When a document is deemed “filed”: The mailbox rule applies when documents are addressed to the clerk’s physical location, even if the clerk has a different official mailing address.
Desai v. Chambers County Appraisal District, No. 14-11-00956-CV (Tex. App.—Houston [14th Dist.] Aug. 7, 2012); Ybarra v. Chambers County Appraisal District, No. 14-11-00957-CV (Tex. App.—Houston [14th Dist.] Aug. 7, 2012)
Issue: Does the mailbox rule apply to documents mailed for filing to the district clerk’s physical address rather than to the mailing address?
Relevant Facts: Appellants Victor P. and Bonnie K. Ybarra and appellants Pratap and Jaya Desai (collectively, “Appellants”) sued to challenge property appraisals made by the Chambers County Appraisal District (“CCAD”). Appellants were represented by the same trial counsel, who mailed each petition to the physical address of the district clerk’s office. Unbeknownst to counsel, however, the district clerk had a different mailing address, a post office box in the local post office, which was located across the street from the building housing the district clerk’s office. Both the mailing address and the physical address were listed on the district clerk’s website. The petitions were returned unopened by the United States Postal Service, marked “Returned to Sender.” Appellant’s counsel subsequently filed the petitions electronically. Counsel for CCAD filed pleas to the jurisdiction in Appellants’ cases, arguing that the suit was barred under Ch. 42 of the Texas Tax Code, because it was not filed within the required 60 days after Appellants had received a Notice of Final Order from CCAD, informing them of its decisions as to their properties, thus depriving the court of jurisdiction to review the CCAD decisions. Appellants argued that their electronic filing, which all parties agreed had taken place two days after the expiration of the 60-day deadline, nonetheless was timely under TEX. R. CIV. P. 5 because it had been sent to the district clerk’s physical address, bore proper postage, and the district clerk actually received the petitions less than ten days later. CCAD argued that the petitions had not been “properly addressed” as required by Rule 5, since it established that the physical address was not one to which the USPS delivered mail. The trial court granted CCAD’s pleas, and dismissed both suits.
Outcome/Holding: The Court held that, because the evidence established that Appellants’ petitions were addressed to a location where the district clerk was located and where the district clerk did in fact receive documents for filing by means other than mail (e.g., by courier), Appellants had established a prima facie case that the petitions had been mailed to a proper court address. Noting that the outcome would be different if the petitions had been addressed to a location that did not exist or where the district clerk was not located, the Court held that Appellants’ petitions were timely under the mailbox rule, and reversed the trial court.
No-damages-for-delay clauses, the scope of releases, and the recoverability of attorneys’ fees in disputes regarding pubic construction projects.
Port of Houston Authority v. Zachry Construction Corp., No. 14-10-00708-CV (Tex. App.—Houston [14th Dist.] Aug. 9, 2012)
Issues: (a) Did a “no-damages-for-delay” clause prohibit the contractor’s recovery of delay damages where the delay was caused by the owner’s substantial revision of designs and specifications for the construction project? (b) Did a document entitled “Affidavit and Partial Release of Lien” that did not contain the word “release” in the body of the document bar the contractor’s claim for improper withholding of liquidated damages by the owner? And (c) Was the owner entitled to attorneys’ fees and was $10,580,250 a reasonable fee for successfully defending the claim for breach of contract brought against the owner? (Another issue discussed by the Court of Appeals is not addressed.)
Relevant Facts: Appellant Port of Houston Authority of Harris County, Texas (the “Port”) contracted with Appellee Zachry Construction Corporation (“Zachry”) to build a wharf at the Bayport Ship Channel. As bid, the contract called for the building of the wharf “in the dry” by using a U-shaped, frozen earthen wall to seal out water from Galveston Bay from the construction site. The evidence showed that this method of construction would have the advantage of consuming fewer emissions credits than other methods. The contract permitted Zachry to control the means and methods of construction, but (a) imposed a strict timeline, requiring completion of the wharf in under two years (b) provided the Port with the right to submit a “revise and resubmit” response if it had concerns about Zachry’s designs. The contract also contained a “no-damages-for-delay” clause which provided that the contractor would receive no financial compensation for delay or hindrance of the work, regardless of cause and whether due “IN WHOLE OR IN PART TO THE NEGLIGENCE, BREACH OF CONTRACT OR OTHER FAULT OF THE PORT AUTHORITY.”
In March 2005, the Port decided to extend the original dimensions of the wharf by 332 feet. Zachry submitted proposals for the extension in April, May and June of 2005. On September 9, 2005, Zachry submitted its frozen cut-off wall design to the Port; under the “revise and resubmit” clause of the contract, the Port required Zachry to either provide the Port with an alternate cut-off wall design or to present it with an alternate means of mitigating risk to the drilled shafts supporting the wharf project.
Ultimately, Zachry was unable to comply within the contractual timeframe, which the Port refused to extend. Zachry felt compelled to abandon its original design, switching to an alternate, more costly design. In May 2006, the Port began withholding liquidated damages from payments on Zachry’s monthly invoices. The withheld liquidated damages eventually reached approximately $2.36 million.
In 2006, while the wharf was still under construction, Zachry sued the Port for breach of contract, seeking to recover (a) the difference between the cost of the project as constructed and the cost if Zachry had been allowed to complete the wharf “in the dry”; (b) the withheld liquidated damages, and (c) for additional amounts withheld by the Port as an offset for alleged defective dredging. The Port counterclaimed, seeking to recover attorneys’ fees under section 3.10 of the contract, which provided that Zachry would be liable for attorneys’ fees if it sued the Port and did not prevail. After a three-month trial, the jury found that the Port had breached the contract; it awarded Zachry almost $23,500,000 in damages for the breach. The parties agreed that all of Zachry’s damages for that breach were due to delay or hindrance. The jury found reasonable attorneys’ fees for the Port in the aggregate amount of $10,580,250.00 through trial, plus prospective fees for appeal. The trial court entered judgment in favor of Zachry, and did not award attorneys’ fees to the Port. Both sides appealed.
Of note here, the Port claimed that a no-damages-for-delay clause in the parties’ contract prohibited Zachry from recovering damages attributable to delay because the contract unambiguously stated that Zachry was not entitled to delay damages even if caused by the Port’s negligence, breach, or other fault. The Port also claimed that Zachry released any claim to recover a majority of the liquidated damages the Port withheld. Finally, the Port claimed that it was entitled to recover its attorneys’ fees.
Outcome/Holding: The Court reversed and rendered judgment in favor of the Port. It held that the contract’s “no-damages-for-delay” clause barred Zachry’s recovery of damages, as the clause specifically referenced fault of the Port in its exclusionary language. The court also held that Zachry had released its claim concerning the withheld liquidated damages, because it had executed the Affidavit and Partial Release of Lien, which, irrespective of its title, contained broad-form release language pertaining to any claims for payment for work completed. Finally the court held that the port was entitled to its reasonable and necessary attorneys’ fees in fending off Zachry’s claim for more than $23,000,000 and found that evidence in the record supported a finding that $10,580,250 was a reasonable and necessary fee, although the evidence also would have supported a lower fee.
Non-parties need not verify: Tex. R. Civ. P. 185 does not require that a person who is not a party to a sworn account file a verified denial.
Tandan v. Affordable Power, L.P., No. 14-11-00373-CV (Tex. App.—Houston [14th Dist.] Aug. 9, 2012)
Issues: (a) Can a party raise “subject matter jurisdiction” for the first time on appeal where the contract at issue named a different, albeit similarly named, entity from the plaintiff? (b) Is a defendant who was not a party to a sworn account required to file a verified denial under TEX. R. CIV. P. 185 if he is sued on a sworn account? (c) Was the evidence legally and factually sufficient to support the trial court’s finding that a defendant who did not execute a contract was liable for breaching the contract? and (d) Was the evidence was legally and factually sufficient to support the trial court’s finding that a defendant who did not execute a contract could still be held liable for misrepresenting his and his boss’s ability to enter into the contract?
Relevant Facts: Appellee Affordable Power, L.P. (Affordable Power), an electricity reseller, sued appellant Dilip Tandan and Matthew Vere for a sworn account, fraud, and breach of contract in connection with a contract between Affordable Power and Cross Media Fort Worth, LLC (Cross Media). The evidence at trial established that Cross Media had been organized to facilitate the creation of a regional printing company, in which Vere would be a co-venturer. Without authority to do so, Vere executed a contract on behalf of Cross Media to be supplied with electrical power by Affordable Power. In the written contract Affordable Power was listed as “Affordable Power Plan,” not “Affordable Power, L.P.” Tandan, comptroller for Vere’s company, faxed the contract to Affordable Power after its execution; his name appeared on the fax cover sheet, but not on the contract or on any of the invoices Affordable Power submitted. Likewise, no one at Affordable Power spoke with Tandan.
Affordable Power subsequently sued. The trial court granted a motion for directed verdict on the sworn account, as Tandan had filed only a general denial. After a bench trial, the trial court signed a final judgment in favor of Affordable Power on its breach of contract and fraud claims against Tandan and Vere. Tandan appealed. On appeal, Tandan asserted for the first time that the trial court lacked subject matter jurisdiction because Affordable Power was not the party-in-interest, as the contract listed “Affordable Power Plan.” He also claimed that he did not have to file a verified denial since he did not execute the contract.
Outcome/Holding: The Court held that Tandan had waived his argument regarding the nomenclature of the party on the contract, because it related to capacity, not to standing, and was therefore waived if not asserted below. Moreover, the Court concluded that the nomenclature argument did not deprive Affordable Power of standing, as it could be an aggrieved party without being correctly named in the contract. The Court sustained Tandan’s point of error regarding the directed verdict on the sworn account, holding that Tandan was not required to file a verified denial under Tex. R. Civ. P. 185 because he was a stranger to the transaction giving rise to the account. The Court likewise sustained Tandan’s point regarding the breach of contract claim, as there was no evidence that he was a party to, and therefore obligated upon, the contract at issue. But the Court overruled Tandan’s point regarding the fraud claim, finding that the evidence was legally and factually sufficient to support the trial court’s finding that Tandan had misrepresented his and Vere’s ability to contract on behalf of CM-Fort Worth, and the record contained evidence of Affordable Power’s resulting damages.
You have to be in the game before you can complain about changes to the rules: The enactment of a new ordinance is not a compensable taking if you have not taken a financial risk in reliance upon the old regime.
City of Houston v. Trail Enterprises, Inc., Nos. 14-10-00944-CV and 14-11-00417-CV (Tex. App.—Houston [14th Dist.] Aug. 9, 2012)
Issue: Does the enactment of an ordinance prohibiting the drilling of new oil and gas wells in the vicinity of Lake Houston constitute a compensable taking of the appellees’ mineral rights in property?
Relevant Facts: In 1967, the City of Houston (the “City”) enacted an ordinance restricting the drilling of new oil and gas wells in the “control area” surrounding Lake Houston. The purpose of the ordinance was to protect Lake Houston as a source of public drinking water. The ordinance initially prevented new drilling on property in the control area, regardless of whether it was within the City’s boundaries or merely within its extraterritorial jurisdiction (“ETJ”). In 1967, the interests owned by appellees were within the ETJ. In 1977, the “control area” was redefined so that it would not apply to areas within the City limits. In 1996, the appellees’ property was annexed into the City, effectively ending the prior restriction on new drilling thereon. But in 1997, the City revised its ordinance yet again, restoring the original 1967 definition of the “control area.” It was undisputed that no new wells were drilled on the Appellees’ property during the 11 month period between the annexation and the enactment of the 1997 ordinance. Appellees filed an inverse condemnation action. After substantial litigation at the trial and appellate levels, the jury found that the ordinance was a compensable taking and the trial court entered judgment in favor of the appellees. The City appealed.
Outcome/Holding: The Court applied the three-part analysis formulated by the United States Supreme Court in Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978), as adopted by the Texas Supreme Court in Sheffield Development Co. v. City of Glenn Heights, 140 S.W.3d 660 (Tex.2004), to hold that the 1997 ordinance was not a compensable taking because (a) the character of the governmental action, the protection of the public water supply, was an important governmental interest; (b) there was no evidence that the ordinance interfered with reasonable and distinct investment-backed expectations by the appellees because the appellees had acquired the property when the original 1967 restrictions were in effect and they had failed to demonstrate that they had taken some financial risk based upon the temporary relief of those restrictions; and (c) the economic impact of the ordinance, while fairly significant, was not sufficient to offset the other factors, particularly as it did not prohibit the maintenance of existing wells on the property, only the drilling of new ones.
Jurisdictional issues: (a) the modified time limit on plenary power to reinstate under Tex. R. Civ. P. 306a, and (b) the effect of the Texas Manufactured Housing Act on non-warranty DTPA and fraud claims.
United Residential Properties, L.P. v. Theis, No. 14-11-00330-CV (Tex. App.—Houston [14th Dist.] Aug. 21, 2012)
Issues: (a) Did the trial court have jurisdiction to reinstate more than 30 days after dismissal pursuant to a motion under Tex. R. Civ. P. 306a? (b) Does the Texas Manufactured Housing Standards Act (TMHSA), Tex. Occ. Code Ann. Ch. 1201 (Vernon 2012), require a homeowner to exhaust all administrative remedies before the Texas Manufactured Housing Board before bringing suit on non-warranty Deceptive Trade Practices Act (DTPA) and fraud claims? and (c) Was the evidence legally and factually sufficient to support the trial court’s finding of agency as to a salesman who gave the plaintiffs a card implying that he was an employee of a real estate company?
Relevant Facts: Appellees Tom and Dwana Theis purchased a manufactured home from appellee United Residential Properties, L.P. (“URP”). The evidence showed that the prior owner of the home had vacated the home and allowed it to be foreclosed because it was mold-infested and was making her and her daughter ill. The evidence showed that the prior owner had spoken with a man named Todd McCarty, who held himself out to be the employee of URP, and had told him about the mold infestation, whereupon he had told her to keep it quiet. The evidence further showed that, when they responded to an ad in the newspaper for the sale of the home, appellees met with McCarty, who gave them a business card that contained the phrase “United Residential Properties, Todd McCarty” and represented that there was nothing wrong with the home. After they purchased the home, appellees communicated with the prior owner to make arrangements to move the manufactured home, whereupon she informed them of the mold infestation. After discovering the mold, appellees filed suit. Appellees’ suit was initially dismissed for want of prosecution on October 30, 2006. On November 30, 2006, appellees filed a verified motion to reinstate, which was received on December 4, 2006. The trial court granted the motion to reinstate on December 29, 2006. On March 18, 2011, after a bench trial, the trial court found that appellants were liable for fraud, false and misleading representations under the DTPA and unconscionable conduct under the DTPA. URP and the other appellants filed a plea to the jurisdiction and alternative motion for new trial on April 12, 2011, in which they asserted that the trial court had lost jurisdiction in 2006 because of the delay in filing the motion to reinstate. Appellees filed a motion to extend post-judgment deadlines under Tex. R. Civ. P. 306a(4)-(5). The trial court denied appellants’ plea to the jurisdiction on May 27, 2011, and they appealed.
Outcome/Holding: The Court overruled appellants’ first two points of error, but sustained the third. The Court reasoned that the motion to reinstate was timely because the evidence proffered in appellees’ Rule 306a motion established that the date on which appellees obtained notice of the dismissal order was November 30, 2006, and the motion to reinstate was therefore filed within the trial court’s plenary jurisdiction, as measured from the date determined under Rule 306a(4). The Court also determined that nothing in the TMHSA conferred primary jurisdiction upon any administrative agency over the fraud and DTPA claims asserted by appellees. However, the Court concluded that there was no evidence of agency, either actual or apparent, as there were no statements, actions or omissions made by URP directed to either McCarty or appellees indicating that McCarty was URP’s employee or agent and had authority to make the representations about the property on URP’s behalf. The Court therefore reversed and rendered judgment in favor of appellants.
If it happened in a hospital, you’d better have an expert: The scope of “health care liability claims” under Chapter 54 of the Civil Practice and Remedies Code.
Memorial Hermann Hospital System v. Kerrigan, No. 14-11-00880-CV and 14-11-00890-CV (Tex. App.—Houston [14th Dist.] Aug. 28, 2012)
Issue: The issue presented in this appeal was the scope of a “health care liability claim,” as defined by Tex. Civ. Prac. & Rem. Code § 74.001(a)(13).
Relevant Facts: Appellee Spence Kerrigan (“Kerrigan”) brought his daughter, Kathleen, to an emergency room at a hospital operated by Memorial Hermann Hospital System d/b/a Memorial Hermann Memorial City Hospital (“MHHS”), seeking treatment of painful foot sores. The initial evaluation performed by the attending physician revealed that Kathleen had been previously diagnosed with bipolar disorder, but had recently ceased taking her medication. Kathleen has spent the preceding several days relentlessly pacing throughout her home, leading to the foot sores. The attending diagnosed Kathleen as suffering from acute psychosis and mania related to her bipolar disorder, and requested a consult from a member of the hospital’s psyche-response team, who confirmed the diagnosis. The psyche-response physician noted that Kathleen was experiencing auditory and visual hallucinations and was a danger to herself and others, and recommended that she be transferred to an inpatient psychiatric facility until her mental status stabilized. Kathleen was to stay at the hospital until she could be transferred to the inpatient facility the following day.
During the night, Kathleen became increasingly restless and agitated, and sought to leave the hospital. Seeking help in restraining Kathleen, the treating physician summoned help from hospital security personnel. A security officer intervened, and assisted in restraining Kathleen. There were conflicting versions of what Kathleen did next and the responding behavior of the security officer, but it was undisputed that she fell to the ground in the course of being restrained. Kathleen was transferred to the inpatient facility the next day without further incident.
Kerrigan, individually and as attorney in fact for his daughter, subsequently filed suit against MHHS, alleging claims for false imprisonment, assault and negligence. MHHS moved to dismiss all claims under CPRC section 74.351, due to Kerrigan’s failure to provide an expert report within the timeframe required under the statute. The trial court granted the motion to dismiss as to the negligence claim, but denied it as to the false imprisonment and assault claims. MHHS appealed, and Kerrigan cross-appealed.
Outcome/Holding: The court of appeals held that all of Kerrigan’s claims fell within the definition of “health care liability claims” under Tex. Civ. Prac. & Rem. Code § 74.001(a)(13), and therefore affirmed in part (as to the trial court’s granting of the motion to dismiss negligence claim), reversed in part (as to the trial court’s failure to dismiss the false imprisonment and assault claims), and remanded for further proceedings. The court reasoned that, because all of the actions complained of were taken after Kathleen had been medically determined to be a danger to herself and to others, and were taken in order to preserve the attending physician’s medical care plan for Kathleen, i.e., her transfer to an inpatient psychiatric facility, the claims related to her diagnosis, care and treatment, and were therefore “health care liability claims.” As such they were subject to the expert report requirements imposed by Tex. Civ. Prac. & Rem. Code ch. 54, and dismissal of Kerrigan’s claims was required upon his failure to comply with those requirements.
Timely and competent summary judgment evidence: The affidavit of a minor child is not automatically barred either by the affiant’s age or the failure of a party to file it in accordance with a standing e-filing order.
Pipkin v. Kroger Texas L.P., No. 14-11-00755-CV (Tex. App.—Houston [14th Dist.] Sept. 6, 2012)
Issues: This was a premises liability case involving a “slip and fall” accident at a Kroger store. The issues presented on appeal were (1) whether the trial court’s standing order requiring electronic filing was contrary to the Texas Rules of Civil Procedure and the Harris County District Courts Local Rules, and (2) whether the evidence presented by the appellant was sufficient to raise a fact issue and preclude the summary judgment granted in the trial court.
Relevant Facts: On January 10, 2009, Bayon Shea Pipkin (“Shea”) and his minor son, Roman, were shopping at a Kroger store when Shea slipped and fell on a floor that had recently been cleaned to remove spilled ice. Shea subsequently sued Kroger for premises liability, alleging that he had suffered a broken hip, requiring surgery, as well as injuries to his neck, shoulder, leg, and spine. Shea subsequently dies of unrelated causes and his father, Roy Pipkin, continued to pursue the claims as executor of Shea’s estate (the “Estate”).
Kroger filed a no-evidence motion for summary judgment, arguing that there was no evidence of (1) an unreasonably dangerous condition, (2) Kroger’s actual or constructive notice of the condition, or (3) Kroger’s failure to reduce or eliminate the risk created by the cleaning. Kroger also filed a traditional motion for summary judgment, in which it argued that it had warned of the potential risk by placing a caution sign where anyone could see it, and rendered the condition safe by cleaning the floor. Kroger’s traditional motion attached the affidavit of Hamid Said, the employee who performed the cleaning, who attested to having cleaned the area to remove a few pieces of ice that had fallen and having placed a caution sign at the location of the spill.
On April 4, 2011, the Estate filed a response to the no-evidence motion, arguing that the motion was premature due to inadequate time for discovery, and that the evidence showed the existence of genuine fact issues. Attached to the response was a copy of Said’s affidavit, as well as the affidavit of Roy Pipkin. A few days later, Kroger filed a reply, objecting to Pipkin’s affidavit and pointing out that the response failed to address the traditional motion.
On May 6, 2011, the Estate filed a response to Kroger’s no-evidence and traditional motions, attaching a copy of the first page of Kroger’s Customer Incident Report, as well as the affidavits of Said and Roy Pipkin. Kroger objected to this response as it was not filed at least seven days prior to the hearing on the motions (May 11, 2011), and leave to late file had neither been sought nor given.
At the May 11 hearing, the trial court pointed out that the Dead Man Rule would require the Estate to adduce additional evidence that the condition was unsafe and that the deceased lacked adequate warning of the condition. The Estate’s attorney requested additional time to obtain an affidavit from Roman Pipkin, who was present at the time of the incident. The trial court indicated on the record that it would hold its ruling in abeyance for one week, during which time it would consider any supplemental evidence provided by the Estate.
On May 16, 2011, the Estate filed a second amended response to both summary judgment motions, attaching, in addition to the previously filed evidence, the affidavit of Roman Pipkin, as well as a complete copy of the Customer Incident Report. Roman’s affidavit attested that he had been present at the time of his father’s fall, that there was water on the floor, and that there was no caution “wet floor sign” displayed at the location of the incident. Though the second amended response was file-stamped on May 16th by the district clerk, the clerk subsequently returned it to the Estate’s attorney because it was not electronically filed pursuant to the trial court’s standing order requiring all documents to be electronically filed.
On May 18, 2011, Kroger filed objections to Roman’s affidavit, on the grounds that he lacked personal knowledge, that his affidavit made impermissible factual and legal conclusions, and that, as a minor, he was incompetent to provide an affidavit. Kroger also complained that the Estate had still failed to file a motion for leave and had not obtained written permission to late file the affidavit.
On June 15, 2011, the trial court granted Kroger’s motion for summary judgment, without specifying whether it was on no-evidence or traditional grounds. On June 28, 2011, the Estate electronically filed its second amended response. On July 12, 2011, the Estate filed a motion for reconsideration and/or new trial, based upon clerical errors having led to its failure to supplement the record. One of the Estate’s attorneys asserted that he had been unaware of the trial court’s standing order and did not learn of it until he first learned on June 22, 2011 that the second amended response had been returned and the summary judgment granted. The trial court subsequently denied the motion for reconsideration and/or new trial, on the ground that Roman’s affidavit was neither timely filed nor competent. The Estate appealed.
Outcome/Holding: The court of appeals reversed and remanded, holding that Roman’s affidavit was timely filed and that it was competent summary judgment evidence. Pursuant to Tex. R. Civ. P. 3a, no local rule or order may be applied to determine the merits of any matter, unless it complies with the Texas Rules of Civil procedure and is approved by the Supreme Court of Texas. The court reasoned that the trial court’s standing order was contrary to the uniform Texas rules and case law holding that a document is deemed filed when it is left with the clerk, and, therefore, the standing order could not be applied with outcome-determinative effect. Roman’s affidavit was therefore timely filed. Considering the affidavit, the court agreed with Kroger’s argument that statements in Roman’s affidavit concerning the “prudent” behavior of Shea were impermissible legal conclusions, but the court held that the remainder of Roman’s affidavit was competent evidence because (a) Tex. R. Evid. 601 only bars testimony from minor children where, after examination by the trial court (which had not occurred), it appears that the child lacks sufficient intellect to testify; (b) Roman’s affidavit, though it did not expressly attest to his having personal knowledge, nonetheless attested to sufficient facts to show his possession of personal knowledge of the matters attested to; and (c) Roman’s factual statements concerning the absence of a warning sign and the presence of water on the floor were not conclusory and were subject to rebuttal. Based on these holdings, the court determined that the evidence before the trial court precluded summary judgment.
How to turn an easy win into an incurable loss: The failure to put on evidence regarding the commercial reasonableness of the sale of collateral will not only preclude entry of a deficiency judgment but will also make remand unavailable on appeal.
Foley v. Capital One Bank, No. 14-11-00998-CV (Tex. App.—Houston [14th Dist.] Sept. 6, 2012)
Issues: This is an appeal from a deficiency judgment following the repossession of a motor vehicle. The issues presented were (a) whether Capital One Bank (“Capital One”) had the burden to prove the commercial reasonableness of its sale of a vehicle that it had repossessed from Foley, and (b) whether the trial judge erred in rendering judgment for Capital One in the absence of legally sufficient evidence thereof.
Relevant Facts: In 2006, Foley executed a motor vehicle sales installment contract with Capital One for the purchase of a Chevrolet Silverado Truck (the “Truck”). Thereafter, Foley defaulted on the loan and Capital One repossessed and sold the Truck. In 2011, Capital One sued Foley, seeking judgment for the remaining balance of the loan. In its pleading, Capital One asserted that “all conditions precedent to Plaintiff’s right of recovery have been fulfilled.” Capital One filed a business records affidavit indicating that the Truck was sold sometime between December 26, 2009 and February 16, 2010. In her answer, Foley plead that Capital One failed to dispose of the Truck in a commercially reasonable manner.
At bench trial, no testimony was presented regarding the commercial reasonableness of the sale, and Foley moved for a take-nothing judgment. The trial court, however, awarded judgment in favor of Capital One, noting that the only testimony presented was in the form of Capital One’s business records affidavit. Foley requested findings of fact and conclusions of law, and, though Capital One submitted proposed findings, neither party requested a finding on commercial reasonableness. The trial court signed Capital One’s proposed findings and Foley appealed.
Outcome/Holding: The court of appeals reversed and rendered, holding that, although Capital One had initially met its burden by pleading that all conditions precedent had been met, Foley’s specific denial of the commercial reasonableness of the sale of the Truck placed the burden on Capital One to adduce legally sufficient evidence of its reasonableness. Although neither party requested a finding as to commercial reasonableness, the court held that the absence of evidence before the trial court concerning how the Truck was sold precluded either an actual or a presumed finding that the sale was commercially reasonable, and the evidence was therefore legally insufficient to support the judgment. Moreover, because the evidence regarding commercial reasonableness was legally insufficient, the court held that Capital One was not entitled to remand.
Workers’ compensation coverage for injuries sustained during a lunch break.
Texas Mutual Insurance Company v. Jerrols, No. 14-11-00131-CV (Tex. App.—Houston [14th Dist.] Sept. 6, 2012), and Williams v. Texas Mutual Insurance Company, No. 14-11-00496-CV (Tex. App.—Houston [14th Dist.] Sept. 6, 2012) (consolidated)
Issue: Whether Jerrols, Williams and Luna were injured in the course and scope of their employment when they sustained serious injuries in a traffic accident that occurred while they were returning to work after eating lunch.
Relevant Facts: Jerrols, Williams and Luna (collectively, the “Crew”) lived in the Houston area and worked for Midwestern Services, Inc. (“Midwestern”) as part of a crew cleaning above-ground oil storage tanks. Midwestern provides cleaning services for crude oil tank farms in thirteen states.
In Fall 2008, Midwestern sent the Crew to work at a tank farm outside of Jal, New Mexico, near the Texas-New Mexico border. The job was expected to last between three and six months, during which the workers were expected to work approximately 50 days on the job, return to Houston for approximately four days, and then return to complete the job. Midwestern provided a Midwestern-owned crew cab truck driven by a Midwestern employee to transport its employees, which the Crew was required to use while working in New Mexico. The Crew were not permitted to bring personal vehicles, but were allowed to use the company truck in the evenings and on Sundays for personal errands.
The Crew were allowed one hour for lunch, and ate lunch each day at the Town & Country, a retail location that included a gas station, a convenience store and a restaurant, which was located about two miles from the tank farm. In addition to eating lunch, the Crew would use their lunch hour to make personal calls, converse, and purchase snacks and drinks for later consumption. There was testimony that the Crew were required to eat lunch away from the tank farm, due to the presence of hazardous substances on the work site, though there was also testimony that Midwestern allowed the Crew to eat lunch in the truck, or at locations other than the Town & Country. There was also testimony that the topic of the Crew’s lunchtime conversations frequently related to safety, task coordination and scheduling related to the job. On October 22, 2008, while returning to the tank farm from the Town & Country, an 18-wheel tractor-trailer collided with the Midwestern truck, which was carrying the Crew and was driven by a Midwestern employee, causing the Crew’s injuries.
A hearing officer for the Division of Workers’ Compensation concluded that the Crew were on a “special mission” at the time of the accident, and were therefore injured during the course and scope of their employment. An appeals panel affirmed that decision, and Midwestern’s workers’ compensation insurer, Texas Mutual Insurance Company (“Texas Mutual”), filed multiple suits seeking judicial review of the administrative compensability determination. In conflicting summary judgments, the 333rd District Court determined that Williams and Luna were not in the course and scope of their employment at the time of the accident, while the 129th District Court determined that Jerrols was. Williams, Luna and Texas mutual appealed, and those appeals were subsequently consolidated.
Outcome/Holding: The court reversed both summary judgments and remanded, concluding that fact issues existed that precluded summary judgment either for or against either Texas Mutual or the Crew. The court held that, although the evidence (e.g., the foreign location and the fact that the injuries occurred while the Crew were using the mode of transportation dictated by Midwestern) showed that the lunchtime travel was in furtherance of and originated with the Crew’s work for Midwestern, fact issues existed concerning whether the travel in connection with the Crew’s lunch break “would have been made even had there been no personal or private affairs of the employee to be furthered by the travel” and “would not have been made had there been no affairs or business of the employer to be furthered by the travel,” as required in order for it to fall under the exception to the “dual purpose rule” excluding activities from being within the course and scope of employment, as codified under Tex. Lab. Code § 401.011(12)(B).
Can a defendant challenge a plaintiff’s capacity or standing to bring suit in a no-evidence motion for summary judgment?
Green Tree Financing, LLC v. Woods, —S.W.3d—, 2012 Tex. App. LEXIS 6563, (Tex. App.—Houston [1st Dist.] Aug. 9, 2012, no pet. h.)
Issue: The court examined whether a trial court can properly grant a no-evidence motion for summary judgment raising a challenge to capacity or standing.
Relevant Facts: Defendant Ralph Woods executed a manufactured home installment contract with the manufacturer of his home. The contract immediately assigned the manufacturer’s interest in the contract to Green Tree. Green Tree subsequently assigned the interest in the contract to another entity. Green Tree remained the servicer of the contract, and as such was responsible to manage, administer, and make collections on the contract. When Woods allegedly defaulted on his payment obligations, Green Tree brought suit seeking to collect the amount due and repossess the home. Woods responded by arguing that Green Tree lacked the ability to recover in the capacity in which it sued. Woods filed a no-evidence summary judgment alleging that Green Tree could not prove that it had the standing or capacity to the Woods and his wife, and the trial court granted the motion for summary judgment.
Outcome/Holding: The court of appeals began by quickly dismissing the Woods’ challenge to Green Tree’s capacity. The court first distinguished between capacity and standing, stating that “[a] plaintiff has standing when it is personally aggrieved, regardless of whether it is acting with legal authority; a party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy.” The court held that Green Tree had capacity to sue as a servicer of the contract; therefore, the Woods’ claim of lack of capacity could not have been a basis to support the summary judgment.
The court next addressed the issue of standing. Noting that standing is a component of subject-matter jurisdiction, the court indicated that a challenge to standing is typically raised via a plea to the jurisdiction. When a plea to the jurisdiction challenges the facts pled in a petition, the courts construe those facts liberally in favor of the plaintiff. If the pleading does not contain sufficient facts to affirmatively demonstrate the trial court’s jurisdiction, the plaintiff must be offered an opportunity to amend. If, however, the pleadings affirmatively negate the existence of jurisdiction, the court may dismiss the case without prejudice without offering an opportunity to amend.
The procedure for a plea to the jurisdiction mirrors that of a traditional motion for summary judgment. Thus, Texas courts permit standing to be challenged via a traditional motion for summary judgment. However, the same procedural protections do not exist with a no-evidence motion for summary judgment. First, a no-evidence motion for summary judgment allows a case to be dismissed without reference to the plaintiff’s pleadings—unlike a plea to the jurisdiction, the pleadings are not reviewed liberally in favor of the plaintiff, and the ruling may be made without any reference to the pleadings at all, as pleadings generally do not constitute summary judgment evidence.
Second, unlike a plea to the jurisdiction or traditional motion for summary judgment, which would permit dismissal of a case only where it is established, as a matter of law, that a plaintiff lacks standing, permitting a standing challenge via a no-evidence motion for summary judgment would have the effect of depriving the trial court of jurisdiction not when it is affirmatively disproved, but rather when it is uncertain. In other words, the burden shifts to the plaintiff to affirmatively establish the existence of standing, whereas the burden in a plea to the jurisdiction lies with the defendant to affirmatively negate standing. Moreover, with a no-evidence motion for summary judgment, a plaintiff is not offered the opportunity to re-plead, and the grant of summary judgment is with prejudice.
Based on all these factors, the court held that standing cannot be challenged in a no-evidence motion for summary judgment. The court acknowledged that this holding is conflict with several other courts of appeals, but criticized the reasoning of those other courts.
Special Appearance: How long is too long to obtain a ruling?
Trenz v. Peter Paul Petroleum Co., —S.W.3d—, 2012 Tex. App. LEXIS 6572 (Tex. App.—Houston [1st Dist.] Aug. 9, 2012, no pet. h.).
Issue: One of the main issues presented in this case was whether a defendant waived his special appearance by participating in hearings in the case and waiting over six years to obtain a ruling on his special appearance. The court held that the defendant waived his special appearance.
Relevant Facts: James Trenz was a non-resident of Texas sued over his and his company’s involvement in an oilfield services contract. Trenz timely filed a special appearance along with his answer. After specially appearing, Trenz filed a motion to dismiss the claims against him in the case on the grounds of comity, full faith and credit to a foreign judgment, and statute of limitations. Trenz set this hearing for July 29, 2005. Trenz did not indicate that the motion to dismiss was “subject to” his special appearance.
Trenz set the hearing for his special appearance on December 9, 2005. During that hearing, the court indicated that it intended to deny Trenz’s special appearance, but did not rule on the issue at that time. Trenz also set a hearing for a motion for summary judgment that he filed for December 28, 2005. Additionally, Trenz filed a motion to continue Peter Paul’s summary judgment hearing from December 9, 2005, to December 28, 2005. The court held hearing on the motions for summary judgment on December 28, 2005.
The special appearance issue went silent for nearly six years. Finally, in September 2011, Trenz set his special appearance for hearing yet again. The court finally heard the special appearance on January 6, 2012, and denied it. Trenz appealed.
Outcome/Holding: The court noted that Rule 120a of the Texas Rules of Civil Procedure imposes both a due order of pleading and a due order of hearing requirement. Generally, if a defendant sets and obtains a hearing on a motion that seeks affirmative relief on before he obtains a hearing and ruling on his special appearance, the special appearance is waived. Only where a defendant obtains a hearing that only seeks relief appurtenant to his special appearance may the special appearance be preserved. Trenz argued that he filed his special appearance first and filed other motions strictly subject to his special appearance, thereby preserving his objections to personal jurisdiction.
The court held that the hearings Trenz obtained and attended were not appurtenant to his special appearance. By filing his motions for affirmative relief and arguing them at hearings before the court before obtaining a ruling on his special appearance, Trenz violated Rule 120a and waived his challenge to personal jurisdiction.
The intersection of standing and ripeness.
Phan v. Le, —S.W.3d—, 2012 Tex. App. LEXIS 7693 (Tex. App.—Houston [1st Dist.] Aug. 30, 2012, no pet. h.).
Issue: The court considered whether a pro se plaintiff had standing to file a suit for the damages sustained by a non-profit organization of which the plaintiff had been president. The court held that he did have standing, but on an issue raised sua sponte, held that his claim was not yet ripe.
Relevant Facts: The plaintiff was the president of a local association comprised of individuals that fought for South Vietnam during the Vietnam War. The association decided to hold a fundraising event, assigning responsibility for the event to the defendant, Le. The fundraiser ended up being a net loss, and the plaintiff sued the defendant as a result. The defendant filed a motion for summary judgment alleging that the plaintiff did not have standing to file the suit, as he was no longer the president of the association. The plaintiff responded that he was the president at the time of the fundraiser, and was personally liable in that capacity for any losses sustained by the association. He did not claim to be pursuing a claim on behalf of the association. The trial court granted the defendant’s motion for summary judgment.
Outcome/Holding: On appeal, the court first considered the issue of whether the plaintiff had standing. Viewing the evidence in the light most favorable to the plaintiff, the court determined that the plaintiff’s potential liability to the association was sufficient to preclude summary judgment. However, the court did not end its inquiry at that point. Although neither party raised the issue, the court determined that the facts of the case compelled it to examine the issue of ripeness sua sponte. The court noted that, while standing focuses on who may bring the action, ripeness examines when that action may be brought. A case is not ripe when a court must consider contingent or hypothetical facts in determining whether a plaintiff has sustained an injury. In the case before it, the court found it significant that the association had not sought recovery from the plaintiff, even though it theoretically could have. Until the association actually sought recovery from the plaintiff, the court held, the case would not be ripe, as the plaintiff could not actually suffer an injury until that event occurred. Because the evidence showed that the court lacked subject-matter jurisdiction, the court vacated the trial court’s judgment and dismissed the action.
Make your objection, counselor: An overly vague evidentiary objection fails to preserve the issue for review.
Tryco Enters., Inc. v. Robinson, —S.W.3d—, 2012 LEXIS 7810 (Tex. App.—Houston [1st Dist.] Sep. 13, 2012, no pet. h.).
Issue: In this appeal, the court considered, among several other issues, the admissibility of testimony offered in a prior legal proceeding. The court held that trial counsel’s vague hearsay objection was insufficient to preserve any error for review.
Relevant Facts: Robinson, a former van driver for Tryco, filed suit against his former employer under the Fair Labor Standards Act (“FLSA”), alleging that his former employer failed to adequately pay him for work he performed. At trial, Robinson was awarded a judgment against Tryco. Following the judgment, Tryco forfeited its corporate charter. Robinson filed an additional suit against Tryco and the Dixons, alleging that they intentionally defrauded him by divesting Tryco of its assets.
During the FLSA trial, another former Tryco employee, Edison, testified against Tryco. At the time of the second trial, Edison could not be located. Robinson sought to offer his testimony by reading into the record the testimony Robinson gave in the FLSA suit. Tryco objected to the testimony as hearsay, but the trial court permitted it.
Outcome/Holding: On appeal, Tryco contended that the trial court erred by admitting Edison’s testimony from the FLSA suit, as the testimony was allegedly hearsay. However, before the court even reached the issue of whether the prior testimony was hearsay, it held that the issue had not been preserved for review. Texas Rule of Appellate Procedure 33.1 requires that a party wishing to raise an issue on appeal must show that the issue was timely objected to at trial, and that the objection stated the grounds with sufficient specificity to make the trial court aware of the complaint. Further, the record must show that the trial court ruled on the objection.
In addition, the court pointed out that Texas Rule of Evidence 103 also requires a timely objection to preserve error. Thus, to preserve error for appeal, a party must make a specific, timely objection at the earliest possible opportunity. The purpose behind requiring a specific, timely objection is to “allow the trial judge to make an informed ruling and the other party to remedy the defect, if he can.”
In the case before it, Tryco’s counsel made only a general hearsay objection to all of Edison’s testimony from the FLSA suit. Tryco’s counsel did not object with specificity to the testimony, nor did he obtain a definitive ruling. As such, Tryco and the other appellants waived their hearsay objection. Although the court held that the hearsay objection had been waived, it went on to determine that the testimony was not hearsay in the first place.