ACCEPTED
01-13-00091-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
2/18/2015 1:13:42 PM
CHRISTOPHER PRINE
CLERK
NO. 0l-13-00091-cv
FILED IN
IN TI{E 1st COURT OF APPEALS
HOUSTON, TEXAS
FIRST COTIRT OF APPEALS 2/18/2015 1:13:42 PM
AT HOUSTON, TEXAS CHRISTOPHER A. PRINE
Clerk
TESCO CORPORATTON (US)
Appellant
V
STEADFAST INSURANCE COMPANY
Appellee
APPEALED FROM TFIE I2TI'JUDICIAL DISTRICT COURT
I{ARRIS COLINTY, TEXAS
TESCO CORPORATION (US)'S MOTION FOR REHEARING
TO TI{E HONORABLE FIRST COURT OF APPEALS:
coMES Now, Appellant TESCO coRpoRATIoN (us) (',Tesco,'), and
files this, its Motion for Rehearing and in support thereof, Tesco would
respectfully show unto the Court as follows:
ARG NT AND AUTH ORITIES
This case originates from cross motions for summary judgment filed in the
Trial Court on whether a general liability policy of insurance issued by Steadfast
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Insurance Company ("Steadfast") covered the punitive damage portion of a
judgment entered against Tesco in a Colorado personal injury lawsuit.
Originally, this Court entered an opinion in this declaratory action holding
that the Trial Court erred in granting summary judgment in favor of Steadfast
Insurance Company ("Steadfast") and against Tesco and remanded this case back
to the Trial Court for further consideration. Subsequently, Steadfast filed a motion
for rehearing asserting that, given the resolution of the underlying personal injury
lawsuit prior to the entry of this Court's opinion in favor of Tesco, this appeal was
moot and that the Court of Appeals lacked jurisdiction to render its original
opinion.
Tesco responded to Steadfast's motion by pointing out to the Court that
Tesco had requested attorney's fees at the trial court and that Tesco had asserted
throughout this appeal fhat, in the event Tesco was successful, the case must be
remanded to the Trial Court for a determination of an award of attorney's fees.
Tesco's response also addressed two additional points: (l) Steadfast's mootness
argument by arguing that this case falls under the collateral consequences
exception to the mootness doctrine; and (2) that, in the event this Court vacates its
opinion, then it must also enter an order that vacates the Trial Court opinion and
judgment.
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This Court issued its Opinion on February 3, 2015 addressing only
Steadfast's mootness argument and Tesco's first point under Section A of its
response-that the appeal is not moot and that the dispute concerning attorney's
fees was preserved as a live controversy. In doing so, this Court relied on Farmers
Tex. Cnty. Mut. Ins. Co. v. Grffin,868 S.w.2d 861,870 (Tex. App.-Dallas 1993,
writ denied) in arriving at the conclusion that there is not a live issue of attomey's
fees keeping this case "alive." For the following reasons, there still remains a case
or controversy between Tesco and Steadfast, and Grffin is factually
distinguishable, and this Court did not address Tesco's two remaining points in
opposing Steadfast' s mootness argument.
A. Grffin is Factuatly Distinguishable And Steadfast Never Objected To
Attorney's Fees At the Trial Court or On Appeat
Grffin is clearly distinguishable. First, in Grffin, Farmers requested that the
Court award it, as a prevailingparty following reversal of the trial court's declaratory
judgment in favor of Griffin, costs and attorneys' fees. Grffin,868 S.W.2d at 870. The
appellate court found that Farmers had not raised the attorneys' fees issue in its pleadings
or motions for summary judgment invoking the attorneys' fees provision under Chapter
37 of the Texas Civil Practice and Remedies Code. Id. Additionally, Farmers had not
presented a point of error attacking the trial court's order denying Farmer's demand
attorneys' fees. Id.
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Here, Tesco filed suit seeking judicial declaration on whether Steadfast had a duty
under the relevant policies to pay the punitive damages award in the phathong
Lawsuit.l Tesco also sought the recovery of reasonable attorneys' fees and costs
pursuant to Section 37.009 as are equitable and just. Tesco's pafüal summary judgment
addressed only the issues that Texas law applied to the policies, that under Texas law,
punitive damages are covered unless excluded, that Steadfast waive its right to assert
non-coverage of the punitive damages and Steadfast is estopped from asserting non-
coverage given its failure to issue a reservation of rights letter on that point until after the
Phathong Verdict was entered. Tesco's motion left for later determination the issue of
attorneys' fees under Section 37.009.
Unlike in Grffin, Tesco did raise in its pleading the issue of attorneys' fees
pursuant to Section 37.009. Further, unlike in Grffin, the issue of attorneys' fees was not
before the Trial Court in Tesco's motion for partial summary judgment. The fact that
Tesco did not raise the issue of attorneys' fees in its motion for partial summary
judgment does not mean that the issue is not "live" or that Tesco is initiating the issue for
the first time on remand.
When the declaratory relief has been determined by summary judgment, the issue
of whether attorney's fees are reasonable and necessary is a question of fact for the jury
to determine when the jury is the trier of fact. City of Garland v. Dallas Morning News,
22 S.W.3d 351,367 (Tex. 2000). Tesco's claim for attorney's fees under Section 37.009
t Von J. Phatong et ux v, Tesco Corporation (US), Case No. I0-CV-00780-MSK-MJW,
in the
United States District Court of Colorado
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remains pending despite the fact that substantive declaratory relief may have purportedly
become moot during the pendency of this appeal. Hansen v. JP Morgan Chase Bank,
N.4.,346 s.w.3d 769,774-75 (Tex. App.-Dallas 2011, no pet.) (,,[A] case under the
Declaratory Judgments Act remains a live controversy, even if all requests for substantive
declaratory relief become moot during the action's pendency, as long as a claim for
attorney's fees under the Act remains pending.") As noted in Tesco's Motion for partial
Summary Judgment, the determination of attorneys' fees was specifically left to be
addressed by the Trial Court following the Appellate Court's reversal of the judgment in
favor of steadfast and the granting ofjudgment in favor of Tesco.
Additionally, Steadfast, in its opposition to Tesco's Motion for Partial Summary
Judgment and Cross-Motion for Summary Judgment, did not address the attorneys' fees
issue. Since attorney's fees under Section 37.009 are not limited to a "prevailing party:'
Steadfast had the opportunity to object in its dispositive motion at the Trial Court level to
any award of attorneys' fees in favor of Tesco. Steadfast did not do so, nor did it move
for such fees in its favor. Although the Trial Court granted Steadfast's Cross-Motion for
Summary Judgment, the issue of attorneys' fees in favor of Tesco pursuant to Section
37 '009 remained alive because the statute does not require a finding that a party prevailed
in the action. Bocquet v. Herring,972 S,w.2d 19,20 (Tex. l99s); See Tpx. Clv. pnnc.
& RsN4. Coos 37.009.
Moreover, having failed to obtain a ruling on attorney's fees-in favor of
Steadfast and/or objecting to such award in favor of Tesco--Steadfast had not preserved
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an objection to attorney's fees pursuant to Rule 33.1 of the Texas Rules of Appellate
Procedure. Tex. R. App. P.33.1(a). "As a general rule, a complaint is preserved for
appellate review only if the record establishes the complaint was made known to the trial
court in a timely manner and the trial court ruled on the complaint." Franco v. Slavonic
MuL Fire Ins. Ass'n, r54 s.w.3d 777,794 (Tex. App.-Houston
[14th Dist.] 2004, no
pet.) (citing Tnx. R. App. P. 33.1(a)); see also Trayis v. City of Mesquite,830 S.W.2d
94,
100 (Tex. 1992) ("In an appeal from a summary judgment, issues to be reviewed by the
appellate court must have been actually presented to and considered by the trial
court."). Steadfast failed to meet its obligation in this regard and has failed to preserve
for appeal any complaints it may have regarding Tesco's ultimate award of attorneys'
fees under Section 37 .009.
Thus, the conduct of the parties affîrmatively indicates that there remains for
determination by the fact finder the amount of reasonable and necessary attorneys' fees to
award pursuant to Section 37.009. The issue remains alive and is unaffected by an Order
Vacating the Trial Court's Opinion and Judgment or the withdrawal of this Court's
Opinion and Judgment in this matter.
B. The Appeal is Not Moot Based on the Collateral Consequences
Exception to the Mootness Doctrine.
As an alternative basis for its argument that the case is not moot, Tesco analyzed
in its response the application of the collateral consequences exception. The issue was
not addressed by this Court in its February 3,2015 Memorandum on Rehearing.
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The collateral consequences exception is invoked when vacating the
underlying judgment will not cure the adverse consequences suffered by the party
seeking to appeal that judgment. Marshall v. Hous. Auth. of City of San Antonio,
198 S.W.3d 782, 789 (Tex. 2006), The circumstances which exist for the
exception to apply are (1) the concrete disadvantages have in fact occurred, are
imminently threatened to occur, or are imposed as a matter of law; and (2) the
concrete disadvantages will persist even after the judgment is vacated. Id. (cíting
Gen. Land office v. oxY U.S.A., Inc.,7B9 S.w.2d 569, 571 (Tex. 1990)) (noting
the collateral consequences exception is invoked only when prejudicial events have
occurred whose effects will continue to stigmatize after dismissal of the case as
moot).
Steadfast's attempt to vacate an opinion by a settlement and stipulation after
the matter had been on appeal for over seventeen (17) months would have multiple
adverse consequences and practical effects to Tesco including: (1) Tesco would
lose its right to recover attorney's fees and costs because the Trial Court judgment
would become a final, non-appealable judgment; (2) Tesco and this Court would
have wasted considerable time and effort in reaching a decision on significant legal
issues and matters of public policy for Texas insureds; (3) vacating this Court's
opinion leaves an erroneous Trial Court judgment in place, which will cause other
parties and other Texas courts to spend more time and effort re-litigating these
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same issues and will allow Steadfast to argue this Court's well-reasoned opinion is
of no force and effect; and (4) Steadfast, by its own strategic settlement and
stipulation in the Colorado District Court case, has been able to wait and see this
Court's opinion and then file these Motions.
Steadfast waited more than thirty (30) days to tell this Court or Coats Rose
I
that it had entered into a stipulation that would allegedly moot this court's issuance
of its opinion. Steadfast, knowing the Trial Court was about to lose jurisdiction
and this Court's decision could be moot, delayed the Motion to Vacate until after
this Court's opinion was released. Steadfast has laid behind the law to seek an
advantage. Proper and adequate notice would have allowed actions to be taken to
extend the Colorado Court's jurisdiction or to issue this Court's opinion. Hence,
this case is also not moot under the collateral consequences exception to the
mootness doctrine.
C. Vacate One, Vacate All
In its response, Tesco also posited that, in the event this Court vacates its
Opinion, then it must also enter an order that vacates the Trial Court Opinion and
Judgment. Thompson v. Rícardo,269 S.w.3d 100, 103-04 (Tex. App.-Houston
(The appellate court must vacate the judgment of the trial court and dismiss the
underlying case if there ceases to be a controversy between the litigating parties.);
Gen. Land office v. oxY U.S.A., hnc.,789 S.w.2d 569,570 (Tex. 1990) (stating if
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no controversy continues to exist between the parties, the appeal is moot and the
court must dismiss the cause); Reule v. RLZ Investments, 4ll S.V/.3d 31,32 (Tex.
App.-Houston [14th Dist.] 2013, no pet.) (stating if a case is found to be moot on
appeal, all previous orders and judgments must be set aside and the case
dismissed). To instruct otherwise would allow Steadfast to attempt to use an
erroneous Trial Court judgment in future disputes with Texas insureds on the issue
of punitive damages and choice of law.
CON USION
This Court should leave its current Opinion and Judgment intact and remand
the case to the Trial Court for a determination of attorney's fees to which Tesco is
entitled through that date. There is a continuing legal and equitable dispute as to
attorney's fees and costs to which Tesco is entitled given the extensive effort
expended correcting an effoneous Trial Court decision. This is especially
appropriate in this case where this Court has previously remanded this case for that
very determination. Steadfast should not be rewarded for its stipulation that
attempts to destroy this Court's jurisdiction. To do otherwise would result in the
waste of judicial resources and have significant adverse practical effects on Tesco
and other Texas insureds.
Alternatively, to the extent this Court finds that the case is moot and that no
live controversy regarding attorney's fees remained pending, it should not only
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withdraw its Opinion and Judgment, but also enter an order that vacates the Trial
Court Opinion and Judgment.
PRAYER
For the reasons stated above, Appellate Tesco Corporation (US) requests
that this Court grant its Motion for Rehearing, leave its current Opinion and
Judgment intact, remand this case to the Trial Court for further proceeding, and
award all other relief in which Appellate shows it is justly entitled.
Respectfully submitted,
COATS, ROSE, YALE, RYN4AN &.LEE,
P.C.
B
S.L
State Bar Number 725825
atsrose.corn
Daniel F. Shank
State Bar Number 18090400
dshank@coatsrose.com
9 Greenway Plaza, Suite 1100
(713) 65 1-01 I 1 (telephone)
(7 13) 6 5 I -0220 (facsimile)
ATTORNEYS FOR APPELLANT,
TESCO CORPORATTON (US)
t0
4829-5812-0226.v1
CERTIFICÄTE OF SERVICE
As required by Texas Rule of Appellate procedure 6.3 and 9.5(b), (d), (e), I
certiff that I have served this Response to Steadfast Insurance Company's Motion
for Rehearing and Motion to Vacate Opinion and Judgment on Appellee's
attorneys of record on the 18th day of February, z0l5, as follows:
Blair Dancy
bdan cvlôbddsl .com
Rebecca DiMasi
rdi (Ò.bddpla .com
BucuaNaN DrMasr DANCv & GnaeousKr, LLp
9600 Great Hills Trail, Suite 300 West
Austin, Texas 78759
By email
DaV1
Date: February 1 015
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