In The
Court of Appeals
Seventh District of Texas at Amarillo
No. 07-19-00278-CV
IN RE HURST SATURN, LTD.; FORT WORTH SATURN, LTD.;
ARLINGTON SATURN, LTD.; MICHAEL EDWARDS; JENNI MARSHALL;
AND GLEN POLLARD, RELATORS
OPINION ON ORIGINAL PROCEEDING FOR WRIT OF MANDAMUS
November 8, 2019
MEMORANDUM OPINION
Before QUINN, C.J.,1 and PIRTLE and PARKER, JJ.
Relators filed this mandamus proceeding after the trial court issued an order
granting the motion filed by the real party in interest to designate responsible third parties,
pursuant to section 33.004 of the Texas Civil Practice and Remedies Code. We find that
mandamus relief is not warranted and deny the writ.
Background
This case arises from financial problems at three Metroplex-area car dealerships:
Hurst Saturn, Ltd., Fort Worth Saturn, Ltd., and Arlington Saturn, Ltd. The three entities,
1 Chief Justice Brian Quinn, not participating.
along with their owners, Michael Edwards, Jenni Marshall, and Glen Pollard, are Relators
herein.
Relators allege that, between 2010 and 2015, real party in interest Robinson
Burdette Martin & Seright, LLP (“Robinson”) prepared and reviewed financial statements
and tax returns that tended to show that the dealerships were turning a profit. According
to Relators, they relied on the documents and representations from Robinson in making
investment decisions and paying taxes. In 2015-16, however, Relators learned that the
dealerships were not in sound fiscal shape, but were in fact “hemorrhaging money” and
near collapse. When they investigated this financial downturn, Relators discovered
mismanagement and theft by some of the dealerships’ employees and their associates.
These discoveries led them eventually to file lawsuits against employees, lenders, and
others. In the present case, they sued Robinson, alleging professional negligence,
breach of contract, and negligent misrepresentation. Relators contend that Robinson’s
failures caused them to pour money into failing businesses and pay taxes on nonexistent
profits.
Robinson moved for leave to designate as responsible third parties several other
entities and individuals, including dealership employees and their affiliates, who Relators
had alleged to be involved in falsifying records, sales fraud, financing fraud, rebate fraud,
audit fraud, and more. Over Relators’ objection, the trial court granted Robinson leave to
designate eighteen responsible third parties.
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Relators then filed the instant petition for writ of mandamus, in which they argue
that the trial court’s decision was an abuse of discretion and that they have no adequate
remedy by appeal.
Law and Analysis
Standards for Mandamus
A writ of mandamus will issue only if the trial court clearly abused its discretion and
the relator has no adequate remedy on appeal. In re Prudential Ins. Co. of Am., 148
S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding). “A trial court abuses its discretion if
it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial
error of law . . . .” In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005)
(orig. proceeding) (per curiam) (internal quotations omitted). A trial court also abuses its
discretion if it fails to correctly analyze or apply the law, because a trial court has no
discretion in determining what the law is or applying it to the facts. See Prudential, 148
S.W.3d at 135.
No Adequate Remedy by Appeal
The Texas Supreme Court has held that “[a]llowing a case to proceed to trial
despite [the] erroneous denial of a responsible-third-party designation would skew the
proceedings, potentially affect the outcome of the litigation, and compromise the
presentation of [the relator’s] defense in ways unlikely to be apparent in the appellate
record.” In re Coppola, 535 S.W.3d 506, 509 (Tex. 2017) (orig. proceeding) (per curiam)
(internal quotations omitted). Consequently, the court determined that mandamus may
be appropriate to review an order that either denies or grants a defendant’s motion to
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designate a responsible third party. See In re Dawson, 550 S.W.3d 625, 631 (Tex. 2018)
(orig. proceeding) (per curiam). Therefore, Relators are entitled to mandamus relief if
they establish that the trial court abused its discretion in granting Robinson’s motion to
designate responsible third parties.
The Proportionate Responsibility Statute
Texas’ proportionate responsibility statutes provide a framework for apportioning
percentages of responsibility among defendants, plaintiffs, settling persons, and
responsible third parties in a lawsuit. TEX. CIV. PRAC. & REM. CODE ANN. § 33.003 (West
2015). A responsible third party is
any person who is alleged to have caused or contributed to causing in any
way the harm for which recovery of damages is sought, whether by
negligent act or omission, by any defective or unreasonably dangerous
product, by other conduct or activity that violates an applicable legal
standard, or by any combination of these.
Id. § 33.011(6) (West 2015). The purpose of the statute is to hold each party “responsible
[only] for [the party’s] own conduct causing injury.” MCI Sales & Serv., Inc. v. Hinton, 329
S.W.3d 475, 505 (Tex. 2010) (quoting F.F.P. Operating Partners, L.P. v. Duenez, 237
S.W.3d 680, 690 (Tex. 2007)). A defendant may seek to designate a responsible third
party by filing a motion for leave to designate on or before the sixtieth day before the trial
date. Id. § 33.004(a) (West 2015). Unless another party files a timely objection to the
motion, the trial court must grant leave. Id. § 33.004(f).
In this case, Relators timely filed an objection to Robinson’s motion. They argued
that the persons and entities designated by Robinson did not meet the definition of
responsible third parties.
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The question of whether the third parties meet the definition of responsible third
parties under Chapter 33 presents a case of statutory construction, which is a question
of law reviewed de novo. See MCI Sales & Serv., Inc., 329 S.W.3d at 500. The primary
objective in construing a statute is to give effect to the Legislature’s intent. TEX. GOV’T
CODE ANN. §§ 311.021, 312.005 (West 2013); Am. Home Prods. Corp. v. Clark, 38
S.W.3d 92, 95 (Tex. 2000). Under the canons of statutory construction, courts are to
construe a statute according to its plain and common meaning, unless the language is
ambiguous or the interpretation leads to absurd or nonsensical results. City of Rockwall
v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008). A reviewing court should seek to
enforce the statute “as written” and “refrain from rewriting text that lawmakers chose . . . .”
Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 443 (Tex. 2009).
Relators contend that the present case turns on the meaning and effect of the
Legislature’s 2003 change to the definition of responsible third party. Under the 1995
version of the law, a responsible third party was defined as any person who met the
following three characteristics: (1) The court in which the action was filed could exercise
jurisdiction over the person; (2) the person could have been, but was not, sued by the
claimant; and (3) the person is or may be liable to the plaintiff for all or a part of the
damages claimed against the named defendant or defendants. See Act of May 8, 1995,
74th Leg., R.S., ch. 136, § 1, 1995 Tex. Gen. Laws 971, 973 (current version at TEX. CIV.
PRAC. & REM. CODE ANN. § 33.011(6)). In 2003, the Legislature revised the statute,
eliminating the first two requirements and redefining responsible third party as “any
person who is alleged to have caused or contributed to causing in any way the harm for
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which recovery of damages is sought . . . .” TEX. CIV. PRAC. & REM. CODE ANN.
§ 33.011(6).
The 2003 change in definition means that a responsible third party must have
caused the same harm—not necessarily the same damages—that the defendant caused.
According to Relators, the harm caused by Robinson differs from the harm caused by the
third parties, although there may be some overlap between the damages they caused.
Relators conclude that because the two harms are different, the trial court erred by
allowing Robinson to designate the third parties as responsible third parties. In their view,
while the third parties might have satisfied the pre-2003 definition of responsible third
party, they do not fit the current version.
By changing the definition of responsible third party, the Legislature made status
as a responsible third party depend not on whether one contributed to the plaintiff’s
damages, but on whether one contributed to the harm for which damages are sought.
Therefore, we must determine the harm for which Relators seek to recover damages in
their lawsuit.
The word “harm” is not defined in the statute. Courts give undefined words “their
common, ordinary meaning unless the statute clearly indicates a different result.” Jaster
v. Comet II Constr., Inc., 438 S.W.3d 556, 563 (Tex. 2014) (citing Molinet v. Kimbrell, 356
S.W.3d 407, 411 (Tex. 2011)). The plain meaning of “harm” is consistent with a loss or
injury. See Harm, BLACK’S LAW DICTIONARY (9th ed. 2009) (defining harm as, “Injury, loss,
damage; material or tangible detriment”).
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Relators assert, “Robinson caused the harm of the loss [of] professional services
and accurate accounting/tax records” (emphasis in original). Relators’ objection to
Robinson’s motion for leave focused on Robinson’s alleged “failure to comply with
SAARS [sic] and GAAP, which resulted in material misstatements on [Relators’] reviewed
financial statements.”2
Relators do not dispute that the third parties engaged in fraud or conduct that
harmed them, but rather contend that the third parties caused a different and distinct
harm, namely the deprivation “of fiduciary/employee services or theft.” Specifically,
Relators have claimed that the third parties “orchestrated a pattern of widespread
financial abuse tantamount to criminal fraud.” According to Relators, Robinson has failed
to show how these actions have anything to do with Robinson’s failure to comply with
applicable standards of care for accountants.
For support, Relators rely on City Nat’l Bank v. Smith, No. 06-15-00013-CV, 2016
Tex. App. LEXIS 4664 (Tex. App.—Texarkana May 4, 2016, pet. denied) (mem. op.).
Smith was a legal malpractice case in which an attorney missed a deadline, failing to file
the plaintiff’s malicious prosecution claim against a bank within the statute of limitations.
Id. at *1. The attorney sought to designate the bank as a responsible third party. Id.
Following a thorough analysis of the amended definition of “responsible third party,” the
Sixth Court of Appeals determined that the harm or injury involved was the loss of the
plaintiff’s cause of action. Id. at *26. Therefore, it concluded, to designate the bank as a
responsible third party, the attorney was required to show that the bank contributed to the
2 “SSARS” refers to the Statement on Standards for Accounting and Review Services. “GAAP”
refers to generally accepted accounting standards in the United States.
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loss of the plaintiff’s cause of action, e.g., by contributing to missing the filing deadline.
Id. at *27. Because the attorney had not alleged or produced any evidence that the bank
contributed to the failure to timely file suit, the bank was not a responsible third party. Id.
at *29-30.
Relators also point to another legal malpractice case, DLA Piper LLP (US) v.
Linegar, 539 S.W.3d 512 (Tex. App.—Eastland 2017, pet. denied). There, the Eleventh
Court of Appeals determined that the harm for which damages were sought related to the
failure to timely perfect the security interest in a note. Id. at 517. The law firm sought to
designate two companies as responsible third parties. But because DLA Piper had not
asserted that those entities contributed to the untimely filing of the financing statement,
the court concluded that they were not responsible third parties. Id.
In its response, Robinson asserts that these outcomes are wrong to suggest that
causing or contributing to cause the “harm” is the same as causing or contributing to
cause the underlying negligent conduct. Robinson maintains that the claimed harm from
Robinson’s supposed failure to detect the fraud is the same as the harm caused by the
third parties’ alleged underlying fraud. Even if the third parties did not cause Robinson’s
supposed negligent conduct, Robinson contends, the third parties indisputably
contributed to the ultimate loss suffered by Relators.
This is a suit premised on claims of professional negligence, negligent
misrepresentations, and breach of contract. In their petition for writ of mandamus,
Relators assert that they lost (1) accurate accounting information and (2) accounting
performed under the applicable standards of care. We note that the fact that the third
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parties are not accountants does not necessarily mean they could not have contributed
to the loss of accurate accounting information. In In re Smith, attorneys were sued for
legal malpractice after they failed to sue the driver of a car in an underlying auto accident
case. In re Smith, 366 S.W.3d 282, 284 (Tex. App.—Dallas 2012, orig. proceeding).
When the defendant attorneys sought leave to designate the driver of the car as a
responsible third party, the plaintiff contended that no set of facts could make the driver
a responsible third party in a legal malpractice case. Id. at 285-86. The Fifth Court of
Appeals disagreed, recognizing that if the attorneys alleged that the driver “somehow
tortiously contributed to any error committed” by the attorneys, the driver could properly
be designated as a responsible third party. Id. Therefore, the court granted the
defendants an opportunity to replead.
In this case, if the harm to Relators includes their alleged deprivation of accurate
information about the dealerships’ finances, then any person or entity who contributed to
causing the deprivation of accurate information may properly be designated as a
responsible third party. Robinson has alleged that the third parties falsified and
manipulated dealership records, conspired to conceal losses, and engaged in other
fraudulent schemes. Relators’ own pleadings in other lawsuits against the third parties
raise similar contentions. Because Robinson has presented pleadings and evidence
indicating that the third parties’ practices caused or contributed to causing Relators’
claimed harm, i.e., the loss of accurate accounting information, we conclude that the trial
court did not err in granting leave to designate them as responsible third parties.
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Conclusion
We conclude that Relators have failed to show that they are entitled to mandamus
relief. Accordingly, the petition is denied.
Judy C. Parker
Justice
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