Petition for Writ of Mandamus Denied and Memorandum Opinion filed January 26, 2004.
In The
Fourteenth Court of Appeals
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NO. 14-03-00712-CV
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IN RE GRANT THORNTON, L.L.P., Relator
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ORIGINAL PROCEEDING
WRIT OF MANDAMUS
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M E M O R A N D U M O P I N I O N
On June 26, 2003, relator filed a petition for writ of mandamus in this Court. See Tex. Gov’t. Code Ann. § 22.221 (Vernon Supp. 2000); see also Tex. R. App. P. 52. Relator requests this Court to compel the judge of the 280th Judicial District Court of Harris County to set aside an order signed March 26, 2003 striking third parties from this action. We deny relator’s petition for writ of mandamus for the reasons discussed below.
Procedural History
The mandamus petition arises from a suit for accounting misrepresentation against relator. The plaintiffs, Blitz Holdings Corp. and GCM Corp., are financial service companies for investors. They are also judgment creditors of insolvent IFS Financial Corporation for a debt exceeding $130 million. Generally, they contend that relator, IFS’s auditor, approved financial statements that greatly overstated the assets and net worth of IFS enabling that company to “perpetuate a false appearance of solvency;” they claim relator was negligent in failing to identify and report fraudulent activity.
In March 2003, the primary parties in this suit were plaintiffs, relator, Deloitte & Touche, Chamberlain, Hrdlicka. There were also third parties purportedly joined by relator as well as third parties joined by Deloitte & Touche. At a hearing regarding joinder of third parties, the trial judge signed an order reconfirming joinder of six responsible third parties[1] and struck all others previously added by relator and/or Deloitte & Touche. In this March 26, 2003 order, the trial court did not state the bases for the ruling; however, in its May 21, 2003 order denying the defendants’ motions for reconsideration, the trial court stated that it rejected relator’s interpretation of section 33.011 of the Texas Civil Practices and Remedies Code.
Relator neither filed nor served any third party petitions. The trial court’s original orders, purporting to join responsible third parties identified by relator, contain the following language: “The Responsible Third Parties are not joined herein as plaintiffs, defendants, or third party defendants under Texas Rule of Civil Procedure 38.” Each order contains the following recitation: “Defendants are not required to serve . . . with citation or file a third-party complaint, since defendants are not seeking affirmative relief or any judgment against the Responsible Third Parties at this time.”
Standard of Review
Mandamus is an extraordinary remedy available only in limited circumstances to correct a clear abuse of discretion or the violation of a duty imposed by law when the relator has no adequate remedy by appeal. Republican Party of Texas v. Dietz, 940 S.W.2d 86, 88 (Tex. 1997); Walker v. Packer, 827 S.W.2d 833, 839–44 (Tex. 1992). A clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion justifying mandamus relief. Walker v. Packer, 827 S.W.2d at 840.
Analysis
The express language of the Proportionate Responsibility Statute in effect for this case requires that responsible third parties be joined in the lawsuit, not simply named or designated.[2] Under Section 33.003, only four categories of persons may be included in the proportionate responsibility jury question: (1) each claimant, (2) each defendant, (3) each settling party and (4) each responsible third party who has been joined under Section 33.004, which is entitled, “Joinder of Responsible Third Parties.” Tex. Civ. Prac. & Rem. Code Ann. § 33.004 (Vernon 1997) (emphasis supplied). Section 33.004, subsection (b) provides: “[n]othing in this section shall affect the third-party practice as previously recognized in the rules and statutes of this state with regard to the assertion by a defendant of rights to contribution or indemnity.” Tex. Civ. Prac. & Rem. Code Ann. § 33.004(b)(Vernon 1997). Sub-sections 33.004(d) and (e) also use the word “join” and discuss filing a third party claim to bring responsible third parties into a lawsuit. Tex. Civ. Prac. & Rem. Code Ann. § 33.004(d), (e) (Vernon 1997).
Because relator’s designated responsible third parties were never served with a petition and citation, they were not parties to the suit at the time the court purportedly struck them. See Gonzalez v. Gutierrez, 694 S.W.2d 384, 389 (Tex. App.—San Antonio 1985, no writ).
We hold the trial court’s decision to strike purported responsible third parties who were never served with citation is not an abuse of discretion.
Accordingly, we deny relator’s petition for writ of mandamus.
/s/ Charles W. Seymore
Justice
Petition Denied and Memorandum Opinion filed January 26, 2004.
Panel consists of Justices Anderson, Seymore and Guzman.
[1] Specifically, those who were retained as responsible third parties named by relator were Interamericas Corp., Comstar Mortgage Corp., Rudolfo Garcia, Jorge Corona, Jerry Polsgrove, and Gerald Simpson. Jorge Hollander was also permitted to remain a responsible third party relative to Deloitte & Touche.
[2] The procedure erroneously used by relator is permitted generally under amendments to the proportionate responsibility statute applicable to cases filed on or after July 1, 2003, which allow “designation,” not joinder, of responsible third parties. See An Act Relating to Reform of Certain Procedures and Remedies in Civil Actions, 78th Leg., R.S., ch. 204, art. 4, §§ 4.01, 4.02, 4.03, 4.04, 4.05, 2003 Tex. Sess. Law Serv. (Vernon) (codified as amendments to Tex. Civ. Prac. & Rem. Code Ann. §§33.002, 33.003, 33.004, 33.011). See also, Section 23.02 (c) of Acts 2003, 78th Leg., R.S., ch. 204 (“An action filed before July 1, 2003, is governed by the law in effect immediately before the change . . . .”). Because this action was filed before July 1, 2003, relator was required to serve responsible third parties.