ACCEPTED
06-14-00106-CV
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
3/30/2015 10:44:46 AM
DEBBIE AUTREY
CLERK
NO. 06-14-00106-CV
IN THE SIXTH COURT OF APPEALS FILED IN
6th COURT OF APPEALS
TEXARKANA, TEXAS TEXARKANA, TEXAS
3/30/2015 10:44:46 AM
PETER G. MILNE, INDIVIDUALLY, PETER G. MILNE P.C., & HEALY , MILNE
DEBBIE &
AUTREY
Clerk
ASSOCIATES, P.C.
Appellants
v.
VAL RYAN & JOY RYAN
Appellees
Appeal from the 4th Judicial District Court
Rusk County, Texas
REPLY BRIEF FOR APPELLANTS
J. CHAD PARKER
Cparker@theparkerfirm.net
Bar Card No: 15489000
FORREST F. MAYS
Fmays@theparkerfirm.net
Bar Card No: 24072228
THE PARKER FIRM, P.C.
3808 Old Jacksonville Rd.
Tyler, Texas 75701
(903) 595-4541 - telephone
(903) 595-2864 - facsimile
Attorneys for Appellants Peter G. Milne,
Ind., Peter G. Milne, P.C.,
PETER G. MILNE
Pmilne@tylertaxlaw.com
Bar Card No. 24037118
327 W. Houston St.
Tyler, Texas 75702
903-593-9300 - telephone
903-593-9325 - facsimile
Attorneys for Appellant Milne &
Associates, P.C.
i
IDENTITY OF PARTIES AND COUNSEL
Appellants/Defendants
Peter G. Milne, Individually
Peter G. Milne, P.C.
Healy, Milne & Associates, P.C.
Counsel for Appellants
J. CHAD PARKER
Bar Card No: 15489000
FORREST F. MAYS
Bar Card No: 24072228
THE PARKER FIRM, P.C.
3808 Old Jacksonville Rd.
Tyler, Texas 75701
Attorneys for Appellants Peter G. Milne, Ind., & Peter G. Milne, P.C.,
PETER G. MILNE
Bar Card No. 24037118
327 W. Houston St.
Tyler, Texas 75702
Attorneys for Appellant Healy, Milne & Associates, P.C.
Appellees/Plaintiff
Val Ryan
Joy Ryan
Counsel for Appellees
James A. Holmes
State Bar No. 00784290
212 South Marshall
Henderson, Texas 75654
ii
John R. Mercy
State Bar No. 13947200
1724 Galleria Oaks Drive
Texarkana, Texas 75503
Attorneys for Appellees Val & Joy Ryan
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL .................................................................. ii-iii
INDEX OF AUTHORITIES ....................................................................................... iv-v
REPLY TO POINTS RAISED IN APPELLEES’ BRIEF ..............................................
I. The Appellants have standing to appeal portions of class certification order
pertaining to the Hicks’ Defendants because Appellees seek to have
Appellants held vicariously liable for that conduct ..................................1–2
II. Appellees’ argument that class is “present ascertainable” fails to appreciate
differences in how the Injunction treats services rendered by the Hicks’
Defendants alone versus those rendered in conjunction with a licensed
attorney and how this dooms the trial court’s class definition..................3
III. Appellees’ argument that Hicks’ Defendants conduct was unconscionable as
a matter of law relies on inapposite case law and statutes and eschews the
rigorous analysis required for class certification
................................................................................................................... 3–5
IV. Appellees’ argument in support of typicality ignores vital differences
between experiences of proposed class members and relies on same failed
reasoning that dooms the class definition ................................................ 5–6
V. Appellees’ argument that the money damages sought flow directly from the
requested declaration ignores a vital prong of the inquiry and is merely used
to shoehorn a damages claim into a claim for declaratory relief.............. 7–9
CONCLUSION AND PRAYER ................................................................................9–10
iii
CERTIFICATE OF COMPLIANCE WITH RULE 9.4(E) ................................................. 10
CERTIFICATE OF SERVICE ...................................................................................... 11
INDEX OF AUTHORITIES
Cases
Allison v. Citgo Petroleum Corp.,
151 S.W.3d 402 (5th Cir. 1998) ................................................................7
Bailey v. Kemper Casualty Ins. Co.,
83 S.W.3d 840 (Tex. App. – Texarkana 2002, pet dism’d w.o.j) ............6
Bhatia v. Piedrahita,
756 F.3d 211, 218 (2d Cir. 2014) .............................................................2
Bolin v. Sears, Roebuck & Co.,
231 F.3d 970 (5th Cir. 2000) .................................................................7, 8
Bratcher v. Monumental Life Ins. Co.,
365 F.3d 408 (5th Cir. 2004) ................................................................... 7
Builders Transp., Inc. v. Grice-Smith,
167 S.W.3d 18 (Tex. App. – Waco 2005, pet. denied) ............................ 2
Ex parte Elliot,
815 S.W.2d 251 (Tex.1993) ..................................................................... 1
In re Turner Bros. Trucking Co.,
8 S.W.3d 370 (Tex. App. – Texarkana 1999, no pet.) ............................. 4
Ski River Dev., Inc. v. McCalla,
167 S.W.3d 121 (Tex. App. – Waco 2005, pet. denied) .......................... 4
Sonat Exploration Co. v. Cudd Pressure Control, Inc.,
271 S.W.3d 228 (Tex.2008) ..................................................................... 1
iv
Turner, Collie & Braden, Inc. v. Brookhollow, Inc.,
642 S.W.2d 160 (Tex.1982) ....................................................................... 2
Statutes
Tex. Bus. & Com. Code § 2.302(a) ...................................................................... 4
Tex. Bus. & Com. Code Ann. § 17.45(5) (Vernon Supp.1998) ....................4, 8, 9
Rules
Tex. R. Civ. P. 42 .................................................................................................. 7
Fed. R. Civ. P. 23 .............................................................................................. 7, 8
v.
REPLY TO POINTS RAISED IN APPELLEES’ BRIEF
I. The Appellants have standing to appeal portions of class certification
order pertaining to the Hicks’ Defendants because Appellees seek to
have Appellants held vicariously liable for that conduct
Appellees cited to several cases for the proposition that Appellants’ do not
have standing to appeal certain portions of the district court’s class certification order
because those portions of the order do not “injuriously affect” Appellants. See Brief
of Appellees at pp. 9–12. However, only one of those cases dealt with the issue in the
context of a class certification order with that case being clearly distinguishable.
Moreover, the general rule that “appealing parties may not complain of errors that do
not injuriously affect them or that merely affect the rights of others” has been held not
to apply where the rights of the “appealing and nonappealing parties ‘are so
interwoven and dependent on each other as to require a reversal of the entire
judgment.’ ” Sonat Exploration Co. v. Cudd Pressure Control, Inc., 271 S.W.3d 228,
236–37 (Tex.2008) (quoting Ex parte Elliot, 815 S.W.2d 251, 251 (Tex.1993) (per
curiam)). In this case, Appellees seek to have Appellants held liable under theories
of partnership liability, joint enterprise liability, and civil conspiracy, for the conduct
alleged to be unconscionable and in breach of the Hicks’ Defendants fiduciary duty
to the proposed Class. 1CR:144–161; 1CR:165–167; 1CR:263–264; 1CR:316–320.
Courts have held that reversal of judgment is proper even where one defendant did
not appeal and other defendant did appeal when issue of vicarious liability is at play.
Page 1
See Builders Transp., Inc. v. Grice-Smith, 167 S.W.3d 18, 20 (Tex. App. – Waco
2005, pet. denied)(holding that claims against employee and employer based upon
vicarious liability are significantly interwoven such that employee’s failure to appeal
did not prevent reversal of entire judgment)(citing Turner, Collie & Braden, Inc. v.
Brookhollow, Inc., 642 S.W.2d 160, 166 (Tex.1982)).
The Bhatia case cited by Appellees is inapposite to the facts of this case and
not controlling. In that case, the court held to the general rule that a non-settling
defendant generally lacks standing to object to a court order approving a partial
settlement because a non-settling defendant is ordinarily not affected by such a
settlement. See Bhatia v. Piedrahita, 756 F.3d 211, 218 (2d Cir. 2014). The instant
case does not involve settling and non-settling defendants in the class context. As
such, the general rule for standing enunciated by the Texas Supreme Court should
control the Court’s disposition of the standing issue. Clearly, Appellants are
prejudiced and injuriously affected by the district court’s Certification Order by virtue
of the vicarious liability theories certified that make the rights of the Appellants and
Hicks Defendants so interwoven and dependent on each other that Appellants’
justiciable interests are clearly implicated by the portions of the Certification Order
that certify claims against the Hicks’ Defendants directly.
Page 2
II. Appellees’ argument that class is “present ascertainable” fails to
appreciate differences in how the Injunction treats services rendered by
the Hicks’ Defendants alone versus those rendered in conjunction with a
licensed attorney and how this dooms the trial court’s class definition
Appellees’ own Statement of Facts contains the relevant text necessary to
address this point and even emphasizes the text that renders the district court’s
Certification Order erroneous. See Appellees’ Brief at 1–2. The Hicks’ Defendants
are enjoined from performing those services listed as a-l unless certain conditions are
complied with by the Hicks’ Defendants. See id. at 1. Because a significant portion
of the proposed class constitute persons for whom the Hicks Defendants’ performed
services in conjunction with a licensed attorney, they are not presently ascertainable
without a determination on the merits. Not only that, but there are other
determinations that must be made on the merits before the class is clearly
ascertainable. Those determinations have already been spelled out in Appellants’
Brief. See Brief of Appellants at p. 8.
III. Appellees’ argument that Hicks’ Defendants conduct was unconscionable
as a matter of law relies on inapposite case law and statutes and eschews
the rigorous analysis required for class certification
Appellees cite to various cases and other portions of the Texas Business &
Commerce Code for the proposition that unconscionability is frequently determined
as a matter of law and that such a determination is appropriate to this case. Appellees’
suggested approach essentially renders the commonality inquiry unimportant
depending upon the particular factual circumstance faced by the certifying court.
Page 3
Appellees cite to case law and statutes that do not apply to the claims being made by
Appellees and seek to circumvent the rigorous analysis required of the district court
instead advocating the “certify now, worry later” approach rejected by the Texas
Supreme Court.
Appellees cite to cases involving written contracts on which the “ultimate issue
of unconscionability of a contract is one of law to be decided by the courts”, Ski River
Dev., Inc. v. McCalla, 167 S.W.3d 121, 136 (Tex. App. – Waco 2005, pet.
denied)(determining unconscionability of written lease); In re Turner Bros. Trucking
Co., 8 S.W.3d 370, 375 (Tex. App. – Texarkana 1999, no pet.)(determining
unconscionability of arbitration agreement with employee). They also cite to Tex.
Bus. & Com. Code § 2.302(a) to support their claim that unconscionability is
appropriately resolved as a matter of law. However, Appellees have not brought their
unconscionability claims under a contract theory of recovery but under Tex. Bus. &
Com. Code § 17.45(5) for which “unconscionable action or course of action” is
specifically defined. The specific elements underlying that claim necessarily require
particularized inquiries into whether the Hicks’ Defendants conduct took advantage
of the proposed Class members “lack of knowledge, ability, experience, or capacity
of the consumer to a grossly unfair degree.” Moreover, Tex. Bus. & Com. Code §
2.302(a) applies to contracts involving the sale of goods which are not involved here
and do not involve the precise definition for unconsionability assigned to § 17.45(5).
Page 4
Appellees are seeking to morph their unconscionability claims into another cause of
action or theory where unconscionability is measured as a matter of law by the courts
so as to circumvent the commonality requirement required to properly certify a class.
This is improper. The commonality requirement has not been met and certification of
the unconscionability cause of action was error.
IV. Appellees’ argument in support of typicality ignores vital differences
between experiences of proposed class members and relies on the same
failed reasoning that dooms the class definition
Appellees insist that Hicks’ conduct that allegedly violated the Injunction is the
course of conduct that makes Appellees claims typical of the class as a whole.
Appellees seek to point out that the lack of a contract is an insignificant difference
that will not defeat typicality. However, Appellants pointed out the lack of a
“contract” or “letter agreement” as one of the key reasons that differentiated the
experience of certain proposed Class members from Appellees in that the “contract”
or “letter agreement” often, if not every time, specifically delineated the roles that the
Hicks Defendants would have versus those the Appellants would have in the
rendition of services, contained certain disclaimers regarding the Hicks’ Defendants
non-lawyer status and regarding certain commissionable services that they
exclusively provided. The lack of any reference to Appellants in materials recovered
from Hicks’ files pertaining to numerous members of the proposed class also portrays
Page 5
a significant difference from that experienced by Appellees since they testified that
they believed Appellants were involved based upon Hicks’ representations and the
materials he presented to them. Finally, the most glaring difference is between those
proposed Class members that the Hicks Defendants and Appellants dealt with
conjunctively and for whom Hicks believed, at least at one time, he was rendering
services for in compliance with the Injunction. These differences are not trivial and
they are sufficient to defeat typicality.
Appellees argument is also based on the same flawed reasoning that supports
its claim that the class definition is “clearly ascertainable”. They analogize this case
to the Bailey case and assert that Appellees’ claim arise from the same course of
conduct and same legal theories as those of the class as a whole – namely that the
Hicks Defendants provided enjoined services. See Br. of Appellee at 21. Just as with
the “clearly ascertainable” inquiry, Hicks conduct cannot be viewed in a vacuum
when it comes to the typicality analysis. The Appellants involvement in conjunction
with the Hicks Defendants exposes another discrete class whose claims, if any, are
not typical of Appellants.
Page 6
V. Appellees’ argument that the money damages sought flow directly from
the requested declaration ignores a vital prong of the inquiry and is
merely used to shoehorn a damages claim into a claim for declaratory
relief
Appellees’ argument that Rule 42(b)(2) relief is proper in this case relies solely
addresses whether the damages are “incidental” to the claim for declaratory relief.
However, as the case they principally rely upon in support of that argument observes,
“Certification under rule 23(b)(2) is appropriate only if members of the proposed
class would benefit from the injunctive relief they request. The question whether the
proposed class members are properly seeking such relief is antecedent to the question
whether that relief would predominate over money damages.” Bratcher v.
Monumental Life Ins. Co., 365 F.3d 408, 416 (5th Cir. 2004). Here, Appellees skip
this antecedent step and move directly to analyze whether monetary damages flow
from the declaratory relief sought. In Bratcher, the Fifth Circuit described the
approach they took in Bolin to analyze this two-pronged inquiry: “Before applying
the Allison predominance test . . . we observed that ‘[m]ost of the class consists of
individuals who do not face further harm from Sear's [sic ] actions.’ Because only a
negligible proportion of proposed class members were properly seeking injunctive
relief, we held that rule 23(b)(2) certification was inappropriate.” 365 F.3d at
416(quoting Bolin, 231 F.3d 970, 978 (5th Cir. 2000)). In Bolin, the court went on to
state that “Rule 23(b)(2) states that certification is proper for a class seeking ‘final
Page 7
injunctive relief or corresponding declaratory relief.’ Thus, the declaratory relief must
‘as a practical matter afford[ ] injunctive relief or serve[ ] as a basis for later
injunctive relief.’ The extent to which the declaratory relief sought satisfies Rule
23(b)(2) is thus no greater than the extent to which the substantive statutes underlying
the claim for declaratory relief satisfy Rule 23(b)(2).” Bolin, 231 F.3d at 978–79 (5th
Cir. 2000)(emphasis in original).
Appellees fail to meet either one of these requisites. First, the declaratory relief
in and of itself provides nothing to the proposed Class members. As in Bolin, the
declaration that Appellants and the Hicks Defendants are in violation of the
Injunction does not provide any meaningful injunctive or declaratory relief because
there is no showing that class members are in jeopardy of further harm from
Appellants or the Hicks Defendants. Secondly (and subject to the foregoing), there
are no underlying claims upon which monetary relief will automatically flow from the
declaration sought by Appellees.1 By example, Appellees do not seek a “declaration
that Appellants and the Hicks Defendants violated Tex. Bus. & Com. Code §17.45(5)
with respect to the Class as a whole” or a “declaration that Appellants and Hicks
violated a fiduciary duty to the Class as a whole.”
Appellees’ argument that the monetary relief sought by the proposed Class
members will be subject to easy calculation only addresses part of the inquiry and
1
See Brief of Appellant at pp. 16–17.
Page 8
entirely ignores any analysis of the substance of the declaratory relief sought of which
there is none.
CONCLUSION AND PRAYER
Appellants have standing to appeal those portions of the Certification Order
relating to claims against the Hicks Defendants because Appellants’ rights are so
intertwined with the Hicks Defendants by virtue of the theories of vicarious liability
upon which Appellees seek recovery from Appellants that the Certification Order
injuriously affects and prejudices Appellants.
The Certification Order improperly defines the class in that the term “enjoined
services” necessarily requires a determination on the merits before the class is clearly
ascertainable not to mention the issues of whether the Injunction binds Appellants or
is subject to interpretation by the district court, neither issue of which was briefed by
Appellees.
Unconscionability for purposes of this appeal is defined by Tex. Bus. & Com.
Code §17.45(5). Appellees attempt to morph their claims into unconscionability
under a contract theory of recovery to circumvent the commonality requirement for
class certification and pose this as a matter of law for the district court. Individual
inquiries are necessary to satisfy the unique elements of §17.45(5) unconscionability
and an answer to the inquiry as to Appellees does not answer the question for the
Page 9
class as a whole.
Appellees’ claims are not typical of the proposed Class as their experience
varied in significant aspects from proposed Class members. The typicality
requirement has not been met.
Appellees’ claims for declaratory relief do not meet the requisites of Tex. R.
Civ. P. 42(b)(2) because they do not seek any meaningful injunctive or corresponding
declaratory relief. Meeting this requirement is antecedent to the Court’s determination
of whether monetary relief flows directly from the injunctive or corresponding
declaratory relief sought and Appellees have not made this showing. It was error to
certify claims Appellees’ claims declaratory judgment.
CERTIFICATE OF COMPLIANCE WITH RULE 9.4(e)
1. This brief complies with the type-volume limitation of Texas Rule of Appellate
Procedure 9.4(e) and (i)(2)(B) because, according to the Microsoft Word 2010
word count function, it contains a total of 4,896 words on pages 7-17 of the
Appellants Brief and on pages 1-10 of the Appellants Reply Brief, excluding
the parts of the brief exempted by Texas Rule of Appellate Procedure
9.4(e)(i)(1).
2. This brief complies with the typeface requirements of Texas Rule of Appellate
Procedure 9.4(e) because it has been prepared in proportionally spaced
typeface using Microsoft Word 2010 software in Times New Roman 14-point
font in text and Times New Roman 12-point in footnotes.
/s/ J. Chad Parker
J. Chad Parker
Page 10
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the Brief of Appellant PETER G. MILNE,
IND., PETER G. MILNE, P.C. was served by electronic service and/or email to the
following counsel of records on March 30, 2015.
James A. Holmes
Law Office of James Holmes, PC
212 South Marshall
Henderson, TX 75654
Via Email
John R. Mercy
Mercy Carter Tidwell, LLP
1724 Galleria Oaks Drive
Texarkana, Texas 75503
Via Email
Peter G. Milne
Peter G. Milne, PC
327 W Houston
Tyler, TX 75702
Via Email
/s/ J. Chad Parker
J. Chad Parker
Page 11
Peter G. Milne, P.C., Peter G. Milne, Individually, and Healy, Milne & Associates, P.C. v. Val Ryan and Joy Ryan
Combined Opinion