HBA Appellate Practice Section
February 19, 2009
SELECTED CASE SUMMARIES
January 16, 2009 – February 18, 2009
Elizabeth A. Holman
Law Clerk, Texas First Court of Appeals
SUPREME COURT OF TEXAS
Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., No. 06-0867 (February 13, 2009) (Justice Willett).
Significance: The eight-corners rule can limit, as well as trigger, an insurer’s duty to defend.
Holding: When the pleadings in an underlying lawsuit fail to allege facts that would trigger an insurer’s duty to defend, an insured may not establish the insurer’s duty to defend by introducing extrinsic evidence.
Relevant Facts: Great American issued general liability policies to Pine Oak, a homebuilder. The policies contained a coverage exclusion for property damage occurring after Pine Oak completes construction. However, they did provide coverage for damage caused by Pine Oak’s subcontractors. When a homeowner sued Pine Oak, Great American refused to defend Pine Oak because the pleadings in the underlying lawsuit did not allege that faulty work was performed by its subcontractors. Pine Oak sued Great American and submitted evidence that it was subcontractors that performed the defective work alleged in the underlying lawsuit. The trial court granted summary judgment in Great American’s favor, and the court of appeals and supreme court both affirmed. The supreme court reasoning that the eight-corners rule restricts a court’s examination to the insurance policy and the pleadings in the underlying lawsuit. The court concluded that the distinction between attempting to introduce extrinsic evidence to limit an insurer’s duty to defend and to trigger an insurer’s duty to defend is legally insignificant.
In re Labatt Food Serv., L.P., No. 07-0419, 2009 WL 353524 (Tex. Feb. 13, 2009) (Justice Johnson).
Significance: Because a wrongful-death beneficiary’s claims are derivative, the beneficiary must arbitrate wrongful-death claims against a decedent’s employer when the agreement between the decedent and the employer contains an arbitration provision.
Holding: The arbitration provision in an agreement between a decedent and his employer required the employee’s wrongful death beneficiaries to arbitrate their wrongful-death claims against the employer even though they did not sign the agreement.
Facts: To participate in Labatt’s occupational injury plan, the decedent Carlos Dancy, Jr. signed an agreement stating that he elected to be covered “individually and on behalf of heirs and beneficiaries.” The agreement also contained an arbitration clause requiring that disputes related to the agreement, plan, or occupational injury/death be submitted to binding arbitration under the Federal Arbitration Act. While on the job, Dancy had an asthma attack and died. Dancy’s parents and children filed a wrongful-death suit against Labatt, and Labatt moved to compel arbitration. The trial court denied Labatt’s motion, and the court of appeals denied mandamus relief. The Texas Supreme Court conditionally granted Labatt’s petition for writ of mandamus and directed the trial court to compel arbitration. The court reasoned that Dancy would have been compelled to arbitrate his own claims, so his beneficiaries suing on his behalf were likewise compelled to arbitrate.
FIRST COURT OF APPEALS
Stanford Dev. Corp. v. Stanford Condo. Owners Ass’n, No. 01-08-00240-CV (January 29, 2009, no pet. h.) (Chief Justice Radack).
Significance: An association bringing suit on behalf of members is bound to arbitrate if its members agreed to arbitration.
Holding: When an association files suit based on terms in its members’ individual contracts that contain arbitration agreements, the association is equitably estopped from denying the applicability of the arbitration agreements.
Facts: A condo association sued the condo developer for construction defects. The suit was brought on behalf of thirty-seven members, twenty-seven of whom had signed (or subsequently purchased from members who had signed) earnest money contracts containing arbitration agreements. The developer moved to compel arbitration, but the trial court denied that motion, concluding that the association was not bound by the arbitration agreements in its members’ contracts. On interlocutory appeal, the court of appeals reversed and remanded, explaining that the association was bound to arbitrate the dispute because it stepped into the shoes of its members when it sued on their behalf. Additionally, because the arbitration agreements created rights independent of the conveyance, the subsequent deeds did not extinguish the arbitration agreements in the earnest money contracts.
Lincoln v. Clark Freight Lines, Inc., No. 01-06-01177-CV, 2009 WL 350563 (Tex. App.—Houston [1st Dist.] Feb. 12, 2009, no pet. h.) (Justice Keyes).
Significance: To satisfy Daubert, a car tested for purposes of accident reconstruction does not have to be identical to the car involved in an accident.
Holding: The expert’s testimony based on testing data from a newer-model Camaro was reliable in a suit involving an older-model Mustang with tires similar to the Camaro because the expert explained that the only relevant factor was whether the cars had similar tires.
Facts: Brian Gregory, Jr. was killed when the fifteen-year-old Mustang that he was riding in collided with a tractor-trailer owned by Clark Freight Lines. His mother, Kimble Lynette Lincoln, sued Clark Freight Lines and filed a Daubert motion to prevent Harris County’s expert accident reconstructionist from testifying. Lincoln asserted that the accident reconstruction was unreliable because it was based on a coefficient of friction calculated by testing a two-year-old Camaro. Lincoln stated that the engine, type of transmission, braking system, weight, age, horsepower, and suspension system in the Camaro were all different from those in the Mustang. At the Daubert hearing, the expert acknowledged those differences, but explained that they do not affect the coefficient of friction; only similarity in type and hardness of tire affect the coefficient of friction, and the Camaro and Mustang had similar tires. The trial court ruled that the expert could testify. The jury found that the Mustang driver’s negligence was the sole proximate cause of the accident. The court of appeals affirmed, reasoning that the expert’s testimony was reliable because he acknowledged the differences between the Mustang involved in the accident and the Camaro used for testing, and then gave the jury reasons why these differences did not affect his accident reconstruction.
FOURTEENTH COURT OF APPEALS
Galveston Indep. Sch. Dist. v. Jaco, No. 14-08-00271-CV (January 20, 2009, no pet. h.) (Justice Guzman).
Significance: A challenge to an element of a claim under the Texas Whistleblower’s Act does not affect the trial court’s subject-matter jurisdiction.
Holding: A public employer’s waiver of immunity to suit under the Texas Whistleblower’s Act is unconditional. To invoke the trial court’s subject-matter jurisdiction, a public employee need only allege a violation of and seek relief under the Act.
Facts: Jaco, the director of athletics and extracurricular activities for Galveston ISD, learned that a high school student was playing football in violation of a UIL rule. With GISD’s approval, Jaco reported the violation to the UIL. Jaco was thereafter reassigned to the position of athletic director and eventually offered a term contract as a teacher. Jaco sued GISD, alleging violations under the Texas Whistleblower’s Act. GISD filed a plea to the jurisdiction, asserting that GISD’s actions do not constitute an adverse employment act, the UIL rule is not a law, and the UIL is not “an appropriate law enforcement authority” as used in Texas Government Code section 554.002(a). The trial court denied the plea, and the court of appeals affirmed. The court explained that unlike the Texas Tort Claims Act, under which a challenge to an element of the claim is also a challenge to subject-matter jurisdiction, the Texas Whistleblower’s Act does not hinge subject-matter jurisdiction on liability.
Speedy Stop Food Stores, Ltd. v. Reid Rd. Mun. Util. Dist., No. 14-07-00225, 2009 WL 237265 (Tex. App.—Houston [14th Dist.] Feb. 3, 2009, no pet. h.) (Justice Frost).
Significance: The “property owner rule” applies to corporate property owners.
Holding: A corporate property owner or its representative who is familiar with the market value of the property may testify about that market value even if not qualified as an expert witness.
Facts: Reid Road Municipal Utility District (the “District”) initiated a condemnation action to acquire approximately 1/20 of an acre of land owned by Speedy Stop. The trial court appointed three special commissioners to assess damages. At the hearing convened by the commissioners, a state-certified appraiser estimated damages of $9342. Speedy Stop timely filed objections to the commissioners’ finding on the amount of compensation to be awarded to Speedy Stop, among other things. The District filed a motion for summary judgment asserting that there was no evidence of just compensation to be paid to Speedy Stop for the taking of the easement and requesting judgment for Speedy Stop in the amount of $1 nominal damages. Speedy Stop responded by offering, on behalf of the owner, the affidavit of its vice president and general partner, who was in charge of all real estate acquisitions for Speedy Stop. The affidavit demonstrated that the vice president was familiar with the market value of the property, which he testified dropped $62,000 in value after the condemnation. The District objected to the affidavit on the grounds that Speedy Stop did not designate the vice president as an expert and that he was not an expert in real-estate appraisal. The trial court granted the District’s motion to exclude the affidavit and granted summary judgment in favor of the District. In a majority opinion, the court of appeals reversed and remanded, concluding that corporate owners who are familiar with the market value of their property are no less reliable than individual owners. Among other things, the dissenting opinion, written by Justice Seymore, points out that the property-owner rule exclusively allows the testimony of property owners, and the vice president of Speedy Stop was not the property owner.