds that the plaintiff’s exclusive remedy was his worker’s compensation claim. Plaintiff’s employer was a subcontractor. The court held that, because Hunt as the general contractor provided worker’s compensation insurance within the meaning of Texas Labor Code section 406.123, Hunt was deemed the plaintiff’s employer for purposes of the worker’s compensation bar. The claims against other subcontractors were barred as well.
Facts: Harris County Sports Authority hired Hunt Construction to build the Toyota Center. Hunt subcontracted the ventilation and air conditioning work to Way Engineering Service, Ltd. and contracted the fireproofing work to Desert Plains, Inc. Way in turn subcontracted the sheet metal and duct work of the ventilation system to Superior Air Handling Corporation. Plaintiff Kevin Konecny was a supervisor with Superior. The Sports Authority implemented an owner-controlled insurance program (“OCIP”) to provide worker’s compensation and other liability insurance throughout the Toyota Center project and required all contractors to participate in the program. The Sports Authority financed the OCIP by charging a credit for the cost against the contractor’s price. Hunt made a similar financing agreement in its subcontracts with Way and Superior. Hunt required Desert Plains to purchase worker’s compensation in accordance with the OCIP. Crews from Superior and Desert Plains were working in the same area on May 23, 2003. Desert Plains was spraying fireproofing materials on support beams; Superior was installing air ducts. Konecny fell and injured his back when he slipped on fireproofing materials. Konecny filed a worker’s compensation claim and filed suit against Hunt, Way and Desert Plains. Konecny received over $280,000 in worker’s compensation benefits and a jury award against the companies totaling $180,000. The companies appealed.
Transamerica Occidental Life Insurance Company v. Rapid Settlements, Ltd., No. 01-07-00137-CV (December 18, 2008) (Bland).
Significance: This case clarifies that the insurer or obligor of a structured-settlement payment is an interested party that must be served with written disclosures of all actions involving transfers of the right to receive structured-settlement payments.
Holding: The trial court erred in entering a judgment confirming an arbitration award in the absence of Transamerica Occidental Life Insurance Company and Transamerica Annuity Service Corporation’s (collectively “Transamerica”) agreement to arbitrate. The arbitration clause in the original agreement did not bind Transamerica, and the trial court’s final judgment was not enforceable against Transamerica because it was a nonsignatory and did not have notice of the arbitration agreement, arbitration proceeding, or the trial-court hearing.
Facts: In 1988, Raymond Echols settled a personal injury claim in exchange for the right to receive a structured settlement payment of $100,000 in 2027. Transamerica was the annuity insurer and obligor of the structured settlement. Echols entered an agreement with Rapid Settlements, Ltd. to transfer his right to receive the future structured-settlement payment for an immediate lump-sum payment of $5,000. The agreement between Echols and Rapid contained an arbitration clause, but Transamerica was not a party to the agreement. Echols later attempted to cancel the transfer, and Rapid initiated an arbitration proceeding. Transamerica was not a party to the arbitration proceeding. After receiving an arbitral award in its favor, Rapid filed a petition in Harris County Civil Court to confirm the award. Transamerica was not served with the petition and was not made a party to the action. The trial court confirmed the award, signed the final judgment, and ordered Transamerica to change the name of the designated payee to Rapid Settlements.
FOURTEENTH COURT OF APPEALS
In Re Credit Suisse First Boston Mortgage Capital, L.L.C. and Credit Suisse First Boston, L.L.C., Relators No. 14-08-00819-CV (December 11, 2008)
Significance: This case clarifies that a non-signatory who fails to demonstrate an agency relationship with a signatory cannot enforce a jury waiver provision in an agreement made by the signatory.
Holding: In a case of first impression, the court holds that a valid contractual jury waiver can be invoked by agents of a signatory party. However, the court declined to extend a jury waiver to a party merely alleged to be an agent of a signatory party.
Facts: Credit Suisse First Boston Mortgage Capital (“Mortgage Capital”) and a commercial real estate development partnership (“Developer”) made a loan agreement in which Mortgage Capital agreed to lend Developer in excess of $39 million for a renovation project of a Houston office building. After the agreement was made, Developer needed additional funds because the renovation project was redesigned. Two employees with Credit Suisse First Boston (“CSFB”) allegedly told Developer that Mortgage Capital would lend Developer $6.75 million under the same terms as made under the original loan agreement. Mortgage Capital turned down Developer’s additional loan request. Developer sued both Mortgage Capital and CSFB for common-law fraud and alleged that the two CSFB employees were authorized to commit Mortgage Capital to the additional loan. The original loan agreement contained a jury waiver. CSFB, a non-signatory to the original loan agreement, asked the trial court to extend the jury waiver to CSFB. The court of appeals denied mandamus relief because CSFB never claimed that it was an agent of Mortgage Capital, so it could not rely on Developer’s “agency” allegations to confer the right to invoke the jury waiver.