I join the majority in affirming the summary judgment against ANICO on its negligence, gross negligence, and negligent misrepresentation claims. But I must respectfully dissent from the majority's reversal of the summary judgment on ANICO's fraud claims — not because I disagree with the statements of law set forth in the majority's opinion, because I do not. Rather, I dissent because I believe the law governing this appeal is that enunciated by the First Court of Appeals, and that law clearly mandates affirmance of the summary judgment on ANICO's fraud claims.
FACTS This case, and therefore IBM and Image's motions for summary judgment, were filed and "tried" in the 56th Judicial District Court of Galveston County, Texas. The motions sought summary judgment on ANICO's tort causes of action on the ground that *Page 690
ANICO had not pleaded tort damages independent of its claimed breach of contract damages. At the hearing on IBM's motion, the trial court preliminarily agreed, stating, "I think a contract case, breach of contract is what we have got, pure and simple. . . . I think this is a contract case. Damages are contract damages." At a later hearing, the trial court granted summary judgments in favor of IBM and Image on all of their tort claims. ANICO appealed.
Initially, the courts having potential jurisdiction over ANICO's appeal were the First and Fourteenth Courts of Appeals in Houston, Texas. See TEX. GOV'T CODE §22.201(b), (o) (Vernon 1988). Pursuant to statute, the trial court clerk randomly assigned ANICO's appeal to the First Court of Appeals. See id. § 22.202(h). It was, therefore, in the First Court of Appeals that the transcript and ANICO's brief were filed. Subsequently, however, the clerk of the First Court of Appeals notified the parties' counsel that ANICO's appeal had been transferred to this court by order of the Supreme Court of Texas. Seeid. § 73.001.
In the First and Fourteenth Courts of Appeals, it is now well established that a plaintiff who pleads a benefit-of-the-bargain measure of damages does not plead a cause of action sounding in tort; this rule applies even when the plaintiff pleads fraudulent inducement. See, e.g.,River Consulting, Inc. v. Sullivan, 848 S.W.2d 165, 170 (Tex.App. — Houston [1st Dist.] 1992, writ denied);Hebisen v. Nassau Dev. Co., 754 S.W.2d 345, 348 (Tex.App. — Houston [14th Dist.] 1988, writ denied). In this court, on the other hand, the pleaded measure of damages is not dispositive of the contort issue. See Peco Constr.Co. v. Guajardo, 919 S.W.2d 736, 739 n. 4 (Tex.App. — San Antonio 1996, writ denied). The supreme court has not yet resolved this conflict among the courts of appeals.
WHOSE LAW GOVERNS? In my view, this appeal presents a conflict of laws issue between the law of two coordinate courts. See RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 2, cmt. c (1971) (recognizing that "intrastate conflicts" arising out of the existence of territorial divisions, each with its "own separate law and courts," may "give[ ] rise to problems analogous to those dealt with in [the restatement]"). While individual judges have recognized a conflict of laws issue in the transfer context,2 no court has enunciated choice of law rules with which to resolve such a conflict.3 *Page 691 This silence may be attributable to what University of Houston Law Professor Robert Ragazzo has called, in his treatment of federal intercircuit conflicts, the "myth of uniformity." Robert Ragazzo, Transfer and Choice of Federal Law: TheAppellate Model, 93 MICH. L. REV . 703, 736 (1995). Adherents of Professor Ragazzo's "myth of uniformity" hold that a choice of law question in the context of the federal circuit courts of appeals — and other similar courts — is "a logical nonsequitur" because the law "is the creation of a single sovereign and . . ., therefore, uniform in theory."See id. This theory is of course belied by reality, as the abundance of conflicts among the Texas courts of appeals demonstrates.4 In my view, a myth — however attractive — cannot and should not justify failing to recognize, and fashion a rule for resolving, the conflicts that inevitably arise between the intermediate appellate courts within a system.5
Once the myth of uniformity is discarded, the question becomes what, if anything, to do about intrasystem conflicts. At one time, the State of California tried to resolve its intrastate conflicts problem by mandating that the first appellate decision on an issue bound the entire state.See Note, Securing Uniformity *Page 692 in National Law: A Proposal for National Stare Decisis inthe Courts of Appeals, 87 YALE L.J. 1219, 1232 n. 83 (1978). I do not, however, advocate such a rule and believe it was wisely abandoned in California. See JON B. EISENBERG ET AL., CALIFORNIA PRACTICE GUIDE: CIVIL APPEALS WRITS 14:193.1 (1995). Instead, I believe we should adopt a conflict of laws rule requiring transferee courts to apply the law of the transferring court, as suggested by traditional conflict of laws analysis and as Professor Ragazzo has advocated for the federal circuit courts of appeals in similar, temporary transfer situations.
Traditional Conflict of Laws Analysis The usual principles underlying choice of law rules are relatively simple and well-established. A statutory directive naturally takes precedence. RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 6(1) (1971). In the absence of a statutory directive, as in this case, the relevant factors include:
Id. In the intrastate transfer context, these factors can be boiled down to two basic concerns. First, the choice of law rules must serve the needs of the intrastate transfer system. Second, the choice of law rules should further legitimate policies and interests. I believe this case demonstrates that in the transfer context the pertinent factors are either neutral or weigh heavily in favor of applying the law of the transferring court.(1) the needs of the interstate and international systems;
(2) the forum's relevant policies;
(3) other interested states' relevant policies and the relative interests of those states in the determination of the particular issue;
(4) protection of the parties' justified expectations;
(5) the basic policies underlying the particular field of law involved;
(6) certainty, predictability, and uniformity of result; and
(7) ease in determination and application of the law to be applied.
1. The Needs of the Intrastate Transfer System
The overarching goal of the transfer system is and always has been to equalize the dockets of the courts of appeals.Compare Act of April 19, 1895, 24th Leg., R.S., ch. 53, § 1, 1895 Tex. Gen. Laws 79, 79-80 with TEX. GOV'T CODE § 73.001 (Vernon 1988). To serve this laudable goal of maximizing the efficiency of the courts of appeals, the transfer system must be convenient for the courts and also for the litigants and their counsel; it must be workable in a pragmatic sense; and it must be fair to the parties. In my view, each of these factors weighs in favor of applying the law of the transferring court.a. Convenience
The legislature intends for the transfer system to be convenient for all concerned, as was first evidenced by a 1927 amendment requiring that transfer cases, as a general rule, be heard in the place where the transferring court usually sits.See Act of March 10, 1927, 40th Leg., R.S., ch. 76, §§ 1-2, 1927 Tex. Gen. Laws 115, 115-16. This convenience requirement — for both the courts and the litigants and their counsel — is still evident. See TEX. GOV'T CODE § 73.003(b), (c) (Vernon 1988) (requiring that transfer cases be heard in the place where the transferring court usually sits unless the parties agree otherwise or the receiving court is 35 miles or less from the transferring court). These provisions might very naturally be read as suggesting that a transferee court ought essentially to act as a panel of visiting judges — a function that would require application of the transferring court's law. At the very least, convenience appears to be a neutral factor in the conflicts analysis, since we can as conveniently apply the contorts law established by the First and Fourteenth Courts of Appeals as we can our own.
b. Workability
The transfer system must also be workable in a pragmatic sense from the perspective of the courts and the litigants. For instance, for many years the transfer statute required that the cases to be transferred be selected from the cases appealed from counties nearest *Page 693 the receiving court. See Act of March 10, 1909, 31st Leg., R.S., ch. 42, § 1, 1909 Tex. Gen. Laws 88, 88; Act of March 10, 1927, 40th Leg., R.S., ch. 76, § 1, 1927 Tex. Gen. Laws 115, 116. This requirement proved unworkable, however, and was repealed in 1933. See In re Transfer ofCauses Between Courts of Civil Appeals, 103 Tex. 127,124 S.W. 622, 623 (1910) (holding that proximity requirement produced a result "not contemplated by the gentlemen who framed the act"); Act of May 18, 1933, 43rd Leg., R.S., ch. 151, §§ 1-2, 1933 Tex. Gen. Laws 380, 380-81 (repealing notice requirement). For the same reason, a complicated notice system between the transferring and receiving courts was short-lived.Compare Act of March 10, 1927, 40th Leg., R.S., ch. 76, § 1, 1927 Tex. Gen. Laws 115, 116 with Act of June 6, 1927, 40th Leg., 1st C.S., ch. 51, § 1, 1927 Tex. Gen. Laws 148, 148-49. This case demonstrates that a choice of law rule that permits the receiving court to apply its own law is simply not workable.
The parties and the trial court "tried" this case under the law enunciated by the Houston Courts of Appeals. IBM's counsel thus briefed and argued to the trial court the "controlling Fourteenth District authority":
There is not one decision by the Court of Appeals to the 14[th] District in Houston that we can find, and they have not cited one where the question of whether fraud, not negligence now, but fraud should be merged into a contract claim has been decided in any way other than to merge the two. There are four cases have addressed it and every one of the four cases resulted saying fraud ought to be merged.6
IBM's counsel also noted, both in its brief and at the hearing, that the case relied upon by ANICO —Schindler v. Austwell Farmers Cooperative, 829 S.W.2d 283 (Tex.App. — Corpus Christi 1992), aff'd asmodified, 841 S.W.2d 853 (Tex. 1992) (per curiam) — expressly noted that the rule the Corpus Christi Court of Appeals was adopting "was a departure from the rule followed by the Fourteenth District Court of Appeals." Absent a fortuitous transfer, therefore, the result in this case, at least at the court of appeals level, was virtually certain. Indeed, it appears to have been on the strength and consistency of the Houston Courts of Appeals' contorts decisions that IBM moved for, and the trial court granted, summary judgment on ANICO's tort claims.
But if we apply the majority's reasoning and reverse the summary judgment on ANICO's fraud claims, the trial court will be bound by that reasoning on remand under the "law of the case" doctrine. See, e.g., Hudson v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986); see also Thomas v.Collins, 860 S.W.2d 500, 502 (Tex.App. — Houston [1st Dist.] 1993, writ denied) (El Paso Court of Appeals' reversal of trial court's dismissal on the pleadings in a transfer case was "law of the case" and binding on trial court on remand). Accordingly, even though neither of the Houston Courts of Appeals recognize a fraud cause of action in these circumstances, the trial court will be obligated to try ANICO's fraud claim.
Moreover, when that judgment is appealed, as it almost inevitably will be, this court will not hear that appeal absent another fortuitous transfer. See Varner v. Koons, 888 S.W.2d 511, 512-13 (Tex.App. — El Paso 1994, no writ) (receiving court has no jurisdiction over ancillary proceeding); Smith v. City Nat'l Bank, 132 S.W. 527, 528 (Tex.Civ.App. — Texarkana 1910, no writ) (once receiving court decides appeal it loses all jurisdiction over the transferred case). Instead, the statistical odds indicate that the appeal will be heard by either the First or the Fourteenth Court of Appeals. But the majority's reasoning will also control the analysis in that court unless it determines that our ruling on ANICO's fraud claim was "clearly erroneous."See, e.g., Turboff v. Gertner, Aron Ledet Inv., 840 S.W.2d 603, 608 (Tex.App. — Corpus Christi 1992, writ dism'd) (in case transferred from the Fourteenth *Page 694 Court of Appeals, Corpus Christi Court of Appeals bound by "law of the case" established in earlier appeal to the transferring court); see also Thomas, 860 S.W.2d at 502 (court need not reanalyze sufficiency of pleadings because El Paso Court of Appeals' ruling was law of the case). That is an untenable position in which to thrust courts of coordinate jurisdiction, which may not, as a general rule, "set aside, annul, or vacate an order made by another, or review causes confided to another (unless upon transfer)." Cleveland v.Ward, 116 Tex. 1, 285 S.W. 1063, 1074 (1926). In short, to apply this court's interpretation of the law to a case tried in Galveston County under the law enunciated by the Houston Courts of Appeals is simply unworkable.
c. Fairness
The transfer system must be fair; otherwise, it will not only violate the fundamental principles upon which any judicial system rests, but it will also not achieve or maintain the general acceptance necessary to its success. And how can it be fair when IBM would win in the transferring court, while in the receiving court it loses — when the sole purpose of the transfer is docket equalization, not the promotion of one court of appeals' view of the substantive law?2. The Relevant Policies and Interests of the Transferring andReceiving Courts
In light of their uniform and consistent rulings on the contort issue, the Houston Courts of Appeals have clearly indicated the legitimate policies and interests they seek to further within the confines of their district, however much this court may disagree with them. This court, on the other hand, has absolutely no such long-term policy interest in this case. The transaction was not entered into or performed within this district; the case was not filed or "tried" within this district; and in all likelihood this court will not hear any further appeals following remand. Nor does this court have any need to enunciate what it believes to be the controlling law in the contort area, having so recently done so in PecoConstruction, 919 S.W.2d at 739.As demonstrated by the foregoing, all of the factors relevant to traditional conflict of laws analysis are either neutral or forcefully point to applying the law of the transferring court in situations involving intrastate conflicts among the courts of appeals. This is precisely the rule advocated by Professor Ragazzo for resolving the conflicts that arise in similar temporary transfers within the federal system.
The Federal Analogy Two mechanisms exist for transferring a case from one federal district court to another.7 The first, section 1404(a) of the Judicial Code, provides for a permanent transfer made "[f]or the convenience of parties and witnesses, in the interest of justice." 28 U.S.C.A. § 1404(a) (1993). In these cases, when diversity is the basis for the court's jurisdiction, the law of the transferor court unquestionably applies. Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 821, 11 L.Ed.2d 945 (1964); Ferens v. JohnDeere Co., 494 U.S. 516, 531, 110 S.Ct. 1274, 1284, 108 L.Ed.2d 443 (1990). However, the law of the transferee court applies in permanent transfers involving federal question jurisdiction. Ragazzo, 73 MICH. L. REV . at 704-05.
When cases are transferred pursuant to the second transfer mechanism, the Multidistrict Litigation Act (MDL), the applicable law is not so clear. The MDL authorizes a national panel of judges, the Judicial Panel on Multidistrict Litigation, to consolidate cases filed in different districts but involving common questions of fact in a single district for pretrial proceedings. 28 U.S.C.A. § 1407(a), (d) (1993). After completion of the pretrial proceedings, the consolidated cases are remanded to their original districts. Id. § 1407(a). Before 1987, the federal courts universally applied the law of the transferor court in the consolidated cases. Ragazzo, 73 MICH. L. REV . at 726-27 nn. 154-57;see also DAVID F. HERR, MULTIDISTRICT LITIGATION: HANDLING CASES BEFORE *Page 695 THE JUDICIAL PANEL ON MULTIDISTRICT LITIGATION § 9.8, at 210 (1986) ("[T]he transferee court must apply the substantive law of the transferor forum during coordinated or consolidated pretrial proceedings."); MANUAL FOR COMPLEX LITIGATION § 31.122, at 254 n. 25 (2d ed. 1985) ("The transferee judge is bound . . . by the law that would apply in the transferor court. . . ."). In 1987, however, the D.C. Circuit Court of Appeals upset this well-settled law by holding that transferee law applied. In re Korean Air Lines Disaster ofSept. 1, 1983, 829 F.2d 1171, 1175-76 (D.C. Cir. 1987). On appeal, the Supreme Court resolved the intercircuit conflict and thus mooted the conflicts issue. Chan v. Korean AirLines, Ltd., 490 U.S. 122, 135, 109 S.Ct. 1676, 1684, 104 L.Ed.2d 113 (1989).
Today, almost all federal court decisions follow In reKorean Air Lines in MDL transfers. Ragazzo, 93 MICH. L. REV . at 705-06. However, the most recent edition of the Manual for Complex Litigation treats the conflicts issue as an open question. MANUAL FOR COMPLEX LITIGATION § 31.132, at 254 (3d ed. 1995) (stating that "the court must consider whether to apply the law of its circuit or that of the transferor court"). Professor Ragazzo forcefully argues that the courts got it right the first time — applying transferor law is the only sound solution both theoretically and pragmatically. Ragazzo, 93 MICH. L. REV . at 770.
According to Ragazzo, the federal choice of law rule must logically turn on one dispositive factor: the "appellate model," which asks whether the transfer is permanent or temporary, because a case must be decided according to the law of the court that has "ultimate jurisdiction" over its outcome.See id. at 747. Thus, when the transfer is theoretically temporary,8 so that all subsequent proceedings will be conducted within the transferring circuit, the law of the transferring circuit must govern. Seeid. If it does not, then upon remand the trial court will be bound by the "law of the case" doctrine to follow the transferee circuit's legal conclusions, leaving its own court of appeals two equally unacceptable alternatives on further appeal of the case: yield to the transferee court's findings and affirm or declare those findings "clearly erroneous" and reverse. See id. at 760-61. Both options are illogical and inefficient, and neither belongs in a fair, workable system of courts. See id. at 757-62. Therefore, Ragazzo argues, the law of the transferor court should govern all phases of a case that has been temporarily transferred to another district pursuant to section 1407.Id. at 762.
Section 1407 transfers closely resemble transfers between the Texas courts of appeals in several respects. First, like section 1407 transfers, intrastate transfers are made by a separate judicial arm acting at its discretion, not by the presiding court on a party's motion. Compare 28 U.S.C.A. § 1407(a) (1993) (judicial panel) with TEX. GOV'T.CODE § 73.001 (Vernon 1988) (supreme court). Second, like section 1407 transfers, intrastate transfers are generally invoked for the judiciary's convenience, not a party's. Compare 28 U.S.C.A. § 1407(a) (1993) (specifying "convenience" and "efficient conduct")with TEX. GOV'T CODE § 73.001 (Vernon 1988) (requiring "good cause"). Third, like section 1407, the Texas transfer statute expressly provides that the transfers they authorize are to be temporary, not permanent, and that each case is to be remanded for any further proceedings to its original district. Compare 28 U.S.C.A. § 1407(a) (1993) ("shall be remanded") with TEX. GOV'T CODE § 73.002(a) (Vernon 1988) ("to which it is returnable on appeal"). Finally, like section 1407, the current version of the Texas transfer statute does not require that the transferee court sit in a district in which the case might have been filed under standard jurisdiction and venue analysis.Compare 28 U.S.C.A. § 1407(a) (1993) (transfers may be made "to any district") (emphasis added)with TEX.GOV'T CODE § 73.002(a) (Vernon 1988) ("The court of appeals to which a case is transferred has jurisdiction of the case without regard to the districtin *Page 696 which the case was originally tried . . . .") (emphasis added).9 Given these similarities, Ragazzo's intercircuit "appellate model" applies just as forcefully in the intrastate conflict context.
CONCLUSION This appeal presents a conflict of laws issue that I believe should be recognized. If the traditional factors underlying choice of law rules are weighed, they point directly in favor of Ragazzo's "appellate model" and applying the law of the transferring court. I would do so and affirm the summary judgment on ANICO's fraud claims.