Reversed and Remanded and Opinion filed July 11, 2013.
In The
Fourteenth Court of Appeals
NO. 14-12-00896-CV
DIRECT COMMERCIAL FUNDING, INC., Appellant
V.
BEACON HILL ESTATES, LLC AND INTESAR HUSAIN ZAIDI, Appellees
On Appeal from the 295th District Court
Harris County, Texas
Trial Court Cause No. 2012-01150
OPINION
In the dispositive issue in this interlocutory appeal, the plaintiff in a
defamation and breach-of-contract suit contends that the trial court erred in
granting the defendants’ motion to dismiss under the Citizens Participation Act six
weeks after the motion was overruled by operation of law. We agree; thus, we
reverse the trial court’s order and remand the case to the trial court.
I. FACTUAL AND PROCEDURAL BACKGROUND
According to the pleadings in this case, appellant Direct Commercial
Funding, Inc. (“Direct”) is a private commercial lender. Appellees Beacon Hill
Estates, LLC and Intesar Husain Zaidi (collectively, “Zaidi”) contacted Direct
about obtaining financing for a construction project. Zaidi signed a hold-harmless
agreement in which he agreed not to defame or slander Direct or its principal
Calvin Blake “in any cyber, private or public forum” if Zaidi’s loan request were
rejected. After Direct denied the loan request, Zaidi posted comments about Direct
and Blake on the internet websites “Ripoffreport.com” and
“complaintsboard.com.”
Direct sued Zaidi for breach of contract and defamation, seeking declaratory
and injunctive relief as well as actual and punitive damages and attorney’s fees.
Zaidi responded to the suit by filing a pleading that combined his answer with
counterclaims, a third-party complaint against Blake, and pursuant to the Citizens
Participation Act, a motion to dismiss Direct’s claims. The motion to dismiss was
heard by submission on June 25, 2012.1 The Citizens Participation Act (“the Act”)
1
In the prayer for relief of Zaidi’s answer/counterclaims/third-party complaint/motion to
dismiss, Zaidi asked “[t]hat the Court set this matter for a hearing within 30 days, as provided by
the Anti-SLAPP statute and that upon hearing, the Court grant this motion and dismiss [Direct’s]
claims against Zaidi with prejudice in their entirety, [and] award Zaidi . . . reasonable costs and
attorney’s fees . . . .” The statement in Zaidi’s prayer did not comply with local rules for setting
a motion for hearing by submission or for setting a motion for oral hearing. See CIVIL TRIAL
DIV., HARRIS CNTY. (TEX.) DIST. CT. LOC. R. 3.3.3 (“Motions may be heard by written
submission. Motions shall state Monday at 8:00 a.m. as the date for written submission. This
date shall be at least 10 days from filing, except on leave of court.”) (emphasis added); id., Rule
3.3.4 (“Settings for oral hearings should be requested from the court clerk.”). Because Direct
does not complain on appeal that Zaidi’s ineffective “prayer” for a hearing did not comply with
the trial court’s local rules, we do not address the effect under the Act of a movant’s failure to
take the steps actually required to set the motion to dismiss for a timely hearing. On June 13,
2012, Zaidi filed a notice of submission setting the motion to be heard without oral argument at
8:00 a.m. on June 25, 2012. We take judicial notice that June 25, 2012 was a Monday; thus, this
subsequent request complied with local rules.
2
provides that if a trial court does not rule on a motion to dismiss under the Act
within 30 days after the hearing, then the motion is overruled by operation of law.
It is undisputed that the trial court did not rule on the motion within that time;
however, 72 days after the hearing, the trial court signed an order in which it
granted Zaidi’s motion to dismiss Direct’s claims, held Direct liable for Zaidi’s
costs and attorney’s fees incurred in responding to Direct’s suit, and directed Zaidi
to file an affidavit to substantiate these amounts.
Direct timely filed a notice of interlocutory appeal. We overruled Zaidi’s
motion to dismiss the appeal,2 and now address the merits of Direct’s appellate
complaint.
II. ISSUES PRESENTED
In its first issue, Direct argues that Zaidi’s motion to dismiss was overruled
by operation of law 30 days after it was served, and thus, the trial court erred in
granting the motion to dismiss 72 days after the motion was served. Direct argues
in its second issue that the trial court erred in granting the motion to dismiss
because (a) Zaidi did not set the motion for hearing within 30 days after it was
filed, (b) Zaidi failed to present the trial court with sufficient evidence to establish
that he could prevail on a First-Amendment defense, and (c) Direct provided
sufficient evidence to defeat the motion. Direct asserts in its third issue that the
Act violates the Texas Constitution’s open-courts provision because it imposes a
heightened evidentiary standard on plaintiffs that, as a matter of law, cannot be
satisfied.
III. STANDARD OF REVIEW
We review questions of statutory construction de novo. Molinet v. Kimbrell,
2
Direct Commercial Funding, Inc. v. Beacon Hill Estates, LLC, No. 14-12-00896-CV,
2013 WL 407029 (Tex. App.—Houston [14th Dist.] Jan. 24, 2013, order).
3
356 S.W.3d 407, 411 (Tex. 2011). Our purpose in construing a statute is to
determine and give effect to the legislature’s intent. Id. Because the text’s plain
meaning is the best expression of that intent, we will construe the text in
accordance with its plain meaning unless doing so would lead to absurd or
nonsensical results, or the context makes it apparent that the legislature intended
some other meaning. Id.
IV. ANALYSIS
The Texas legislature enacted the Citizens Participation Act “to encourage
and safeguard the constitutional rights of persons to petition, speak freely,
associate freely, and otherwise participate in government to the maximum extent
permitted by law and, at the same time, protect the rights of a person to file
meritorious lawsuits for demonstrable injury.” TEX. CIV. PRAC. & REM. CODE
ANN. § 27.002 (West Supp. 2012). To achieve these ends, the legislature provided
that if a legal action is brought in response to a person’s exercise of certain
constitutional rights, that person may move to dismiss the action. Id. § 27.003(a).
The movant bears the initial burden to show by a preponderance of the evidence
that the action “is based on, relates to, or is in response to the party’s exercise” of
certain rights, including the right of free speech. Id. § 27.005(b). If the movant
satisfies this burden, then the trial court must dismiss the legal action unless the
party who brought the action “establishes by clear and specific evidence a prima
facie case for each essential element of the claim in question.” Id. § 27.005(c).
The legislature included several specific deadlines in the Act, and although
the legislature authorized the trial court to extend the deadlines for filing and
hearing a motion to dismiss, it did not authorize the trial court to extend the time in
which the court is permitted to rule on the motion. To illustrate, the first deadline
in the Act concerns the time during which a party may move to dismiss the action.
4
A motion to dismiss under the Act “must be filed” within 60 days after service of
the legal action, but upon a showing of good cause, the trial court may extend the
time to file the motion. Id. § 27.003(b). The second deadline concerns the date of
the hearing. A hearing on the motion “must be set” within 30 days after the motion
was served “unless the docket conditions of the court require a later hearing.” Id.
§ 27.004. In contrast to these provisions, the next deadline is mandatory: “The
court must rule on a motion [to dismiss] not later than the 30th day following the
date on the hearing on the motion.” Id. § 27.005(a). The legislature gave the trial
court no discretion to extend this deadline, but instead provided that if the trial
court does not rule on the motion within 30 days after the hearing, then the motion
is overruled by operation of law. Id. § 27.008(a).3
Here, the trial court signed an order granting Zaidi’s motion to dismiss six
weeks after the motion was overruled by operation of law. We agree with Direct
that the trial court erred in granting the motion more than 30 days after it was
heard. The Act contains no provision authorizing such an action, nor can the
authority to do so be implied.
The entire Act is directed toward the expeditious dismissal and appeal of
suits that are brought to punish or prevent the exercise of certain constitutional
rights. The distinction drawn by the legislature between extendable deadlines and
firm deadlines—and more particularly, the mandatory deadline that applies to the
trial court’s authority to rule on a motion to dismiss—would be meaningless if the
trial court, acting sua sponte, could reverse the consequences imposed by statute
3
For the sake of completeness, we note two additional deadlines. The ruling on the
motion, whether expressly made by the trial court or by operation of law, may be challenged by
an appeal or other writ filed within 60 days of the ruling. Id. § 27.008(c). Direct’s appeal was
timely. The Act also contains a deadline that applies if certain statutory findings are requested.
See id. § 27.007. Findings were requested, but were not made in this case; however, neither
party complains of the trial court’s failure to issue findings.
5
for the failure to timely act. See Avila v. Larrea, 394 S.W.3d 646, 656 (Tex.
App.—Dallas 2012, pet. filed) (holding that a motion to dismiss under the Act was
overruled by operation of law 30 days after the hearing on the motion because no
provision in the Act permits the extension of this mandatory deadline).
Zaidi contends that the trial court properly could grant the motion to dismiss
even after it was overruled by operation of law because a trial court that has
plenary power over the case can always set aside an interlocutory order. In support
of this argument, Zaidi cites Fruehauf Corp. v. Carrillo, 848 S.W.2d 83, 84 (Tex.
1993) (per curiam). The issue presented in Fruehauf was whether a trial court that
had expressly granted a motion for new trial could set aside the order and overrule
the motion on the 75th day after judgment. Id. at 84. The court quoted the
subsection of Texas Rule of Civil Procedure 329b in which it is stated that a
motion for new trial is overruled by operation of law on the “expiration” of the
75th day after the judgment. Id. (citing TEX. R. CIV. P. 329b(c)). At the time the
trial court made the challenged ruling in Fruehauf, the time in which the trial court
was permitted to rule had not yet expired, and the motion had not been overruled
by operation of law. The opposite is true here. Moreover, Rule 329b contains an
additional provision specifically empowering the trial court “to grant a new trial or
to vacate, modify, correct, or reform the judgment until thirty days after all such
timely-filed motions are overruled, either by a written and signed order or by
operation of law, whichever occurs first.” TEX. R. CIV. P. 329b(e) (emphasis
added). See also TEX. R. CIV. P. 165a(3) (similarly providing that if a case is
dismissed for want of prosecution and the trial court does not rule on a motion to
reinstate within the prescribed time, then the motion is overruled by operation of
law, but authorizing the trial court to reinstate the case within 30 days after the
motion to reinstate is overruled, regardless of whether the motion was overruled
6
expressly or by operation of law). Unlike these procedural rules, the Citizens
Participation Act contains no analogous provision empowering the trial court to
grant a motion to dismiss after it has been overruled by operation of law.
In sum, the plain text of the Citizens Participation Act provides a limited
authorization for a party to seek, and a trial court to grant, dismissal of a legal
action that was brought in response to the party’s exercise of the right of free
speech. Because a trial court is not authorized to grant a motion to dismiss under
the Act more than 30 days after the hearing on the motion, the trial court erred in
signing such an order here. We therefore sustain Direct’s first issue. In light of
our disposition of this issue, Direct’s remaining issues are moot.4
V. CONCLUSION
Because Zaidi’s motion to dismiss was overruled by operation of law, we
reverse the trial court’s subsequent order purporting to grant the motion, and we
remand the case for further proceedings not inconsistent with this opinion.
/s/ Tracy Christopher
Justice
Panel consists of Justices Brown, Christopher, and McCally.
4
Because Zaidi neither timely filed a cross-appeal nor raised any cross-points to argue
that the trial court erred in allowing the motion to dismiss to be overruled by operation of law,
that question is not presented for our review.
7