ACCEPTED
06-15-00013-CV
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
12/14/2015 2:21:13 PM
DEBBIE AUTREY
CLERK
No. 06-15-00013-CV
IN THE FILED IN
6th COURT OF APPEALS
COURT OF APPEALS TEXARKANA, TEXAS
SIXTH DISTRICT OF TEXAS 12/14/2015 2:21:13 PM
TEXARKANA DEBBIE AUTREY
Clerk
__________________________________________________________________
C ITY N ATIONAL B ANK OF S ULPHUR S PRINGS,
Appellant
v.
J OHN A LEXANDER S MITH,
Appellee
__________________________________________________________________
On Appeal from the District Court of Hopkins County, Texas
62nd Judicial District
The Honorable Will Biard Presiding
__________________________________________________________________
APPELLEE’S BRIEF
__________________________________________________________________
J. Mark Sudderth
Texas Bar No. 19461500
N OTEBOOM – T HE L AW F IRM
669 Airport Freeway, Suite 100
Hurst, Texas 76053
(817) 282-9700
(817) 282-8073 (facsimile)
Sudderth@Noteboom.com
Attorney for Appellee,
John Alexander Smith
ORAL ARGUMENT REQUESTED
REQUEST FOR ORAL ARGUMENT
Appellee John Alexander Smith respectfully requests the opportunity to
present oral argument. T EX. R. A PP. P. 39.7.
Appellee’s Brief - Page ii
TABLE OF CONTENTS
INDEX OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
ABBREVIATIONS AND RECORD REFERENCES. . . . . . . . . . . . . . . . . . . . . . xii
STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. How it Really All Began. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Who Cares About Probable Cause?. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Untruths and Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Misery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Things Cone Forgot.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. Shame and Degradation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7. The Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SUMMARY OF ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
I. Response to Appellant’s Issue No. 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
A. The Bank is barred and estopped from asserting that it is not a
“responsible third party” under Chapter 33 because such assertion
is clearly adverse to its position in the trial court that Clark was a
“settling person” under Chapter 33, upon which the Bank sought
and obtained judgment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Appellee’s Brief - Page iii
B. The Bank is barred and estopped from asserting that it is not a
“responsible third party” under Chapter 33 because the bank
judicially admitted that “the harm for which recovery of damages
is sought” from Clark and the Bank was the same by affirmatively
and unequivocally pleading that Clark was a “settling person”
under Chapter 33, which requires that Clark settled claims with
respect to “the harm for which recovery of damages is sought”
from the Bank... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
C. The Bank has failed to preserve any error on its alleged statute of
limitations defense.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1. The Bank never secured an order on its improper motion to
strike its own designation as a responsible third party,
choosing instead to proceed with its limitations defense by
motion for summary judgment... . . . . . . . . . . . . . . . . . . . . . . . 21
2. The denial of the Bank’s motion for summary judgment
preserved no alleged error.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3. At trial, the Bank offered no proof to establish its alleged
limitations defense and did not request or secure any findings
to sustain such affirmative defense; nor did it move for a
directed verdict in such regard.. . . . . . . . . . . . . . . . . . . . . . . . . 22
D. The trial court had no discretion to grant the Bank’s improper
motion to strike its own designation as a responsible third party... . . 25
E. The trial court did not err in entering judgment against the Bank
for malicious prosecution.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1. The Bank was properly joined and timely sued under
Chapter 33 because it was responsible for contributing,
in some way, to some portion of Smith’s alleged injury
or damages.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Appellee’s Brief - Page iv
a. The damages Smith sought from Clark included all
damages recoverable from the Bank in a malicious
prosecution suit.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
b. The damages Smith sought from the Clark also
included mental anguish and harm to his reputation.. . . 29
2. Identity of cause of action is not required.. . . . . . . . . . . . . . . . 30
3. Smith’s claims against Clark and the Bank are not mutually
exclusive, and Chapter 33 would apply, regardless.. . . . . . . . . 36
4. Applying the statute as written does not produce an absurd
result, and no vested right was curtailed.. . . . . . . . . . . . . . . . . 37
5. The statute promotes public policy.. . . . . . . . . . . . . . . . . . . . . 39
II. Response to Appellant’s Issue No. 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
A. Punitive damages recoverable from the Bank in a malicious
prosecution case were part of the actual damages Smith’s sought
against Clark... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
B. Chapter 33 prohibits the reduction of exemplary damages, not their
recovery.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
III. Response to Appellant’s Issue No. 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
A. Sufficient evidence supports the jury’s finding that the Bank
initiated or procured the prosecution.. . . . . . . . . . . . . . . . . . . . . . . . . 44
1. The evidence shows that the Bank initiated the prosecution;
moreover, the Banks’ representative and retained expert each
testified and admitted that it did... . . . . . . . . . . . . . . . . . . . . . . 44
2. The evidence shows that the Bank procured the prosecution. . 47
a. Cone knowingly provided false information. . . . . . . . . 48
Appellee’s Brief - Page v
b. The Bank was the source of information that caused Smith’s
prosecution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
B. Sufficient evidence supports the jury’s finding that the Bank lacked
probable cause.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
IV. Response to Appellant’s Issue No. 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Sufficient evidence supports the jury’s finding that the Smith sustained
some physical pain or mental anguish.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
A. Physical Pain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
B. Mental Anguish. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
PRAYER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
CERTIFICATE OF COMPLIANCE ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
APPENDIX . .. . . . . . . . . . . . . . . . . (Separate Index Located in Front of Materials)
Appellee’s Brief - Page vi
INDEX OF AUTHORITIES
Cases
Ackerman v. Vordenbaum,
403 S.W.2d 362 (Tex. 1966). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Adams v. Parker Square Bank,
610 S.W.2d 250 (Tex.App.–Fort Worth 1980). . . . . . . . . . . . . . . . . . . . . . . 21
Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Research Corp.,
299 S.W.3d 106 (Tex.2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29, 41
Anzaldua v. State,
696 S.W.2d 911 (Tex.Crim.App. 1985). . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Ardmore, Inc. v. Rex Group, Inc.,
377 S.W.3d 45 (Tex.App.–Houston [1st Dist.] 2012). . . . . . . . . . . . . . . . . . 55
Baker v. Hughes,
12 S.W.3d 1 (Tex. 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Browning-Ferris Industries, Inc. v. Lieck,
881 S.W.2d 288 (Tex. 1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . 44, 45, 46, 47
City of Rockwall v. Hughes,
246 S.W.3d 621 (Tex. 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
City of San Antonio v. Talerico,
81 S.W. 518 (1904). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Clark v. Dillard’s, Inc.,
460 S.W.3d 714 (Tex.App.–Dallas 2015). . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Clear Lake City Water Authority v. Kirby Lake Development, Ltd.,
123 S.W.3d 735 (Tex.App.–Houston [14th Dist.] 2008). . . . . . . . . . . . . . . 55
Cosgrove v. Grimes,
774 S.W.2d 662 (Tex.1989). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29, 30, 41
Appellee’s Brief - Page vii
Dixon v. SW Bell Tel. Co.,
607 S.W.2d 240 (Tex. 1980). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 23
Edlund v. Bounds,
842 S.W.2d 719 (Tex.App.–Dallas 1992). . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Elizondo v. Krist,
415 S.W.3d 259 (Tex. 2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29, 41
Eslon Thermoplastics v. Dynamic Systems, Inc.,
49 S.W.3d 891 (Tex.App.–Austin 2001).. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ExxonMobil Corp. v. Pagayon,
467 S.W.3d 36 (Tex.App.–Houston [14th Dist.] 2015). . . . . . . . . . . . . . . . . 35
FFP. Operating Ptnrs., L.P. v. Duenez,
237 S.W.3d 680 (Tex. 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Flack v. Hanke,
334 S.W.3d 251 (Tex. App.–San Antonio 2010). . . . . . 25, 26, 27, 38, 40, 43
French v. Gill,
252 S.W.3d 748 (Tex.App.–Texarkana 2008).. . . . . . . . . . . . . . . . . . . . . . . 20
GAB Business Services, Inc. v. Moore,
829 S.W.2d 345 (Tex.App.–Texarkana 1992).. . . . . . . . . . . . . . . . . . . . . . . 59
Golden Eagle Archery, Inc. v. Jackson,
116 S.W.3d 757 (Tex. 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Gonzalez v. Grimm,
No. 08-13-00326-CV, 2015 WL 4137862
(Tex.App.–El Paso, July 8, 2015). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46, 47
Gray v. Nash,
259 S.W.3d 286 (Tex.App.–Fort Worth 2008). . . . . . . . . . . . . . . . . . . . . . . 34
Greathouse v. McConnell,
982 S.W.2d 165 (Tex.App.–Houston [1st Dist.] 1998). . . . . . . . . . . . . . . . . 29
Appellee’s Brief - Page viii
Heath v. Herron,
732 S.W.2d 748 (Tex.App.–Houston [14th Dist.] 1987). . . . . . . . . . . . . . . 30
Hernandez v. Bumbo, Ltd.,
No. 3:12-CV-1213-M, 2014 WL 924238 (N.D. Tex. March 10, 2014). . . . 36
Hines v. Commission for Lawyer Discipline,
28 S.W.3d 697 (Tex.App.–Corpus Christi 2000). . . . . . . . . . . . . . . . . . . . . 21
Holy Cross Church of God in Christ v. Wolf,
44 S.W.3d 562 (Tex. 2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Houston First Am. Sav. v. Musick,
650 S.W.2d 764 (Tex. 1983). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
In re: Bexar County,
224 S.W.3d 182 (Tex. 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
In re: Brokers Logistics, Ltd.,
320 S.W.3d 402 (Tex.App. – El Paso 2010). . . . . . . . . . . . . . . . . . . . . . 34, 35
In re: Smith,
366 S.W.3d 282 (Tex.App.–Dallas 2012). . . . . . . . . . . . . . . . . . . . . . . . 23, 24
Ingersoll-Rand Co. v. Valero Energy Corp.,
997 S.W.2d 203 (Tex. 1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Isern v. Watson,
942 S.W.2d 186 (Tex.App.– Beaumont 1997). . . . . . . . . . . . . . . . . . . . . . . 55
J.C. Penney Co., Inc. v. Ruth,
982 S.W.2d 586 (Tex.App.–Texarkana 1998).. . . . . . . . . . . . . . . . . . . . 51, 54
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee, Inc.,
381 S.W.3d 635 (Tex. App.–San Antonio 2012). . . . . . . . . . . . . . . 25, 26, 27
Latham v. Castillo,
972 S.W.2d 66 (Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58, 59
Appellee’s Brief - Page ix
Lexington Ins. Co. v. Strayhorn,
209 S.W.3d 83 (Tex.2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Litton Indus. Prod., Inc. v. Gammage,
668 S.W.2d 319 (Tex. 1984). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Mobil Oil Corp. v. Ellender,
968 S.W.2d 917 (Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42, 43
Parkway Co. v. Woodruff,
901 S.W.2d 434 (Tex.1995). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56, 58
Parsons v. Greenberg,
No. 02-10-00131-CV, 2012 WL 310505
(Tex.App.–Fort Worth, Feb. 2, 2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Patterson & Wallace v. Frazer,
93 S.W. 146 (Tex.Civ.App.–El Paso 1906).. . . . . . . . . . . . . . . . . . . . . . . . . 41
Patterson & Wallace v. Frazer,
94 S.W. 324 (Tex. 1906). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Rhodes v. Batilla,
848 S.W.2d 833 (Tex.App.–Houston [14th Dist.] 1993). . . . . . . . . . . . . . . 30
Richey v. Brookshire Grocery Co.,
952 S.W.2d 515 (Tex.1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51, 54
Shepherd v. Ledford,
962 S.W.2d 28 (Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Shoemake v. Fogel, Ltd.,
826 S.W.2d 933 (Tex. 1992). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Taylor v. Alonso, Cersonsky & Garcia, P.C.,
395 S.W.3d 178 (Tex. App.—Houston [1st Dist.] 2012). . . . . . . . . . . . . . . 29
Tenet Hospitals Ltd. v. Rivera,
445 S.W.3d 698 (Tex. 2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Appellee’s Brief - Page x
Tex. & P. Ry. Co. v. Wood,
199 S.W.2d 652 (1947). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Tex. Dep't of Transp. v. City of Sunset Valley,
146 S.W.3d 637 (Tex. 2004). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Thrift v. Hubbard,
974 S.W.2d 70 (Tex.App.–San Antonio 1998). . . . . . . . . . . . . . . . . 50, 57, 58
Tittizer v. Union Gas Corp.,
171 S.W.3d 857 (Tex. 2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Tobin v. Garcia,
316 S.W.2d 396 (Tex. 1958). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Turner v. State,
850 S.W.2d 210 (Tex.App.–Texarkana 1993).. . . . . . . . . . . . . . . . . . . . . . . 51
Villarreal v. Wells Fargo Brokerage Svcs., LLC,
315 S.W.3d 109 (Tex.App.–Houston [1st Dist.] 2010). . . . . . . . . . . . . . . . . 39
Statutes and Rule
T EX. C IV. P RAC. & R EM. C ODE §33.002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42, 43
T EX. C IV. P RAC. & R EM. C ODE §33.004. . . . . . . . . 23, 25, 26, 28, 31, 38, 39, 40, 41
T EX. C IV. P RAC. & R EM. C ODE §33.011. . . . . . . . . . . . . . . . . . 18, 20, 27, 28, 31, 32
T EX. C IV. P RAC. & R EM. C ODE §33.012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
T EX. G OV. C ODE § 311.011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
T EX. R. C IV. P. 38(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Dictionary
Webster’s Dictionary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Appellee’s Brief - Page xi
ABBREVIATIONS AND RECORD REFERENCES
Abbreviations
Plaintiff/Appellee,
John Alexander Smith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “Plaintiff” or “Smith”
Defendant/Appellant,
City National Bank of Sulphur Springs. . . . . . . . . . . . . . “Defendant” or “the Bank”
Record References
References to Clerk’s Record. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “CR:[page #]”
References to Supplemental Clerk’s Record. . . . . . . . . . . . . . . . . . . “SCR:[page #]”
References to Reporter’s Record . . . . . . . . . . . . . . . . . . . . . . . “[vol#]RR:[page #]”
Plaintiff’s Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “PX-[exhibit #]”
Defendant’s Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “DX-[exhibit #]”
Appellee’s Brief - Page xii
STATEMENT OF THE CASE
This is a malicious prosecution case.1 Smith filed a Rule 202 petition
against the Bank to investigate his malicious prosecution claim,2 but his attorney
neglected to file suit within one year. Smith sued the attorney for malpractice,3 but
the attorney designated the Bank as a responsible third party.4 Smith joined the
Bank as a defendant and settled with the attorney. The case was transferred from
Smith County to Hopkins County on the Bank's motion and proceeded to trial,
resulting in a verdict against the Bank including actual and exemplary damages.5
The trial court entered judgment on such verdict, applying a settlement credit as
requested by the Bank.6 The judgment was modified to reduce the amount of
pre-judgment interest.7 The Bank appeals.
1
CR:403
2
CR:585
3
CR:12
4
CR:23
5
CR:535
6
CR:582
7
SCR:5
Appellee’s Brief - Page xiii
STATEMENT OF FACTS
1. How it Really All Began
Smith obtained a loan from the Bank to purchase a commercial embroidery
machine and pledged the machine as collateral. (DX-20) He fell behind on his
payments, and in July, 2004, the Bank’s vice-president in charge of collections,
Jerry Cone, sent Smith a letter threatening to file “Hindering a Secured Creditor
with the Sulphur Springs Police Department” if payment arrangements were not
made. (3RR:44; PX-6) When Cone made this threat, he had never spoken to Smith
and had no information whatsoever that Smith had done anything improper with
any collateral. (3RR:45,76; 4RR:102)
Smith contacted Cone (4RR:126) and agreed to sign a new, consolidated
loan with monthly $400 payments. (3RR:47; 4RR:79) Smith executed the new note
and security agreement on August 13, granting a security interest in the machine.
(DX-41,42)
Smith and Cone agreed that Cone would help Smith sell the machine by
taking it to the bank to show customers, and that when it was sold, all the proceeds
would be applied to Smith’s loan balance. (3RR:45-47; 4RR:81-82; PX-20) With
Smith’s help, Cone loaded the machine in his vehicle and took it to the bank.
(3RR:46-47,171; 4RR:47-48; PX-20)
Appellee’s Brief - Page 1
Smith and Cone agreed that the minimum price Smith would accept for the
machine was $9,800. (4RR83,101)8 Nevertheless, Cone sold the machine for
$6,000 without Smith’s permission. (3RR:69; 4RR:11-12,13,14,27-28,185-
186,192) The buyers financed their purchase with a $500 down payment to the
Bank and a $5,500 loan for the balance, which Cone personally handled. (3RR:59-
60,127)
When Smith learned of the sale, he demanded Cone credit his loan by his
$9,800 asking price, but Cone refused. (4RR:87) Smith had his partner, Lillian
Lake, stop payment on the $400 loan payment check she had recently sent.
(4RR:86) Cone called Lake, angry and upset, and told her he would get his money
one way or another. (4RR:55-56) Cone told Smith he would fix him so he would
never again work on a military base or government job. (4RR:89-90) After these
discussions, Cone and Smith had no further contact, and the Bank never requested
or demanded the return of any other alleged collateral. (3RR:118, 119,125;
4RR:58,59,67,68,90,91,143)
Although he refused Smith’s demand to credit the loan by $9,800, Cone
understood and believed that Smith’s loan had nevertheless been credited by the
8
Cone claimed it was $7,800. (3RR:68-69)
Appellee’s Brief - Page 2
$6,000 selling price as they had agreed. (3RR:64-65; PX-20)9 Such $6,000 credit
would put Smith fifteen months ahead on his loan payments, giving Smith the
option to wait fifteen months to make his next payment. (3RR:66-67)
Five months later, on February 7, 2005, the Bank filed a lawsuit against
Smith, alleging Smith had defaulted on the loan, that the entire $24,378.54
principal amount was unpaid, and that $30,425.91 was currently due. (PX-14). On
the same day the lawsuit was filed, the Bank secured an Order Granting Motion for
Substituted Service based on an affidavit of Cone. (PX-15) The affidavit falsely
swore that Cone had attempted to contact Smith at his residence on many
occasions and had been advised many times that Smith was a long-haul truck
driver and was seldom home. (PX-21:p.CNB_00222) Cone admitted that these
statements in the affidavit were false. (3RR:135-136,137,139). The Bank’s expert
confirmed such constitutes perjury. (4RR:290-291)
The Bank took no action on its lawsuit. (PX-16,17) Instead, three weeks
later, Cone personally filed “hindering a secured creditor” charges against Smith
with the Sulphur Springs Police Department. (3RR:76; PX-20)10 Cone initiated
9
Cone did not discover until after his 2009 deposition that no money was actually
credited to the loan. (3RR:64-65)
10
Cone knew from experience the police would want to see that a civil lawsuit had
been attempted. (3RR:133) The Bank never pursued the suit because, he said, “we turned
it over to the police department to file the claim.” (3RR:140)
Appellee’s Brief - Page 3
such charges on behalf of the Bank. (3RR:77)
2. Who Cares About Probable Cause?
Cone’s purpose in filing the charges was “to get him indicted and charged
with the crime.” (3RR:112-113) Nevertheless, Cone admitted that when he filed
charges, he had no knowledge of any facts or circumstances whatsoever that would
lead him to reasonably and honestly believe that any crime had been committed.
(3RR:115-116,119) Smith had never interfered with any efforts to repossess any
collateral or even refused to tell the Bank where it was. (3RR:118-119).
Cone specialized in collections and knew and understood that the crime of
hindering a secured creditor is not a vehicle to collect a debt, but applies to a
situation where someone has destroyed or basically stolen collateral . (3RR:35-36)
He knew that a Bank cannot file such charges to collect a debt, as opposed to in a
situation where somebody has destroyed collateral. (3RR:36,104-105)
Nevertheless, Cone admitted that when he filed the complaint with the police, he
knew nothing about Smith destroying, removing, or even hiding any collateral.
(3RR:115-116) "I didn't know anything about the collateral."(3RR:119)
3. Untruths And Consequences
As reflected on the incident and offense reports, (PX-27; PX-28) Cone
provided the following documents to the police:
Appellee’s Brief - Page 4
• Two copies of the August, 2004, security agreement. The only collateral
specifically identified is the embroidery machine. (PX-21:pp.CNB_00188,
CNB_00196)
• Copy of a financing statement dated May, 2001. No collateral is identified,
and the loan was no longer outstanding. (PX-21:p.CNB_00216)
• Copy of the Bank’s civil petition against Smith. (PX-21:p.CNB_00217)
• Copy of “civil paper,” apparently the Bank’s Motion for Substituted Service,
including the false affidavit of Cone. (PX-21:p.CNB_00220-222)
• Copy of Texas license plate return.
• Copy of the demand letter Cone had sent in July threatening to file criminal
charges (before Smith contacted the Bank, signed a new loan, and turned
over the machine), and the envelope showing it was returned unclaimed.
(PX-21:pp.CNB_00224-225)
No other loan documents were provided. (3RR:88) The only piece of equipment
mentioned as collateral was the embroidery machine. (3RR:79-80)
Cone met with Officer Irving. (3RR:79; 4RR:32) Cone was the only bank
representative who dealt with the police, and Irving was the only police officer
Cone spoke to. (3RR:75; 4RR:33)
The police conducted no investigation beyond talking to Cone and receiving
information from him; they had no other source of information and “totally took
the word of the Bank.” (4RR:33,36) Irving documented what Cone told him in a
written narrative. (4RR:39; PX-29) It stated that Smith secured a loan on 8/13/2004
for $24,378.54, that no part of it had been repaid, and that Smith had not contacted
Appellee’s Brief - Page 5
the Bank or returned any property associated with the loan. (PX-29) Cone admitted
these statements were false, as Smith had been in contact with the Bank, the
embroidery machine had been returned, and payments had been made. (3RR:204)11
In addition to providing documents which identified the embroidery
machine as the collateral, Cone told Irving that Smith had not contacted the Bank
or returned any of the property associated with the loan. (4RR:36) Cone told
Irving the machine was the collateral. (4RR:37) Irving wrote exactly what Cone
told him and did not add or omit anything. (4RR:39) This was his job and practice,
and if Cone had told him the machine was not actually the collateral in question,
Irving would have noted that on his narrative. (4RR:38,39)
Cone told the police the missing collateral was worth $23,150. (3RR:81,92)
At the time, Cone knew that all the collateral on all of Smith's loans, other than the
machine, was worth at most, $14,800. (3RR:100-102). The Bank estimated the
embroidery machine was worth approximately $8,000 (3RR:94).12
When Cone filed the criminal charges, he believed the $6,000 sales price of
the machine had been credited against Smith's loan (3RR:64-65), and knew that
11
The Bank is thus absolutely incorrect in asserting that “no one disputes that the
information in Plaintiff's Exhibit 29 is true.”
12
Adding $8,350 to $14,800 yields the $23,150 value Cone reported. No other
collateral was ever pledged by Mr. Smith. (3RR:94-95)
Appellee’s Brief - Page 6
would have put Smith 15 months ahead on his payments. (3RR:66-67). Yet Cone
told the authorities that Smith had not contacted the Bank, had made no payments,
and had returned no collateral. (PX-29)
Irving forwarded the information and allegations Smith had provided to
Lieutenant Stillwagoner, who did not himself speak to Smith. (4RR:33)13
Stillwagoner put such information in a probable cause affidavit. (PX-25) Based on
such information, an arrest warrant was issued for Smith on a charge of hindering a
secured creditor (signed by a Justice of the Peace who was the wife of the Bank’s
vice-president). (4RR:277; PX37,pp.CNB_00300-301)
4. Misery
Smith was arrested in front of his friend and neighbor while on a fishing trip,
after he was stopped in Henderson County for not wearing a seat belt, and was
taken to jail. (4RR:104-105) For the first day and a half, Smith was forced to sit in
the drunk tank (though he did not drink and was not drunk) before being
transferred to a cell with a bunk. (4RR:105) The conditions were bad, including: a
one-inch feather mattress, an open shower, no toilet paper, a cup of coffee in the
morning with a quarter scoop of egg, half a bologna sandwich for lunch; further,
13
It is not uncommon for a detective to simply rely on what a victim tells an
officer. (5RR67-68)
Appellee’s Brief - Page 7
Smith had a fight with another inmate over a bunk. (4RR:106)
Smith suffers from a seizure disorder for which he takes Phenobarbital.
(4RR:61) The medication is very important, because without having it at least
twice a day he can go into seizures, including grand mal seizures. (4RR:61) While
in jail, Smith was without this medication. (4RR:61) He kept asking for it, but
they could not give him any. (4RR:105) Without his medication, he is unable to
sleep and loses his sense of time and space. (4RR:107) His mind goes into
overdrive and he just overloads. (4RR:107)
After several days in the Henderson County jail Smith was transferred to
Sulphur Springs, where he spent several more days before finally being released.
(4RR:107) When Lake picked him up he was physically very shaky.(4RR:61) He
was speaking incoherently, like he had "fuddle brain." He would start to say
something then his sentences would become all jumbled. (4RR:62) The first thing
he did when he got to the car was take a double dose of his medication.
(4RR:61-62)
He was rough, dirty, and smelled. (4RR:61-62) He was also very angry
because he knew he had not done what he was accused of. (4RR:62) He felt like he
had been dropped down and kicked – and totally wronged. (4RR:62) He was also
scared because he did a lot of work on high security military bases, and feared the
Appellee’s Brief - Page 8
effect it would have on his ability to work. (4RR:63)
5. Things Cone Forgot
When Smith appeared in court for his arraignment, Cone was present in the
courtroom, observed the proceedings, and heard the charges read. (4RR:108-109)
The indictment stated that Smith did:
sell or dispose of secured property, to-wit: Toyota 860-12 needle embroidery
machine, with intent to appropriate the proceeds or value of the secured
property, and at the time of the said sale or disposition, the said defendant
was a debtor under a security agreement and did not have a right to sell or
dispose of the secured property, and said proceeds were $20,000 or more but
less than $100,000... (PX-22)
Over one year later, in May of 2007, the indictment was amended to allege that
Smith:
having theretofore signed a security agreement (see Exhibit “A”) creating a
security interest in property, namely, Toyota 860-12 needle embroidery
machine, conceal said property by not allowing a representative of City
National Bank to retrieve the property or returning the property at the
request of City National Bank. (PX-36,p.CNB_00263)
Although Cone testified he never had any communications with the D.A.’s
office,14 the evidence proved he did. After filing the charges with the police, Cone
received a letter from the D.A. stating they needed to know the value of the items
in question so that proper restitution could be ordered. (3RR:91-92; PX-34) The
14
Cone testified that if he had been in communication with the D.A.’s office, he
would have “straightened out this error.” (3RR:214)
Appellee’s Brief - Page 9
letter enclosed a "Restitution Form" asking for the amount of "property damages,"
and the value of "unrecovered property." (PX-35) Cone filled it out and signed it
on behalf of the Bank, stating that the Bank's damages totaled $31,925.91 and that
the value of the allegedly unrecovered collateral was $23,150. (PX-35)
On cross-examination, Cone admitted sending the form, but claimed he had
no other communications with the D.A. and never knew anything about Smith
being arrested, jailed, or indicted. (3RR:215-216) He was then shown a copy of a
letter the D.A. had sent to him personally, stating Smith had been indicted and that
Cone would be notified of relevant court dates. (PX- 33) Cone conceded he
probably did receive the letter, but claimed not to remember. (3RR:216) Cone
admitted the handwritten notes on the bottom of the letter were his. (3RR:216)
Cone’s notes included several apparent hearing dates, including “2-28-06” (three
days after the date of the letter), “pre-trial 6-23-06, 9AM, w/no atty Probably will
be reset,” and “11-13-06 Tim Rountree w/D.A.’s office.” (PX-33) Cone then
admitted he could not tell the jury he was not in communication with the D.A.’s
office. (3RR:216-217) The Bank’s expert confirmed that Tim Rountree was indeed
an assistant district attorney (4RR:270) and that Cone’s notations obviously
indicated he was checking to see what had happened in court that day and finding
out when the next setting was. (4RR:272)
Appellee’s Brief - Page 10
6. Shame And Degradation
Smith remained under indictment for over two years until the D.A.
dismissed the charges without explanation in 2008. (PX-21,pp.CBB_00256-257)
During this time, Smith had to appear in court approximately 18 times. (4RR:109;
PX-36,pp.CNB_000270-292)
Having a felony charge hanging over him was extremely distressing. He had
to lie to his boss every time he had to take off work to appear in court, as Smith
was afraid of being fired if he found out. (4RR:111) When Smith would appear in
court, he would be seen by friends and people in town he did business with, who
would wonder why he was going to jail. (4RR:111) He was embarrassed and
humiliated. (4RR:112)
It was very upsetting to be indicted for something he knew he was innocent
of. (4RR:63) He felt like the neighbors were all looking down on him. The people
that he had worked for and with now had a different view of him. He had been
charged with a felony and branded a crook, a thief. (4RR:63) He was terribly
embarrassed around family and friends. (4RR:63) At the time of trial – years after
he was originally arrested – Smith still felt humiliated and embarrassed. (4RR:112)
Smith also suffered significantly from his inability to earn a living doing
what he most enjoyed, working on government construction projects. Prior to
Appellee’s Brief - Page 11
being arrested, Smith had a security clearance and had done a lot of construction
work for the government in different parts of the country. (4RR:64,75) For most of
his life he had made a living working in construction. (4RR:74) He particularly
liked working on government jobs – “the only one in the world that guarantees
pay” – and did so every chance he could. (4RR:74) The government jobs required
a security clearance. (4RR:75) As a result of the Bank’s allegations, he lost
government jobs and was never again able to work on a military base. (4RR:65,66)
The loss of his security clearance prevented him from getting a lot of jobs he
otherwise would have gotten, which he testified about. (4RR:113,114,115)
Despite the dismissal of the criminal charges, as of the date of trial Smith’s
arrest still showed up on criminal background checks, hanging over his head and
continuing to limit what he could do professionally. (4RR:113) This was very
upsetting to him, as it impacted not only his reputation, but his ability to provide
for his family. (4RR:66) It was very important to Smith to clear his name.
(4RR:69) This had been hanging over him almost a decade. (4RR:117) Even at the
time of trial, the Bank was still telling people he was guilty, which angered and
insulted him. (4RR:118)
Appellee’s Brief - Page 12
7. The Litigation
After the criminal charges were dismissed, Smith retained attorney Charles
Clark, who filed an “Application for Investigative Depositions” of the Bank under
T EX. R. C IV .P. 202 (CR:585) Clark’s efforts to schedule pre-suit depositions of
the Bank were delayed for months by the Bank's attorney until he finally notified
Clark that limitations had expired. (CR:35,39)
Smith sued Clark for negligence. (CR:12) After fifteen months of litigation,
Clark filed a motion for leave to designate the Bank as a responsible third party,
alleging the Bank “caused or contributed to cause the harm for which the plaintiff
in this matter seeks to recover damages from Defendants.” (CR:23) No objection
was filed; accordingly, the court entered an order granting the motion and
designating Bank a responsible third party. (CR:25)
In accordance with T EX. C IV. P RAC. & R EM. C ODE [“C.P.R.C.] § 33.004(e)
(WEST 2008), Smith then joined the Bank as a defendant, alleging malicious
prosecution. (CR:27) Smith subsequently settled his claims against Clark for
$100,000 and dismissed Clark from the case. (CR:79; CR:74)
The Bank affirmatively pled that Smith had settled with Clark, who was a
settling party under Chapter 33, and that the Bank was therefore entitled to an
offset and settlement credit. (CR:494,497)
Appellee’s Brief - Page 13
The Bank filed a motion for summary judgment based on the statute of
limitations, which was denied. (CR:487) Thereafter, the Bank did not attempt to
offer any evidence or obtain any findings at trial in support of such affirmative
defense.
The jury returned a unanimous verdict finding the Bank had maliciously
prosecuted Smith and assessing damages of $150,000 for “physical pain and
mental anguish,” $250,000 for “injury to reputation,” and $500,000 in “exemplary
damages.” (CR:535-545)
The trial court entered a judgment which, based on Bank’s affirmative
pleading and the parties’ stipulation (4RR:165), provided that “the amount of
damages to be recovered by the Plaintiff should be reduced by $100,000 in
accordance with C.P.R.C. § 33.0l2(b).” After such credit, the judgment awarded
$800,000, plus $84,542 in prejudgment interest. (CR:582-3)
The Court then granted the Bank’s motion to modify the judgment to include
only $54,243 in prejudgment interest. (SCR:5)
Appellee’s Brief - Page 14
SUMMARY OF ARGUMENT
The Bank’s argument that it was improperly designated as a responsible
third party – because it allegedly did not contribute to “the harm for which
recovery of damages was sought” from Clark – is barred because such assertion is
clearly adverse to the Bank’s request for a settlement credit under Chapter 33,
which the trial court granted. Such credit required that Clark settled claims with
respect to “the harm for which recovery of damages was sought” from the Bank.
Additionally, the Bank’s affirmative pleading for such a credit was a judicial
admission, which estopps the Bank from arguing the contrary.
Furthermore, the Bank waived its alleged statute of limitations defense by
offering no proof and requesting no findings at trial on such affirmative defense.
As a matter of law, its motion for summary judgment preserved no error.
Moreover, the Bank secured no order on its motion to strike its designation as a
responsible party, which the trial court could not have granted in any event as the
Bank had been joined as a defendant and was no longer a designated third party.
Regardless, the Bank was properly joined under Chapter 33 because it was
alleged to be responsible for contributing, in some way, to some portion of the
injuries or damages Smith sought from Clark. Such damages included all
underlying damages recoverable from the Bank in a malicious prosecution suit, as
Appellee’s Brief - Page 15
well as additional mental anguish and harm to Smith’s reputation as a result of
Clark’s conduct.
After being properly designated, the Bank was timely joined as the plain
language of Chapter 33 clearly permitted. The statute does not apply only to
derivative claims or consistent claims as the Bank asserts, and does not produce an
absurd result, nor was any vested right curtailed. The statute promotes public
policy, as determined by the legislature, and this Court should decline the Bank’s
request to disregard its unambiguous language
This Court should also reject the Bank’s argument that punitive damages
must be reversed because Chapter 33 does not apply to punitive damages. Smith
did not seek punitive damages from Clark, and Clark did not designate the Bank as
being responsible for such a non-existent claim. All damages recoverable from the
Bank in a malicious prosecution case were part of the actual damages Smith sought
against Clark, but Smith recovered punitive damages against the Bank (which was
a defendant, not a third party) under the common law, not Chapter 33. Moreover
Chapter 33 prohibits the reduction of exemplary damages, not their recovery.
Turning to the evidence, the jury’s finding that the Bank initiated the
prosecution was not only sufficiently supported, it was required. The Bank’s own
attorney elicited clear and specific testimony from the Bank’s own expert witness
Appellee’s Brief - Page 16
that the Bank initiated the prosecution for purposes of malicious prosecution. This
fact was also confirmed by the testimony of the Bank’s vice-president Cone, who
filed the charges.
Although not required, the evidence established that the Bank also
“procured” the prosecution by providing information to the authorities it knew to
be false, thereby causing the prosecution.
The jury’s finding that the Bank lacked probable cause was likewise strongly
supported by more than sufficient evidence, including Mr. Cone’s clear
acknowledgment that he had no knowledge of any facts whatsoever that would
lead him to reasonably and honestly believe that Smith had committed any crime.
Finally, overwhelming evidence supports the jury’s finding that Mr. Smith –
who was wrongfully accused of a felony of moral turpitude, arrested, jailed for
almost a week without his medication, prosecuted for over two years, stripped of
his security clearance, humiliated in front of his friends and neighbors, and forced
to fight almost a decade to clear his name – sustained some physical pain or mental
anguish.
In short, the trial court did not err and was well within its discretion in
entering judgment in Smith’s favor, based on the law and the jury’s verdict, and
must be sustained.
Appellee’s Brief - Page 17
ARGUMENT
I. Response to Appellant’s Issue No. 1
A. The Bank is barred and estopped from asserting that it is not a
“responsible third party” under Chapter 33 because such assertion is
clearly adverse to its position in the trial court that Clark was a
“settling person” under Chapter 33, upon which the Bank sought and
obtained judgment.
The Bank affirmatively pled for,15 proved,16 and obtained judgment
awarding,17 a settlement credit on the grounds that Clark was a “settling person”
under Chapter 33. Chapter 33 defines a “settling person” as a person who has
settled with respect to “the harm for which recovery of damages is sought.”18
Using identical language, Chapter 33 defines a “responsible third party” as a
person who contributed to causing in any way “the harm for which recovery of
damages is sought.”19
The Bank was designated as a responsible third party for the same reason
Clark is a settling person – the harm for which recovery of damages was sought
15
CR:497, paragraph 10.
16
RR:165
17
CR:582
18
C.P.R.C. 33.011(5)
19
C.P.R.C. 33.011(6)
Appellee’s Brief - Page 18
from each of them was the same harm (in whole or in part). The Bank's assertion
that it did not contribute to the harm for which damages were sought from Clark is
directly and irreconcilably in conflict with its affirmative pleading that Clark
settled with respect to the harm for which damages were sought from the Bank,
and to the Court entering judgment in the Bank's favor based on the Bank's request
for a settlement credit on such basis.
A party is estopped from taking a position on appeal that is clearly adverse
to its position in the trial court. See, e.g., Tittizer v. Union Gas Corp., 171 S.W.3d
857, 863 (Tex. 2005). Having affirmatively obtained a judgment from the trial
court, the Bank cannot, on appeal, take a position inconsistent with that part of the
judgment. Litton Indus. Prod., Inc. v. Gammage, 668 S.W.2d 319, 321-22 (Tex.
1984).
B. The Bank is barred and estopped from asserting that it is not a
“responsible third party” under Chapter 33 because the Bank judicially
admitted that “the harm for which recovery of damages is sought” from
Clark and the Bank was the same by affirmatively and unequivocally
pleading that Clark was a “settling person” under Chapter 33, which
requires that Clark settled claims with respect to “the harm for which
recovery of damages is sought” from the Bank.
The Bank clearly, deliberately, and unequivocally pled that Plaintiff had
sued and settled with Clark, who was a settling party under Chapter 33, and that
the Bank was entitled to an offset and settlement credit for any and all monies
Appellee’s Brief - Page 19
paid by Clark.20 The Bank thus pled that Clark is a person who settled with
respect to “the harm for which recovery of damages is sought.” 21
“The facts alleged or admitted in the live pleadings of a party are accepted as
true by the court and jury and are binding on the pleader.”22 “Assertions of fact, not
pleaded in the alternative, in the live pleadings of a party are regarded as formal
judicial admissions. A judicial admission that is clear and unequivocal has
conclusive effect and bars the admitting party from later disputing the admitted
fact.”23
By pleading that Clark was a settling person under Chapter 33, and that the
Bank was entitled to a settlement credit under Chapter 33, the Bank has judicially
admitted the required Chapter 33 element that Clark settled with respect to “the
harm for which recovery of damages is sought,” and is estopped to claim the
contrary.24
20
CR 497, paragraph 10. See also CR 494, paragraph 5.
21
C.P.R.C. 33.011(5).
22
Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 769 (Tex. 1983).
23
French v. Gill, 252 S.W.3d 748, 754 (Tex.App.–Texarkana 2008, pet. denied),
quoting, Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 568 (Tex. 2001).
24
Shepherd v. Ledford, 962 S.W.2d 28, 33 (Tex. 1998) ("because the defendants
judicially admitted facts ... they are estopped from now claiming to the contrary.")
Appellee’s Brief - Page 20
C. The Bank has failed to preserve any error on its alleged statute of
limitations defense.
1. The Bank never secured an order on its improper motion to strike
its own designation as a responsible third party, choosing instead
to proceed with its limitations defense by motion for summary
judgment.
Appellant’s Brief refers to the Bank’s motion to strike its designation as a
responsible third party and to several motions for summary judgment; however, the
only such motion the Bank ever secured an order on was its second amended
motion for summary judgment. (CR: 487)
2. The denial of the Bank’s motion for summary judgment
preserved no alleged error.
As a matter of law, an order denying a motion for summary judgment is not
reviewable after a conventional trial on the merits has been held. Ackerman v.
Vordenbaum, 403 S.W.2d 362, 365 (Tex. 1966);25 See also, e.g., Hines v.
Commission for Lawyer Discipline, 28 S.W.3d 697, 700 (Tex.App.–Corpus Christi
2000, no pet.) (“The general rule is that appellate courts do not have jurisdiction to
hear denied motions for summary judgment on appeal.”); Adams v. Parker Square
Bank, 610 S.W.2d 250 (Tex.App.–Fort Worth 1980, no pet.) (“an appeal does not
25
An exception exists where, unlike at bar, both parties file competing motions for
summary judgment on the same issue and one is granted. Ackerman, 403 S.W.2d at 364,
365 (citing Tobin v. Garcia, 316 S.W.2d 396 (Tex. 1958)).
Appellee’s Brief - Page 21
lie from an order overruling a motion for summary judgment.”). Therefore, the
trial court’s order overruling the Bank’s motion for summary judgement could not
and did not preserve any error.
3. At trial, the Bank offered no proof to establish its alleged
limitations defense and did not request or secure any findings to
sustain such affirmative defense; nor did it move for a directed
verdict in such regard.
Because the statute of limitations is an affirmative defense, the Bank had the
burden to plead, prove, and secure findings to support the defense. Clark v.
Dillard’s, Inc., 460 S.W.3d 714, 719 (Tex.App.–Dallas 2015, no pet.); Edlund v.
Bounds, 842 S.W.2d 719, 728 (Tex.App.–Dallas 1992, writ denied). The Bank
failed to do so. Instead, after the trial court denied its summary judgment, the
Bank did not attempt to offer any evidence or obtain any findings at trial in support
of the defense, either by the submission of jury questions or by motion for directed
verdict.26
Notably, this is not a case where evidence and jury findings were not
required due to the defense being established as a matter of law.27 Under the
26
The Bank did move for a directed verdict on the statute of limitations with regard
to Plaintiff’s “unreasonable collection efforts” cause of action, which was granted.
4RR:162-163. A limitations defense was not pursued, however, with regard to the
malicious prosecution claim.
27
An issue which is normally a question of fact can, in some circumstances, be
proved so conclusively by the evidence at trial that it becomes a question of law. See, e.g.,
Appellee’s Brief - Page 22
posture of this case, in order to establish that Smith’s suit was barred by
limitations, the Bank would have to prove that it was not responsible for any
portion of the damages Smith had alleged against Clark.28 Such would have
entailed evidence and arguments addressing the damages Smith had alleged against
Clark – including the loss of the underlying lawsuit recovery, mental anguish, and
ongoing damage to Smith’s reputation – and whether the Bank was allegedly
partially responsible for such alleged damages.
Moreover, although not necessary, the evidence could have also addressed
whether or not the Bank contributed to causing Clark to miss the statute of
limitations.29 An illustrative case in this regard is In re: Smith, 366 S.W.3d 282
(Tex.App.–Dallas 2012, no pet.) As in the case at bar, the plaintiff in Smith sued
Dixon v. SW Bell Tel. Co., 607 S.W.2d 240, 242 (Tex. 1980)
28
C.P.R.C. § 33.004 (l) (“A party may move to strike the designation of a
responsible third party on the ground that there is no evidence that the designated person
is responsible for any portion of the claimant's alleged injury or damage.”) This standard
is addressed in more depth in Section I-E of this brief, infra.
29
Clark testified in his deposition that his efforts to schedule pre-suit depositions of
the Bank were delayed for months by the Bank’s attorney until he finally notified Clark
that limitations had expired. (CR:35,39) Clark had known the Bank’s attorney for 35
years (CR:57) and (unbeknownst to Smith) once served with him as co-counsel for the
Bank in defense of another lawsuit filed by a bank customer. [Such testimony appears in
the deposition of the Bank’s president, Lee Teets, which is not a part of the record in this
appeal.] Because this issue was not tried, none of this testimony was introduced at trial
and is mentioned solely to illustrate the type of hypothetical testimony that could have
been admitted if the Bank had proceeded with the defense.
Appellee’s Brief - Page 23
his attorney for missing a statute of limitations to file a lawsuit against a tortfeasor
– the driver of a vehicle involved in an injury accident. After being sued, the
attorney moved for leave to designate the driver as a responsible third party. The
plaintiff opposed such motion and the trial court denied it, but the Court of Appeals
reversed. Like the Bank in the case at bar, the plaintiff argued that since the driver
was not an attorney, she could not have contributed to the attorney’s error in
missing limitations, thereby losing the right to pursue the car-wreck case, which
the plaintiff characterized (apparently without disagreement) as the harm in
question. Without addressing whether such characterization was correct, the Court
of Appeals held that it was nevertheless improper to deny the motion without
giving the movant an opportunity to attempt to show that the driver had indeed
somehow contributed to the attorney’s error. Smith, 366 S.W.3d at 286.30
As addressed in detail below, the Bank was properly designated as a
responsible third party because it allegedly contributed to causing part of the harm
or damages Smith sought to recover from Clark; however, even if the Bank were
30
The attorney/defendant pled contributory negligence against the plaintiff,
claiming to have relied on information provided by the plaintiff when he mistakenly sued
the wrong person. Smith, 366 S.W.3d at 286, fn.2. The court explained, “If [the
attorney/defendant] made a similar allegation against [the driver] – that she somehow
tortiously contributed to any error committed by [the attorney/defendant] –the fact that
[the driver] is not an attorney would not necessarily mean she could not have tortiously
contributed to cause the harm, for which [plaintiff] is suing [the attorney/defendant] .” Id.
at 286.
Appellee’s Brief - Page 24
correct in asserting it would have to have contributed to Clark’s missing
limitations, rather than simply contributing to the damages sought, the Bank still
never proved that it did not somehow contribute to such error. The Bank made no
effort whatsoever to present anything to the jury or trial court in such regard.
In short, although the Bank did plead limitations, it did not prove such
defense under the evidence and did not secure any findings to support the defense.
Accordingly, the affirmative defense of limitations was waived.
D. The trial court had no discretion to grant the Bank’s improper motion
to strike its own designation as a responsible third party.
Although the Bank failed to secure an order on its motion to strike, denial of
such motion could not have been erroneous as the Bank had no standing and was
now a defendant and no longer a designated third party.
If a defendant designates an entity as a responsible third party, an opposing
“party” may move to strike that designation [C.P.R.C. § 33.004(f), (g),(l) (WEST
2008)], but a responsible third party cannot object to or strike its own designation.
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee, Inc., 381 S.W.3d 635, 642
(Tex. App. --San Antonio 2012, no pet.); Flack v. Hanke, 334 S.W.3d 251, 261-62
(Tex. App.-San Antonio, 2010 pet. dism'd). Further, once a party has been joined
as a defendant, it is a party, not a responsible “third party” subject to being
stricken. Flack, 334 S.W.3d at 262. Accordingly, a trial court has no discretion to
Appellee’s Brief - Page 25
strike the designation of a responsible third party when the challenge comes from
the responsible third party itself. Flack, 334 S.W.3d at 263; See FFP. Operating
Ptnrs., L.P. v. Duenez, 237 S.W.3d 680, 694 (Tex. 2007). Simply stated, “Chapter
33 does not authorize a joined defendant to litigate its previous designation as a
responsible third party.” Jay Miller, 381 S.W.3d at 642, citing, Flack, 334 S.W.3d
at 261-63.
In this case, Clark filed a motion for leave to designate the Bank as a
responsible third party, which the trial court reviewed and granted. The Bank, as
an entity which had been designated as a responsible third party but had not yet
been sued, simply did not have standing to object or to strike its designation, and
did not attempt to do so. The court then granted the designation, and the statute of
limitations no longer barred Smith's claims against the Bank, per the express
language of the statute.
Once Smith subsequently joined the Bank as a defendant, there was no
longer any responsible third party designated. Allowing a recently-joined
defendant that was previously a responsible third party to challenge its own
designation as a responsible third party would improperly require that party to be
simultaneously both a defendant and a responsible third party. Flack, 334 S.W.3d
at 262. Such a use of the statute “conflicts with its plain wording and renders the
Appellee’s Brief - Page 26
statute unworkable.” Id.
Accordingly, the Bank was not capable of striking its designation before it
was joined as a defendant and, once joined as an actual party, was no longer a
"third party" capable of being stricken. As explained in Jay Miller and Flack, the
statute simply provides no mechanism for a responsible third party to challenge its
own designation, and a joined defendant lacks standing to collaterally attack that
designation. The court thus could not have properly granted the Bank’s motion to
strike, and its refusal to do so could not constitute error.
E. The trial court did not err in entering judgment against the Bank for
malicious prosecution.
1. The Bank was properly joined and timely sued under Chapter 33
because it was responsible for contributing, in some way, to some
portion of Smith’s alleged injury or damages.
The Bank’s argument that it was improperly joined in a legal malpractice
case because it did not commit legal malpractice mis-construes the law, and is
unsupported by any authority. The clearly-defined test is whether the Bank was
responsible for contributing “in any way” to “any portion of [Smith’s] alleged
injury or damages.” C.P.R.C. § 33.011(6) (A “responsible third party” means “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
Appellee’s Brief - Page 27
activity that violates an applicable legal standard, or by any combination of
these.”); C.P.R.C. § 33.004 (l) (“A party may move to strike the designation of a
responsible third party on the ground that there is no evidence that the designated
person is responsible for any portion of the claimant’s alleged injury or damage.”)
(emphasis added).
a. The damages Smith sought from Clark included all
damages recoverable from the Bank in a malicious
prosecution suit.
The causes of action Smith asserted against the Bank and attorney Clark
were distinct, but the Bank was responsible for the harm giving rise to the damages
Smith sought from Clark as a matter of law. When Smith sued Clark for mis-
handling his case against the Bank, his primary measure of damages was defined as
the money he could prove he would have recovered from the Bank, had Clark not
negligently failed to file suit.
When an attorney is sued by a client for mis-handling a case, the plaintiff
must prove the “case within the case,” that is, he must prove that, but-for the
attorney’s neglect, he would have prevailed in the underlying lawsuit.
Significantly, to prove damages in the malpractice case, he must prove that he
would have actually recovered damages in the underlying suit. By definition, a
major portion of his damages in the malpractice suit are the damages he would
Appellee’s Brief - Page 28
have recovered in the underlying suit, had the malpractice not occurred
(compensatory, punitive, or otherwise).31
Accordingly, the harm caused by the Bank – and all damages recoverable
from the Bank – is precisely the “harm for which recovery of damages [was]
sought” in Smith’s suit against Clark.
b. The damages Smith sought from the Clark also included
mental anguish and harm to his reputation.
The damages Smith sought against Clark included not only the loss of his
recovery against the Bank, but all other damages resulting from Clark's
malpractice, including continuing damage to his reputation and mental anguish.
See, e.g., Cosgrove v. Grimes, 774 S.W.2d 662, 666 (Tex.1989) (affirming a
mental anguish award in legal malpractice case).
Although the criminal charges had been dropped, the Bank had continued to
assert that Smith was not innocent.32 After everything the Bank had put Smith
31
The Texas Supreme Court has repeatedly explained that, “in a legal-malpractice
case damages consist of ‘the amount of damages recoverable and collectible ... if the suit
had been properly prosecuted.’” Elizondo v. Krist, 415 S.W.3d 259, 263 (Tex. 2013)
(quoting, Cosgrove v. Grimes, 774 S.W.2d 662, 666 (Tex.1989)); see also Akin, Gump,
Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Research Corp., 299 S.W.3d 106, 112
(Tex.2009). Court’s refer to this method of proving damages as a “suit-within-a-suit.”
See, e.g., Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178, 183 (Tex.
App.—Houston [1st Dist.] 2012, no pet.); Greathouse v. McConnell, 982 S.W.2d 165,
173 (Tex. App.—Houston [1st Dist.] 1998, pet. denied).
32
See, e.g., 5RR:125-126; 4RR:232-233,236.
Appellee’s Brief - Page 29
through, the loss of Smith’s ability to proceed with a lawsuit to finally clear his
name was devastating, and could certainly have caused substantial mental anguish
and reputational injury. At the very least, Smith was entitled to allege33 and attempt
to prove such damages against Clark.34 Had the case against Clark gone to trial
rather than settling, Clark could have attempted to prove that all or part of the
mental anguish and harm to Smith’s reputation alleged to have resulted from his
malpractice was caused or contributed to by the conduct of the Bank.
Accordingly, Clark’s designation of the Bank as a responsible third party,
and Smith’s subsequent joinder of the Bank, were entirely proper, even without
considering the “case-within-a-case” damages.
2. Identity of cause of action is not required.
The Bank’s argument that Chapter 33 “does not waive the statute of
limitations on claims not asserted in the original case” because the “plain language
of the statute only allowed revival of the cause of action originally sued under”
33
Smith’s pleadings against Clark, which were not excepted to, broadly and
generally pled for all damages. CR:14
34
Mental anguish damages are not recoverable in a legal malpractice claim alleging
“pure economic loss” (anguish caused solely by the loss of economic compensation) but
are recoverable where the circumstances of a legal malpractice case otherwise make an
award of emotional distress damages appropriate. See, e.g., Cosgrove, 774 S.W.2d at
666; Rhodes v. Batilla, 848 S.W.2d 833 (Tex.App.–Houston [14th Dist.] 1993, pet.
denied); Heath v. Herron, 732 S.W.2d 748 (Tex.App.–Houston [14th Dist.] 1987, writ
denied).
Appellee’s Brief - Page 30
makes no sense, and is contrary to the statutory language. Chapter 33 specifically
provides for the joinder of claims that would otherwise be barred by limitations35
and thus not “originally sued under.” Moreover, it expressly allows such claims
against “any person”36 alleged to have contributed to “any portion”37 of a
claimant’s “injury or damage,”38 “in any way,”39 “whether by negligent act or
omission, by [product liability], by other conduct or activity that violates an
applicable legal standard, or by any combination of these.”40 The plain language of
the statute thus clearly and unambiguously allows the assertion of virtually any
independent cause of action against any party who allegedly contributed to the
“injury” or the “damage.”
The Bank’s attempt to construe “harm” to somehow mean “cause of action”
is contradicted by numerous references throughout Chapter 33 which demonstrate
that “harm” clearly refers to the injuries which are compensated by an award of
35
C.P.R.C. 33.004(e)
36
C.P.R.C. 33.011(6)
37
C.P.R.C. 33.004(l)
38
Id.
39
C.P.R.C. 33.011(6)
40
Id.
Appellee’s Brief - Page 31
damages.41 The statute consistently uses “harm” to mean injury, which in this case
was the injury Smith suffered as a result of the Bank’s wrongful prosecution.42
Such harm is precisely what the jury would have considered and evaluated in
awarding damages had Plaintiff’s claims against Clark gone to trial, just as it was
the harm the jury considered and evaluated in assessing damages against the Bank.
Ignoring the plain and unambiguous language of the statute,43 the Bank
attempts to re-write Chapter 33's definition of a responsible third party to mean a
person who is liable for all or part of the plaintiff’s claim or cause of action against
41
See, e.g., C.P.R.C. § 33.011(1)–(1)(A)(“. . . ‘claimant’ includes: the person who
was injured, was harmed, or died or whose property was damaged . . .”); § 33.011(1),
(1)(B) (“. . . ‘claimant’ includes: . . . any person who is seeking ... recovery of damages
for the injury, harm, or death of that person”); § 33.011(4) (“‘Percentage of
responsibility’ means that percentage . . . attributed . . . with respect to causing . . . the
personal injury, property damage, death, or other harm for which recovery of damages is
sought.”); § 33.011(5) (“‘Settling person’ means a person who has . . . paid or promised
to pay money . . . with respect to the personal injury, property damage, death, or other
harm for which recovery of damages is sought.”); § 33.011(6) (“‘Responsible third party’
means any person . . . causing in any way the harm for which recovery of damages is
sought . . . .”). Substituting “cause of action,” “legal theory,” or “defendant's conduct” for
“harm” in any of these provisions would yield absurd results.
42
Courts must read a statute as whole, not just isolated portions. Tex. Dep't of
Transp. v. City of Sunset Valley, 146 S.W.3d 637, 642 (Tex.2004)
43
Court's “look first and foremost to the words of the statute.” Lexington Ins. Co. v.
Strayhorn, 209 S.W.3d 83, 85 (Tex.2006). A court must construe the statute's words
according to their plain and common meaning, unless a contrary intention is apparent
from the context or unless such a construction leads to absurd results. City of Rockwall v.
Hughes, 246 S.W.3d 621, 625–26 (Tex.2008); see also T EX. G OV.C ODE A NN. §
311.011(a) (Vernon 2005) (“Words and phrases shall be read in context and construed
according to the rules of grammar and common usage.”)
Appellee’s Brief - Page 32
the defendant, as opposed to a person responsible for any part of the plaintiff’s
alleged injuries or damages. If the legislature had intended to limit responsible
third parties to those liable for the plaintiff’s cause of action against a defendant it
could have done so, using clear and well-understood language such as appears in
T EX.R.C IV.P. 38(a), which allows a defendant to join a third party who is liable to
the defendant or to the plaintiff “for all or part of the plaintiff’s claim against him.”
Instead, by referring to causing any portion of the “alleged injury or damages,”
Chapter 33 provides a much broader definition than Rule 38(a).
Moreover, in contrast to the broad language of Chapter 33, Rule 38(a)’s
definition allows only derivative claims for contribution and indemnity.44 Such
derivative actions do not accrue for limitations purposes until a plaintiff recovers
damages or settles its suit against a defendant.45 Accordingly, if Chapter 33 were
indeed limited to such derivative claims, there would be no need for Section
33.004(d)’s provision authorizing joinder notwithstanding limitations. Such would
be meaningless surplusage, which cannot be presumed, since every word of a
44
See, Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891, 902
(Tex.App.–Austin 2001, no pet.), citing, Shoemake v. Fogel, Ltd., 826 S.W.2d 933, 935
(Tex. 1992).
45
City of San Antonio v. Talerico, 81 S.W. 518, 520 (1904); see also, Ingersoll-
Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 211 (Tex. 1999).
Appellee’s Brief - Page 33
statute must be presumed to have been used for a purpose.46
In addition to being contrary to the clear statutory language, the Bank’s
position is contrary to case law. Citing no supporting authority, the Bank argues
this is a case of first impression, but the Bank’s position is actually counter to well-
established law recognizing that when apportioning responsibility and liability for
damages among multiple defendants, no joint conduct or identity of cause of action
is required. Instead, liability and comparative causation under independent causes
of action is routinely considered.
Significantly, this is true even in cases involving an original tort followed by
subsequent professional malpractice. Under Chapter 33's proportionate
responsibility scheme, the negligence of an original tortfeasor and a subsequently-
malpracticing professional are compared in evaluating causation. An example is In
re: Brokers Logistics, Ltd., 320 S.W.3d 402 (Tex.App. – El Paso 2010, no pet.),
which was decided under the same (2008) version of Chapter 33 applicable to the
case at bar. In Brokers, the original defendant in a premises liability case
designated a subsequently-treating doctor as a responsible third party. The
plaintiff then sued the doctor within sixty days, despite the fact that limitations had
otherwise expired. The trial court granted a motion to strike the doctor’s
46
Gray v. Nash, 259 S.W.3d 286, 291 (Tex.App.-Fort Worth 2008, pet. denied).
Appellee’s Brief - Page 34
designation as a responsible third party, but the court of appeals granted
mandamus, holding that, because “a genuine issue of fact regarding [the doctor’s]
responsibility for at least a portion of [the plaintiff’s] injury or damages” had been
raised, “[t]he trial court clearly abused its discretion by striking the designation of
[the doctor] as a responsible third party.” Brokers, 320 S.W.3d at 408. The
original tortfeasor did not cause the doctor to malpractice, and the doctor did not
cause the original tort, but part of the damages sought from each were the same.
The rule continues to apply under the current version of Chapter 33. See,
e.g., ExxonMobil Corp. v. Pagayon, 467 S.W.3d 36, 52 (Tex.App.–Houston [14 th
Dist.] 2015, pet. filed) (trial court in intentional assault case erred in striking the
defendant’s designation of a subsequent treating doctor as a responsible third party
where the evidence raised an issue as to whether the doctor was “responsible for at
least a portion of [the plaintiff’s] ‘alleged injury or damage,’ which is all that the
statute requires.”)
Nevertheless, citing no authority, the Bank asserts that the 2003 amendments
to Chapter 33 provided “a very limited definition of a proper responsible third
party,” limiting it to parties at blame for a “particular cause of action.” Case law
recognizes the opposite is true – that the 2003 amendments actually liberalized and
significantly broadened the definition of a responsible third party:
Appellee’s Brief - Page 35
The purpose of the 2003 amendments to the requirements for designating
responsible third parties was to liberalize who may be so designated, such
that the jury may be permitted to consider the extent to which each involved
entity is at fault, regardless of the extent to which the plaintiff could actually
recover against such an entity.(... the 2003 amendments “substantially
broadened” the meaning of responsible third parties to eliminate those
restrictions and to allow the jury to allocate responsibility among all persons
potentially responsible); Holman, supra, at 884 (describing the new rule as a
“veritable free-for-all, with submission of ‘... unidentified defendants,
phantom vehicles, subcontractors ... whose names can't be remembered,’ and
so forth”) (quoting Tort Reform of 2003: Hearings on Tex. H.B. 4 Before the
Senate Comm. on State Affairs, 78th Leg., R.S. (Apr. 10, 2003), reprinted in
2 Legislative History of Texas H.S. 4: The Medical Malpractice & Tort
Reform Act of 2003, at 1304 (2003)).
Hernandez v. Bumbo, Ltd., No. 3:12-CV-1213-M, 2014 WL 924238, *5 (N.D. Tex.
March 10, 2014) (emphasis added).
3. Smith’s claims against Clark and the Bank are not mutually
exclusive, and Chapter 33 would apply, regardless.
The Bank did not raise its “mutually exclusive” argument in the trial court.
On appeal, the Bank cites no authority for its novel assertion that Chapter 33 does
not waive limitations as to mutually exclusive claims. Instead, numerous scenarios
exist involving mutually exclusive claims where Chapter 33 clearly applies. One
example is where an original defendant and a designated responsible third party,
later joined as a defendant, each assert that the other’s conduct was the sole cause
of a plaintiff’s injuries – for example, by disputing which of them caused an
accident, or disputing which of two distinct events caused the plaintiff’s alleged
Appellee’s Brief - Page 36
damages. If the Bank’s theory were correct, Chapter 33 would not provide for
joinder in such “mutually exclusive” cases.
At any rate, Smith’s claims against the Bank and Clark are not mutually
exclusive. Smith’s entire claim against the Bank was an element of his claim
against Clark (due to the “case-within-a-case” rule), and Smith’s claim against
Clark does not contradict or affect his claim against the Bank at all. There is no
inconsistency.
There is nothing “inconsistent” about the fact that – as applied in this case –
Chapter 33 allows all parties who are somehow responsible for injuring a plaintiff
to be brought into litigation filed against other parties which involves such injuries,
notwithstanding the statute of limitations. This represents a legislative policy, not
an inconsistency.
4. The statute does not produce an absurd result, and no vested right
was curtailed.
The Bank argues that reading the statute to permit its joinder produces an
“absurd result.” Smith could as easily argue it was an “absurd result” that a Rule
202 petition filed against the Bank did not toll limitations on the identified claims,
of which the Bank was fully aware. But in specific response to the Bank’s
argument, it would be much more absurd if the law permitted a Bank which had
maliciously harmed its customer to shift all of its liability to the attorney
Appellee’s Brief - Page 37
attempting to help the aggrieved customer by allowing – or perhaps even
contributing to causing – the statute of limitations to be missed. In short, there is
nothing “absurd” about a legislative scheme that permits the party that actually
caused damages to be joined and held to account, rather than allowing all
responsibility to be permanently shifted onto somebody else.
The Bank’s argument it was deprived of some “vested right” to rely on
limitations is unsupportable and contrary to law. The Bank relies on Baker v.
Hughes, 12 S.W.3d 1 (Tex. 2000), which addressed the completely different
situation where a statutory amendment took away a limitations defense that had
already vested under prior law, thereby violating Article I, Section 16 of the Texas
Constitution which prohibits “ex post facto or retroactive laws.” See, Baker, 12
S.W.3d at 4.47 Such rule has no application to the case at bar, where no statutory
amendment destroyed a pre-existing right.
The precise argument made by the Bank was squarely rejected in Flack v.
Hanke, 334 S.W.3d 251, 260 (Tex.App.–San Antonio 2010, pet. denied), which
held that joinder of claims under Chapter 33.004(e) which would otherwise be
47
The Texas Supreme Court recently noted, “We have only upheld constitutional
retroactivity challenges four times. In two of those cases, we upheld retroactivity
challenges because amendments to statutes of limitations revived claims the previous
statutes barred. [citing Baker] Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698, 708 (Tex.
2014).
Appellee’s Brief - Page 38
barred by limitations cannot violate the rule against retroactive application unless
the cause of action arose before the statute was amended in 2003.
The Bank’s other cited case is to the same effect. Villarreal v. Wells Fargo
Brokerage Services, LLC, 315 S.W.3d 109, 123 (Tex.App.–Houston [1st Dist.]
2010, no pet.) (Because “claims were time-barred when the 2003 amendments to
Chapter 33 were enacted,” section 33.004(e) would not be applied retroactively.)
5. The statute promotes public policy.
The Bank urges this Court to question the statute’s wisdom and logic and
apply a “different construction than as written” in the interest of “public policy.”
The Court should decline to do so. A court’s job is to ascertain the policy and
intent of a statute from its language and apply it as written, not to substitute its
opinions on matters of public policy.
Furthermore, it is much better public policy to permit a tortfeasor primarily
responsible for causing damages to be joined in an ongoing lawsuit, despite
limitations, than to allow all of its liability to be permanently shifted onto others.
Regardless, this is an area entrusted to the legislature.
An extreme example illustrates that courts properly apply Chapter 33.004(e)
as written and permit joinder, even where it is argued that such permits absurd
results or violates public policy. In Flack, the court applied the “plain meaning” of
Appellee’s Brief - Page 39
the statute to hold that joinder of third parties should have been permitted, despite
the fact they had been “designated as RTPs solely to ‘try and wash out their
limitations defense,’” allegedly contrary to “public policy.” Flack, 334 S.W.3d at
260. 261. Applying the statute as written, the court explained:
Section 33.004(e) creates the potential to revive otherwise barred claims
against a designated RTP. This procedure may result in the plaintiff
collaborating with a defendant to join additional tortfeasors. For example,
section 33.004(e) allows a plaintiff to sue a defendant with little or no
liability, and that defendant may then designate the true tortfeasor as an
RTP. Id. The plaintiff subsequently may join the true tortfeasor, avoid a
limitations defense, and nonsuit the original defendant. Id.; see also Gregory
J. Lensing, Proportionate Responsibility and Contribution Before and After
the Tort Reform of 2003, 35 TEX. TECH L.REV. 1125, 1182 (2004) ("A
plaintiff who misses limitations as to one joint tortfeasor can easily suggest
to another joint tortfeasor that it should invoke the responsible-third-party
device-perhaps even offer that tortfeasor some inducement to do so-and then
enjoy a new sixty-day window of opportunity to sue the responsible third
party.")
Flack, 334 S.W.3d at 256. Despite such “public policy” concerns, court applied
the plain language of the statue and held that the trial court abused its discretion in
dismissing the plaintiff’s claims against the third party based on limitations. Id. at
263.
Appellee’s Brief - Page 40
II. Response to Appellant’s Issue No. 2
A. Punitive damages recoverable from the Bank in a malicious prosecution
case were part of the actual damages Smith’s sought against Clark.
The Bank argues that punitive damages should not be recoverable against
the Bank because Smith did not seek punitive damages against Clark, since
Chapter 33.004(e) only allows for the joinder of tortfeasors who could be
responsible for the damages sought from the original defendant. This argument
completely mis-construes the basis of Smith’s claims. All damages Smith could
have recovered from the Bank in a malicious prosecution suit – including punitive
damages – represent part of the compensatory damages Smith sought from Clark.48
Such damages were thus included in the damages which Clark alleged the Bank
was responsible for in his designation of the Bank as a responsible third party.
48
Damages in a legal malpractice case include “the amount of damages recoverable
and collectible ... if the suit had been properly prosecuted.” Elizondo, 415 S.W.3d at 263
(citing Cosgrove, 774 S.W.2d at 666; see also, Akin, 299 S.W.3d at 112. This includes
exemplary damages. Patterson & Wallace v. Frazer, 93 S.W. 146, 148, (Tex.Civ.App.–
El Paso 1906) (“[S]he has lost by such negligence of defendants what she would have
otherwise collected; and the fact that part of the judgment which might reasonably have
been expected to be recovered and collected might have been for exemplary damages
would make no difference.”), rev’d o.g., 94 S.W. 324, 328 (Tex. 1906) (holding that the
trial court’s error in instructing the jury regarding what a witness had said was “harmful”
because it prevented the jury from considering facts in mitigation of the underlying
damages, “especially in the matter of exemplary damages.”); Parsons v. Greenberg, No.
02-10-00131-CV, 2012 WL 310505, *11, (Tex.App.–Fort Worth, Feb. 2, 2012, pet.
denied) (noting that no known case has ever overruled Patterson’s holding that the loss of
underlying punitive damages are recoverable as compensatory damages in a legal
malpractice case.)
Appellee’s Brief - Page 41
B. Chapter 33 prohibits the reduction of exemplary damages, not their
recovery.
The Bank next argues that Chapter 33 “does not apply to exemplary
damages;” however, rather than supporting the Bank’s position, such fact actually
highlights why the Bank’s preceding argument is incorrect.
Section 33.002(c)(2) states that Chapter 33 “does not apply to ... a claim for
exemplary damages included in an action to which this chapter otherwise apples.”
Thus, a defendant cannot shift or reduce his liability for punitive damages to a third
party, nor can a defendant receive a “settlement credit” for settlement payments
representing punitive damages. This is the meaning and effect of section
33.002(c)(2). See, Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 927 (Tex. 1998)
(“A defendant cannot receive credit for settlement amounts representing punitive
damages [because] ‘[t]his chapter does not apply to ... a claim for exemplary
damages included in an action to which this chapter otherwise applies.’”)
Accordingly, if Smith had sought punitive damages against Clark, Clark
could not have properly designated the Bank as a responsible third party with
respect to such punitive damages claim, and the Bank’s first argument would
indeed apply. Punitive damages from Clark, based on Clark’s own conduct, would
not represent compensation for a loss the Bank caused.
Appellee’s Brief - Page 42
This did not occur, however. Smith did not sue Clark for exemplary
damages, and the Bank was not designated or joined because it allegedly caused
the harm giving rise to a non-existent punitive damage claim against Clark. The
Bank was designated because it caused the “actual damages” sought from Clark.
Such is expressly permitted, by Chapter 33. Once the Bank had been so-
designated, it was proper for Smith to join the Bank as a defendant. At that point,
the Bank was no longer a “responsible third party” under Chapter 33 but a
defendant in the case. Flack, 334 S.W.3d at 262. Nothing prohibited Smith from
recovering from the Bank every element of damages the Bank was liable for –
certainly all elements representing part of the actual damages alleged against Clark.
Chapter 33's prohibition against using another party’s comparative
responsibility to reduce a defendant’s liability for punitive damages has never been
construed to prohibit holding a defendant responsible for its own punitive
damages, as the Bank advocates. Instead, punitive damages are routinely awarded
in cases which also involve the application of comparative responsibility under
Chapter 33; the defendant simply does not receive a reduction on punitive
damages. See, e.g., Mobil Oil Corp. 968 S.W.2d at 927.49
49
Thus, if the Bank had alleged and proved that Smith was negligent and
responsible for his own injuries, Smith’s negligence would still have reduced his recovery
of actual damages against the Bank under 33.012(a), notwithstanding the fact that it
would not have reduced his recovery of punitive damages, per 33.002(c)(2).
Appellee’s Brief - Page 43
The Bank was properly designated as a responsible third party because it
allegedly caused at least part of the damages Smith sought to recover from Clark. It
was then permissibly joined as a defendant. Smith’s claims against the Bank arose
under common law, not Chapter 33. Chapter 33 allowed for the Bank’s joinder in
the case, but did not otherwise create or diminish any substantive rights, once the
Bank became a defendant.
III. Response to Appellant’s Issue No. 3
A. Sufficient evidence supports the jury’s finding that the Bank initiated or
procured the prosecution.
1. The evidence shows that the Bank initiated the prosecution;
moreover, the Bank’s representative and its retained expert each
testified and admitted it did.
“A person initiates a criminal prosecution if he makes a formal charge to law
enforcement authorities.” Browning-Ferris Industries, Inc. v. Lieck, 881 S.W.2d
288, 292 (Tex. 1994). That is exactly what the Bank’s vice president Jerry Cone
did when he personally “filed hindering a secured creditor” charges against Smith
with the Sulphur Springs Police Department. (3RR:76; PX-20) Indeed, Cone
testified (then denied) that his purpose in filing the charges was “to get him
indicted and charged with the crime.” (3RR:112-113) Moreover, Cone
acknowledged that he “initiated criminal prosecution” against Smith on behalf of
the bank. (3RR:77)
Appellee’s Brief - Page 44
Significantly, the Bank’s attorney elicited clear and specific testimony from
the Bank's own retained expert witness, former Hopkins County District Attorney
Frank Long, that when the Bank filed the complaint with the police department, the
Bank “initiated the prosecution” within the meaning of the required element of
malicious prosecution. (4RR:234) On cross-examination, Mr. Long confirmed
that, consistent with the Texas Court of Criminal Appeals’ holding that, “A person
initiates a criminal prosecution if he makes a formal charge to law enforcement
authorities,” that is what Cone did when he filed a complaint with the police in this
case. (4RR:254-255)
Smith’s expert, Lamar County District Attorney Gary Young, likewise
testified, “if a person goes to the police, reports a crime, they have initiated
criminal prosecution.” (5RR:22)
The Bank did not object to any of this testimony, offer any contrary
testimony, or request any sort of instruction or definition from the court regarding
initiating the prosecution. The charge did not define “initiate,”50 which is
commonly understood and defined to mean, “to cause or facilitate the beginning
50
“Initiation would not ordinarily need to be defined, as it would be demonstrated
by evidence that a defendant filed formal charges against plaintiff.” Browning-Ferris, 881
S.W.2d at 293.
Appellee’s Brief - Page 45
of.”51 Under the evidence and the charge, “initiation of prosecution” was clearly
established, in addition to being admitted by the Bank’s vice president, and though
expert testimony offered by and on behalf of the Bank.
Contrary to its own testimony and admissions, the Bank quotes language out
of context from an unpublished, unreviewed, El Paso opinion, Gonzalez v. Grimm,
that “initiating” an action “describes executing the charging instrument which goes
before the magistrate who may then issue an arrest warrant.”52 While Gonzalez did
quote such language from the Restatement of Torts, the Bank omits the remainder
of the citation, where the court went on to also quote the Texas Supreme Court’s
holding that, “A person initiates a criminal prosecution if he makes a formal charge
to law enforcement authorities.”53
Gonzalez did not hold or suggest that “execution of a charging instrument”
is required. Gonzalez held that a witness, who had previously reported a man to
the police for threatening to misuse her social security number, had not “initiated
prosecution” when the D.A. had declined to prosecute him based on her complaint,
51
See Webster’s Dictionary: http://www.merriam-webster.com/dictionary/initiate
52
Appellant’s Brief p.24, quoting Gonzalez v. Grimm, No. 08-13-00326-CV, 2015
WL 4137862, (Tex.App.–El Paso 2015, no pet.)
53
Gonzalez, 2015 WL 4137862 at *5, quoting Browning-Ferris, 881 S.W.2d at
292.
Appellee’s Brief - Page 46
but one year later had filed different charges – for criminal assault – based on the
factual statements of an investigating police officer and other witnesses (including
allegations which the original witness herself actually disputed), without
communicating with her at all.54 Such holding in no way changes the fact,
confirmed by the court, that “[a] person initiates a criminal prosecution if he makes
a formal charge to law enforcement authorities.”55 As all the witnesses agreed at
trial, that is exactly what the Bank did.
2. The evidence shows that the Bank procured the prosecution.
Because the Bank initiated Smith’s prosecution, evidence of procurement is
not required, as a plaintiff asserting malicious prosecution may prove the defendant
“either ‘initiated’ or ‘procured’” criminal proceedings. Browning-Ferris, 881
S.W.2d at 293 (emphasis added). Nevertheless, even if Cone had not personally
initiated the criminal proceedings by filing hindering a secured creditor charges
against Smith with the police, the Bank would still be liable for “procuring” the
prosecution, as sufficient evidence supports a finding that the Bank provided
information it knew to be false, thereby causing the prosecution, which would not
have occurred absent the Bank's actions.
54
Gonzalez, 2015 WL 4137862 at *3-*4,*6.
55
Gonzalez, 2015 WL 4137862 at * 5, quoting, Browning-Ferris, 881 S.W.2d at
292.
Appellee’s Brief - Page 47
a. Cone knowingly provided false information.
When Cone accused Smith of hindering a secured creditor, he was not aware
of any facts or circumstances whatsoever that would lead him to believe that Smith
had committed such crime. (3RR:45,76,115-116,118-110; 4RR:102)56
In addition to groundlessly accusing Smith of committing a crime, Cone
gave the police several pieces of important information he knew to be false –
information he later repeated and confirmed to the D.A.’s office when they
contacted him, including: that Smith had not paid any part of the $24,378.54 loan;
that Smith had refused to contact the Bank; that Smith had not returned any part of
the collateral associated with the loan; that the value of the unreturned collateral
was $23,150; and that the collateral included in particular the Toyota commercial
embroidery machine.57 He also gave the police his false affidavit claiming he had
been unable to contact Smith at his house on multiple occasions, and had been
informed he was a long-distance trucker, and gave them an unclaimed demand
letter he had sent before the consolidated loan was even executed.58
56
Please see the “Facts” section of this brief, supra, p. 4
57
Supra, pp. 4-7
58
Id. See also supra, p. 3
Appellee’s Brief - Page 48
The Bank attempts to rely on Cone’s self-serving assertions that he told
Officer Irving the truth, did not realize the ramifications of filing a complaint; and
had no contacts with the D.A.’s office after filing the charges, but such assertions
are demonstrably false, and the jury was well within its purview in concluding
otherwise.59
b. The Bank was the source of information that caused
Smith’s prosecution.
A plaintiff in a malicious prosecution suit need not provide direct evidence
of causation, but may prove his case through “alternative means,” including
circumstantial evidence. In re: Bexar County, 224 S.W.3d 182, 186 (Tex. 2007).
Nevertheless, as detailed in the “Facts” section of this brief, strong, direct evidence
shows that all of the allegations and information which the police and D.A.’s office
relied upon in arresting, jailing, indicting, and prosecuting Smith were provided
exclusively by Cone, on behalf of the Bank.60 There was no independent
investigation, beyond talking to Cone and receiving information from him.61
59
Supra, pp. 2-3; 4-7; 9-10
60
Supra, pp. 3-7; 9-10
61
4RR:33,36. See also the first page of the D.A. documents (PX-21) which states
that most of the file consists of documents the Bank provided. It contains no
independently-developed evidence.
Appellee’s Brief - Page 49
The Bank claims that “Officer Russell Sterling [sic.] swore out the complaint
against Smith based on his investigation and own beliefs,” but cites only Officer
Stillwagoner’s probable cause affidavit, failing to mention that Stillwagoner
undisputedly never conducted any independent investigation. (4RR:33,36) The
Bank’s own expert, former D.A. Frank Long, did not fault the police department
for relying on the information Cone provided. (4RR:286) A police officer would
reasonably expect and assume that someone reporting that certain property has
been destroyed or sold would accurately identify the property. (4RR:289)
As addressed in Thrift v. Hubbard, 974 S.W.2d 70 (Tex.App.–San Antonio
1998, pet. denied), even though the decision to prosecute is ultimately made by the
District Attorney, evidence that a party intentionally included false and misleading
information in his complaint to the police is sufficient to support a finding of
procurement.62 The evidence in this case is more than sufficient.
B. Sufficient evidence supports the jury’s finding that the Bank lacked
probable cause.
When asked about the Bank’s probable cause to believe that Smith was
guilty of the crime the Bank accused him of, Cone acknowledged that he had no
knowledge of any facts whatsoever that would lead him to reasonably and honestly
62
Thrift cited the defendant’s misidentification of certain accounts receivable
pledged as collateral on a loan as an example of false information the D.A. had acted
upon. Thrift, 974 S.W.2d at 78.
Appellee’s Brief - Page 50
believe that any crime had been committed. (3RR:115)
Although there is an initial presumption that the defendant in a malicious
prosecution case acted reasonably and in good faith and had probable cause to
initiate the proceedings, this presumption disappears once the plaintiff produces
evidence that the motives, grounds, beliefs, and evidence upon which the defendant
acted did not constitute probable cause. Richey v. Brookshire Grocery Co., 952
S.W.2d 515, 517, 518 (Tex.1997). The burden then shifts to the defendant to offer
proof of probable cause. Id. Cone’s admission that he knew of no facts
whatsoever that would lead him to reasonably and honestly believe that any crime
had been committed not only shifted the burden, it established the lack of probable
cause as a mater of law.63
To overcome the jury’s finding, the Bank “must show that [the] evidence
could only be interpreted in such a way as to provide it with probable cause to
believe that [Smith] was guilty of the offense.” J.C. Penney Co., Inc. v. Ruth, 982
S.W.2d 586, 589 (Tex.App.–Texarkana 1998, no pet.), citing, Richey, 952 S.W.2d
at 517. Thus, this Court must “look to see if [the Bank] conclusively proved that a
63
When a litigant admits positive facts, he is conclusively bound by such
admissions. “The testimony of a party to a suit and admissions made by him must be
construed as binding upon him, and not merely as raising issues of fact.” Turner v. State,
850 S.W.2d 210, 213 (Tex.App.–Texarkana 1993, no pet.), quoting, Tex. & P. Ry. Co. v.
Wood, 145 Tex. 534, 199 S.W.2d 655 (1947).
Appellee’s Brief - Page 51
reasonable person would believe that a crime had been committed, given the facts
as [the Bank] honestly and reasonably believed them to be before the criminal
proceedings were instituted.” Id. Even aside from Cone’s admissions, the Bank
has failed to meet this burden.
The “Facts” section of this brief cites clear evidence establishing the Bank
lacked probable cause.64 Moreover, the Bank's own expert, former District
Attorney Long, testified that he could not state an opinion that Cone had probable
cause to accuse Smith of hindering a secured creditor. (4RR:274)
As Long confirmed, hindering a secured creditor requires more than simply
refusing to tell a lender where collateral is located. (4RR:244) The statute does not
outlaw refusal by the debtor to reveal the location of property. (4RR:245-246) Not
paying on a secured loan does not constitute the crime. (4RR:261) Nor does the
law outlaw refusal by a debtor to conceal both himself and the collateral from the
lender. (4RR:262) District Attorney Gary Young, agreed: Refusing to reveal the
location of collateral or merely refusing to deliver collateral upon demand does not
constitute an offence, nor does the debtor’s concealment of himself. (5RR:15,16)65
64
Supra, p. 4
65
The trial court correctly so charged the jury. CR:538. See, Anzaldua v. State, 696
S.W.2d 911, 912-913 (Tex.Crim.App. 1985).
Appellee’s Brief - Page 52
The Bank attempts to prove probable cause based solely on Cone’s
testimony that, at the time the renewal note was executed, Smith allegedly told
Cone that he would return later and tell him where some unidentified other
collateral was located, but never did. Smith denied such conversation ever
occurred. (4RR:143) The jury was free to believe Smith, rather than Cone.
Moreover, even if the jury believed Cone’s testimony, such does not
establish probable cause, as a mere refusal by a debtor to reveal the location of
collateral does not constitute the crime of hindering a secured creditor.66 The
Bank’s attorney attempted to elicit testimony from the Bank’s expert that if Cone
had indeed asked Smith where other collateral was, and if Smith had indeed told
Cone he would come back later and show him but then refused to do so, such could
have constituted hindering a secured creditor, but Mr. Long testified it would not.
Such would not be a demand to deliver possession of the property, and refusing to
reveal its location would not constitute the crime of hindering a secured creditor.
(4RR:296,297)
66
Furthermore, Cone claimed this discussion occurred when he renewed Smith's
loan, during a pleasant conversation, when Smith supposedly indicated it was in storage
somewhere by pointing over his shoulder to the west. (3RR:51) At that time, the loan
was being renewed, Smith was cooperating, and there was no demand for payment or
return of any collateral. Cone testified he never again spoke to Mr. Smith about such
collateral, and did not mention it or ask him about it several weeks later when Smith came
up to the Bank to demonstrate the machine to the Stones. (3RR:206-207) He never again
asked Smith about it. (3RR:115,125)
Appellee’s Brief - Page 53
The Bank also cites Cone’s testimony that his intent in filing charges was
not to get Smith indicted, but to get paid. Although largely irrelevant to the issue
of probable cause, Smith would point out that, at one point, Cone admitted that his
purpose in filing the charges was “to get him indicted and charged with the crime.”
(3RR:112-113) Furthermore, Cone knew it was improper to file criminal charges in
order to get paid. (3RR:36,104-105)
Because the evidence does not conclusively prove that a reasonable person
would believe that a crime had been committed, given the facts as the Bank
honestly and reasonably believed them, its point of error must be overruled.67
IV. Response to Appellant’s Issue No. 4
Sufficient evidence supports the jury’s finding that Smith sustained
some physical pain or mental anguish.
As Appellant acknowledges, because the charge submitted physical pain and
mental anguish in a single question, the verdict and judgment must be upheld if
there is some evidence of just one of those elements.68 The record contains
sufficient evidence of both elements.
67
See, J.C. Penney Co., 982 S.W.2d at 589; Richey, 952 S.W.2d at 517.
68
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 771 (Tex. 2003).
Appellee’s Brief - Page 54
A. Physical Pain
Although most of Smith’s anguish was mental, the evidence shows Smith
also suffered some physical pain. For one thing, he was physically restrained and
locked in jail for five days without freedom of movement, forced to sleep on a very
uncomfortable mattress, obliged to eat unpalatable food and to use the bathroom
with no toilet paper, forced to wear filthy, smelly clothes. (4RR:106)
Significantly, during this time he was denied access to important anti-seizure
medication, without which he was unable to sleep or maintain his sense of time and
space. (4RR:107) He became physically very shaky and was speaking
incoherently. (4RR:61,62)
Ignoring the evidence, Appellant argues that “Smith recognizes there was no
evidence of physical pain” because Smith’s counsel stated he was “talking mental
anguish” in his closing argument. (5RR:111) That Smith’s counsel chose to talk
about mental anguish in argument in no way establishes there was no evidence of
physical pain.69
69
The Bank does not assert such comments constituted a judicial admission, and
could not support such assertion in any event, as counsel’s statement that he was “talking
mental anguish” was not a “clear, deliberate, and unequivocal admission” that no
evidence of physical pain existed. See, Clear Lake City Water Authority v. Kirby Lake
Development, Ltd., 123 S.W.3d 735, 753-754 (Tex.App.–Houston [14th Dist.] 2008, pet.
denied); Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45, 62 (Tex.App.–Houston [1st
Dist.] 2012, pet. denied); Isern v. Watson, 942 S.W.2d 186, 201 (Tex.App.– Beaumont
1997, pet. denied).
Appellee’s Brief - Page 55
The Bank does not appeal the amount of damages awarded. Accordingly,
because there was sufficient evidence from which the jury could conclude that
Smith experienced some physical pain, the verdict must be affirmed.
B. Mental Anguish
“An award of mental anguish damages will survive a legal sufficiency
challenge when the plaintiffs have introduced direct evidence of the nature,
duration, and severity of their mental anguish, thus establishing a substantial
disruption in the plaintiffs’ daily routine.” Parkway Co. v. Woodruff, 901 S.W.2d
434, 444 (Tex.1995) Even absent such evidence, the award will survive if the
record nevertheless reveals “any evidence of ‘a high degree of mental pain and
distress’ that is ‘more than mere worry, anxiety, vexation, embarrassment, or
anger.’” Id.70 Considering all that Smith endured, the Bank’s assertion that he
suffered no compensable mental anguish is absurd. The evidence in such regard
was not merely sufficient, it was overwhelming.71
70
Courts have typically defined mental anguish as, “more than mere
disappointment, anger, resentment or embarrassment, although it may include all of these.
It includes a mental sensation of pain resulting from such painful emotions as grief,
severe disappointment, indignation, wounded pride, shame, despair and/or public
humiliation.” Parkway, 901 S.W.2d at 444.
71
Please refer to the evidence of Smith's mental anguish set forth in the "Facts"
section of this brief, Supra, pp. 7-9; 11-12.
Appellee’s Brief - Page 56
A closely analogous case addressing mental anguish damages for malicious
prosecution is Thrift v. Hubbard, 974 S.W.2d 70 (Tex.App.–San Antonio 1998,
pet. denied), in which the court affirmed an award of mental anguish based on
evidence very similar to, though not as compelling as, that at bar:
Thrift contends that the evidence is insufficient to support the jury's award of
damages for emotional distress because the award necessitates an inference
of humiliation. We disagree. The evidence reflects that Hubbard was
indicted by a grand jury of four counts of criminal activity reflecting
negatively on her character, and that she remained under indictment for
over three years. Hubbard testified that she had to sit with other criminal
defendants who were chained and attended by guards during her fifteen
court appearances. She further testified that, during these hearings, she
endured “glossy eyed” on-lookers “pawing” at her and asking why she was
there. She spent over three years assisting in her defense and fearing a
conviction of unfounded charges. She testified that it was “terrible.”
Hubbard testified that she discontinued her church activities because she
feared misleading people about her faith if they discovered that she was
under indictment. She also worried about her business dealings and
feared applying for certain projects because she would be compelled to
disclose the indictment. Hubbard's criminal attorney testified that she was
many times, “crying, a nervous wreck.” Hubbard's stepdaughter testified
that the Hubbards's criminal defense took up “pretty much all of their time
and all of their thoughts and everything ... I mean they worked hard to get
where they were, and it was all gone, taken away.”
Thrift's contention that the award of damages for emotional distress required
evidence that Hubbard could not sleep or eat, required medication or
psychiatric care, experienced depression, or fell into substance abuse as a
result of the charges against her is unfounded. The evidence in this case
supports a finding that Hubbard's daily routine was substantially
disrupted by fear and anxiety related to the charges pending against
her, not to mention by the emotional strain surrounding her
preparation for and attendance at over 15 court proceedings as a
Appellee’s Brief - Page 57
criminal defendant. The jury's award of $150,000 for mental anguish was,
therefore, appropriate. Thrift's third point of error is overruled.
Thrift, 974 S.W.2d at 81 (emphasis added).
As in Thrift, the evidence at bar shows that Smith’s “daily routine was
substantially disrupted by fear and anxiety related to the charges pending against
[him], not to mention by the emotional strain surrounding [his] preparation for and
attendance at [18] court proceedings as a criminal defendant.” Like Ms. Hubbard,
Smith was indicted, felt ashamed, and feared people finding out that he was
accused of a crime. Unlike Hubbard, however, Smith was actually arrested and
jailed for days, deprived of important medication, and actually did lose the ability
to work on certain, projects, as opposed to just fearing that he would.
In addition to being stronger than the evidence held sufficient in Thrift, the
evidence of Smith’s mental anguish is also significantly greater than the evidence
held by the Texas Supreme Court to support such award in Latham v. Castillo, 972
S.W.2d 66 (Tex. 1998). Like Thrift, Latham was decided after Parkway, and
applied the standards from that case to hold that the evidence was sufficient.
Latham involved a DTPA suit against a lawyer by a married couple who
claimed they suffered mental anguish when they learned the lawyer had missed the
statute of limitations to file a medical malpractice lawsuit over their daughter’s
death, and had misled them about it. The father testified that when he found out
Appellee’s Brief - Page 58
the lawyer had lied to him, it “made me throw up,” made him “sick, nervous, and
mad,” and “it just hurt me a lot because I trusted in him.” Latham 972 S.W.2d at
70. The mother simply testified, “my heart was broken. I was devastated, I felt
physically ill.” Id. Citing no other evidence, the Supreme Court held this was
“some evidence” that the attorney’s conduct caused each of the plaintiffs a “high
degree of mental pain and distress,” exceeding the evidence of “mere emotions” as
referenced in Parkway. Id.
Even more so than in Latham, the anguish Smith suffered also exceeded
“mere emotions,” and included great physical discomfort and restraint, the loss of
sleep, shakiness, confusion, incoherent speech, “fuddle brain” from lack of
medication, the loss of the ability to work in his chosen field, harm to his ability to
provide for his family, and the fear and humiliation of being branded a criminal.
“Evidence of what has taken place in a plaintiff's life as a result of a
defendant's actions is important in showing mental anguish. [] Jurors are best
suited to determine, by referring to their own experiences, whether and to what
extent the defendant's conduct caused compensable mental anguish.” GAB
Business Services, Inc. v. Moore, 829 S.W.2d 345, 350 (Tex.App.–Texarkana
1992, no writ). In this case, the evidence strongly supports the jury’s verdict. In
short, the jury’s conclusion that Smith suffered some pain or mental anguish was
Appellee’s Brief - Page 59
well supported by all the evidence, and the trial court did not err in granting
judgment on the jury’s verdict.
PRAYER
For the foregoing reasons, Appellee respectfully requests:
1. that the trial court’s judgment be affirmed (except to the extent that the
judgment is reversed and rendered, in part, so as to include $84,542.00 in
prejudgment interest, as addressed and requested in Smith’s Cross-Appeal herein);
2. that Appellee recover the appellate costs incurred by him herein; and
3. that Appellee have all other and/or further relief that the law and the nature
of this case may require.
Respectfully submitted,
/s/ J. Mark Sudderth
J. Mark Sudderth
Texas Bar No. 19461500
N OTEBOOM – T HE L AW F IRM
669 Airport Freeway, Suite 100
Hurst, Texas 76053
(817) 282-9700
(817) 282-8073 (facsimile)
Sudderth@Noteboom.com
Attorney for Appellee,
John Alexander Smith
Appellee’s Brief - Page 60
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the attached document been served
upon all counsel record on the 14th day of December, 2015, via e-service, to the
attorneys of record for Cross-Appellee City National Bank of Sulphur Springs as
follows:
John R. Mercy
Mercy, Carter, Tidwell, L.L.P.
1724 Galleria Oaks Drive
Texarkana, Texas 75503
E-mail: jmercy@texarkanalawyers.com
Coy Johnson
E-mail: coy@clayjohnsonlaw.com
Clay Johnson
E-mail: clay@clayjohnsonlaw.coim
Johnson Law Firm, P.C.
609 Gilmer Street
Sulphur Springs, Texas 75482
/s/ J. Mark Sudderth
J. Mark Sudderth
CERTIFICATE OF COMPLIANCE
This document complies with the typeface requirements of T EX. R. A PP. P.
§ 9.4(e) because it has been prepared in a conventional typeface no smaller than
14-point for text and 13-point for footnotes.
I certify that this brief was prepared with Corel WordPerfect X5, and that,
according to that program’s word-count function, the sections covered by T EX. R.
A PP. P. § 9.4(i)(1) contain 14,217 words, thus bringing the brief into compliance
with the word-count limitations of that Rule.
/s/ J. Mark Sudderth
J. Mark Sudderth
Appellee’s Brief - Page 61
APPENDIX
A. Ackerman v. Vordenbaum
B. Adams v. Parker Square Bank
C. Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Research Corp.
D. Anzaldua v. State
E. Ardmore, Inc. v. Rex Group, Inc.,
F. Baker v. Hughes,
G. Browning-Ferris Industries, Inc. v. Lieck,
H. City of Rockwall v. Hughes,
I. City of San Antonio v. Talerico,
J. Clark v. Dillard’s, Inc.,
K. Clear Lake City Water Authority v. Kirby Lake Development, Ltd.,
L. Cosgrove v. Grimes,
M. Dixon v. SW Bell Tel. Co.,
N. Edlund v. Bounds,
O. Elizondo v. Krist,
P. Eslon Thermoplastics v. Dynamic Systems, Inc.,
Q. ExxonMobil Corp. v. Pagayon,
R. FFP. Operating Ptnrs., L.P. v. Duenez,
S. Flack v. Hanke,
T. French v. Gill,
U. GAB Business Services, Inc. v. Moore,
V. Golden Eagle Archery, Inc. v. Jackson,
W. Gonzalez v. Grimm,
X. Gray v. Nash,
Y. Greathouse v. McConnell,
Z. Heath v. Herron,
AA. Hernandez v. Bumbo, Ltd.,
BB. Hines v. Commission for Lawyer Discipline,
CC. Holy Cross Church of God in Christ v. Wolf,
DD. Houston First Am. Sav. v. Musick,
EE. In re: Bexar County,
FF. In re: Brokers Logistics, Ltd.,
GG. In re: Smith,
HH. Ingersoll-Rand Co. v. Valero Energy Corp.,
II. Isern v. Watson,
JJ. J.C. Penney Co., Inc. v. Ruth,
KK. Jay Miller & Sundown, Inc. v. Camp Dresser & McKee, Inc.,
LL. Latham v. Castillo,
MM. Lexington Ins. Co. v. Strayhorn,
NN. Litton Indus. Prod., Inc. v. Gammage,
OO. Mobil Oil Corp. v. Ellender,
PP. Parkway Co. v. Woodruff,
QQ. Parsons v. Greenberg,
RR. Patterson & Wallace v. Frazer (App.)
SS. Patterson & Wallace v. Frazer (Tex.)
TT. Rhodes v. Batilla,
UU. Richey v. Brookshire Grocery Co.,
VV. Shepherd v. Ledford,
WW. Shoemake v. Fogel, Ltd.,
XX. Taylor v. Alonso, Cersonsky & Garcia, P.C.,
YY. Tenet Hospitals Ltd. v. Rivera,
ZZ. Tex. & P. Ry. Co. v. Wood,
AAA. Tex. Dep't of Transp. v. City of Sunset Valley,
BBB. Thrift v. Hubbard,
CCC. Tittizer v. Union Gas Corp.,
DDD. Tobin v. Garcia,
EEE. Turner v. State,
FFF. Villarreal v. Wells Fargo Brokerage Svcs., LLC,
GGG. TEX. CIV. PRAC. & REM. CODE Chapter 33
HHH. TEX. GOV. CODE § 311.011
III. TEX. R. CIV. P. 38
A
Ackermann v. Vordenbaum, 403 S.W.2d 362 (1966)
15 A.L.R.3d 893
Generally, order overruling motion for summary
judgment is interlocutory in nature and not
403 S.W.2d 362
appealable.
Supreme Court of Texas.
151 Cases that cite this headnote
Milton O. ACKERMANN et ux., Petitioners,
v.
Ernestine VORDENBAUM, Respondent. [3] Appeal and Error
On Appeal from Intermediate Court
No. A—11101. | May 25, 1966. Where an order of dismissal was appealed from
| Rehearing Denied June 22, 1966. Court of Civil Appeals and Supreme Court had
determined that order of dismissal was improper,
Suit in form of trespass to try title. The Second Twenty-Fifth
a remand and reinstatement of case in trial court's
District Court, Guadalupe County, Paul C. Boethel, J., entered
docket was the proper disposition of case rather
a dismissal and the plaintiff appealed. The San Antonio Court
than the Supreme Court's rendition of a judgment
of Civil Appeals of the Fourth Supreme Judicial District, 393
for the plaintiff.
S.W.2d 927, reversed and rendered and error was brought.
The Supreme Court, Norvell, J., held that although where 11 Cases that cite this headnote
amended original petition of plaintiff was defective in the
matters pointed out by defendants' motion to strike which
related to form rather than substance of petition which was
not claimed to have failed to state a cause of action and trial
Attorneys and Law Firms
court had not ordered a repleader, the decision of plaintiff not
to amend did not render cause subject to dismissal. *362 Jandt & Jandt, Seguin, for petitioners.
Judgment of Court of Civil Appeals reformed, and as so Threlkeld, Saegert & Saegert, Seguin, W. James Kronzer,
reformed, affirmed. Houston, for respondent.
Opinion
West Headnotes (3) NORVELL, Justice.
Upon an appeal from an order dismissing this cause, the Court
[1] Pretrial Procedure of Civil Appeals reversed the judgment of the trial court and
Defects and Objections Ground for rendered judgment for the plaintiff, Ernestine Vordenbaum.
Dismissal in General The Court of Civil Appeals held that the trial court erred in
Where second amended original petition of overruling the plaintiff's motion for summary judgment and
plaintiff was defective in the matters pointed out rendered judgment for the plaintiff in accordance with Rule
by defendants' motion to strike which related to 434, Texas *363 Rules of Civil Procedure. 393 S.W.2d 927.
form rather than substance of petition, which was We affirm.
not claimed to have failed to state a cause of
The plaintiff in the trial court was the appellant in the Court
action and trial court had not ordered a repleader,
of Civil Appeals and is the respondent here. 1 We will use the
the decision of plaintiff not to amend did not
trial court designation of the parties.
render cause subject to dismissal. Rules of Civil
Procedure, rules 46, 69, 90. Two questions are involved, namely, (1) Did the trial court err
in dismissing this cause?, and, if that question be answered in
7 Cases that cite this headnote
the affirmative, (2) Was the Court of Civil Appeals correct in
rendering judgment for the plaintiff or should the cause have
[2] Appeal and Error been remanded for another trial?
Nature and Scope of Decision
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Ackermann v. Vordenbaum, 403 S.W.2d 362 (1966)
15 A.L.R.3d 893
repleader and plaintiff had violated no order of the court. The
The first question presents little difficulty. The action was in ground set forth in the motion to strike related to form rather
trespass to try title in which the grounds of recovery were than substance and it was not contended that the petition failed
specifically alleged. The plaintiff alleged that on December 5, to state a cause of action. We have no true analogy between
1951, she executed a deed conveying one and one-fifth acre the action taken here and the now outmoded general demurrer
of land out of the G. Malpaz Survey No. 67 in Guadalupe practice (Rule 90), in which a dismissal could be ordered
County, Texas to the defendants, Milton O. Ackermann upon a refusal *364 to amend after a court had held that the
and wife, Emelie Ackermann, in which she reserved a life petition stated no cause of action. We hold that the order of
estate and a vendor's lien, said lien being reserved ‘until dismissal was erroneous and must be reversed.
the above described obligations are fully complied with
according to their intent and purpose when this deed shall
become absolute’. The consideration for this deed was that This brings us to a consideration of the second question,
the Ackermanns ‘take care of and provide the meals for that is, whether an order of rendition or remand constitutes
the grantor (Mrs. Vordenbaum) as long as she lives'. These the correct disposition of the case. This largely depends
were the obligations referred to in the vendor's lien clause. upon whether an appellate court having held that an order
The plaintiff asserted the agreement to support had not been of dismissal was improper may then examine a trial court's
carried out, but had been abandoned and consequently she action in overruling a summary judgment. In Tobin v. Garcia,
was entitled to recover upon the superior legal title retained 159 Tex. 58, 316 S.W.2d 396 (1958), we held that:
by her in the deed above mentioned. ‘If the only order in the trial court is
one overruling a motion for summary
Plaintiff's Second Amended Original Petition in the forepart
judgment, then that order is interlocutory
thereof contained a number of exceptions directed against
and no appeal will lie therefrom. But
defendants' answer. These exceptions were followed by a
when, as in this case, both parties
repleading of her cause of action. The defendants moved
file motions for summary judgment and
to ‘strike from the record the document called the second
one such motion is granted, then the
amended original petition for the reason that the same is not
trial court's judgment becomes final and
in compliance with Rules 46 and 69 of the Texas Rules of
appealable, and on appeal the Court
Civil Procedure’. Apparently the motion to strike was heard
of Civil Appeals should determine all
on May 21, 1964, but the order sustaining the same was not
questions presented. If reversible error
signed by the trial judge until December 14, 1964. It appears
is found, the court should render such
that on the same date the order was signed, the defendants
judgment as the trial court should have
made a further motion in which they requested the trial court
rendered, Rule 434, and if the case is
to dismiss the case for want of prosecution because plaintiff
brought to this court and the judgment of
had failed to amend her second amended original petition.
the Court of Civil Appeals is reversed, we
The trial court sustained the motion to strike the second
should render such judgment as that court
amended original petition and then dismissed the case. The
should have rendered. Rules 501 and 505.
order of dismissal was not based upon the theory that the
Rogers v. Royalty Pooling Co. (Tex., 302
plaintiff had failed to prosecute her case, but on the contrary
S.W.2d 938) is overruled.’
recites that as ‘plaintiff desires to stand on her pleadings and
not to replead the same after having a reasonable opportunity
to do so, it is further ordered that this cause be and the same In the Tobin-Garcia case, the appeal was from an order
is hereby dismissed, * * *.’ granting a summary judgment based upon the defendants'
[1] Undoubtedly, the second amended original petition was motion. We held that the order granting such summary
defective in the particulars pointed out by defendants' motion judgment was erroneous and that after having made such
and we do not know why plaintiff did not amend her defective holding, we were authorized to review the trial court's action
petition. However that may be, the only pleading which was in overruling the plaintiff's motion for summary judgment.
stricken was the second amended original petition and if In the present case, an order of dismissal was appealed from
plaintiff decided not to file another amendment, such decision instead of an order granting a motion for summary judgment.
did not render the cause subject to dismissal. As pointed out
by the Court of Civil Appeals, the trial court did not order a
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Ackermann v. Vordenbaum, 403 S.W.2d 362 (1966)
15 A.L.R.3d 893
for summary judgment do not always disclose all the pertinent
This circumstance squarely raises the question of whether facts relating to a case and the same may be said as to answers
the Tobin-Garcia rule is a comparatively narrow one having and defenses to such motions. Generally, the facts are more
application only to that situation wherein both parties have fully developed upon a conventional trial than they are by the
moved for summary judgment, or whether it should be affidavits and depositions relied upon to support or defeat a
applied broadly as applicable to all cases in which a motion motion for summary judgment. It would seem incongruous
for judgment has been overruled and thereafter an appealable for a court, upon finding that a judgment following a full and
judgment has been rendered. In Gulf, Colorado & Santa complete conventional trial should be reversed because of the
Fe Ry. Co. v. McBride, 159 Tex. 442, 322 S.W.2d 492 admission of improper evidence, to then review the action of
(1959), the Tobin-Garcia rule was thus broadly stated: ‘We a trial court in overruling a summary judgment, particularly if
held (in Tobin v. Garcia) that where there was a final it appears from the evidence adduced upon the conventional
judgment rendered in a cause, which was appealable (and trial that there were genuine issues of fact in the case even
was appealed), the appellate court could act upon a denied though the summary judgment record might not reflect this
motion for summary judgment, if the point has been properly situation because of an incomplete development of the facts.
preserved’. Although in McBride, both sides had filed [2] In Wright v. Wright, 154 Tex. 138, 274 S.W.2d 670
motions for summary judgment, the Court of Civil Appeals in (1955), this Court pointed out that the general rule was that
the present case took the language of McBride as indicating an order overruling a motion for summary judgment was
that this Court intended the Tobin-Garcia rule to apply to all interlocutory in nature and hence not appealable. In speaking
cases wherein an appealable judgment (including a dismissal, of the practice later sanctioned in Tobin v. Garcia, it was said:
or judgment rendered at the conclusion of a conventional
‘True, where there is an appeal from
trial upon the merits), had been entered subsequent to the
that part of the court's order which
overruling of a motion for summary judgment. The broader
grants summary judgment, it might
interpretation of the rule would undoubtedly lead to the
be convenient to allow the appellate
expeditious disposal of lawsuits in cases where it appears
court to review also the part refusing
that a litigant whose motion for summary judgment had been
summary judgment and itself to render
overruled was clearly entitled to prevail, and undoubtedly
summary judgment on the latter issue,
this factor was considered by the Court of Civil Appeals
if it concludes that the trial court ought
in rendering judgment in the case. However, there are
to have done so. At the same time,
other considerations which must be taken into account in
since such a practice would be by way
determining whether to adopt a narrow or broad interpretation
of exception to a general rule, any
of the Tobin-Garcia doctrine.
benefits might well be outweighed by the
When both sides file motions for summary judgment, each resultant confusion.’
litigant in support of his own motion necessarily takes the
position that there is no genuine issue of fact in the case and
that he is entitled to judgment as a matter of law. While it does
Undoubtedly, the rule of practice adopted by Tobin v. Garcia
not necessarily follow that when both sides file motions for
is an exception to the general rule that an order overruling
summary judgment there is no genuine fact issue in the case,
a motion for summary judgment is not subject to review
it does indicate that the legal controversy is one *365 which
upon appeal. Compare, Brown v. Aetna Casualty & Surety
generally turns upon an interpretation of some rule of law and
Co., 135 Tex. 583, 145 S.W.2d 171 (1940). Such rule
both sides are prepared to present their respective contentions
was recognized in the interest of the prompt disposal of
with reference thereto.
causes and its operation has generally been attended with
However, when we have a case in which a motion for satisfactory results. However, the rule should not be so
summary judgment is overruled and thereafter,—perhaps broadened as to produce confusion or injustice. Thomas
years thereafter, the suit is removed from the trial court docket de Quincey once intimated that many a man could trace
by dismissal or a judgment following a conventional trial on his downfall to some murder he thought little of at the
the merits, a different situation is presented. In such instances time. However, our system of practice should not permit
a review of the overruled motion for summary judgment could the downfall of a cause because of an overruled motion for
result in judgments which would be patently unjust. Motions summary judgment, which in the light of a conventional
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Ackermann v. Vordenbaum, 403 S.W.2d 362 (1966)
15 A.L.R.3d 893
and the appeal is prosecuted from a judgment granting one or
trial on the merits appears to have been defectively defended
more of them.
against by insufficient pleadings, depositions or affidavits.
[3] Accordingly, the judgment of the Court of Civil
Many of the considerations militating against the review of a
Appeals is reformed to provide *366 for a remand and a
trial court's action overruling a motion for summary judgment
reinstatement of the case on the trial court's docket rather than
after the case has been tried in the conventional manner before
a rendition of a judgment for the plaintiff. As so reformed, the
judge or jury are also applicable when the final judgment
judgment of the Court of Civil Appeals is affirmed.
appealed from is one of dismissal. The safer rule is one
restricting the Tobin-Garcia doctrine to its factual situation
and that disclosed in Gulf, Colorado & Santa Fe Ry. Co.
All Citations
v. McBride, that is, to cases in which motions for summary
judgment have been filed by all of the real parties at interest 403 S.W.2d 362, 15 A.L.R.3d 893
Footnotes
1 The action was instituted by Ernestine Vordenbaum, who is advanced in years. She was joined by her grandson, Wilbur
Paul Vordenbaum, as next of kin and temporary guardian, while the suit was pending in the trial court.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
B
Adams v. Parker Square Bank, 610 S.W.2d 250 (1980)
the summary judgment for Bank and denied the summary
judgment for Adams. Adams appealed. (See also Ormsby v.
610 S.W.2d 250
Parker Square Bank, 610 S.W.2d 246 (Tex.Civ.App.) handed
Court of Civil Appeals of Texas, Fort Worth.
down this date. Background of the instant Adams appeal is
Van E. ADAMS, Appellant, nearly identical.)
v.
PARKER SQUARE BANK, Appellee. We dismiss the appeal.
No. 18351. | Dec. 31, 1980. Strangely the appellant in this case could have but did not
appeal from the summary judgment for appellee, but chose
The District Court, Wichita County, Calvin Ashley, J., instead to limit his appeal to the denial of his own motion for
entered summary judgment, and appeal was taken. The Court summary judgment.
of Civil Appeals, Massey, C. J., held that appellant could
not raise by point of error denial of his motion for summary Of this we could not have been aware until appellant's brief
judgment where appellant did not challenge by point of error was filed, because up until the time he became committed by
granting summary judgment in favor of adverse party. his point of error it was to be assumed that his appeal would
be predicated upon the action of the trial court in granting
Appeal dismissed. judgment for his opponent. (Adams waived all but the single
point of error which is identical to the point in the appeal
by Ormsby companion hereto.) It is by reference to his brief
that we have found absence of any complaint of error by
West Headnotes (1)
the trial court in having granted summary judgment for his
adversary. This fact is evidenced by the point and by the
[1] Appeal and Error language thereunder to which we have referred to seek to
Scope and Effect determine whether there was any such complaint of error in
Appellant could not raise by point of error denial the summary judgment which was granted to the defendant
of his motion for summary judgment where bank. Rather than any such complaint we find that appellant
appellant did not challenge by point of error Adams has confined himself to point of error and complaint
granting summary judgment in favor of adverse thereunder of no more than the court's failure to grant the
party. motion for summary judgment filed by him.
12 Cases that cite this headnote Could we have known of this at the time the clerk received
the transcript in the case it would not have been filed, for
an appeal does not lie from an order overruling a motion for
summary judgment.
Attorneys and Law Firms
Obviously it is the theory of appellant that because both
*250 James Q. Smith, Wichita Falls, for appellant. he and his adversary filed motions for summary judgment,
followed by order of the court granting the motion of his
Donald E. Short, Wichita Falls, for appellee.
adversary and denying his own motion, he can predicate
his appeal solely upon the denial and disregard the motion
granted. That is not the law.
OPINION
Until there is successful attack made on appeal of the motion
MASSEY, Chief Justice.
granted, with judgment entered in accord, the question does
Van E. Adams sued Parker Square Bank (Bank) which had not exist as to whether the trial court should have granted
financed the purchase of a truck for Adams. Adams sued the motion which was denied. In such a situation this court
for penalties under the Texas Consumer Credit Code. Both would lack authority to rule upon the contentions made of
sides moved for summary judgment. The trial court granted impropriety of the denial.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Adams v. Parker Square Bank, 610 S.W.2d 250 (1980)
Since Wright v. Wright a great deal has been written on the
question, with the ultimate resolution of that upon which the
*251 It is after having made the holding that the trial court
appellate court has the power to decide, as we understand
erred in granting a summary judgment that a complainant
it, be in accord with what is written in the paragraph next
becomes entitled to have the appellate court review the court's
preceding. See Tobin v. Garcia, 159 Tex. 58, 316 S.W.2d
action in overruling his own motion for summary judgment.
396 (1958), and Ackermann v. Vordenbaum, 403 S.W.2d 362
If it were otherwise his appeal would be no different from the
(Tex.1966), and the authorities referred to in both opinions.
situation where it was only the appellant who had moved for
summary judgment and had his motion overruled, and who
The appeal is dismissed.
attempted an appeal from the denial. In such a case it is settled
that no appeal shall lie. Wright v. Wright, 154 Tex. 138, 274
S.W.2d 670 (1955).
All Citations
610 S.W.2d 250
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
C
Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National..., 299 S.W.3d 106 (2009)
53 Tex. Sup. Ct. J. 77
Reversed, rendered, and remanded.
KeyCite Yellow Flag - Negative Treatment
Disagreed With by Smith v. McLaughlin, Va., February 26, 2015
West Headnotes (20)
299 S.W.3d 106
Supreme Court of Texas.
[1] Attorney and Client
AKIN, GUMP, STRAUSS, HAUER Pleading and evidence
& FELD, L.L.P., Petitioner, When a former client sues a lawyer for
v. improperly prosecuting a prior lawsuit, provided
NATIONAL DEVELOPMENT AND the judgment is not dormant or preempted, the
RESEARCH CORPORATION, Respondent. requirement that client must prove amount of
damages that would have been collectible from
No. 07–0818. | Argued Dec. 9, defendant in prior suit is satisfied by proof of the
2008. | Decided Oct. 30, 2009. greater of either (1) the fair market value of the
| Rehearing Denied Jan. 15, 2010. underlying defendant's net assets that would have
been subject to legal process for satisfaction of
Synopsis
the judgment as of the date the first judgment
Background: Client, a consulting company, brought legal
was signed or at some point thereafter, or (2)
malpractice action against law firm that represented it in
the amount that would have been paid on the
litigation against energy company and its affiliates, which
judgment by the defendant or another, such as a
litigation resulted in entry of judgment notwithstanding the
guarantor or insurer.
verdict (JNOV) against client due to firm's failure to submit
jury questions to support partial verdict in client's favor. The 5 Cases that cite this headnote
68th Judicial District Court, Dallas County, Charles Stokes,
J., entered judgment on jury verdict finding firm negligent
[2] Attorney and Client
and awarded client damages. Firm appealed. The Court of
Elements of malpractice or negligence
Appeals, 232 S.W.3d 883, Bea Ann Smith, J., retired, sitting
action in general
by assignment, affirmed as modified. Parties petitioned for
review. To prevail on a legal malpractice claim, the
plaintiff must prove the defendant owed the
plaintiff a duty, the defendant breached that duty,
the breach proximately caused the plaintiff's
Holdings: The Supreme Court, Johnson, J., held that: injury, and the plaintiff suffered damages.
[1] evidence was insufficient to support damages award to 26 Cases that cite this headnote
client for value of stock at time energy company breached
parties' agreement;
[3] Attorney and Client
Conduct of litigation
[2] evidence was insufficient to support finding that attorney's
negligence was a cause in fact of client's appellate attorney's When the claim for legal malpractice is that
fees and expenses; lawyers improperly represented the plaintiff in
another case, the plaintiff must prove and obtain
[3] evidence was legally sufficient to support award for findings as to the amount of damages that would
separate counsel fees; and have been recoverable and collectible if the other
case had been properly prosecuted.
[4] evidence was insufficient to support amount of award for
11 Cases that cite this headnote
separate counsel fees.
[4] Attorney and Client
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National..., 299 S.W.3d 106 (2009)
53 Tex. Sup. Ct. J. 77
Pleading and evidence Findings based on speculation are not based on
When the claim for legal malpractice is that legally sufficient evidence.
lawyers improperly represented the plaintiff in
1 Cases that cite this headnote
another case, evidence that a defendant in the
underlying suit could have satisfied a judgment
at times prior to the time a judgment is signed [8] Appeal and Error
generally will not be relevant to and will not be Verdict
probative of the judgment's collectibility unless In reviewing a legal sufficiency challenge to the
it is also shown that the defendant's ability to evidence, the Supreme Court credits evidence
satisfy a judgment was not diminished by the that supports the verdict if reasonable jurors
passage of time until judgment was signed. could have done so and disregards contrary
evidence unless reasonable jurors could not have
2 Cases that cite this headnote
done so.
[5] Attorney and Client 15 Cases that cite this headnote
Pleading and evidence
When the claim for legal malpractice is that [9] Appeal and Error
lawyers improperly represented the plaintiff Sufficiency of Evidence in Support
in another case, evidence that a judgment in Appeal and Error
client's favor in the other case would have been Total failure of proof
collectible on or after the date a judgment was
A legal sufficiency challenge will be sustained
first signed is relevant, since a judgment creditor
by the Supreme Court when (a) there is a
does not have to wait thirty days past signing
complete absence of evidence of a vital fact, (b)
of the final judgment to begin procedures for
the court is barred by rules of law or of evidence
collecting its judgment.
from giving weight to the only evidence offered
Cases that cite this headnote to prove a vital fact, (c) the evidence offered
to prove a vital fact is no more than a scintilla,
or (d) the evidence conclusively establishes the
[6] Attorney and Client opposite of the vital fact.
Pleading and evidence
When the claim for legal malpractice is that 44 Cases that cite this headnote
lawyers improperly represented the plaintiff in
another case, prejudgment or pre-suit evidence [10] Appeal and Error
of solvency or other evidence that damages Sufficiency of Evidence in Support
would be collectible from a defendant could
Evidence does not exceed a scintilla, as required
be sufficient to support a finding that damages
to sustain a legal sufficiency challenge, if it is so
were later collectible, provided the evidence
weak as to do no more than create a mere surmise
also shows a reasonable probability that the
or suspicion that the fact exists.
underlying defendant's financial condition did
not change during the time before a judgment 45 Cases that cite this headnote
was signed in a manner that would have
adversely affected collectibility.
[11] Attorney and Client
5 Cases that cite this headnote Pleading and evidence
Evidence submitted against law firm was
insufficient to prove that damages that client
[7] Evidence
would have been awarded in underlying lawsuit
Sufficiency to support verdict or finding
against energy company for value of stock, if
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National..., 299 S.W.3d 106 (2009)
53 Tex. Sup. Ct. J. 77
its attorney had submitted jury questions to
support partial verdict in client's favor, were [15] Negligence
collectible from company, as required to support “But-for” causation; act without which
award of damages against firm for malpractice; event would not have occurred
statements admitted to show that company Negligence
had sufficient assets to pay judgment, such as Substantial factor
company's financial statement showing over $47 Element of cause in fact, as required to support
million in equity, did not represent its financial finding of proximate cause in a negligence
capabilities or access to any asset listed on case, must be established by proof that (1) the
statement, or set out which company entities negligent act or omission was a substantial factor
were included in statement, but implied that only in bringing about the harm at issue, and (2)
the financial condition of four joint ventures absent the negligent act or omission, the harm
were represented, and those joint ventures were would not have occurred.
not parties to underlying lawsuit.
18 Cases that cite this headnote
2 Cases that cite this headnote
[16] Negligence
[12] Attorney and Client In general; degrees of proof
Damages and costs
Causation must be proved to support finding of
General rule that a party may not recover negligence, and conjecture, guess, or speculation
attorney fees for the litigation in which it is will not suffice as that proof.
involved unless recovery is authorized by statute
or contract does not bar a malpractice plaintiff 3 Cases that cite this headnote
from claiming damages in the malpractice case
for fees it paid its attorney in the underlying suit [17] Attorney and Client
if it was the defendant attorney's negligence that Pleading and evidence
proximately caused the fees.
In legal malpractice action against law firm,
47 Cases that cite this headnote there was legally insufficient evidence to support
a finding that attorney's negligence was a cause
in fact of client's appellate attorney's fees and
[13] Attorney and Client
expenses in underlying lawsuit, so as to support
Deductions and forfeitures
award of appellate fees as damages against
Part or all of the fees a client paid to an attorney firm; there was no evidence that defendant in
may be recovered through disgorgement and underlying suit would not have appealed case if
forfeiture if the attorney breached his or her client had obtained a favorable judgment, or that
fiduciary duty to the client. client would not have defended its judgment on
appeal if underlying defendant appealed.
6 Cases that cite this headnote
11 Cases that cite this headnote
[14] Negligence
Necessity of causation [18] Attorney and Client
Negligence Damages and costs
Foreseeability Evidence was legally sufficient that attorney's
In a negligence case, proximate cause has two failure in underlying lawsuit to request jury
elements: cause in fact and foreseeability. instruction on whether opposing party had
breached certain agreements was a cause in
15 Cases that cite this headnote fact of client's need to retain separate counsel
for post-trial proceedings, and thus client could
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National..., 299 S.W.3d 106 (2009)
53 Tex. Sup. Ct. J. 77
recover attorney fees and expenses paid to the
separate counsel as damages in legal malpractice Opinion
action; separate counsel were retained to focus
Justice JOHNSON delivered the opinion of the Court.
on the jury charge in underlying lawsuit and
argue to trial court that despite the absence of a [1] When a former client sues a lawyer for improperly
jury finding that the opposing party had breached prosecuting a prior lawsuit, part of what the plaintiff must
the agreements, the verdict entitled client to prove is the amount of damages that would have been
specific performance of the agreements. collectible from the defendant in the prior suit. In this legal
malpractice case we address the following issues: (1) what
1 Cases that cite this headnote
evidence is necessary to prove damages would have been
collectible in the prior case, and (2) whether a client may
[19] Attorney and Client recover attorney's fees and expenses paid for representation
Damages and costs in the prior case as damages in the malpractice case.
In legal malpractice action, evidence was legally
insufficient to support amount of jury award We hold that (1) the amount of damages that would have
for separate counsel appellate fees incurred by been collectible in the prior suit is the greater of the amount
client, where client's actual fees were less than of a judgment for damages that would have been either paid
half amount that jury awarded. Rules App.Proc., or collected from the underlying defendant's net assets; and
Rule 61.2. (2) the time at which collectibility is determined is as of or
after the time a judgment was first signed in the underlying
5 Cases that cite this headnote case. We also hold that attorney's fees and expenses paid for
representation in the underlying lawsuit may be recovered as
damages to the extent they were proximately caused by the
[20] Appeal and Error
defendant's negligence.
Rendering Final Judgment
Generally, Supreme Court renders judgment
Because there is legally insufficient evidence in this case
when it sustains a no evidence issue, however,
to support a finding that damages in the underlying suit
when there is some evidence of damages, but
would have been collectible or that the defendant attorneys'
not enough to support the full amount, it is
negligence proximately caused the entire amount the jury
inappropriate to render judgment.
awarded as damages for attorney's fees and expenses, we
8 Cases that cite this headnote reverse the judgment of the court of appeals. Because there is
evidence that the attorneys' negligence caused some amount
of attorney's fees and expenses in the underlying suit, we
remand to the court of appeals for further proceedings.
Attorneys and Law Firms
*108 Thomas Fenton Allen Jr., Christopher John Scanlan, I. BACKGROUND
Carrington, Coleman, Sloman & Blumenthal, L.L.P., Jeffrey
S. Levinger, Hankinson Levinger LLP, Dallas, and Corbet F.
Bryant Jr., Richardson, for petitioner. A. The Underlying Suit
David W. Shuford, Law Office of David W. Shuford, and At times relevant to this matter, Panda Energy
Michael L. Jones, Henry & Jones LLP, Dallas, for respondent. International Corporation (Panda International) was involved
in developing energy-related projects. Its operations were
*109 Mark C. Harwell, Cotham Harwell & Evans, P.C., conducted, in part, through several subsidiary corporations
Houston, Luther H. Soules III, Soules & Wallace, San and joint ventures. In 1994, National Development and
Antonio, for amicus curiae. Research Corporation (NDR) entered into a Letter Agreement
with Panda Energy Corporation (PEC), one of Panda
International's subsidiary corporations, for NDR to assist
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Panda International, the parent Panda corporation. PEC also
PEC in locating and securing energy-related projects in
sold its Pan–Sino stock to Panda Global Energy Company
China. NDR's compensation was to be (1) an annual service
retainer, (2) stock grants in a Panda subsidiary corporation, (Panda Global), another subsidiary of Panda International. 1
and (3) success fees for each transaction that closed. To
facilitate the stock grants, NDR and PEC entered into a *110 In the spring of 1997, Panda Global, as the issuing
Shareholders' Agreement with respect to Pan–Sino Energy company, closed a $155 million Senior Secured Notes
Development Company, L.L.C. (Pan–Sino), the Panda offering (the bonds) from which a project in Luannan County,
subsidiary corporation whose shares would be transferred China (the Luannan project) was funded. NDR assisted with
to NDR as part of its compensation. The Shareholders' the Luannan project and, pursuant to the Letter Agreement,
Agreement required NDR to sell its interest in Pan–Sino to received 4 1/2% of Pan–Sino's stock. After NDR received its
PEC if the Letter Agreement was terminated. stock in Pan–Sino, and as relevant to this appeal, the corporate
structure of the Panda entities and interests was as follows:
Subsequently, and with NDR's approval, PEC assigned its
interest in and obligations under the Letter Agreement to
against NDR and Tang for breach of contract, constructive
Shortly after funding closed on the Luannan project, Panda
fraud, breach of fiduciary duty, unjust enrichment, and
Global notified NDR that it was terminating the Letter
negligence.
Agreement and exercising its rights under the Shareholders'
Agreement to purchase NDR's Pan–Sino stock. NDR
The case was tried to a jury in August 1999. The trial court
disputed Panda Global's authority to take those actions. The
held several post-trial hearings and signed, then modified,
dispute resulted in Panda Global filing a declaratory judgment
four successive judgments, all generally in favor of the Panda
action (the “underlying” or “Panda” suit) in Dallas County
entities. Final judgment was signed on February 6, 2001,
against NDR and its President, Robert Tang. NDR and Tang
and provided that (1) Panda Global recover $111,043.50
retained Akin Gump to represent them in the suit and agreed
from NDR and Tang as attorney's fees for obtaining
to pay the firm an hourly fee and a sliding percentage
the declaratory judgment; (2) Panda Global and Pan–Sino
contingency fee on any recovery they obtained in the suit.
recover $316,273.50 from NDR as attorney's fees pursuant to
NDR and Tang then, through Akin Gump, counterclaimed
the Shareholders' Agreement; (3) contingent attorney's fees be
for declaratory judgment and breach of the Letter Agreement
awarded in the event of appeal; and (4) all parties take nothing
and filed third party claims against Panda International and
otherwise. The court of appeals affirmed the judgment. Nat'l
Pan–Sino. The Panda entities responded by asserting claims
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Dev. & Research Corp. v. Panda *111 Global Energy Co., We agree with Akin Gump that the evidence is legally
No. 05–00–00820–CV, 2002 WL 1060483 (Tex.App.-Dallas insufficient to support the jury's findings that NDR would
May 29, 2002, pet. denied) (not designated for publication). have collected damages awarded in the Panda suit for the
value of NDR's Pan–Sino stock and for success fees. Absent
such evidence, there is no evidence Akin Gump's negligence
proximately caused those damages to NDR. We do not reach
B. The Malpractice Suit
the law firm's issue challenging the evidentiary support for
the damages findings or the issue of whether NDR's damages
NDR 2 later sued Akin Gump for legal malpractice based
should be reduced by Akin Gump's contingency fee.
on its handling of the Panda suit. NDR asserted, in part,
that Akin Gump negligently failed to request jury questions
We also agree with NDR that it may recover damages for
asking whether Panda breached the Letter and Shareholders'
Agreements. NDR alleged that because there were no jury attorney's fees it paid 3 to its attorneys in the underlying suit to
findings that the agreements were breached by Panda, the the extent the fees were proximately caused by the defendant
trial court rendered judgment against NDR despite the verdict attorneys' negligence. We conclude the evidence is legally
having been favorable to NDR. sufficient to support a finding that *112 some attorney's
fees paid by NDR were proximately caused by Akin Gump's
The malpractice jury found Akin Gump's negligence resulted negligence, but the evidence is legally insufficient to support
in damages to NDR as follows: (1) $168,667.41 for the the finding of $216,590.
judgment paid by NDR in the Panda lawsuit; (2) $427,777.77
that was owed to NDR for the fair market value of its Pan–
Sino stock; (3) $109,596.68 for success fees owed to NDR; II. COLLECTIBILITY OF A JUDGMENT
and (4) $216,590.00 for attorney's fees and expenses paid by IN THE UNDERLYING SUIT
NDR in the Panda lawsuit. The trial court rendered judgment
in favor of NDR according to the verdict. [2] [3] To prevail on a legal malpractice claim, the plaintiff
must prove the defendant owed the plaintiff a duty, the
Akin Gump did not appeal the negligence finding or damages defendant breached that duty, the breach proximately caused
awarded for the $168,667.41 NDR paid on the Panda the plaintiff's injury, and the plaintiff suffered damages.
judgment. 232 S.W.3d 883, 889. However, it appealed the Peeler v. Hughes & Luce, 909 S.W.2d 494, 496 (Tex.1995).
other damage awards. The court of appeals reversed that part When the claim is that lawyers improperly represented the
of the judgment awarding attorney's fees and expenses and plaintiff in another case, the plaintiff must prove and obtain
affirmed the remainder of the judgment. Id. at 887. findings as to the amount of damages that would have
been recoverable and collectible if the other case had been
We granted petitions for review filed by both Akin Gump properly prosecuted. Cosgrove v. Grimes, 774 S.W.2d 662,
and NDR. Akin Gump urges that the court of appeals erred 666 (Tex.1989). In Cosgrove, a lawyer was sued for failing
in upholding the trial court's judgment for the value of to properly prosecute an automobile collision case. Id. at 662.
NDR's Pan–Sino stock and success fees because (1) there The jury was charged to find the amount of damages the
is legally insufficient evidence to support the jury's finding malpractice plaintiff would have “in reasonable probability
that a favorable judgment in the Panda suit would have been recovered” and “in reasonable probability collected from
collectible, (2) there is legally insufficient evidence to support [the defendant] as a result of the collision.” Id. at 665 n. 3
the jury's finding as to the amount NDR was owed for the (emphasis added). Addressing the submission, we said, “The
value of its Pan–Sino stock, and (3) the damages should have two issues should have inquired as to the amount of damages
been reduced by the amount Akin Gump's contingency fee recoverable and collectible [in the prior case] if the suit had
would have reduced NDR's net recovery. been properly prosecuted.” Id. at 666.
NDR challenges the court of appeals' determination that The jury in this case was charged to find the amount of
attorney's fees it paid for representation in the Panda suit are damages that would have been “recovered and collected” in
not recoverable as damages. the prior case. In connection with the damages question, the
jury was instructed:
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NDR, citing Texas Civil Practice and Remedies Code
In determining damages, you are sections 31.002 and 63.001(c), argues that the court of appeals
instructed to only consider the amount was correct: evidence of collectibility prior to the date the
of money NDR actually would have judgment was signed is relevant because some remedies
recovered and collected from [Panda are available to judgment creditors even before a judgment
Global and Panda International]. becomes final. Section 31.002, commonly referred to as the
“turnover statute,” allows a party that has already secured
See COMM. ON PATTERN JURY CHARGES, STATE
a final judgment to collect the judgment through a separate
BAR OF TEX., TEXAS PATTERN JURY CHARGES—
court proceeding. TEX. CIV. PRAC. & REM. CODEE §
MALPRACTICE, PREMISES, PRODUCTS PJC 84.3 cmt.
31.002; see also Schultz v. Fifth Judicial Dist. Court of
(2008). Neither party questions whether the jury instruction
Appeals at Dallas, 810 S.W.2d 738, 739 n. 3 (Tex.1991)
was correct. Cf. Cosgrove, 774 S.W.2d at 665 n. 3 (instructing
(stating that the “purpose of the turnover statute is to aid the
jury to find the amount of damages the plaintiff would have
collection of final money judgments”). Because that section
collected to a reasonable probability). Because there was no
does not address prejudgment remedies, it does not aid NDR
objection to the charge as submitted, we assume, without
here.
deciding, that the instruction was correct and measure the
evidence by the charge as given. See Osterberg v. Peca, 12
Section 63.001 contemplates the availability of prejudgment
S.W.3d 31, 55 (Tex.2000).
writs of garnishment. But NDR did not attempt to garnish any
Panda assets before judgment nor did it prove that it would
Akin Gump's argument on the collectibility issue is twofold.
have been entitled to do so. Accordingly, Section 63.001
First, it asserts the court of appeals erred in considering
does not make evidence of Panda International's prejudgment
evidence of collectibility as of the time the Panda suit was
financial condition relevant in determining collectibility of a
filed in 1997, as opposed to evidence of collectibility on
judgment favorable to NDR.
or after the date execution could have issued on the final
judgment. Second, it contends that if a judgment favorable to
We next address Akin Gump's position that a plaintiff must
NDR had been rendered in the underlying suit for its Pan–
prove a judgment would have been collectible when the
Sino stock values and success fees, there is legally insufficient
evidence that the judgment would have been collected. judgment becomes final or at some later time. 4 Texas Rule
of Civil Procedure 627 states that unless an exception applies,
“the clerk of the court or justice of the peace shall issue
the execution upon [a] judgment upon application of the
A. When Must Judgment be Collectible successful party or his attorney after the expiration of thirty
days from the time a final judgment is signed.” TEX. R. CIV.
The Panda case was filed in October 1997 and tried in
P. 627. Depending on the particular case's circumstances,
August 1999. The trial court signed its first judgment on
however, the thirty-day period may be shortened or extended.
February 25, 2000, and its final judgment on February 6,
See TEX. R. CIV. P. 628 (allowing a trial court to issue
2001. In affirming the trial court judgment for NDR, the
execution any time before the thirtieth day after the final
court of appeals considered evidence of the Panda entities'
judgment is signed if the plaintiff shows that the defendant
financial condition at times before any judgment was signed.
may remove personal property subject to execution out of the
In doing so, the court cited Jackson v. Urban, Coolidge,
county); TEX. R. CIV. P. 627 (extending the period for which
Pennington & Scott, 516 S.W.2d 948, 949 (Tex.Civ.App.-
a clerk must wait before issuing execution when a motion for
Houston [1st Dist.] 1974, writ ref'd n.r.e.), for the proposition
new trial or a motion in arrest of judgment is filed). Further,
that the time to be considered in determining whether NDR
unless the judgment debtor properly supersedes the judgment,
would have collected on a *113 judgment was “on the date
the judgment creditor is not precluded from immediately
the [underlying] case was filed or anytime thereafter.” 232
filing an abstract of judgment to aid in seeking satisfaction of
S.W.3d at 895. Akin Gump asserts collectibility can only be
its judgment. See 5 ROY W. MCDONALD & ELAINE A.
proved by evidence of the underlying defendant's financial
GRAFTON CARLSON, TEXAS CIVIL PRACTICE § 31:2
status as of the time execution could have been issued—thirty
(2d ed. 1999).
days after the final judgment was signed. We agree with Akin
Gump's position in part.
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[4] [5] In light of the foregoing, we conclude that evidence some judgment debtors might be classified as insolvent
a defendant in the underlying suit could have satisfied a because they have a balance sheet showing more debts
judgment at times prior to the time a judgment is signed than assets, or showing liens or pledges that encumber their
generally will not be relevant to and will not be probative of property, yet there is insurance or a surety that will pay
the judgment's collectibility unless, as discussed below, it is some or all of the judgment. Or an insolvent judgment debtor
also shown that the defendant's ability to satisfy a judgment might have current income, profits, or access to finances
*114 was not diminished by the passage of time until that can be diverted to satisfy a judgment. Evidence that
judgment was signed. On the other hand, because a judgment damages awarded against the debtor in the underlying suit
creditor does not have to wait thirty days past signing of probably would have been paid, even though the debtor was
the final judgment to begin procedures for collecting its not solvent, would be probative evidence that the damages
judgment, evidence that the judgment would have been were collectible.
collectible on or after the date a judgment was first signed will
be relevant. Generally, then, the amount that would have been collectible
in regard to an underlying judgment—provided the judgment
[6] [7] Part of the evidence NDR references predates not is not dormant or preempted—will be the greater of either (1)
only signing of a judgment in the Panda suit but the suit the fair market value of the underlying defendant's net assets
itself. We agree that prejudgment or pre-suit evidence of that would have been subject to legal process for satisfaction
solvency or other evidence that damages would be collectible of the judgment as of the date the first judgment was signed
from a defendant could be sufficient to support a finding or at some point thereafter, or (2) the amount that would
that damages were later collectible, provided the evidence have been paid on the judgment by the defendant or another,
also shows a reasonable probability that the underlying such as a guarantor or insurer. See 4 RONALD E. MALLEN
defendant's financial condition did not change during the & JEFFREY M. SMITH, LEGAL MALPRACTICE § 31.17
time before a judgment was signed in a manner that would (2009); see also James V. Mazuca & Assocs. v. Schumann,
have adversely affected collectibility. Absent such evidence 82 S.W.3d 90, 96 (Tex.App.-San Antonio 2002, pet. denied)
as to the gap time period, however, a factfinder could only (finding collectibility was adequately shown by a letter
speculate as to how events during the period affected the recognizing the defendant in the underlying suit was insured
judgment debtor's finances. Findings based on speculation and the policy would have satisfied a judgment against the
are not based on legally sufficient evidence. See Leitch v. defendant). But *115 collectibility must be proved; it is not
Hornsby, 935 S.W.2d 114, 119 (Tex.1996) (noting that proof presumed.
of causation cannot rest on speculation or conjecture).
We next consider Akin Gump's contention that the evidence
was legally insufficient to support the jury's finding that NDR
would have collected damages for the value of its Pan–Sino
B. Evidence of Collectibility
stock and success fees had they been awarded in the Panda
The court of appeals stated that a legal malpractice plaintiff suit. In doing so, we note NDR did not claim in the court
must prove the underlying defendant was solvent in order of appeals that Panda Global was solvent or that damages
to prove collectibility of damages that would have been would have been collectible from it. See 232 S.W.3d at 895
recovered in the underlying suit. 232 S.W.3d at 895. We (noting that the parties did not dispute that Panda Global was
agree with the court of appeals, at least in part. Proving insolvent). Nor does it do so here. Accordingly, our focus
the underlying defendant was solvent is one way to prove will be on whether NDR would have recovered and collected
collectibility when “solvent” means the underlying defendant damages from Panda International.
owned sufficient property subject to legal process to satisfy
all outstanding debts and have property remaining to satisfy
some or all of the damages the malpractice plaintiff would C. Analysis
have recovered. See BLACK'S LAW DICTIONARY 434
(8th ed. 2004) (defining a “solvent debtor” as a debtor [8] [9] [10] In reviewing a legal sufficiency challenge to
who owns enough property to satisfy all outstanding debts the evidence, we credit evidence that supports the verdict if
and against whom a creditor can enforce a judgment). But reasonable jurors could have done so and disregard contrary
collectibility may also be shown in other ways. For example, evidence unless reasonable jurors could not have done so.
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City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). A NDR. We will address the evidence as it is categorized by
legal sufficiency challenge “will be sustained when (a) there NDR.
is a complete absence of evidence of a vital fact, (b) the court
is barred by rules of law or of evidence from giving weight to First, the consolidated financial statements which NDR
the only evidence offered to prove a vital fact, (c) the evidence refers to as part of Panda International's business records,
offered to prove a vital fact is no more than a scintilla, or and as showing “owner's equity,” comprise just over one
(d) the evidence conclusively establishes the opposite of the page. The document heading states “Consolidated Financial
vital fact.” Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d Statements (JV1–JV4) as of May 2001.” The statements (1)
706, 711 (Tex.1997). “Evidence does not exceed a scintilla do not purport to represent Panda International's financial
if it is ‘so weak as to do no more than create a mere surmise capabilities or access to any asset shown on the financial
or suspicion’ that the fact exists.” Kroger Tex., Ltd. P'ship statement, and (2) do not expressly set out which Panda
v. Suberu, 216 S.W.3d 788, 793 (Tex.2006) (quoting Ford entities were included in the statement, but imply that only the
Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex.2004)). financial condition of the four joint ventures is represented.
The same group of business records included a one-page
The jury charge instructed that in determining damages the balance sheet from Pan–Western, the subsidiary through
jury was to consider the amount NDR would have collected which Panda International's interest in the joint ventures
from “Panda.” “Panda” was defined as Panda International flowed. 5 Pan–Western owned 87.92% of the joint ventures.
and Panda Global. As previously noted, however, because The Pan–Western balance sheet, however, showed no owner's
NDR did not address the collectibility of damages from Panda equity and indicated that as of May 31, 2001, the Luannan
Global in the court of appeals and does not do so here, Project had not commenced commercial operations, Pan–
our review is for evidence that damages would have been Western had not yet received any interest on loans it made to
collectible from Panda International. the joint ventures to fund the project, and Pan–Western had
paid no interest on the $96.136 million in loans it received
[11] NDR generally contends the evidence showing Panda from Panda Global, the issuer of the $155 million in bonds
International “owned numerous subsidiaries with hundreds that funded the Luannan project.
of millions of dollars of assets is evidence that Panda
[International], through its ownership of these subsidiaries, To the extent the consolidated financial statement referenced
had sufficient assets to pay” a judgment. Specifically, the joint ventures, the joint ventures were not parties to the
NDR points to the following as legally sufficient evidence Panda suit, nor did NDR allege that it would have been
of collectibility from Panda International: (1) May 2001 entitled to collect a judgment from any of them. See TEX.
“Consolidated Financial Statements” which were attached to BUS. ORGS. CODEE § 21.223 (stating that any affiliate of
a Panda International business records affidavit and showed a corporation shall be under no obligation to the corporation
over $47 million of owner's equity; (2) Panda International or to its obligees with respect to “any contractual obligation
owned 100% of the stock of Panda Holdings, Inc. (Panda of the corporation or any matter relating to or arising from
Holdings) and a May 1999 investor service report showed the obligation” unless “the obligee demonstrates that the ...
that Panda Holdings had $70 million on its balance sheet; affiliate caused the corporation to be used for the purpose
(3) Tang's testimony that Panda International and Panda of perpetrating and did perpetrate an actual fraud on the
Global indirectly owned a portion of the Luannan project as obligee”). Nor does one corporation's ownership of all or the
well as several other power projects in the United States, majority of a second entity affect the second entity's existence
Latin America, and Asia; (4) the value of Pan–Sino stock as a distinct, separate legal entity. See BMC Software Belg.,
owned by Panda Global (which was wholly owned by Panda N.V. v. Marchand, 83 S.W.3d 789, 798 (Tex.2002); Lucas v.
International) would have been over $8 million based on the Tex. Indus., Inc., 696 S.W.2d 372, 374 (Tex.1984); Gentry
jury finding as to the value of NDR's 4.5% ownership interest v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573
in Pan–Sino; (5) the ability of Panda International and Panda (Tex.1975); Bell Oil & Gas Co. v. Allied Chem. Corp.,
Global to pay NDR $593,000 in success fees in 1997; and (6) 431 S.W.2d 336, 337 (Tex.1968). The consolidated financial
the award of attorney's fees to Panda International and *116 statements NDR references are not evidence that a judgment
Panda Global in the underlying suit as well as their ability would have been collectible from Panda International as of or
to pay their own attorneys to prosecute their claims against after February 2000.
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Next, NDR references a report reflecting that Panda International's ownership of the projects. Tang testified that
Holdings's May 1999 balance sheet showed it had “millions Panda International indirectly owned multiple projects. But
of dollars.” To begin with, NDR does not contend that it Tang's testimony is no better evidence a judgment would
would have been entitled to collect its damages from Panda have been collectible from Panda International than the
Holdings, a separate corporation, and Panda International's financial statement in Panda International's business records.
ownership of Panda Holdings is not, by itself, evidence First, the evidence was uncontroverted that the joint ventures
that NDR would have collected any amount from Panda directly owned the Luannan project and there were several
International, the parent corporation. See TEX. BUS. ORGS. corporate entities between the joint ventures and Panda
CODEE § 21.223; BMC Software, 83 S.W.3d at 798. Further, International. Moreover, there was no evidence the judgment
the report was dated May 14, 1999, which was more than was collectible from the joint ventures themselves, and
nine months before *117 the first judgment was signed on NDR does not contend it would have been. Second, Tang's
February 25, 2000. And the May 1999 report itself negates testimony did not set out any particular owner's equity, cash
its value as evidence a judgment would have been collectible on hand, current assets, or similar details that would support
from Panda Holdings, even disregarding the fact Panda a conclusion Panda International was solvent or that NDR
Holdings is a separate corporation from Panda International. could have collected any damages from it. Third, testimony
The document is a third party report disclosing that “Moody's from the Panda trial of a Panda International employee with
Investors Service has downgraded the bonds of Panda Global first-hand knowledge of Panda International's affairs was
Energy from B2 to B3. The rating outlook is negative.” read into evidence. The employee's testimony was that he
The report says that Panda Holdings “has up to $70–million was “trying to save the company” because the Luannan
available on its balance sheet currently,” but “there is no project “cannot meet its debt, and therefore, we are at risk of
certainty as to how much may be available both in the short foreclosure.”
—and medium-term to supply Panda Global ” (emphasis
added). To the extent NDR's argument is that cash held Next, the total value of the Pan–Sino stock based on NDR's
by Panda Holdings implies the corporation was an asset ownership interest is not evidence that damages in the Panda
evidencing Panda International's solvency, we disagree with suit would have been collectible. The court of appeals relied
it. The Offering Memorandum for the $155 million bond on the jury finding that NDR's interest in Pan–Sino stock was
issue contains financial data for Panda Holdings, including valued at over $400,000 to conclude that the remaining 94.5%
an Unaudited Pro Forma Consolidated Balance Sheet as of Pan–Sino stock *118 was worth over $8 million. The
of December 31, 1996. The balance sheet showed Panda court attributed that value to Panda International. 232 S.W.3d
Holdings' liabilities exceeded its assets by $101.5 million. at 895. But on April 11, 1997, four years prior to the final
There is no evidence that its financial situation improved even judgment in the Panda suit, PEC had transferred all the Pan–
though it sold one of its assets and had $70 million in cash as Sino stock to Panda Global, which NDR does not contend
of May 1999. No evidence shows whether the asset sale was was solvent. The Chairman of the Board and Chief Executive
at a loss or profit, how the sale affected the solvency of Panda Officer of Panda International testified in the Panda trial that
Holdings itself, whether the cash was committed to and used bonds with a face value of over $155 million issued in 1997 to
for other projects or to pay creditors, or other such details. The finance the Luannan project were trading at “30 to 40 cents on
May 1999 report simply is not evidence that damages would the dollar” at the time of the Panda trial because the “Chinese
have been collectible from Panda International. markets ha [d] deteriorated dramatically.... Banks ha[d] lost
all confidence in this Chinese market.” His testimony was
Third, the fact that success fees were paid to NDR in May introduced as evidence in the malpractice suit. Further, notes
1997 is no evidence a judgment in the Panda suit would have accompanying a Balance Sheet for Pan–Western Energy
been collectible over two years later. There is no evidence Corporation LLC (Pan–Western) stated that as of May 31,
of events between the time the success fees were paid and 2001, the Luannan Project had not commenced commercial
the time judgment was signed except testimony evidencing operations, Pan–Western had not received any interest on
financial deterioration of the Panda entities and projects. loans it made to fund the project, and Pan–Western had
not paid any interest on the loans it received from Panda
NDR argues that collectibility is also shown by Panda Global, the issuer of the bonds that funded the project. The
International's indirect ownership of the Luannan Project Bond Offering Memorandum showed that the $155 million
and other power projects and Tang's testimony as to Panda bonds were secured not only by the assets of Panda Global,
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including the Pan–Sino stock, but by the capital stock of involved unless recovery is authorized by statute or contract.
6 It urges adoption of the “tort of another” exception. See
Panda Global itself. The only interest Panda International
had in the Pan–Sino stock flowed from Panda Global's status RESTATEMENT (SECOND) OF TORTS § 914(2) (1977)
as a subsidiary of Panda International, and any value the Pan– (allowing a party to recover attorney's fees when that party
Sino stock had was subsumed in the uncontested insolvent must, as a result of some tort committed by another, bring or
financial status of Panda Global. defend an action against a third party). NDR contends that
under the exception, it can recover the attorney's fees it had
NDR asserts that the award of attorney's fees Panda Global to pay for appealing the Panda judgment.
incurred in the Panda suit and the fact that Panda International
and Panda Global obtained representation in the Panda suit As to the jury's finding on attorney's fees, Akin Gump asserts
are evidence a judgment against them was collectible. We (1) NDR is seeking fee disgorgement, which is available
disagree. First, if judgment in the Panda suit had been in only if the attorneys breached a fiduciary duty to NDR, but
favor of NDR, then Panda Global would not have recovered NDR did not plead or request jury questions on breach of
attorney's fees. Therefore, the fact it recovered fees in the suit fiduciary duty, see Burrow v. Arce, 997 S.W.2d 229, 241–43
has no bearing on whether a judgment against Panda Global (Tex.1999); (2) the “tort of another” exception to the general
would have been collectible. See Cosgrove, 774 S.W.2d at rule is not implicated by facts such as these where the fees
666. Second, as to NDR's assertion that a judgment would being sought were paid to the defendant attorneys in the
have been collectible because the Panda parties had sufficient underlying suit; (3) NDR did not prove it paid the appellate
assets to pay attorneys in the underlying lawsuit, NDR offered fees it seeks to recover; and (4) to the extent NDR paid the
no evidence of (1) the terms by which the attorneys for the fees, the fees would have been incurred regardless of the
Panda entities were compensated, (2) whether the attorneys firm's negligence and therefore were not proximately caused
were actually paid, (3) the source of any funds used to pay by Akin Gump's actions. 8
the attorneys, even if they were paid, or (4) if any funds that
might have been used to pay the Panda attorneys would have We disagree with Akin Gump that attorney's fees paid in an
been used to pay NDR's damages. underlying suit can only be recovered through forfeiture for
breach of fiduciary duty. For the reasons set out below, we
In sum, none of the evidence NDR cites is legally sufficient to conclude the general rule as to recovery of attorney's fees
prove collectibility of damages it would have been awarded from an adverse party in litigation does not bar a malpractice
in the Panda suit for its Pan–Sino stock value and success plaintiff from claiming damages in the malpractice case for
fees. Accordingly, we need not and do not reach the issues fees it paid its attorneys in the underlying suit. Because the
of whether there was evidence to support the jury findings as general rule does not apply to NDR's claim, we need not and
to the amount of NDR's damages and whether the judgment do not address whether the exception set out in section 914(2)
in favor of NDR should have been reduced by the *119 of the Second Restatement should be adopted as Texas law.
contingency fee Akin Gump would have collected had NDR
prevailed in the Panda lawsuit.
*120 A. The American Rule
III. ATTORNEY'S FEES AS DAMAGES It has long been the rule in Texas that attorney's fees paid
to prosecute or defend a lawsuit cannot be recovered in that
In its petition, NDR argues that the court of appeals erred in suit absent a statute or contract that allows for their recovery.
holding the attorney's fees it paid in the Panda lawsuit are See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299,
not recoverable. 232 S.W.3d at 897. It says the fees paid to 310–11 (Tex.2006) (“Absent a contract or statute, trial courts
appeal the judgment in Panda's favor are economic damages do not have inherent authority to require a losing party to
proximately caused by Akin Gump's negligent failure to pay the prevailing party's fees.”); Wm. Cameron & Co. v.
properly submit jury questions. 7 Am. Sur. Co. of N.Y., 55 S.W.2d 1032, 1035 (Tex. Comm'n
App.1932, judgm't adopted) (“It is settled law in this state
Citing Turner v. Turner, 385 S.W.2d 230, 233 (Tex.1964), that, unless provided for by statute or by contract between the
NDR acknowledges the general rule that a party may not parties, attorneys' fees incurred by a party to litigation are not
recover attorney's fees for the litigation in which it is recoverable against his adversary either in an action in tort or
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a suit upon a contract.”); Sherrick v. Wyland, 14 Tex.Civ.App. case, could be read out of context as generally precluding
299, 37 S.W. 345, 345 (1896) (“It has often been ruled, recovery of attorney's fees for prosecuting or defending a suit.
in this state and elsewhere, that fees of counsel, incurred It was not intended to extend so far.
in prosecuting a suit for or defending against a wrong, are
not ordinarily recoverable as actual damages, because they *121 The situation before us does not involve the American
are not considered proximate results of such wrong.”). The Rule that prevails in Texas. NDR does not seek to recover
rule is known as the American Rule. See Buckhannon Bd. & attorney's fees for prosecuting its malpractice suit against
Care Home, Inc. v. W. Va. Dep't of Health and Human Res., Akin Gump. It seeks damages measured by the economic
532 U.S. 598, 602, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001) harm it suffered from Akin Gump's breach of its duty of
(“[P]arties are ordinarily required to bear their own attorney's care in prosecuting the Panda suit. Akin Gump does not
fees—the prevailing party is not entitled to collect from the contend it did not have or did not breach a duty of care. Thus,
loser.”); Fleischmann Distilling Corp. v. Maier Brewing Co., unless there is some reason not to consider the Panda suit
386 U.S. 714, 718, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967). attorney's fees as damages in the malpractice suit, the question
becomes an evidentiary one: Does evidence support the jury's
[12] The court of appeals in this case concluded that finding that $216,590 in attorney's fees and expenses were
attorney's fees are not recoverable as damages for legal proximately caused by Akin Gump's negligence?
malpractice. 232 S.W.3d at 896–97 (citing El Dorado Motors,
Inc. v. Koch, 168 S.W.3d 360, 366 (Tex.App.-Dallas 2005, no Akin Gump, in effect, urges us to exclude all the Panda suit
pet.) (noting that attorney's fees are not recoverable in a legal attorney's fees from being considered as damages. It says that
malpractice suit because attorney's fees expended in prior awarding damages for the fees would be fee forfeiture by
litigation are recoverable only when provided for by contract another name, and NDR did not plead or obtain findings that
or agreement between the parties)). The court of appeals Akin Gump breached a duty that would allow fee forfeiture
also cited Martin–Simon v. Womack, 68 S.W.3d 793, 797–98 under the holding of Burrow v. Arce. See Burrow, 997 S.W.2d
(Tex.App.-Houston [14th Dist.] 2001, pet. denied), where it at 241–43. We disagree with the proposition.
was held that a plaintiff in an interference-with-contract case
could not recover attorney's fees as damages when the fees [13] If an attorney has breached his or her fiduciary duty
were paid in a prior suit related to enforcement of the contract. to a client, then part or all of the fees the client paid may
That court relied on Dallas Central Appraisal District v. be recovered through disgorgement and forfeiture. See id. at
Seven Investment Co., 835 S.W.2d 75, 77 (Tex.1992), and 237. In Burrow, we noted our agreement with the following
New Amsterdam Casualty Co. v. Texas Industries, Inc., forfeiture rule: “A lawyer engaging in clear and serious
414 S.W.2d 914, 915 (Tex.1967), for the proposition that violation of duty to a client may be required to forfeit some
attorney's fees are not recoverable unless provided for by or all of the lawyer's compensation for the matter.” Id. at
statute or contract. But those cases should not be read so 241–42 (quoting RESTATEMENT (THIRD) OF THE LAW
broadly. GOVERNING LAWYERS § 49 (Proposed Final Draft No.
1, 1996)). But because attorney's fees in an underlying case
For example, in New Amsterdam Casualty Co., we considered may be subject to forfeiture for breach of fiduciary duty,
the appeal of a case in which an unpaid materialman sued a it does not follow that fees and expenses paid to attorneys
construction contractor and its surety. New Amsterdam Cas. who negligently try a suit should not be recoverable as
Co., 414 S.W.2d at 914. Judgment was rendered in favor of compensatory damages in a second suit for malpractice.
the materialman for the amount due on the materials plus
attorney's fees for prosecuting the suit. Id. at 915. The appeal In Burrow, the plaintiffs were injured in explosions at a
before this Court concerned only the award of attorney's fees. Phillips 66 chemical plant. Burrow, 997 S.W.2d at 232.
See id. The Court reversed the award of attorney's fees and The defendant lawyers represented the plaintiffs in a suit
rendered judgment in favor of the surety. Id. at 916. In doing for their personal injuries. Id. The suit was settled and the
so, we “reaffirmed the rule previously recognized as settled plaintiffs received settlement payments. Id. They then sued
law ... that attorney's fees are not recoverable either in an their lawyers for breach of fiduciary duty, fraud, violations
action in tort or a suit upon a contract unless provided by of the Deceptive Trade Practices–Consumer Protection Act,
statute or by contract between the parties.” Id. at 915. Our negligence, and breach of contract. Id. at 232. The trial court
statement, considered without reference to the facts of the granted summary judgment for the defendant attorneys on the
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basis that the settlement in the underlying case was fair and attorney's negligence caused identifiable economic harm to
reasonable and any misconduct of the lawyers did not cause the malpractice plaintiff. The better rule, and the rule we
damages to the plaintiffs. Id. at 233. adopt, is that a malpractice plaintiff may recover damages
for attorney's fees paid in the underlying case to the extent
This Court held that the defendants were not entitled to the fees were proximately caused by the defendant attorney's
summary judgment because they did not establish as a matter negligence. See Alexander v. Turtur & Assocs., Inc., 146
of law that the plaintiffs suffered no actual damages. Id. at S.W.3d 113, 119 (Tex.2004); Knebel v. Capital Nat'l Bank,
237. As to the breach of fiduciary duty claim, though, we 518 S.W.2d 795, 799 (Tex.1974); 3 RONALD E. MALLEN
held that a client need not prove actual damages as part of & JEFFREY M. SMITH, LEGAL MALPRACTICE § 21:19
the breach of fiduciary duty claim. Id. at 240. We remanded (2009).
the claim to the trial court for determination of whether
the lawyers breached their fiduciary duties and if so, the
appropriate amount of fee forfeiture. Id. at 246. The question
B. Analysis
of whether the plaintiffs were precluded from recovering, as
damages in a malpractice case, attorney's fees paid to the NDR's position is that it incurred damages by paying
defendant lawyers in the underlying case was not before the attorney's fees to appeal the judgment rendered against it
Court in Burrow. As we said, “[t]he main purpose of [fee] because Akin Gump negligently failed to request inclusion of
forfeiture is not to compensate an injured principal, even necessary questions in the jury charge. NDR does not contest
though it may have that effect. Rather, the central purpose of its burden to prove that Akin Gump's negligence proximately
the equitable remedy of forfeiture is to protect relationships caused it to pay the fees and expenses it seeks to recover.
of trust by discouraging agents' disloyalty.” Id. at 238.
[14] [15] [16] Proximate cause has two elements: cause in
*122 A negligence claim, unlike a fee forfeiture claim for fact and foreseeability. IHS Cedars Treatment Ctr. of DeSoto,
breach of fiduciary duty, is about compensating an injured Tex., Inc. v. Mason, 143 S.W.3d 794, 798 (Tex.2004). Cause
party. See Douglas v. Delp, 987 S.W.2d 879, 885 (Tex.1999) in fact must be established by proof that (1) the negligent
(“[W]hen the injuries caused by an attorney's negligence act or omission was a substantial factor in bringing about the
are economic, the plaintiff can be fully recompensed by harm at issue, and (2) absent the negligent act or omission
the recovery of any economic loss. Restoration of the (“but for” the act or omission), the harm would not have
pecuniary interest suffices to return a plaintiff to her occurred. See id. at 799. Causation must be proved, and
prior circumstances.”); THOMAS D. MORGAN, LAWYER conjecture, guess, or speculation will not suffice as that proof.
LAW: COMPARING THE ABA MODEL RULES AND Leitch, 935 S.W.2d at 119; Doe v. Boys Clubs of Greater
THE ALI RESTATEMENT (THIRD) OF THE LAW Dallas, Inc., 907 S.W.2d 472, 477 (Tex.1995).
GOVERNING LAWYERS 98 (2005) (“A key distinction
between fee forfeiture and the malpractice remedy is that
the amount forfeited need have no relation to actual
damages suffered by the client.”) (emphasis omitted); 1. Fees and Expenses Paid to Akin Gump
RESTATEMENT (SECOND) OF TORTS § 903 cmt. a NDR does not contest the reasoning of the court of appeals
(1977) (“When there has been harm only to the pecuniary that “even a successful litigant may be forced to defend its
interests of a person, compensatory damages are designed to judgment when the losing party appeals.” 232 S.W.3d at 896.
place him in a position substantially equivalent in a pecuniary Instead, NDR argues that the court of appeals overlooked
way to that which he would have occupied had no tort been Texas Civil Practice and Remedies Code section 38.001,
committed.”). which allows a successful litigant on a breach of contract
claim to recover its attorney's fees for appeal. It asserts that
We see little difference between damages measured by NDR would not have suffered economic loss by paying
the amount the malpractice plaintiff would have, but did appellate attorney's fees because a judgment favorable to
not, recover and collect in an underlying suit and damages NDR would have included provisions that it recover *123
measured by attorney's fees it paid for representation in the appellate attorney's fees from Panda.
underlying suit, if it was the defendant attorney's negligence
that proximately caused the fees. In both instances, the
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[17] First, we agree with the court of appeals. There is no
evidence that if NDR had recovered a favorable judgment Akin Gump further argues that even if NDR were entitled to
in the Panda suit, it would not have paid appellate fees recover fees and expenses charged by Dorsaneo and Armour,
to defend the judgment. The evidence does not show that there was no evidence NDR actually paid them. However,
if NDR had obtained a favorable judgment, Panda would Professor Armour testified NDR paid her several thousand
not have appealed the case or that NDR would not have dollars for her work on the case, and Tang testified that
defended its judgment on appeal if Panda appealed. Thus, the Professor Dorsaneo was paid for his work. Thus, there was
court of appeals was correct in determining there is legally more than a scintilla of evidence that NDR actually paid
insufficient evidence to support a finding that Akin Gump's attorney's fees and expenses to the professors. See City of
negligence was a cause in fact of the appellate attorney's fees Keller, 168 S.W.3d at 810.
and expenses NDR paid to Akin Gump.
[19] But although there is some evidence that the fees and
Next, we address NDR's argument that it would have been expenses of Dorsaneo and Armour were paid, the evidence
entitled to recover in the Panda suit for its appellate attorney's is undisputed that the total of those payments was less than
fees under Texas Civil Practice and Remedies Code section half the $216,590 awarded by the jury. NDR only argues that
38.001. As Akin Gump points out, NDR's position in the it paid Armour $49,500 and Dorsaneo $10,000. Accordingly,
malpractice suit was not that it would have recovered and although the evidence is legally sufficient to support a finding
collected a judgment for additional appellate attorney's fees of some amount, it is legally insufficient to support the entire
from Panda had Akin Gump properly tried the Panda case. amount the jury found. *124 Guevara v. Ferrer, 247 S.W.3d
The damages question in the malpractice jury charge asked 662, 669–70 (Tex.2007); see Texarkana Mem'l Hosp., Inc. v.
about, and NDR argued to the jury that it sought recovery for, Murdock, 946 S.W.2d 836, 841 (Tex.1997).
“[a]ttorney's fees and expenses paid by NDR in the Panda
Lawsuit,” not about what fees and expenses would have been [20] Ordinarily, we render judgment when we sustain a no
recovered and collected from Panda had Akin Gump properly evidence issue. Guevara, 247 S.W.3d at 670; Murdock, 946
tried the underlying case. S.W.2d at 841. However, when there is some evidence of
damages, but not enough to support the full amount, it is
inappropriate to render judgment. Guevara, 247 S.W.3d at
670. In such a situation, we may either remand the case to the
2. Fees for Separate Counsel
court of appeals for a suggestion of remittitur or to the trial
[18] The situation is different as to the fees NDR paid court for a new trial. Id. Given the state of the evidence in
the separate, additional counsel who were retained post- this case, it is appropriate to remand the case to the court of
trial. Post-trial proceedings focused on whether the jury appeals. See id. (remanding to the court of appeals to consider
verdict entitled NDR to specific performance of the Letter suggestion of remittitur rather than remanding for a new
and Shareholder Agreements calling for NDR's Pan–Sino trial after determining the evidence was legally insufficient
stock to be purchased by Panda upon termination of the to support all of the damages awarded by the jury). If the
agreements, or whether NDR waived its claims by failing court of appeals determines that suggestion of remittitur is not
to request jury questions as to breach of the agreements. appropriate or is unable to successfully suggest a remittitur,
NDR at that point retained law Professors William Dorsaneo then the part of the case involving liability and attorney's
and Maureen Armour to help Akin Gump convince the trial fees and expenses—including those of both Akin Gump and
judge to render judgment favorable to NDR. There was separate counsel—should be remanded for a new trial. See
evidence that Professors Dorsaneo and Armour were retained TEX. R. APP. P. 61.2.
to focus on the jury charge and argue to the trial court that
despite the absence of a jury finding that Panda breached
the agreements, the verdict supported judgment for NDR. IV. CONCLUSION
The evidence is legally sufficient to support the jury finding
that Akin Gump's negligence was a cause in fact of NDR's We reverse the court of appeals' judgment. We render
retaining the professors and, thus, that the firm's negligence judgment that NDR take nothing on its claims for the fair
proximately caused NDR to pay the fees and expenses of the market value of its stock and success fees owed to it. The
professors. claim for attorney's fees and expenses is remanded to the
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court of appeals for further proceedings consistent with this
All Citations
opinion.
299 S.W.3d 106, 53 Tex. Sup. Ct. J. 77
Justice GUZMAN did not participate in the decision.
Footnotes
1 NDR, PEC, and Panda International are Texas corporations. Panda Global and Pan–Sino are Cayman Island
corporations. NDR, PEC, Panda International, and Panda Global have their principal offices in Dallas.
2 Tang was initially a party in the suit but was dismissed in the trial court. He is not a party to this appeal.
3 The jury found and NDR argues that the attorney's fees paid in the Panda suit are recoverable as damages. We address
only that issue and express no opinion as to whether attorney's fees incurred but not paid in an underlying case would
be recoverable as damages.
4 To be enforced, an unsatisfied final judgment must not have become dormant and must not be preempted by federal
law. See TEX. CIV. PRAC. & REM. CODE E § 34.001; 5 ROY W. MCDONALD & ELAINE A. GRAFTON CARLSON,
TEXAS CIVIL PRACTICE § 31:3 (2d ed. 1999). Here, however, there is no contention that a judgment in the Panda suit
would have been dormant or preempted by federal law.
5 As we begin our analysis of the evidence, it is helpful to review the relationships among the Panda entities. Panda
International owned 100% of Panda Holdings, which owned 100% of Panda Global. Panda Global owned 95.5% of Pan–
Sino (NDR owned the other 4.5%). Pan–Sino owned 99% of Pan–Western. Pan–Western owned 87.92% of each of the
joint ventures, which in turn owned the Luannan facilities.
6 The record shows that Panda Global owned 94.5% of Pan–Sino, which in turn owned 99% of Pan–Western. The 1997
Bond Offering Memorandum stated that the bonds were secured by a pledge of 100% of Panda Global's Capital Stock
as well as by
a security interest in certain assets of [Panda Global] and its Subsidiaries, including a pledge of (i) at least 90%
of the Capital Stock of Pan–Sino, (ii) 99% of the Capital Stock of Pan–Western, (iii) the Issuer Note and (iv) the
Luannan Facility Notes and the granting of a security interest in certain funds of [Panda Global] and its Subsidiaries
maintained by the Senior Secured Notes trustee.
7 In its petition for review, NDR claims that legally sufficient evidence supports the jury finding it paid attorney's fees to Akin
Gump for appeal. In its reply brief, NDR argues that it also paid post-trial and appellate attorney's fees to two attorneys
who were not members of the firm and the evidence it paid those fees also supports the jury finding. Akin Gump asserts
NDR did not timely raise the argument about evidence of fees paid to separate counsel supporting the jury finding. We
believe the argument is fairly encompassed within the issue framed by NDR. TEX. R. APP. P. 53.2(f) (“The statement of
an issue or point [in a petition for review] will be treated as covering every subsidiary question that is fairly included.”).
8 Akin Gump does not assert the collectibility argument in response to NDR's petition seeking attorney's fees based on
the actual jury finding awarding attorney's fees. The firm makes the collectibility argument as to attorney's fees only in
response to NDR's argument that if Akin Gump had not negligently submitted the underlying case, NDR would have
recovered its appellate attorney's fees under Texas Civil Practice and Remedies Code § 38.001.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
D
Anzaldua v. State, 696 S.W.2d 911 (1985)
Before the court en banc.
696 S.W.2d 911
Court of Criminal Appeals of Texas.
Gilbert ANZALDUA, Appellant, OPINION ON APPELLANT'S
v. MOTION FOR REHEARING
The STATE of Texas, Appellee. ONION, Presiding Judge.
No. 64066. | Sept. 25, 1985. Our opinion on original submission is withdrawn in lieu of
the following.
Defendant was convicted in the County Court at Law No. 2,
Bell County, William P. Gibson, J., of hindering a secured
This appeal is from a conviction for hindering a secured
creditor, and he appealed. The Court of Criminal Appeals,
creditor under V.T.C.A., Penal Code, § 32.33 (1974).
Onion, P.J., held that information did not adequately charge
Appellant entered a plea of nolo contendere before the court.
one element of offense.
His punishment was assessed at 60 days in jail and at a fine
of $50.00. Appellant, however, was placed on misdemeanor
Reversed and cause dismissed.
probation for a period of 12 months and ordered to pay
restitution of $165.03.
Davis and McCormick, JJ., dissented.
Among his grounds of error appellant contends the
information filed in the County Court at Law No. 2 of
West Headnotes (1) Bell County did not allege an offense under § 32.33 of the
Penal Code. 1 Appellant urges, as we understand it, that the
information is fundamentally defective.
[1] Secured Transactions
Criminal Liability of Debtor
Omitting the formal parts, the information alleged that
Information charging that defendant
appellant
“concealed . . . by refusing to return . . .”
property in which secured party had interest “having signed a security agreement
did not sufficiently allege an element of with Arthur Neale Potts creating
offense of hindering secured creditor as defined interest in property, namely One Weed
in V.T.C.A., Penal Code § 32.33, namely, Eater, One Lawnmower, One Bicycle,
that defendant “destroys, removes, conceals, One Ladder with intent to hinder the
encumbers, transfers or otherwise harms or enforcement of the security interest,
reduces value of property”, and thus did not the defendant intentionally concealed
charge an offense under that section. the above described property by
refusing to return said property upon
8 Cases that cite this headnote
demand at a time when a part of the
debt secured by the aforesaid security
was due and unpaid. 2 (Emphasis
added.)
Attorneys and Law Firms
*911 Glenn H. Williams, Copperas Cove, Frank Newton, V.T.C.A., Penal Code, § 32.33 (1974), in effect at the time of
Del Rio, Charles O. Grigson, James G. Boyle, Austin, for the alleged offense, 3 provides as follows:
appellant; H. Clyde Farrell, Austin, of counsel.
Patrick Ridley, Co. Atty., and Pete Hamer, Asst. Co. Atty., “(a) For purposes of this section:
Belton, Robert Huttash, State's Atty., Austin, for the State.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Anzaldua v. State, 696 S.W.2d 911 (1985)
information alleges appellant “concealed ... by refusing to
“(1) ‘Remove’ means transport, without the effective return....” The information does not allege that appellant hid
consent of the secured party, from the state in which or secreted the property nor that he withheld the whereabouts
*912 the property was located when the security of the property. The terms “conceal” or “refuse” are not
interest or lien attached. defined in the statute or by the Penal Code.
“(2) ‘Security interest’ means an interest in personal
V.T.C.A., Penal Code, § 1.05 (Construction of the Code),
property or fixtures that secures payment or
provides in part:
performance of an obligation.
“(b) Unless a different construction
“(b) A person who has signed a security agreement
is required by the context, Sections
creating a security interest in property or a mortgage
2.01, 2.02, 2.04, 2.05, and 3.01
or deed of trust creating a lien on property commits
through 3.12 of the Code Construction
an offense if, with intent to hinder enforcement of
Act (Article 5429b–2, Vernon's
that interest or lien, he destroys, removes, conceals,
Texas Civil Statutes) apply to the
encumbers, transfers, or otherwise harms or reduces the
construction of this code.”
value of the property.
“(c) For purposes of this section, a person is presumed Section 2.01 of said Article 5429b–2, V.A.C.S., provides:
to have intended to hinder enforcement of the security
interest or lien if, when any part of the debt secured by “Words and phrases shall be read in
the security interest or lien was due, he failed: context and construed according to
rules of grammar and common usage.
“(1) to pay the part then due; and Words and phrases that have acquired
a technical or particular meaning,
“(2) if the secured party had made demand, to deliver whether by legislative definition
possession of the secured property to the secured or otherwise, shall be construed
party. accordingly.”
“(d) Except as provided in Subsection (e) of this section,
an offense under this section is a Class A misdemeanor. Thus we give to “conceal” and “refuse” their original
meaning and common usage. See Courtemanche v. State,
“(e) If the actor removes the property, the offense is a 507 S.W.2d 545 (Tex.Cr.App.1974). Black's Law Dictionary
felony of the third degree. (1968), defines “conceal” as “to hide, secrete, withhold from
The elements of the offense are the knowledge of others; to withdraw from observation....”
Webster's Third International Dictionary (1961) defines
(1) a person “refuse” as “to show or express a positive unwillingness to do
or comply with (as something asked, demanded, expected).
(2) who has signed
The mere refusal to deliver property upon demand does not
(3) a security agreement that created a security interest in constitute “concealing.” Further, the intent of § 32.33, supra,
property, or is apparently to protect secured property for the benefit of
the credit. The clause “otherwise harms or reduces the value
(4) a mortgage or deed of trust creating a lien on property of the property” implies that aforementioned acts, destroys,
removes, conceals, etc., also harm or reduce such value.
(5) with intent to hinder enforcement of interest on lien Certainly the mere refusal to deliver property generally would
not harm or reduce its value.
(6) destroys, removes, conceals, encumbers, transfers or
otherwise harms or reduces value of property.
In the Practice Commentary to § 32.33 (Searcy & Patterson)
it is stated in part:
Subsection (b) of the statute sets out two elements of
the offense which are (5) and (6) above. The information “This section is derived from Business & Code Secs. 25.0
sufficiently alleges element (5) above. As to element (6), the and 25.02, but is somewhat broader in its choice of verbs. It
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Anzaldua v. State, 696 S.W.2d 911 (1985)
beyond mere refusal to deliver citing 53 Tex.Jur.2d, Statutes,
is narrower in that it does not outlaw refusal by the debtor
§ 165 and authorities there cited. The Attorney General
to reveal the location *913 of the property (although this
concluded that “mere refusal to deliver property to a secured
may violate Section 32.34); nor does it make the debtor's
party is not an offense under § 32.33 of the Penal Code.”
concealment of himself an offense....” (Emphasis added.)
Accord: Explanatory Comment, § 32.33, Texas Anno. Penal We conclude that the instant information does not charge an
Statutes, Branch's 3rd Ed., Vol. 2, p. 578. offense under V.T.C.A., Penal Code, § 32.33 (1974). The
judgment is reversed and the cause ordered dismissed.
In Attorney General's Opinion H–980 (1977), the Attorney
General was asked whether there was concealment under
V.T.C.A., Penal Code, § 32.33 (1974), when the debtor W.C. DAVIS and McCORMICK, JJ., dissent.
refuses to deliver collateral upon demand of a secured party
but does not harm or reduce the value of the collateral. All Citations
The Attorney General answered that concealment under
subsection (b) of the statute must entail some further act 696 S.W.2d 911
Footnotes
1 Appellant complains the court erred in failing to set aside the information pursuant to his motion.
2 Now see the 1979 amendment to § 32.33 (Acts 1979, 66th Leg., p. 501, ch. 232, § 1, eff. Sept. 1, 1979).
3 Now see the 1979 amendment to § 32.33 (Acts 1979, 66th Leg., p. 501, ch. 232, § 1, eff. Sept. 1, 1979).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
E
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
377 S.W.3d 45 Affirmed in part, reversed in part, and remanded.
Court of Appeals of Texas,
Houston (1st Dist.).
ARDMORE, INC. f/k/a GHX Incorporated West Headnotes (35)
and Star Properties, LLC, Appellants
v.
[1] Landlord and Tenant
The REX GROUP, INC. d/b/a T–
Conditions precedent
3 Support Services, Inc., Appellee.
Landlord and Tenant
No. 01–11–00328–CV. | April 19, 2012. Time
Sublease, which had a separate exercise date
Synopsis for the purchase option in the lease than the
Background: After lessor asserted that lessee's attempt lease did, did not modify the lease, even
to exercise purchase option in lease was ineffective, and though lessor's required consent to sublease
lessee asserted that sublessee's attempt to exercise purchase was expressly conditioned on specific terms of
option in sublease was ineffective, lessee brought claims for sublease, and thus lessee timely exercised its
declaratory relief against lessor and sublessee, and lessor and purchase option under the lease, where lease
sublessee brought counterclaims against lessee, each seeking provided that any sublease entered into by lessee
an adjudication of which, if any, of the purchase options would not relieve it “of any of its obligations
were properly exercised. The 125th District Court, Harris hereunder,” the sublease provided that it was
County, Kyle Carter, J., granted lessee's motion for summary “subject and subordinate to” the lease, and the
judgment on basis that it had timely exercised its purchase consent to sublease provided that the sublease
option under the lease and that the description of the property “shall not diminish or in any way effect the
subject to the purchase option in the sublease was rendered obligations of [lessee] to [lessor] under the
unenforceable by the statute of frauds. Lessor and sublessee Lease” and that the original lessors “executed
appealed, lessee cross-appealed, and appeals were dismissed this Consent solely to evidence [their] consent to
for lack of jurisdiction, 2011 WL 486588. the Sublease.”
Cases that cite this headnote
Holdings: On appeal after remand, the Court of Appeals,
Laura Carter Higley, J., held that: [2] Landlord and Tenant
Time
[1] sublease, which had a separate exercise date for the While lessee's purchase option in lease was
purchase option in the lease than the lease did, did not modify generally a right, the notice requirement and
the lease, and thus lessee timely exercised its purchase option deadline were obligations that could not be
under the lease; effected by sublease, where lessor's required
consent to sublease explicitly provided that the
[2] property to be sold under purchase option in sublease was sublease would not “in any way effect” lessee's
sufficiently identified to satisfy statute of frauds; obligations in the lease.
[3] sublessee was not entitled to summary judgment on its Cases that cite this headnote
claim for specific performance of purchase option in sublease;
and
[3] Landlord and Tenant
Construction and Operation of Subleases
[4] lessor's attorney's statement during closing argument of
Lessor could not assert that the modified
bench trial on attorney fees did not preclude trial court from
notification date in sublease for the purchase
awarding lessee only $85,000 in attorney fees.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
option in lease was fraudulently induced, The purpose of a description in a written
rendered the contract unenforceable, or had conveyance is not to identify the land, but to
resulted in a material breach of the contract, afford a means of identification.
where lessor was not party to sublease.
2 Cases that cite this headnote
Cases that cite this headnote
[9] Frauds, Statute Of
[4] Contracts Purpose
Rights Acquired by Third Persons Frauds, Statute Of
The general rule is that only the parties to Sufficiency in general
a contract have the right to complain of a While courts apply a strict application of the
breach thereof; and if they are satisfied with the statute of frauds, they allow for a liberal
disposition that has been made of it and all claims construction of the words describing the land.
under it, a third person has no right to insist that V.T.C.A., Bus. & C. § 26.01.
it has been broken.
Cases that cite this headnote
Cases that cite this headnote
[10] Frauds, Statute Of
[5] Frauds, Statute Of Sufficiency in general
Sufficiency in general
A metes-and-bounds description is not required
For a contract concerning the conveyance of real to satisfy the statute of frauds. V.T.C.A., Bus. &
estate to satisfy the statute of frauds, the writing C. § 26.01.
must furnish within itself, or by reference to
some other existing writing, the means or data by Cases that cite this headnote
which the particular land to be conveyed may be
identified with reasonable certainty. V.T.C.A.,
[11] Frauds, Statute Of
Bus. & C. § 26.01.
Sufficiency in general
2 Cases that cite this headnote A plat in a recorded property description is not
required to satisfy the statute of frauds. V.T.C.A.,
Bus. & C. § 26.01.
[6] Frauds, Statute Of
Nature of Contract in General Cases that cite this headnote
The statute of frauds applies to a purchase option
in a contract. V.T.C.A., Bus. & C. § 26.01.
[12] Frauds, Statute Of
Cases that cite this headnote Sufficiency in general
The description of the property does not require
conviction beyond all peradventure of doubt to
[7] Frauds, Statute Of
satisfy the statute of frauds. V.T.C.A., Bus. & C.
Questions for jury
§ 26.01.
Whether a contract falls within the statute of
frauds is a question of law. V.T.C.A., Bus. & C. Cases that cite this headnote
§ 26.01.
Cases that cite this headnote [13] Frauds, Statute Of
Sufficiency in general
If enough appears in the description of the
[8] Frauds, Statute Of
property so that a party familiar with the locality
Sufficiency in general
can identify the premises with reasonable
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
certainty, it will be sufficient to satisfy the statute Frauds, Statute Of
of frauds. V.T.C.A., Bus. & C. § 26.01. Admissibility of evidence to aid
memorandum
1 Cases that cite this headnote
Parol evidence cannot be used to supply the
essential elements of a contract for the sale of real
[14] Frauds, Statute Of estate.
Sufficiency in general
Cases that cite this headnote
Generally, a property can be identified with
reasonable certainty, as required to satisfy the
statute of frauds, if it identifies the general area [19] Evidence
of the land and contains information regarding Grounds for admission of extrinsic evidence
the size, shape, and boundaries. V.T.C.A., Bus. Frauds, Statute Of
& C. § 26.01. Admissibility of evidence to aid
memorandum
Cases that cite this headnote
Parol evidence can be used to explain or clarify
the essential terms appearing in a contract for the
[15] Deeds sale of real estate.
Language of instrument
When construing a conveyance, the court does Cases that cite this headnote
not look at terms in isolation; rather, it must give
effect to all parts of the conveyance and construe [20] Frauds, Statute Of
the document as a whole. Sufficiency in general
Cases that cite this headnote If it does not sufficiently describe the land to
be conveyed, a conveyance of an interest in real
property is void and unenforceable under the
[16] Frauds, Statute Of statute of frauds. V.T.C.A., Bus. & C. § 26.01.
Sufficiency in general
When a contract includes a map of the property Cases that cite this headnote
to be conveyed as a part of its description of
the property, this is included in the analysis of [21] Frauds, Statute Of
whether the description satisfies the statute of Sufficiency in general
frauds. V.T.C.A., Bus. & C. § 26.01.
Property to be sold under purchase option
1 Cases that cite this headnote in sublease, which was a portion of property
subject to purchase option in lease, was
sufficiently identified to satisfy the statute of
[17] Frauds, Statute Of frauds, where property subject to sale under the
Sufficiency in general sublease could be identified with a metes-and-
Whether a map is helpful in remedying bounds description, by reference to the property
descriptive defects of the contract so as to satisfy description in the lease, on three out of four
the statute of frauds depends on whether the of its borders, and the fourth border, a hand-
missing details are shown on the map. V.T.C.A., drawn line on a map attached as an exhibit to
Bus. & C. § 26.01. sublease, could be identified with reasonable
certainty given the amount of detail on the
Cases that cite this headnote map, including designations of buildings on the
premises. V.T.C.A., Bus. & C. § 26.01.
[18] Evidence
Cases that cite this headnote
Contracts of sale
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
its claims against lessor and sublessee for
[22] Evidence declaratory relief required reversal of trial court's
Leases award of attorney fees in favor of lessee.
Frauds, Statute Of
Admissibility of evidence to aid Cases that cite this headnote
memorandum
While testimony by representative of sublessee [26] Judgment
who prepared exhibit to sublease showing the Specific performance
property subject to purchase option was parol Sublessee was not entitled to summary judgment
evidence, it could be used to clarify the meaning on its claim for specific performance of purchase
of the markings on exhibit. option in sublease, following appellate court's
reversal of trial court's grant of summary
Cases that cite this headnote
judgment to lessee on basis that sublease was
rendered unenforceable by the statute of frauds,
[23] Frauds, Statute Of where sublessee's only summary judgment
Admissibility of evidence to aid evidence concerned whether the purchase option
memorandum was unenforceable under the statute of frauds,
Surveyor's affidavit stating that he was able and its motion for summary judgment did not
to identify and determine the boundaries of present any legal authority for what was required
property to be sold under purchase option to entitle it to specific performance of the
in sublease, and metes-and-bounds description purchase option, nor did it present any evidence
attached to affidavit, did not function in violation to establish that it had done everything required
of rule that the information required to satisfy to entitle it to specific performance. V.T.C.A.,
the statute of frauds must be in the document or Bus. & C. § 26.01.
by reference to some other existing writing, or
Cases that cite this headnote
rule that parol evidence cannot be used to supply
the essential requirements to satisfy the statute
of frauds, but rather, functioned to show that a [27] Appeal and Error
party familiar with the locality could identify the Verdict
premises with reasonable certainty. V.T.C.A., In conducting a legal sufficiency review of the
Bus. & C. § 26.01. evidence, appellate court considers all of the
evidence in a light favorable to the verdict
Cases that cite this headnote
and indulges every reasonable inference that
supports it.
[24] Frauds, Statute Of
Admissibility of evidence to aid Cases that cite this headnote
memorandum
The information required to satisfy the statute of [28] Appeal and Error
frauds must be in the document or by reference Sufficiency of Evidence in Support
to some other existing writing. V.T.C.A., Bus. & In conducting a legal sufficiency review
C. § 26.01. of the evidence, appellate court considers
evidence favorable to the challenged finding
Cases that cite this headnote
if a reasonable factfinder could consider
it, and disregards evidence contrary to the
[25] Declaratory Judgment finding unless a reasonable factfinder could not
Determination and disposition of cause disregard it.
Appellate court's reversal of trial court's
Cases that cite this headnote
summary judgment in favor of lessee on
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
[29] Appeal and Error [32] Evidence
Extent of Review Judicial Admissions
Appeal and Error A judicial admission results when a party makes
Clearly, plainly, or palpably contrary a statement of fact which conclusively disproves
In conducting a factual sufficiency review, a right of recovery or defense he currently
appellate court considers all of the evidence asserts.
supporting and contradicting the challenged
Cases that cite this headnote
finding and sets it aside only if the evidence is so
weak as to make it clearly wrong and manifestly
unjust. [33] Evidence
Judicial Admissions
Cases that cite this headnote
The elements for establishing that a statement is
a judicial admission are (1) the statement must
[30] Appeal and Error be made in the course of a judicial proceeding;
Credibility of witnesses; trial court's (2) it must be contrary to an essential fact or
superior opportunity defense asserted by the party; (3) it must be
Appeal and Error deliberate, clear, and unequivocal; (4) it cannot
Province of trial court be destructive of the opposing party's theory
of recovery or defense; and (5) enforcing the
In an appeal of a judgment rendered after a
statement as a judicial admission would be
bench trial, appellate court may not invade the
consistent with public policy.
fact-finding role of the trial court, who alone
determines the credibility of the witnesses, the Cases that cite this headnote
weight to give their testimony, and whether to
accept or reject all or any part of that testimony.
[34] Evidence
Cases that cite this headnote Judicial admissions in general
The public policy concerning judicial admissions
[31] Costs is that it would be unjust to permit a party to
Vendor and purchaser; sales recover after he has sworn himself out of court
by a clear, unequivocal statement.
Evidence
By counsel Cases that cite this headnote
Lessor's attorney's recognition during closing
argument of bench trial on attorney fees, that
[35] Trial
it would risk appearing hypocritical arguing it
Statements as to Facts, Comments, and
should be entitled to $120,000 in attorney fees
Arguments
but that lessee should be entitled to less for work
done during the same period, was not a judicial Unsworn statements of counsel generally do not
admission and was not excepted from rule constitute evidence.
that unsworn statements of counsel generally
1 Cases that cite this headnote
do not constitute evidence, and thus attorney's
statement did not preclude the trial court from
performing its obligation to determine what
were reasonable and necessary attorney fees and
awarding lessee only $85,000 in attorney fees. Attorneys and Law Firms
1 Cases that cite this headnote *48 Ben A. Baring Jr., Paul J. McConnell, De Lange,
Hudspeth, McConnell & Tibbets, *49 L.L.P., Robert A.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
Jones, Craig W. Saunders, Barlow Jones L.L.P., Richard H. was ineffective, and The Rex Group asserted that Ardmore's
Edelman, Houston, TX, for Appellants. attempt was ineffective. The parties brought this litigation
seeking to establish their respective claims to ownership of
Katherine T. Garber, James M. Kimbell, Strasburger & the property.
Price, L.L.P., Thomas W. Paterson, Susman Godfrey, LLP,
Houston, TX, for Appellee. The commercial property at issue in this case is located along
Ardmore Street in Houston, Texas. In 1991, the property in
Panel consists of Chief Justice RADACK and Justices
question was owned by Baker Hughes, Inc. and Combustion
HIGLEY and BROWN.
Engineering, Inc. Combustion Engineering later conveyed
its interest in the property to ABB Prospects, Inc. Baker
Hughes, Combustion Engineering, and ABB Prospects will
OPINION be referred to collectively as the “Original Lessors.” The
Original Lessors entered into a lease agreement with The Rex
LAURA CARTER HIGLEY, Justice.
Group, Inc. in May 1991. The lease was effective until the end
This appeal concerns whether purchase options in two leases of November 1997. During the term of the lease—provided
were properly exercised. Appellants, Ardmore, Inc. and Star that proper notice was given—The Rex Group was authorized
Properties, LLC, appeal the trial court's grants of summary to purchase the property in question for $2,500,000.
judgment against them and in favor of appellee, The Rex
Group, Inc. In one issue, Star Properties argues that the The lease also prevented The Rex Group from assigning or
trial court erred by determining that The Rex Group had subleasing any portion of the property to non-affiliated parties
timely exercised its option to purchase from Star Properties. without obtaining the prior written consent of the landlord.
In two issues, Ardmore argues that the trial court erred by Specifically, the lease provided, in pertinent part,
determining the statute of frauds barred the application of
*50 Except for subleases to affiliates
its option to purchase from The Rex Group because (1)
or subsidiaries of Tenant [The
the property was identified with reasonable certainty; (2)
Rex Group] for which no consent
Ardmore fully performed under the contract; (3) Ardmore
to sublease shall be required by
partially performed under the contract; and (4) The Rex
Landlord [the Original Lessors],
Group is estopped from asserting the statute of frauds defense.
Tenant may not sublet all or any
In a cross-appeal, The Rex Group challenges the sufficiency
portion of the Premises without the
of the evidence to support the trial court's award of attorneys'
prior written consent of Landlord.
fees in favor of The Rex Group and against Star Properties.
Landlord shall not unreasonably
withhold its required consent to a
We affirm, in part, and reverse and remand, in part.
particular subletting provided [certain
enumerated conditions exist]. Tenant
shall not be relieved of any of its
Background obligations hereunder by reason of any
sublease of all or part of the premises.
This lawsuit concerned a dispute over ownership of certain
commercial property located in Houston, Texas. There are
The lease was amended by agreement of the parties at least
three parties involved in the suit: Star Properties, the owner
seven times. Among other things, the amendments extended
of the property; The Rex Group, the lessee of the property;
the term of the lease to July 2008, and modified the terms
and Ardmore, a sublessee of the property. Both the lease
of the purchase option. As modified by the sixth amendment,
from Star Properties to The Rex Group and the sublease
the purchase option section of the lease provided, in pertinent
from The Rex Group to Ardmore contain purchase options,
part,
exercisable at the end of the lease from Star Properties to The
Rex Group. At the end of the lease, The Rex Group attempted A. In consideration of the mutual covenants herein
to exercise the purchase option in the lease, and Ardmore contained, Landlord grants to Tenant the option to purchase
attempted to exercise the purchase option in the sublease. In the Premises during the Term for $2,500,000 in accordance
turn, Star Properties asserted that The Rex Group's attempt with this Section. This option to purchase may not be
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
condition of the merger was that Industrial Holdings would
exercised to be effective at any time or times other than in
sell Ardmore prior to the merger.
the month of June, 2008 (the “Effective Month”).
.... As a result, Industrial Holdings approached Ben Andrews
and Dan Ahuero, the executives then in charge of Ardmore,
D. Except as provided in subsection F. below, to exercise about purchasing Ardmore. Andrews and Ahuero agreed but
such purchase option, Tenant must ... (ii) give Landlord insisted as part of the sale that they be allowed to remain
written notice of its intent to purchase at least 90 days prior on the leased premises and, if The Rex Group elected to
to the first day of the applicable Effective Month.... exercise the purchase option in the lease, that they be allowed
to purchase a lesser portion of the property.
The parties agree that, by the terms of these two subsections
alone, The Rex Group's deadline to exercise the purchase
To that end, The Rex Group entered into a sublease with
option was March 3, 2008.
Ardmore. The sublease provided that it was “subject and
subordinate to” the lease. It also recognized that Ardmore was
As of 2001, both The Rex Group and Ardmore were
already subleasing a portion of the property. That portion of
subsidiaries of Industrial Holdings Incorporated, and both
the property was defined as the “Premises” in the sublease “as
were operating their businesses in the commercial property
more particularly described on Exhibit A.” Exhibit A consists
subject to the lease. In 2001, Industrial Holdings began
of the following image:
negotiations over a merger with T3 Energy Services. One
The purchase option in the sublease provided, in pertinent
*51 The sublease gave Ardmore continued use of the part:
Premises along with “the nonexclusive right to use for
In the event that Sublessor [The Rex
vehicular and pedestrian access and vehicular parking, any
Group] elects to exercise the option
and all driveways, parking areas, pedestrian walkways, and
to purchase the premises covered
other common or shared areas, including, without limitation,
by the Base Lease (the “Entire
the “Shared Drive” depicted on Exhibit A.”
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Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
be entitled, contemporaneously with
Base Lease Premises”) in accordance
Sublessor's acquisition of the Entire
with the terms of such purchase
Base Lease Premises, to acquire
option contained in Section 27 of the
from Sublessor that portion of the
Base Lease (the “Purchase Option”),
Entire Base Lease Premises (“Option
Sublessor shall give Lessors the
Property”) as is depicted on the
required written notice of Sublessor's
drawing attached hereto as Exhibit D
intent to exercise the Purchase Option
....
(the “Exercise Notice”) no later than
the thirtieth (30th) day (“Sublessor
Exercise Deadline”) prior to the last The parties agree that the Ardmore's exercise deadline, as
day by which the Purchase Option defined in the sublease, was February 2, 2008.
may be timely exercised pursuant to
Section 27.D(ii) of the Base Lease.... Exhibit D consists of the following image:
Sublessee [Ardmore] shall thereupon
of Lessee [The Rex Group] to Lessor [the Original
*52 Both exhibits were prepared by Andrews on behalf
Lessors] under the Lease and Lessee shall remain primarily
of Ardmore. Andrews testified in his deposition that both
liable for the performance of its obligations under the
exhibits were drafted from the same basic drawing. Andrews
Lease notwithstanding the existence of the Sublease.” The
acknowledged that there were already markings on the basic
consent also provided that “Lessee and Sublessee [Ardmore]
drawing he used to create the exhibits. Exhibit A defines the
acknowledge and agree that Lessor has executed this Consent
premises to be leased, and Exhibit D defines the premises
solely to evidence its consent to the Sublease and this Consent
subject to the purchase option. To that end, Andrews testified,
shall not in any way create any liabilities, obligations or duties
Exhibit A contains a line that “more heavily note [s]” the
on the part of Lessor.” It was signed by representatives for the
subleased area. The markings added to Exhibit D show what
Original Lessors, The Rex Group, and Ardmore.
would be subject to the purchase option.
In 2003, the Original Lessors sold the property and its lease
The Original Lessors consented in writing to the sublease on
to Star Properties.
December 13, 2001. In it, the Original Lessors acknowledged
that consent was given and provided that the “Sublease
shall not diminish or in any way effect the obligations
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Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
On February 7, 2008, The Rex Group sent Star Properties a
written notification of its intent to exercise its purchase option
under the lease. On February 15, 2008, Star Properties sent
Motions for Summary Judgment
The Rex Group a letter, asserting that The Rex Group had
failed to timely exercise its purchase option in accordance In one issue, Star Properties argues that the trial court
with the lease as modified by the sublease. erred by determining that The Rex Group had timely
exercised its option to purchase from Star Properties. In
Following The Rex Group's notification of its intent to two issues, Ardmore argues that the trial court erred by
exercise the purchase option under the lease, Ardmore elected determining the statute of frauds barred the application of
to exercise its purchase option under the sublease. The Rex its option to purchase from The Rex Group because (1)
Group asserted that Ardmore *53 could not enforce the the property was identified with reasonable certainty; (2)
purchase option on the grounds that the description of the Ardmore fully performed under the contract; (3) Ardmore
property subject to the sublease's purchase option violated the partially performed under the contract; and (4) The Rex
statute of frauds. Group is estopped from asserting the statute of frauds defense.
The underlying litigation ensued. The Rex Group brought
claims against Star Properties and Ardmore. Star Properties A. Standard of Review
and Ardmore each brought counterclaims against The Rex The summary-judgment movant must conclusively establish
Group. As those claims pertain to this appeal, each of its right to judgment as a matter of law. See MMP, Ltd.
the parties sought an adjudication of which, if any, of the v. Jones, 710 S.W.2d 59, 60 (Tex.1986). Because summary
purchase options were properly exercised. All of the parties judgment is a question of law, we review a trial court's
ultimately brought motions for summary judgment on the summary judgment decision de novo. Mann Frankfort Stein
issues. & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848
(Tex.2009).
As a part of its summary judgment evidence, Ardmore
presented the affidavit of Ernest Roth, a registered To prevail on a “traditional” summary-judgment motion
professional land surveyor. Roth testified in his affidavit that asserted under Rule 166a(c), a movant must prove that there
he was familiar with the locality of the property subject to is no genuine issue regarding any material fact and that it is
the sublease's purchase option, that he “was able to identify entitled to judgment as a matter of law. See TEX.R. CIV. P.
and determine the boundaries of the Option Property with 166a(c); Little v. Tex. Dep't of Criminal Justice, 148 S.W.3d
reference to the description thereof provided in the sublease 374, 381 (Tex.2004). A matter is conclusively established if
and Exhibit D thereto,” and that the property could be reasonable people could not differ as to the conclusion to be
identified with reasonable certainty. He included with his drawn from the evidence. See City of Keller v. Wilson, 168
affidavit a metes-and-bounds description of the property S.W.3d 802, 816 (Tex.2005).
subject to the sublease's purchase option based on the property
description. When a party moves for summary judgment on a claim for
which it bears the burden of proof, it must show that it is
In a series of rulings on the motions, the trial court determined entitled to prevail on each element of its cause of action.
that The Rex Group had timely exercised its purchase option See *54 Parker v. Dodge, 98 S.W.3d 297, 299 (Tex.App.-
under the lease and that the description of the property Houston [1st Dist.] 2003, no pet.). The party meets this burden
subject to the purchase option in the sublease was rendered if it produces evidence that would be sufficient to support an
unenforceable by the statute of frauds. instructed verdict at trial. Id.
The parties submitted the issue of attorneys' fees to a bench To determine if there is a fact issue, we review the evidence in
trial. The trial court ultimately awarded attorneys' fees in the light most favorable to the nonmovant, crediting favorable
favor of The Rex Group and against Ardmore and Star evidence if reasonable jurors could do so, and disregarding
Properties. contrary evidence unless reasonable jurors could not. See
Fielding, 289 S.W.3d at 848 (citing City of Keller, 168
Each of the parties appealed. S.W.3d at 827). We indulge every reasonable inference and
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
resolve any doubts in the nonmovant's favor. Sw. Elec. Power was signed by all three ... parties to the lease and sublease, the
Co. v. Grant, 73 S.W.3d 211, 215 (Tex.2002). signing of the consent was tantamount to all three parties also
signing the lease and sublease so as to each be mutually bound
When, as here, the parties file cross-motions for summary by the terms of the three agreements that applied to them.”
judgment on overlapping issues, and the trial court grants
one motion and denies the other, we review the summary Specific terms from the lease, the sublease, and the consent
judgment evidence supporting both motions and “render the show that this argument is incorrect. The lease provides that
judgment that the trial court should have rendered.” FM any sublease entered into by The Rex Group will not relieve it
Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 “of any of its obligations hereunder by reason of any sublease
(Tex.2000). of all or part of the Premises.” The sublease provides that it
is “subject and subordinate to” the lease. The consent *55
provides that the sublease “shall not diminish or in any way
B. Timeliness of the Notice under the Lease effect the obligations of [The Rex Group] to [then Original
[1] Star Properties acknowledges that, under the terms of Lessors, now Star Properties] under the Lease” and that the
the lease alone, The Rex Group's deadline to exercise the Original Lessors “executed this Consent solely to evidence
purchase option was March 3, 2008. It also acknowledges that [their] consent to the Sublease.” The plain language of each of
The Rex Group sent its written notice of its intent to exercise these contracts establishes that Star Properties was not a party
its purchase option under the lease on February 7, 2008. Star to the sublease and that the sublease did not modify the lease.
Properties maintains that The Rex Group nevertheless failed
to timely exercise the purchase option under the lease because [2] Star Properties argues that the provision in the consent
the purchase option under the lease was modified by the stating that the sublease does not diminish or effect the
purchase option under the sublease to Ardmore. obligations of The Rex Group should not affect our analysis
because the purchase option is a right, not an obligation.
The Rex Group acknowledges that, under the terms of the The Rex Group counters that, while the purchase option may
sublease purchase option, it had agreed with Ardmore that generally be a right, the notice requirement and deadline
The Rex Group would submit its notice of its intent to exercise are obligations. We agree with The Rex Group. Generally,
the purchase option by February 2, 2008. The Rex Group an option in a contract “is a privilege or right.” Faucette
maintains, however, that Star Properties was not a party to v. Chantos, 322 S.W.3d 901, 907 (Tex.App.-Houston [14th
the sublease and, accordingly, cannot use the notice deadline Dist.] 2010, no pet.). But that right can only be exercised by
under the sublease as a basis to claim that The Rex Group's strictly complying with the obligations set out in the contract.
notice was untimely. See id. at 908; Mensa–Wilmot v. Smith Int'l, Inc., 312 S.W.3d
771, 781 (Tex.App.-Houston [1st Dist.] 2009, no pet.). The
The trial court determined that the deadline to exercise the consent explicitly provides that the sublease would not “in
purchase option under the lease was March 3, 2008 and that any way effect” The Rex Group's obligations in the lease. No
The Rex Group timely exercised its right to purchase the exception is made for the obligations required to exercise the
property. purchase option.
In making its argument, Star Properties relies on the following [3] Star Properties also argues that allowing the lease and
facts: The lease required consent of the landlord for subleases sublease to have separate exercise dates for the purchase
with entities that were not affiliates or subsidiaries of The Rex option in the lease leads to the conclusion that The Rex
Group. Star Properties signed a written consent in the form of Group intended to allow for the breach of the sublease.
a contract, which incorporated the sublease into the consent. It further argues that such a conclusion would violate the
The sublease incorporated the lease into the sublease. The rules of contract construction because this would mean the
consent was expressly conditioned on the specific terms of sublease was fraudulently induced and, accordingly, invalid.
the sublease, including, Star Properties argues, the February See Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex.2011)
2 exercise date for the option. (holding all provisions of a contract must be given effect so
that none is rendered meaningless).
Based on these facts, Star Properties argues, “Because the
consent was a formal contract that expressly incorporated the
sublease (which, in turn, expressly incorporated the lease) and
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
[4] Whether the sublease was fraudulently induced, is [8] [9] The purpose of a description in a written
unenforceable, or allows for an easy breach by The Rex conveyance is not to identify the land, but to afford a means
Group is irrelevant to our analysis. “The general rule is that of identification. Jones v. Kelley, 614 S.W.2d 95, 99–100
only the parties to a contract have the right to complain of a (Tex.1981). While we apply a strict application of the statute
breach thereof; and if they are satisfied with the disposition of frauds, we allow for a liberal construction of the words
that has been made of it and all claims under it, a third describing the land. Gates v. Asher, 154 Tex. 538, 280 S.W.2d
person has no right to insist that it has been broken.” Wells 247, 248 (1955).
v. Dotson, 261 S.W.3d 275, 284 (Tex.App.-Tyler 2008, no
pet.); see also Allan v. Nersesova, 307 S.W.3d 564, 571 [10] [11] [12] A metes-and-bounds description is not
(Tex.App.-Dallas 2010, no pet.) (holding party must be in required to satisfy the statute of frauds. Tex. Builders v.
privity of contract or beneficiary of contract to have standing Keller, 928 S.W.2d 479, 481 (Tex.1996). Similarly, a plat
to complain about contract). Neither The Rex Group nor in a recorded property description is not required. Nguyen v.
Ardmore has asserted that the modified notification date in Yovan, 317 S.W.3d 261, 269 (Tex.App.-Houston [1st Dist.]
the sublease was fraudulently induced, rendered the contract 2009, pet. denied). Nor does the description of the property
unenforceable, or has resulted in a material breach of the require “[c]onviction beyond all peradventure of doubt.”
contract. Star Properties may not assert this argument on their Gates, 280 S.W.2d at 249; see also Templeton v. Dreiss, 961
behalf. See Wells, 261 S.W.3d at 284. S.W.2d 645, 659 (Tex.App.-San Antonio 1998, pet. denied)
(holding mathematical certainty not required). Instead, only
We hold that the evidence establishes, as a matter of law, that proof within “reasonable certainty” is required. Gates, 280
The Rex Group timely exercised its purchase option under the S.W.2d at 249.
lease. We overrule Star Properties' sole issue.
[13] [14] “If enough appears in the description so that
a party familiar with the locality can identify the premises
C. Application of the Statute of Frauds to the Purchase with reasonable certainty, it will be sufficient.” Id. at 248–
Option in the Sublease 49. Generally speaking, a property can be identified with
In its first issue, Ardmore argues the trial court erred by reasonable certainty if it identifies the general area of the
granting The Rex Group's motion for summary judgment. land and “contains information regarding the size, shape, and
Both parties' motions for summary judgment focus on boundaries.” Reiland v. Patrick Thomas Props., Inc., 213
whether the statute of frauds bars the application of the S.W.3d 431, 437 (Tex.App.-Houston [1st Dist.] 2006, pet.
purchase option in the sublease and, if it does, *56 whether denied); accord Fears v. Tex. Bank, 247 S.W.3d 729, 736
any of the exceptions to the application of the statute of frauds (Tex.App.-Texarkana 2008, pet. denied).
also apply.
[15] [16] [17] “[W]hen construing a conveyance, the
[5] [6] [7] Under the applicable statute of frauds, a court does not look at terms in isolation; rather, it must
contract for the sale of real estate is not enforceable unless give effect to all parts of the conveyance and construe the
it, or a memorandum of it, is in writing and signed by document as a whole.” Plainsman Trading Co. v. Crews, 898
the person to be charged with the contract. TEX. BUS. & S.W.2d 786, 789 (Tex.1995). When a contract includes a map
COM.CODE ANN. § 26.01(a), (b)(4) (Vernon 2009). For a of the property to be conveyed as a part of its description
contract concerning the conveyance of real estate to satisfy of the property, this is included in the analysis of whether
the statute of frauds, “the writing must furnish within itself, or the description satisfies the statute of frauds. Matney, 210
by reference to some other existing writing, the means or data S.W.2d at 984; U.S. Enters., Inc. v. Dauley, 535 S.W.2d 623,
by which the particular land to be conveyed may be identified 628 (Tex.1976). “Whether a map is helpful in remedying
with reasonable certainty.” Wilson v. Fisher, 144 Tex. 53, 188 descriptive defects of the contract depends on whether the
S.W.2d 150, 152 (1945). This applies to a purchase option missing details are shown on the map.” U.S. Enters., 535
in a contract. See Matney v. Odom, 147 Tex. 26, 210 S.W.2d S.W.2d at 628.
980, 981–82 (1948) (applying statute of frauds analysis to
purchase option in contract). Whether a contract falls within [18] [19] While parol evidence may be considered under
the statute of frauds is a question of law. Iacono v. Lyons, 16 certain circumstances, it cannot be used to supply the
S.W.3d 92, 94 (Tex.App.-Houston [1st Dist.] 2000, no pet.). “essential elements” of the contract. Wilson, 188 S.W.2d at
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
152. In contrast, it can be used *57 to “explain or clarify the The Rex Group focuses on the irregular loop and the arrows
essential terms appearing in the” contract. Id. on the map, arguing that these drawings are too vague to
identify the property subject to the sublease's purchase option.
[20] If it does not sufficiently describe the land to be Ardmore, in contrast, focuses on the solid line and arrows
conveyed, a conveyance of an interest in real property is void on the map, arguing this is sufficient to satisfy the statute of
and unenforceable under the statute of frauds. Nguyen, 317 frauds. We hold that Ardmore's explanation of the markings
S.W.3d at 267. on Exhibit D is supported by the record.
[21] In order to determine if the purchase option under the Andrews, one of the representatives for Ardmore, prepared
sublease is barred by the statute of frauds, we must determine Exhibit D to the sublease. In his deposition, Andrews testified
if the property to be sold under the sublease is identified with that he prepared both Exhibit A and Exhibit D. He further
reasonable certainty. Wilson, 188 S.W.2d at 152. We begin by testified that both exhibits were drafted from the same basic
noting that the entire property subject to the lease is described drawing. Andrews acknowledged that there were already
by three metes-and-bounds descriptions. The lease identifies markings on the basic drawing used to prepare the exhibits.
the property subject to the lease as the property “described on Exhibit A defined the premises to be leased, and Exhibit D
Exhibit A” of the lease. Exhibit A of the lease is a metes-and- defined the premises subject to the purchase option. To that
bounds description of three tracts of land. end, Andrews testified, Exhibit A contains a line that “more
heavily note[s]” the subleased area. The markings added to
The sublease expressly incorporated the lease by reference, Exhibit D showed what would be subject to the purchase
and made the lease “a part [of the sublease] for all purposes.” option.
Additionally, the purchase option in the sublease expressly
recognizes The Rex Group's authority to purchase the This testimony is borne out by a review of the two exhibits.
premises covered by the lease and defines those premises as Both exhibits contain the irregular loop and the dashed line.
the “Entire Base Lease Premises.” The sublease then allows *58 Exhibit A adds the heavier line, which follows the basic
Ardmore to purchase a portion of the Entire Base Lease path of the irregular loop. It also adds some shaded areas with
Premises, provided that The Rex Group exercises its right to arrows indicating that the shaded areas were a shared drive.
purchase the Entire Base Lease Premises. In contrast, Exhibit D adds the solid line, which follows the
same basic path of the dashed line. It also adds the arrows at
The question we must answer, then, is whether the portion of the top and bottom of the solid line and the notation “property
the Entire Base Lease Premises that was a part of the purchase covered by option.”
option in the sublease was sufficiently identified. See Matney,
210 S.W.2d at 982 (considering whether portion of larger [22] While Andrews's testimony is parol evidence, it
identified property was sufficiently identified). falls within the exception of when parol evidence can be
considered. See Wilson, 188 S.W.2d at 152 (holding parol
The sublease identifies the portion subject to its purchase evidence can be used to “explain or clarify the essential
option as “that portion of the Entire Base Lease Premises ... terms appearing in the contract”); see also David J. Sacks,
as is depicted on the drawing attached hereto as Exhibit D.” P.C. v. Haden, 266 S.W.3d 447, 450 (Tex.2008) (per
Exhibit D is a map of the premises, including designations curiam) (holding when contract contains ambiguity, courts
of the buildings on the premises at the time of the creation can admit extraneous evidence to determine true meaning of
of the sublease. There are three main markings on Exhibit D. contract). 1 Because there were multiple markings on Exhibit
It contains an irregular loop around certain buildings on the D, Andrews's testimony may be used to clarify the meaning
map. It contains a dashed line that intersects the property from of the markings.
Highway 288 to Ardmore Street. It also contains a solid line
that follows the same basic path as the dashed line. On either We are left, then, with a map of the Entire Base Lease
end of the two lines are two arrows that point in the same Premises with a line running through the parking lot, midway
direction. Next to one of the arrows is a notation that says between two groups of buildings, and notations indicating
“property covered by option.” that the property covered by the purchase option is everything
to one side of this line. To put it another way, the property
subject to sale under the sublease can be identified with a
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
metes-and-bounds description—by reference to the property this utility line could be identified, the last border was a fence
description in the lease, which contains a metes-and-bounds that was not identified in any way. Id. Because there was no
description of the entire premises—on three out of four indication of the location of the fence, the size of the property
of its borders. Whether the fourth border—the hand-drawn or the length of the borders, there was no information to fill
line running through the premises—can be identified with in what would be needed to identify this last border either.
reasonable certainty determines whether the purchase option See id.
under the sublease satisfies the statute of frauds.
We find this case to be easily distinguishable from U.S.
The Rex Group argues that the map is too ambiguous to Enterprises and Guenther. Unlike U.S. Enterprises, the map
identify the property subject to the sublease's purchase option consists only of the property subject to the lease's purchase
with reasonable certainty. To support this argument, The Rex option and the portion of that property that is subject to the
Group relies on U.S. Enters., 535 S.W.2d at 623 and Guenther sublease's purchase option is demarcated. Unlike Guenther,
v. Amer–Tex Constr. Co., 534 S.W.2d 396 (Tex.Civ.App.- three of the four boundaries can be identified with metes-
Austin 1976, no writ). and-bounds descriptions, leaving only one line that is not
identified at that level of detail.
In U.S. Enterprises, the Texas Supreme Court recognized
that, when a map is included as a part of a property We hold that this last line on Exhibit D of the sublease can be
description, it “becomes a part of the written contract and can identified with reasonable certainty. There is enough detail on
aid a defective written description if the map contains enough the map—including designations of buildings on the premises
necessary descriptive information.” 535 S.W.2d at 628. In —to show fairly clearly where this last line falls. While the
that case, the written description of the land to be sold was 10 location of the line is not identified with exact precision, this
tracts of land out of three identified surveys in Wise County, is not required to satisfy the statute of frauds. See Gates, 280
Texas. Id. at 625. The 10 tracts were generally identified S.W.2d at 249 (holding “[c]onviction beyond all peradventure
in the written description. Id. The written description also of doubt” is not required); Templeton, 961 S.W.2d at 659
said that the tracts—other than certain identified tracts—were (holding mathematical certainty is not required).
identified on a map marked as Exhibit A. Id.
Additionally, as Ardmore points out, the property subject
The issue for the court to resolve was whether two of the to the sublease's purchase option has been identified by a
10 tracts were properly identified in the contract, including land surveyor. Roth, the surveyor, testified in his affidavit
the map. Id. at 626–27. It was undisputed that, without the that he was familiar with the locality of the property subject
map, the two tracts were not sufficiently identified. Id. at 628. to the sublease's purchase option, that he “was able to
The court held that the map did not correct this inadequacy identify and determine the boundaries of the Option Property
because there was nothing on the map “which supplies any with reference to the description thereof provided in the
aid as to *59 the name or location of” the tracts at issue. sublease and Exhibit D thereto,” and that the property could
Id. U.S. Enterprises sought to establish by parol evidence that be identified with reasonable certainty. He included with
the two tracts were located on the map, but the court held his affidavit a metes-and-bounds description of the property
that—even if this were a proper use of parol evidence—the subject to the sublease's purchase option based on the property
proffered evidence did not show where on the map the two description.
properties were. Id. at 629. Accordingly, even if admissible,
it was insufficient. Id. [23] [24] The Rex Group argues that Roth's affidavit and
attached metes-and-bounds description cannot be considered
In Guenther, the only reference to the land to be conveyed because after-the-fact parol evidence cannot be used to cure
was a map. 534 S.W.2d at 396–97. The map referenced two an inadequate description in a contract. It is true that, the
roads, two fences, and a utility line to establish the boundaries information required to satisfy the statute of frauds must
of the land. Id. One of the fences bordered a park. Id. The be in the document “or by reference to some other existing
court recognized that the two roads and the fence bordering writing.” Wilson, 188 S.W.2d at 152 (emphasis added). It is
the park could likely be found. Id. at 398. It held, however, also true that parol evidence cannot be used to supply the
that the type of utility line—such as electric, telephone, or gas essential requirements to satisfy the statute of frauds. Id. at
—forming one of the borders was not identified. Id. Even if 57, 188 S.W.2d at 152. Roth's affidavit and attached metes-
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
and-bounds description do not function in violation of either purchase option could not be identified with a reasonable
of these rules, however. Instead, they function to show “that certainty. 2
a party familiar with the locality can identify the premises
with reasonable certainty.” Gates, 280 S.W.2d at 248–49; [25] In the remainder of its first issue, Ardmore argues that,
see also Dixon *60 v. Amoco Prod. Co., 150 S.W.3d 191, if we reverse the trial court's summary judgment in favor
195 (Tex.App.-Tyler 2004, pet. denied) (holding testimony of The Rex Group, we must also reverse the trial court's
of surveyor can be admitted to show that property can be award of attorneys' fees in favor of The Rex Group. The
identified with reasonable certainty); Foster v. Bullard, 496 Rex Group acknowledges this is the law, and we agree.
S.W.2d 724, 733 (Tex.Civ.App.-Austin 1973, writ ref'd n.r.e.) See Bd. of Med. Exam'rs v. Nzedu, 228 S.W.3d 264, 276
(holding parol evidence can be considered to show property (Tex.App.-Austin 2007, pet. denied) (holding that reversal
can be identified with reasonable certainty). of declaratory judgment act claim also requires reversal of
award of attorneys' fees for new determination of equitable
The Rex Group included evidence of its own surveyor, and just award). Accordingly, we reverse the trial court's
who asserted in an affidavit that the property subject to the award of attorneys' fees in favor of The Rex Group and against
sublease cannot be identified with reasonable certainty. At Ardmore.
best, however, this creates a fact issue. We must review the
evidence in the light most favorable to Ardmore, crediting We sustain Ardmore's first issue.
favorable evidence if reasonable jurors could do so, and
disregarding contrary evidence unless reasonable jurors could *61 [26] Ardmore's second issue concerns whether the trial
not. See Fielding, 289 S.W.3d at 848 (citing City of Keller, should have granted summary judgment in favor of Ardmore
168 S.W.3d at 827). Additionally, we must indulge every and against The Rex Group.
reasonable inference and resolve any doubts in Ardmore's
favor. See Sw. Elec. Power Co. v. Grant, 73 S.W.3d at 215. When a party moves for summary judgment on a claim for
The affidavit of The Rex Group's surveyor does not overcome which it bears the burden of proof, it must show that it is
the affidavit of Ardmore's surveyor. As a result, The Rex entitled to prevail on each element of its cause of action. See
Group was not entitled to judgment as a matter of law. Parker, 98 S.W.3d at 299. When, as here, the parties file
cross-motions for summary judgment on overlapping issues,
In this way, this case is similar to W. Beach Marina, Ltd. v. and the trial court grants one motion and denies the other,
Erdeljac, 94 S.W.3d 248 (Tex.App.-Austin 2002, no pet.). we review the summary judgment evidence supporting both
In West Beach Marina, the property at issue was identified motions and “render the judgment that the trial court should
by “a hand-drawn sketch superimposed on an elevation map have rendered.” FM Props., 22 S.W.3d at 872.
that indicates the location of” the relevant property. Id. at
265. Both parties presented testimony from a surveyor. Id. Ardmore's counter-petition against The Rex Group seeks
at 266. During a bench trial, one surveyor asserted he could specific performance of the purchase option, arguing that
not identify the property with reasonable certainty, while the it had exercised the purchase option and that it “is ready,
other surveyor testified that he could identify it and created a willing, and able to complete its purchase of the property.”
metes-and-bounds description of the property. Id. The court Ardmore argued the same thing in its motion for summary
of appeals held that the trial court did not err in relying on judgment. In its prayer, Ardmore asked the court to “enter
the other surveyor's testimony and accepting that the property judgment decreeing specific performance, requiring [The Rex
could be identified with reasonable certainty. Id. Group] to convey the property described in Exhibit ‘D’ to
the sublease to [Ardmore] in accordance with the terms and
The same reasoning is applicable here. The property conditions of the sublease.”
description contained with the sublease is not so vague
or ambiguous as to render its boundaries indeterminable. Ardmore's only summary judgment evidence, however,
Additionally, the record shows that a surveyor, using the concerned whether the purchase option was unenforceable
information contained in or referenced by the sublease, under the statute of frauds. Its motion for summary judgment
was able to identify the property with reasonable certainty. did not present any legal authority for what was required
Accordingly, we hold that the trial court erred by determining, to entitle it to specific performance of the purchase option.
as a matter of law, that the property subject to the sublease's Nor did it present any evidence to establish that it had done
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
everything required to entitle it to specific performance. See CODE ANN. tit. 2, subtit. G, app. A (Vernon Supp. 2011)
TEX.R. CIV. P. 166a(c) (requiring movant to establish with (Tex. State Bar R., art. X, § 9)).
competent evidence that it is entitled to judgment as a matter
of law). Accordingly, we hold that the record does not permit During the bench trial, it was established that Star Properties
us to render judgment in favor of Ardmore and against The had incurred about $120,000 in attorneys' fees for about
Rex Group. 410 hours of work through the time that summary judgment
was rendered against it. Star Properties' attorney then
We overrule Ardmore's second issue. acknowledged to the trial court that it was “in no position to
deny that [$]120,000 is reasonable in the case.”
Ultimately, the trial court awarded $85,000 in attorneys' fees
Bench Trial on Attorneys' Fees
in favor of The Rex Group and against Star Properties. On
In a cross-appeal, The Rex Group challenges the sufficiency appeal, The Rex Group argues the trial court abused its
of the evidence to support the trial court's award of attorneys' discretion by only awarding $85,000 in attorneys' fees based
fees in favor of The Rex Group and against Star Properties. on Star Properties' attorney's statement. Specifically, The Rex
Group argues,
A. Standard of Review Thus the record contains undisputed
[27] [28] [29] [30] In conducting a legal sufficiency evidence that Rex's reasonable and
review of the evidence, we consider all of the evidence in a necessary attorneys' fees against
light favorable to the verdict and indulge every reasonable Star were at least $120,000. This
inference that supports it. City of Keller, 168 S.W.3d at 827. conclusion in turn triggers a series
We consider evidence favorable to the finding if a reasonable of subsidiary conclusions: (1) that
factfinder could consider it, and disregard evidence contrary as a matter of law the evidence
to the finding unless a reasonable factfinder could not contradicts the trial court's implied
disregard it. Id. at 827. In conducting a factual sufficiency finding that only an $85,000 fee was
review, we consider all of the evidence supporting and reasonable and necessary; (2) that the
contradicting the challenged finding and set it aside only finding is against the great weight and
if the evidence is so weak as to make it clearly wrong preponderance of the evidence; and (3)
and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 that the trial court abused its discretion
(Tex.1986); see also Plas–Tex, Inc. v. U.S. Steel Corp., 772 in setting the fee at $85,000.
S.W.2d 442, 445 (Tex.1989). In an appeal of a judgment
rendered after a bench trial, we may “not invade the fact- [32] [33] [34] The Rex Group does not cite to any legal
finding role of the trial court, who alone determines the authority to show why the statement made during closing
credibility of the witnesses, the weight to give their testimony, arguments by Star Properties' attorney would constitute
and whether to accept or reject all or any part of that evidence or would otherwise be binding on the trial court. Star
testimony.” Volume Millwork, Inc. v. W. Hous. Airport Corp., Properties' attorney's statement does not constitute a judicial
218 S.W.3d 722, 730 (Tex.App.-Houston [1st Dist.] 2006, admission. “A judicial admission results when a party makes
pet. denied). a statement of fact which conclusively disproves a right of
recovery or defense he currently asserts.” Seminole Pipeline
Co. v. Broad Leaf Partners, Inc., 979 S.W.2d 730, 740
B. Analysis (Tex.App.-Houston [14th Dist.] 1998, no pet.). The elements
[31] In the bench trial on the issue of attorneys' fees, The for establishing that a statement is a judicial admission are
Rex Group presented *62 evidence that it had incurred (1) the statement must be made in the course of a judicial
$209,552 in attorneys' fees. It also presented expert testimony proceeding; (2) it must be contrary to an essential fact or
concerning whether the fees were reasonable and necessary defense asserted by the party; (3) it must be deliberate, clear,
based on Arthur Andersen & Co. v. Perry Equip. Corp., and unequivocal; (4) it cannot be destructive of the opposing
945 S.W.2d 812, 818 (Tex.1997) (quoting Tex. Disciplinary party's theory of recovery or defense; and (5) enforcing
Rules Prof'l 1 Conduct R. 1.04, reprinted in TEX. GOV'T the statement as a judicial admission would be consistent
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
Ardmore, Inc. v. Rex Group, Inc., 377 S.W.3d 45 (2012)
Properties' attorney's statement should be excepted from this
with public policy. Kaplan v. Kaplan, 129 S.W.3d 666, 669
rule. Accordingly, we hold that this statement did not preclude
(Tex.App.-Fort Worth 2004, pet. denied). The public policy
the trial court from performing its obligation to determine
concerning judicial admissions is that it would be unjust to
what were reasonable and necessary attorneys' fees.
permit a party to recover after he has sworn himself out of
court by a clear, unequivocal statement. Id.
We overrule The Rex Group's sole issue.
Star Properties' attorney's recognition that it would risk
appearing hypocritical arguing it should be entitled to
$120,000 in attorneys' fees but that The Rex Group should be Conclusion
entitled to less for work done during the same period is not
tantamount to a deliberate, clear, and unequivocal admission We reverse the trial court's grant of summary judgment in
that $120,000 is inherently reasonable and necessary. See id. favor of The Rex Group and against Ardmore as well as its
award of attorneys' fees in favor of The Rex Group and against
[35] Moreover, unsworn statements of counsel generally do Ardmore. We affirm the judgment in all other respects. We
not constitute evidence. See Banda v. Garcia, 955 S.W.2d remand this case to the trial court for further proceedings.
270, 272 (Tex.1997); see also Vaughn v. Tex. Emp't Comm'n,
792 S.W.2d 139, 144 (Tex.App.-Houston [1st Dist.] 1990,
All Citations
no writ) (holding unsworn attorney's statement does not
constitute evidence to support award of attorneys' fees). 377 S.W.3d 45
The Rex Group offers no argument as to why Star *63
Footnotes
1 While The Rex Group argues that the irregular loop formed the property subject to the sublease's purchase option,
it presented no evidence that this in any way reflected the intent of the parties. Accordingly, whether this alternative
interpretation satisfies the statute of frauds is not before us. See Travis v. City of Mesquite, 830 S.W.2d 94, 100 (Tex.1992)
(holding appellate courts may only review issues “actually presented to and considered by the trial court”); City of Houston
v. Clear Creek Basin Auth., 589 S.W.2d 671, 677 (Tex.1979) (holding that trial court may not grant summary judgment
on ground not presented by movant in writing).
2 Because we hold that the trial court could not determine as a matter of law that the statute of frauds barred the enforcement
of the purchase option in the sublease, we do not reach Ardmore's remaining arguments concerning the application of
certain exceptions to the statute of frauds. See TEX.R.APP. P. 47.1 (requiring appellate courts to address every issue
raised and necessary to final disposition of the appeal).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
F
Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1 (1999)
43 Tex. Sup. Ct. J. 9
[2] Limitation of Actions
KeyCite Yellow Flag - Negative Treatment Nature of statutory limitation
Declined to Extend by Tenet Hospitals Ltd. v. Rivera, Tex., August
Statutes of limitations are procedural.
22, 2014
6 Cases that cite this headnote
12 S.W.3d 1
Supreme Court of Texas.
[3] Statutes
BAKER HUGHES, INC. and Effect on vested rights
Envirotech Controls, Inc., Petitioners,
Statutes
v. Application to pending actions and
KECO R. & D., INC., Respondent. proceedings
No. 98–0520. | Argued Sept. 15, Procedural statutes may apply to suits pending
at the time they became effective, but even a
1999. | Decided Oct. 7, 1999. |
procedural statute cannot be given application to
Rehearing Overruled Jan. 6, 2000.
a suit pending at the time it becomes effective if
Manufacturer of calibration apparatus sued buyer, alleging to do so would destroy or impair rights which had
misappropriation of trade secrets and breach of contract become vested before the act became effective.
for violating confidential disclosure agreement. The 165th Vernon's Ann.Texas Const. Art. 1, § 16.
District Court, Harris County, Elizabeth Ray, J., entered
10 Cases that cite this headnote
summary judgment for buyer. Manufacturer appealed, and
buyer cross-appealed. The Houston Court of Appeals, First
District, 982 S.W.2d 25, reversed and remanded. Buyer [4] Limitation of Actions
petitioned for review. The Supreme Court, Hecht, J., held Retroactive Operation
that: (1) application of three-year statute of limitations to After a cause has become barred by a statute of
revive misappropriation claim violated prohibition against limitations, a defendant has a vested right to rely
retroactive laws, but (2) genuine issues of material fact on such statute as a defense, so that a procedural
precluded summary judgment for buyer on breach of contract statute that became effective while the cause was
claim. pending and that impaired that right would not
apply.
Affirmed in part, reversed in part, and remanded.
19 Cases that cite this headnote
West Headnotes (8) [5] Courts
In general; retroactive or prospective
operation
[1] Limitation of Actions
As a rule, court decisions apply retroactively.
Revival of causes of action by amendment
or repeal of statute 4 Cases that cite this headnote
Application of three-year statute of limitations to
revive claim for misappropriation of trade secrets
[6] Courts
that was barred by two-year statute of limitations
In general; retroactive or prospective
violated State Constitution's prohibition against
operation
retroactive laws. Vernon's Ann.Texas Const. Art.
1, § 16; V.T.C.A., Civil Practice & Remedies Exceptions to general rule that court decision
Code § 16.010. applies retroactively are determined mostly by
three factors: (1) whether the decision establishes
17 Cases that cite this headnote a new principle of law by either overruling clear
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1 (1999)
43 Tex. Sup. Ct. J. 9
past precedent on which litigants may have relied
or by deciding an issue of first impression whose Opinion
resolution was not clearly foreshadowed; (2)
Justice HECHT delivered the opinion of the Court.
whether prospective or retroactive application
of the particular rule will further or retard its The principal issue we address here is whether a claim
operation through an examination of the history, for misappropriation of trade secrets that was barred by
purpose, and effect of the rule; and (3) whether limitations was revived by the later enactment of section
retroactive application of the rule could produce 16.010 of the Texas Civil Practice and Remedies Code, which
substantial inequitable results. extended the limitations period from two years to three years
and adopted the discovery rule for determining accrual. We
9 Cases that cite this headnote
hold that for section 16.010 to have such effect would violate
the prohibition against retroactive laws in article I, section 16
[7] Judgment of the Texas Constitution. Consequently, we reverse in part
Contract cases in general and affirm in part the judgment of the court of appeals 1 and
Genuine issues of material fact existed as to remand the case to the district court for further proceedings.
whether information about plaintiff's product
that defendant disclosed to third party could
be classified as trade secret and whether
I
that information was confidential, precluding
summary judgment for defendant on claim of Keco R. & D., Inc., a small, closely-held corporation,
breach of contract for violating confidential manufactured a device that recalibrates industrial pollution
disclosure agreement. gas analyzer systems when the accuracy of their readings
drifts. Keco began selling the device, which Keco called
7 Cases that cite this headnote
a “Texas Ranger,” to Tracor Atlas, Inc. in 1987 for
incorporation into industrial gas analyzer systems that Tracor
[8] Appeal and Error manufactured. Baker Hughes, Inc. later bought Tracor and
Determination of part of controversy merged it into Envirotech Controls, Inc., a wholly owned
General rule that a denial of summary judgment Baker Hughes subsidiary. For convenience, we refer to
is interlocutory and not appealable does not Tracor, Envirotech, and Baker Hughes collectively as “Baker
apply when a movant seeks summary judgment Hughes.”
on multiple grounds and the trial court grants the
motion on one or more grounds but denies it, Keco also provided Baker Hughes information concerning
or fails to rule, on one or more other grounds the “Texas Ranger” that Keco considered proprietary. To
presented in the motion and urged on appeal; protect that information, Keco had Baker Hughes sign a
this exception does not depend on the number of “Confidential Disclosure Agreement” in December 1989.
motions filed, when they were presented to the Reciting that Keco had “developed substantial confidential
trial court, or when the trial court ruled. information data and products,” the Agreement provided that
as long as Keco continued to sell to Baker Hughes and for
38 Cases that cite this headnote three years thereafter, Baker Hughes would not (1) disclose
confidential information, data, or processes supplied by Keco,
(2) manufacture, in competition with Keco, components
of original Keco design, or (3) use Keco's confidential
Attorneys and Law Firms information for the development of competitive component
equipment. The Agreement gave Baker Hughes ownership of
*2 Claudia Wilson Frost, Jacalyn Ann Hollabaugh, David any test data it developed.
Hricik, Steve Rosenblatt, Houston, for petitioners.
On April 26, 1991, Keco's president and principal, Charles
D. Arlon Groves, David Alton Bryant, Jr., Houston, for
Kimbell, wrote to a Baker Hughes employee and asserted that
respondent.
a paper the employee had presented at an industry trade show
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1 (1999)
43 Tex. Sup. Ct. J. 9
some six months earlier violated the Confidential Disclosure
Agreement. The paper purported to discuss Baker Hughes (a) This Act applies to all actions:
test data concerning calibration of gas analyzer systems,
(1) commenced on or after the effective date of this
but Kimbell called it “plagiarism” of Keco information. In
Act [May 1, 1997]; or
response, Baker Hughes terminated its relationship with Keco
and sought a different supplier for a calibration device to (2) pending on that effective date and in which the
incorporate in its analyzer systems. Also in April 1991, trial, or any new trial or retrial following motion,
Baker Hughes furnished a Keco competitor, Kin–Tek, with a appeal, or otherwise, begins on or after that effective
disassembled “Texas Ranger,” the test data it had presented date.
at the trade show, and Keco's promotional literature. Within
a month or so, Kin–Tek had developed *3 a unit for Baker (b) In an action commenced before the effective date of
Hughes's use in place of the “Texas Ranger.” this Act, a trial, new trial, or retrial that is in progress
on the effective date is governed by the law applicable
On October 27, 1993, Keco sued Baker Hughes for to the trial, new trial, or retrial immediately before the
misappropriation of trade secrets and breach of the effective date, and that law is continued in effect for that
Confidential Disclosure Agreement. Baker Hughes moved purpose. 6
for summary judgment on the trade secrets claim on the The court of appeals concluded simply that because Keco's
ground that it was barred by the applicable two-year statute action was pending on May 1, 1997, section 16.010 applied,
of limitations, section 16.003 of the Texas Civil Practice and and that the parties' dispute over when Keco knew or should
Remedies Code. About a month later, Baker Hughes filed a have known of the misappropriation of its trade secrets
second motion for summary judgment on the contract claim
precluded summary judgment. 7
on the ground that the evidence established as a matter of
law that no breach had occurred. The district court granted
Concerning Keco's contract claim, the court held that Baker
the first motion but denied the second one at the same time.
Hughes had not established that information it obtained from
Several months later, Baker Hughes then filed a third motion
Keco was not a trade secret, so that its third motion for
for summary judgment on the ground that it did not breach
the Confidential Disclosure Agreement because none of the summary judgment should not have been granted. 8 The court
information it obtained from Keco was a trade secret. The trial refused to consider whether Baker Hughes's second motion
court granted this motion. In accordance with its rulings, the for summary judgment should have been granted. 9
court rendered a final judgment that Keco take nothing.
*4 We granted Baker Hughes's petition for review. 10 Baker
The court of appeals reversed and remanded both of Keco's Hughes argues that the court of appeals' application of section
claims. 2 Concerning limitations, the court held that section 16.010 violates the prohibition against retroactive laws in
16.010, enacted almost a year after final judgment was article I, section 16 of the Texas Constitution, and that Keco's
rendered, applied to Keco's trade secrets claim. 3 Section trade secrets claim is barred by limitations. Baker Hughes also
16.010(a) states: argues that it was entitled to summary judgment on Keco's
contract claim. We address each argument in turn.
A person must bring suit for misappropriation of trade
secrets not later than three years after the misappropriation
II
is discovered or by the exercise of reasonable diligence
should have been discovered. 4 [1] This case was pending on May 1, 1997, the effective
The statute extends the applicable limitations period from date of section 16.010, and any trial following this appeal will
two years, which it had been under section 16.003 and begin after that date. Thus, section 3(a)(2) of the Act adopting
adopts the discovery rule for determining the accrual of a section 16.010 makes the statute applicable to this case.
claim, something we declined to do in Computer Associates
International, Inc. v. Altai, Inc. 5 Section 3 of the Act [2] [3] [4] Statutes of limitations are procedural. 11
adopting section 16.010 adds:
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1 (1999)
43 Tex. Sup. Ct. J. 9
discovery rule was in keeping with this Court's precedents and
The rule is well settled that procedural statutes may apply with the purpose of limitations.
to suits pending at the time they became effective, but even
a procedural statute cannot be given application to a suit Keco's claims against Baker Hughes accrued, at the latest,
pending at the time it becomes effective if to do so would in April 1991, when Baker Hughes provided Kin–Tek with
destroy or impair rights which had become vested before information to manufacture a calibrator to compete with
the act became effective. In this connection it is the settled Keco's “Texas Ranger.” Within a few weeks Kin–Tek began
law that, after a cause has become barred by the statute of manufacturing the new device. Keco's trade secrets claim,
limitation, the defendant has a vested right to rely on such filed well over two years later, was therefore barred by
statute as a defense. 12 the then-applicable two-year statute of limitations. Baker
To permit barred claims to be revived years later would Hughes's right to a limitations defense vested before section
undermine society's interest in repose, which is one of the 16.010 was enacted. Section 16.010's divestiture of that right
principal justifications for statutes of limitations. 13 Thus, we violates article I, section 16 of the Texas Constitution.
have written that a statute extending the limitations period
of a claim already barred by limitations violates the Texas Baker Hughes was thus entitled to summary judgment on
Constitution's prohibition against retroactive laws, which is Keco's trade secrets claim.
article I, section 16. 14
[5] [6] Keco argues that Baker Hughes had no vested III
right to its limitations defense because at the time suit was
filed, it was an “open question” whether the discovery rule [7] Baker Hughes argues that it is entitled to summary
applied to claims for misappropriation of trade secrets. It is judgment on Keco's contract claim because it established, in
true that no reported decision of a Texas court addressed the its third motion, that no information it received from Keco
applicability of the discovery rule to such claims until our was a trade secret and, in its second motion, that no breach of
opinion in Computer Associates International, Inc. v. Altai, the Confidential Disclosure Agreement occurred.
Inc., 15 which issued while the present case was pending in
We agree with the court of appeals that factual disputes over
the district court. But whether a party has a vested right to
whether the information Baker Hughes obtained from Keco
a limitations defense does not depend on whether the law
can be classified as trade secrets preclude summary judgment.
was settled when suit was filed. Our decision in Computer
Baker Hughes relied on the affidavit of an expert on pollution
Associates did not create new law for trade secrets claims;
analyzers who stated that the information in question was
rather, it recognized what the law was. As a rule, court
widely known in the industry and therefore could not qualify
decisions apply retroactively. 16 Exceptions are determined for trade secret protection. But Keco's president, also an
mostly by three factors: expert in engineering and manufacturing Keco's products,
made statements in his affidavit directly counter to Baker
Hughes's expert. Because of this conflict in the evidence,
(1) whether the decision establishes a new principle of law
Baker Hughes's third motion for summary judgment should
by either overruling clear past precedent on which litigants
have been denied.
may have relied or by deciding an issue of first impression
whose resolution was not clearly foreshadowed; (2)
[8] The court of appeals refused to consider whether Baker
whether prospective or retroactive application of the
Hughes's second motion for summary judgment should have
particular rule will further or retard its operation through
been granted, citing the general rule that a denial of summary
an examination of the history, purpose, and effect of the
rule; and (3) whether retroactive application *5 of the rule judgment is interlocutory and not appealable. 18 But as we
could produce substantial inequitable results. 17 recognized in Cincinnati Life Insurance Co. v. Cates, 19 the
We did not indicate in Computer Associates that our decision rule does not apply when a movant seeks summary judgment
there should be prospective only, and these factors clearly do on multiple grounds and the trial court grants the motion on
not weigh in favor of a prospective application. Although the one or more grounds but denies it, or fails to rule, on one
issue was one of first impression, denying applicability of the or more other grounds presented in the motion and urged
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1 (1999)
43 Tex. Sup. Ct. J. 9
was not confidential, but the Baker Hughes employee who
on appeal. 20 In Cates we held that the appellate court must
provided the information to Kin–Tek testified that he could
review all of the summary judgment grounds on which the
not recall exactly what was furnished. Keco's president
trial court actually ruled, whether granted or denied, and
averred that Kin–Tek could not possibly have designed and
which are dispositive of the appeal, 21 and may consider any built, in a few weeks, a device that Keco had taken four
grounds on which the trial court did not rule. 22 The court of years and spent millions of dollars to develop, unless Kin–
appeals refused to follow Cates because the second motion Tek had used confidential information that Keco had provided
was denied months before the third motion was granted. 23 Baker Hughes. As we have noted, Keco's president was an
The court of appeals offered no rationale for its position, and expert involved in the design and manufacture of the “Texas
we know of none. The rule in Cates does not depend *6 Ranger”. On this record, we conclude that questions of fact
on the number of motions filed, when they were presented precluded summary judgment on the grounds raised in Baker
to the trial court, or when the trial court ruled. The court Hughes's second motion.
of appeals should have considered whether the district court
properly denied Baker Hughes's second motion for summary Thus, Baker Hughes was not entitled to summary judgment
judgment. on Keco's contract claim.
Rather than remand the case to the court of appeals, however,
we have examined the grounds of Baker Hughes's second *****
24
motion ourselves. Baker Hughes argues that the essence
Accordingly, the court of appeals' judgment is affirmed in part
of Keco's breach of contract claim is that Baker Hughes
and reversed in part, and the case is remanded to the district
provided Keco's confidential information to Kin–Tek, who
court for further proceedings.
used it to design and manufacture a product to compete with
the “Texas Ranger.” Baker Hughes concedes that it obtained
information from Keco, and we have concluded that there All Citations
is evidence to support Keco's claims that that information
included trade secrets. Baker Hughes contends that the only 12 S.W.3d 1, 43 Tex. Sup. Ct. J. 9
information it furnished Kin–Tek, and that Kin–Tek used,
Footnotes
1 982 S.W.2d 25.
2 Id.
3 Id. at 28.
4 TEX. CIV. PRAC. & REM.CODE § 16.010.
5 918 S.W.2d 453, 458 (Tex.1996).
6 Act of Apr. 17, 1997, 75th Leg., R.S., ch. 26, § 3, 1997 Tex. Gen. Laws 68.
7 982 S.W.2d at 28.
8 Id. at 28–29.
9 Id. at 29.
10 42 Tex. Sup.Ct. J. 420 (Mar. 25, 1999).
11 Franco v. Allstate Ins. Co., 505 S.W.2d 789, 793 (Tex.1974).
12 Wilson v. Work, 122 Tex. 545, 62 S.W.2d 490, 490 (1933) (per curiam) (citing Cathey v. Weaver, 111 Tex. 515, 242 S.W.
447, 453 (1922)); see Mellinger v. City of Houston, 68 Tex. 37, 3 S.W. 249, 255 (1887).
13 Safeway Stores, Inc. v. Certainteed Corp., 710 S.W.2d 544, 545 (Tex.1986).
14 Mellinger, 3 S.W. at 251.
15 918 S.W.2d at 458; see Computer Assocs. Int'l, Inc. v. Altai, Inc., 22 F.3d 32, 33 (2d Cir.1994).
16 State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 719(Tex.1996); Elbaor v. Smith, 845 S.W.2d 240, 250 (Tex.1992);
Carrollton–Farmers Branch Indep. Sch. Dist. v. Edgewood Indep. Sch. Dist., 826 S.W.2d 489, 515 (Tex.1992); Sanchez
v. Schindler, 651 S.W.2d 249, 254 (Tex.1983).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1 (1999)
43 Tex. Sup. Ct. J. 9
17 Gandy, 925 S.W.2d at 719–720 (quoting Elbaor, 845 S.W.2d at 250). See also Carrollton–Farmers Branch, 826 S.W.2d
at 518 (quoting Chevron Oil Co. v. Huson, 404 U.S. 97, 106–07, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971)).
18 See Novak v. Stevens, 596 S.W.2d 848, 849 (Tex.1980).
19 927 S.W.2d 623 (Tex.1996).
20 Id. at 625, 626.
21 Id. at 624.
22 Id.
23 982 S.W.2d at 29.
24 See Coulson & CAE, Inc. v. Lake L.B.J. Mun. Util. Dist., 734 S.W.2d 649, 652 (Tex.1987); Roark v. Allen, 633 S.W.2d
804, 811 (Tex.1982).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
G
Browning-Ferris Industries, Inc. v. Lieck, 881 S.W.2d 288 (1994)
about prosecution and, but for his actions,
prosecution would not have occurred; abrogating
KeyCite Yellow Flag - Negative Treatment -Flowers, 314 S.W.2d 373.
Disagreed With by Pahle v. Colebrookdale Tp., E.D.Pa., March 26,
2002 89 Cases that cite this headnote
881 S.W.2d 288
Supreme Court of Texas. [2] Husband and Wife
Personal injuries to wife resulting in loss of
BROWNING–FERRIS INDUSTRIES, services or consortium, impairment of earning
INC. and James Meszaros, Petitioners, capacity, or expenses
v.
Husband and Wife
Kenneth LIECK and Nydia Personal injuries to husband
Hinojosa Lieck, Respondents.
Damages for loss of consortium cannot be
awarded for harm to spouse that involves no
No. D–3616. | Argued Oct. 13,
physical injury.
1993. | Decided June 2, 1994. |
Rehearing Overruled Sept. 8, 1994. 29 Cases that cite this headnote
City manager, against whom charges of official misconduct
had been dropped, brought action against defendant who
had provided information to authorities, alleging malicious
prosecution. The 138th District Court, Cameron County, Attorneys and Law Firms
Darrell B. Hester, J., entered jury verdict for city manager,
*289 Roger Townsend, Houston, William Powers, Jr.,
and appeal was taken. The Corpus Christi Court of Appeals,
Austin, Lisa Powell, Charles C. Murray, McAllen, for
845 S.W.2d 926, Gilberto Hinojosa, J., affirmed in part and
petitioners.
reversed in part, and writ of error was sought. The Supreme
Court, Hecht, J., held that, unless person knowingly provides Neil E. Norquest, McAllen, Norton A. Colvin, Jr.,
false information, person cannot be held to have “caused” Brownsville, Gordon L. Briscoe, Harlingen, for respondents.
criminal prosecution, as required to establish tort of malicious
prosecution, unless person's acts were both necessary and Opinion
sufficient cause of prosecution.
HECHT, Justice, delivered the opinion of the Court, in which
PHILLIPS, Chief Justice, and HIGHTOWER, CORNYN,
Reversed and remanded.
GAMMAGE, ENOCH, and SPECTOR, Justices, join.
Doggett, J., concurred in part and dissented in part. We address three questions in this malicious prosecution
action: first, whether the trial court properly instructed
the jury concerning the causal connection a plaintiff must
West Headnotes (2) prove between defendant's conduct and plaintiff's criminal
prosecution to establish liability; second, whether a defendant
can ever be liable for making statements to law enforcement
[1] Malicious Prosecution officials which he did not actually know were false; and third,
Instigation of or participation in prosecution whether damages for loss of consortium can be awarded for
Unless person knowingly provides false harm to a spouse that involves no physical injury? For reasons
information to authorities, person cannot be that follow, we answer the first and third questions “no”,
held to have “caused” criminal prosecution, and the second question “yes”. The district court rendered
as required to establish tort of malicious judgment against defendants, which a sharply divided court
prosecution, unless person's acts were both of appeals, 845 S.W.2d 926, en banc, affirmed with some
necessary and sufficient cause of prosecution, modifications. 845 S.W.2d at 950. We reverse and remand the
i.e., person's actions in course of things brought case for further proceedings.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Browning-Ferris Industries, Inc. v. Lieck, 881 S.W.2d 288 (1994)
that the terms of BFI's contract had been made public during
the City Commission's consideration of the bids, even though
he knew that was true, nor did he tell officials that he
I
believed Lieck had not committed a crime, even though that
A detailed account of the evidence in this case has been made was his belief. From these admissions it may thus be fairly
by the court of appeals in assessing the sufficiency of the said that Meszaros withheld from law enforcement officials
evidence to support the judgment. As we have not been asked information which they might well have considered important
to review the method or standard used in that assessment, we in deciding whether to prosecute Lieck.
need not recapitulate the entire record. We focus instead on
the circumstances directly relevant to the legal issues raised An assistant district attorney reviewed the matter and
here. presented it to the grand jury, which indicted Lieck for giving
Torres confidential information, specifically, the contract BFI
When James Meszaros, an employee of Browning–Ferris had submitted to the Brownsville City Commission. The
Industries, Inc., heard that the Texas Rangers were indictment alleged a misdemeanor, although it did not state
investigating the purchasing practices of the City of what statute had been violated. The indictment was dismissed
Brownsville, he became concerned that they might question about two months later because the grand jury had been
his attempt to make a financial contribution to the reelection improperly constituted. A second grand jury refused to indict
campaign of one of the members of the City Commission at a Lieck, and the prosecution was then terminated.
time when BFI was bidding on the City's garbage collection
business. Meszaros asked another BFI employee and former Lieck and his wife Nydia sued BFI and Meszaros for
Ranger, Dan North, to contact his friends among the Rangers malicious prosecution. The jury rendered a verdict favorable
and try to determine the scope of the investigation. North to the Liecks on all issues and found actual damages of
did so, and arranged for Meszaros to meet with two officials $706,500 for Lieck 1 and $250,000 for his wife for loss of
involved in the investigation. consortium, and punitive damages against BFI of $1,500,000.
The trial court rendered judgment awarding Lieck his actual
At that meeting, Meszaros brought up the subject of the damages against BFI and Meszaros, jointly and severally, and
bidding on the City's garbage collection business. BFI had his punitive damages against BFI, but rendered judgment non
submitted its bid on its standard form contract, which was obstante veredicto that Nydia Lieck take nothing. The court
similar to the ones it, and its competitors, used with other of appeals reversed in part, awarding Nydia the consortium
Texas cities. Garbage Management Services also bid on the damages found by the jury, then modified the punitive
City's business. The terms of the bids were summarized damages, apportioning them between Nydia and Kenneth,
by Brownsville's City Manager, Kenneth Lieck, distributed and otherwise affirmed the judgment. 845 S.W.2d 926.
to members of the City Commission and to the press, and
discussed at several City Commission meetings *290 which
were open to the public. After the Commission voted to award
II
the business to GMS, Lieck gave GMS' representative, Robert
Torres, a slightly modified form of the contract BFI had Before we turn to petitioners' complaints, it is necessary to
submitted, and that proposed contract became the basis of recognize the important societal interests in tension in the tort
the final negotiations between the City and GMS. Meszaros of malicious criminal prosecution. A century ago this Court
complained to the investigators that the contract Lieck had wrote:
given Torres was confidential information. North showed the
two investigators a statute from which they concluded, after It is important that every citizen
reading it, that Lieck had violated the law. should be protected against malicious
prosecutions, and it is equally
At the request of various other law enforcement officials, important that crimes should be
Meszaros and an attorney for BFI provided additional punished, in order that the law-abiding
statements and affidavits. Two City Commissioners also told citizen may be secure in life, liberty,
officials that Lieck had given Torres confidential information. and property. To make the citizen
Meszaros, by his own admission at trial, never told officials liable to be mulcted in damages for
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Browning-Ferris Industries, Inc. v. Lieck, 881 S.W.2d 288 (1994)
an honest discharge of duty is to give malicious prosecution is that there is little room for error
immunity to crime, and to weaken the in applying the law. Even a small departure from the
restraining power of the criminal law, exact prerequisites for liability may threaten the delicate
thereby endangering the security of balance between protecting against wrongful prosecution and
law-abiding people. encouraging reporting of criminal conduct. It is in this context
that we consider the issues raised.
Sebastian v. Cheney, 86 Tex. 497, 25 S.W. 691, 694 (1894).
The Restatement (Second) of Torts describes these competing
interests similarly:
III
The first is the interest of society
in the efficient enforcement of the
A
criminal law, which requires that
private persons who aid in the Petitioners complain that the trial court erred in refusing to
enforcement of the law should be require the jury to find whether Meszaros' actions actually
given an effective protection against caused the indictment of Lieck. The trial court asked instead:
the prejudice that is likely to arise from
the termination of the prosecution in Did James R. Meszaros, acting without
favor of the accused. The second probable cause and with malice, cause,
is the interest that the individual or aid or cooperate in causing, a
citizen has in being protected against criminal prosecution to be commenced
unjustifiable and oppressive litigation against Kenneth J. Lieck?
of criminal charges, which not only
(Emphasis added.) The trial court did not define “cause, or
involve pecuniary loss but also distress
aid or cooperate in causing” in the jury charge. Giving these
and loss of reputation.
words their plain meaning, the jury could have concluded
*291 RESTATEMENT (SECOND) OF TORTS ch. that it was enough for Meszaros to have aided or cooperated
29, intro. note, at 405 (1977) [hereinafter “the with law enforcement officials in bringing about Lieck's
RESTATEMENT”]. These interests are balanced by carefully prosecution. Petitioners argue that this does not satisfy the
defining the elements of an action for malicious prosecution, requirements for liability.
and the balance is maintained by strictly adhering to these
elements. The court of appeals rejected petitioners' argument in a
single sentence: “The courts of this State have repeatedly
It is frequently said that actions for malicious prosecution stated that the causation issue submitted in this case is
are not favored in the law. E.g., Sullivan v. O'Brien, 85 the proper question for malicious prosecution cases.” 845
S.W.2d 1106, 1112 (Tex.Civ.App.—San Antonio 1935, writ S.W.2d at 943. The court cited four cases in support of
ref'd); Diamond Shamrock Corp. v. Ortiz, 753 S.W.2d 238, this statement. In Davis v. City of San Antonio, 752 S.W.2d
241 (Tex.App.—Corpus Christi 1988, writ denied); Parker 518 (Tex.1988), this Court held that there was evidence to
v. Dallas Hunting & Fishing Club, 463 S.W.2d 496, 499 support a finding that defendant caused, aided or contributed
(Tex.Civ.App.—Dallas 1971, no writ); Montgomery Ward & to a criminal prosecution, but did not consider—because it
Co. v. Kirkland, 225 S.W.2d 906, 909 (Tex.Civ.App.—San was not questioned by the parties—whether such a finding
Antonio 1949, writ ref'd n.r.e.); Deaton v. Montgomery Ward was sufficient for liability. In Bass v. Metzger, 569 S.W.2d
& Co., 159 S.W.2d 969, 972 (Tex.Civ.App.—Beaumont 917, 924 (Tex.Civ.App.—Corpus Christi 1978, writ ref'd
1942, writ ref'd w.o.m.); Reed v. Lindley, 240 S.W. 348, n.r.e.), and Ellis v. Sinton Sav. Ass'n, 455 S.W.2d 834,
351 (Tex.Civ.App.—Ft. Worth 1922, no writ); 54 C.J.S. 836 (Tex.Civ.App.—Corpus Christi 1970, writ ref'd n.r.e.),
Malicious Prosecution § 4, at 524–25 (1987); 52 AM.JUR.2D the court listed the elements of a malicious prosecution
Malicious Prosecution § 5, at 188 (1970). This aphorism is action as including that defendant have caused, or aided
far too vague to serve as an analytical tool. As with any or cooperated in causing, plaintiff's prosecution. Neither of
other cause of action, if the elements of malicious prosecution these cases considered the causation element specifically;
are proved, liability is established. What is distinctive about each merely listed the element among the other requirements
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Browning-Ferris Industries, Inc. v. Lieck, 881 S.W.2d 288 (1994)
to establish liability. See also Yianitsas v. Mercantile Nat'l The concept of procurement in the RESTATEMENT is
Bank, 410 S.W.2d 848, 850 (Tex.Civ.App.—Dallas 1967, essentially the same as the cause-in-fact element of proximate
no writ). Finally, Thomas v. Cisneros, 596 S.W.2d 313, cause. Cause in fact is ordinarily defined as “that cause
316–17 (Tex.Civ.App.—Austin 1980, writ ref'd n.r.e.), also which, in a natural and continuous sequence, produces an
lists the same elements but later refers to a requirement event, and without which cause such event would not have
that defendant's actions have proximately caused plaintiff's occurred”. 1 STATE BAR OF TEXAS, TEXAS PATTERN
prosecution. Thus, none of the cases cited by the court of JURY CHARGES PJC 2.04 (1987). A person procures a
appeals, or by respondents, specifically considers the element criminal prosecution if his actions in the course of things bring
of causation. it about, and if, but for his actions, the prosecution would not
have occurred. Just as there may be more than one proximate
The statement of the element as “cause, or aid or cooperate cause of an event, a single prosecution may be procured
in causing”, appears to have originated in Flowers v. Central by more than one person. The RESTATEMENT idea of
Power & Light Co., 314 S.W.2d 373, 375 (Tex.Civ.App.— procurement does not, however, include the foreseeability
Waco 1958, writ ref'd n.r.e.). That case cites no authority component of proximate cause, which requires that “the
for so broad an element *292 of causation. Prior decisions act or omission complained of must be such that a person
included among the required elements a stricter showing that using ordinary care would have foreseen that the event,
defendant actually caused the prosecution. See Davidson v. or some similar event, might reasonably result therefrom.”
First State Bank, 310 S.W.2d 678, 680 (Tex.Civ.App.—El Id. Foreseeability is not an appropriate requirement for
Paso 1958, no writ); Kirkland, 225 S.W.2d at 907–08; Meyer procurement. An ordinary person simply cannot be expected
v. Viereck, 286 S.W. 894, 897 (Tex.Civ.App.—Galveston to foresee that his communication with law enforcement
1926, writ dism'd w.o.j.); Reed, 240 S.W. at 351. Although officials either will or will not lead to a criminal prosecution.
as noted above several courts of appeals have recited the There are too many participants in the process to foresee what
Flowers version of the elements of malicious prosecution, the outcome of one person's role in the investigatory process
several others have referred to the pre-Flowers version of the is likely to be.
causation element. See McHenry v. Tom Thumb Page Drug
Stores, 696 S.W.2d 664, 665 (Tex.App.—Dallas 1985, writ The RESTATEMENT rule does not subject a person to
dism'd); Blanton v. Morgan, 681 S.W.2d 876, 878 (Tex.App. liability for merely aiding or cooperating in causing a
—El Paso 1984, writ ref'd n.r.e.); Fisher v. Beach, 671 S.W.2d criminal prosecution. We agree that liability should be
63, 66 (Tex.App.—Dallas 1984, no writ); Martin v. Trevino, thus restricted. Were it otherwise, persons only incidentally
578 S.W.2d 763, 766 (Tex.Civ.App.—Corpus Christi 1978, involved in a criminal investigation might find themselves
writ ref'd n.r.e.); Lloyd v. Almeda State Bank, 346 S.W.2d 947, facing allegations in a civil suit. The prospect of such liability
951 (Tex.Civ.App.—Waco 1961, writ ref'd n.r.e.). poses too great a disincentive for people to cooperate freely
with law enforcement officials. As many Texas courts have
The RESTATEMENT formulates the causation element as already recognized, a person's actions must be the cause in
“initiates or procures”. RESTATEMENT § 653. 2 A person fact of a criminal prosecution before he can be liable for
initiates a criminal prosecution if he makes a formal charge malicious prosecution. The trial court's instruction permitted
to law enforcement authorities. Id. cmt. c. A person procures the jury to find liability under a lesser standard and was
a criminal prosecution if his actions are enough to cause the therefore in error.
prosecution, and but for his actions the prosecution would not
have occurred. Id. cmts. d, f–h. In other words, procurement *293 [1] The RESTATEMENT concepts of initiation
requires that a person's actions be both a necessary and a and procurement are better suited to malicious prosecution
sufficient cause of the criminal prosecution. Thus, a person cases than the more general idea of causation. In such cases
cannot procure a criminal prosecution when the decision in the future, the jury should be asked, not whether the
whether to prosecute is left to the discretion of another person, defendant “caused” criminal proceedings, but whether he
a law enforcement official or the grand jury. Id. An exception, either “initiated” or “procured” them, depending on the nature
which we discuss below, occurs when a person provides of the case. Initiation would not ordinarily need to be defined,
information which he knows is false to another to cause a as it would be demonstrated by evidence that defendant filed
criminal prosecution. Id. cmt. g. formal charges against plaintiff, but procurement should be
defined as follows:
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Browning-Ferris Industries, Inc. v. Lieck, 881 S.W.2d 288 (1994)
should not be liable for malicious prosecution unless he
A person procures a criminal knows the information to be false. Petitioners base their
prosecution if his actions were enough argument on the RESTATEMENT § 653, cmt. g, quoted
to cause the prosecution, and but for in Thomas, 596 S.W.2d at 317, and policy considerations
his actions the prosecution would not underlying actions for malicious prosecution and defamation.
have occurred. A person does not
procure a criminal prosecution when Comment g describes the circumstances under which a person
the decision whether to prosecute may be said to have procured a criminal prosecution by
is left to the discretion of another, influencing a public prosecutor. The comment states:
including a law enforcement official
or the grand jury, unless the person A private person who gives to a public official information
provides information which he knows of another's supposed criminal misconduct, of which the
is false. A criminal prosecution may be official is ignorant, obviously causes the institution of
procured by more than one person. such subsequent proceedings as the official may begin
on his own initiative, but giving the information or even
We discuss below the basis for the exception for providing making an accusation of criminal misconduct does not
false information. constitute a procurement of the proceedings initiated by
the officer if it is left entirely to his discretion to initiate
the proceedings or not. When a private person gives to a
B prosecuting officer information that he believes to be true,
and the officer in the exercise of his uncontrolled discretion
Respondents argue that even if the trial court erred in failing initiates criminal proceedings based upon that information,
to instruct the jury properly on the element of causation, that the informer is not liable under the rule stated in [§ 653]
error was harmless, citing Island Recreational Dev. Corp. v. even though the information proves to be false and his
Republic of Texas Sav. Ass'n, 710 S.W.2d 551 (Tex.1986). belief was one that a reasonable man would not entertain.
Petitioners urge us to overrule Island Recreational as having The exercise of the officer's discretion makes the initiation
been wrongly decided. See 34 GUS. M. HODGES & T. of the prosecution his own and protects from liability the
RAY GUY, THE JURY CHARGE IN TEXAS CIVIL person whose information or accusation has led the officer
LITIGATIONN § 34, at 92–94 (Texas Practice 1988). Island to initiate the proceedings.
Recreational considered whether the trial court's failure to
instruct the jury on a party's theory was reversible error. In If, however, the information is known by the giver to
the present case, the trial court affirmatively charged the jury be false, an intelligent exercise *294 of the officer's
on the wrong standard of causation. We have not extended discretion becomes impossible, and a prosecution based
the holding of Island Recreational, see Exxon Corp. v. Perez, upon it is procured by the person giving the false
842 S.W.2d 629 (Tex.1992) (per curiam), and we do not do information. In order to charge a private person with
so in this case. We need not consider here whether Island responsibility for the initiation of proceedings by a public
Recreational should be overruled. official, it must therefore appear that his desire to have
the proceedings initiated, expressed by direction, request
The trial court rendered judgment against petitioners on a or pressure of any kind, was the determining factor in the
verdict which allowed the jury to find only that Meszaros official's decision to commence the prosecution, or that the
aided or cooperated in causing Lieck's criminal prosecution. information furnished by him upon which the official acted
The trial court's failure to limit the jury to the proper standard was known to be false.
of causation constitutes reversible error.
Plainly, comment g does not support petitioners' argument.
The last sentence states that a person may be liable, not
only when he gives information he knows is false to a
IV prosecutor, but also when his conduct is the determining
factor in the prosecutor's decision to prosecute. The comment
Petitioners also argue that a person who cooperates with states that a person who provides information which he
law enforcement authorities by providing them information believes is true but is in fact false is not liable when the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Browning-Ferris Industries, Inc. v. Lieck, 881 S.W.2d 288 (1994)
prosecutor relies upon his own discretion in deciding whether absent proof of physical injury, the only cases in which
to prosecute. If the prosecutor does not exercise his own we have allowed such damages did involve physical injury.
discretion, however, the comment indicates that the provider See Reed Tool Co. v. Copelin, 610 S.W.2d 736 (Tex.1980);
of information has procured a criminal prosecution whether Whittlesey v. Miller, 572 S.W.2d 665 (Tex.1978). Moreover,
he knew the information to be false or not. in Reagan v. Vaughn, 804 S.W.2d 463, 467 (Tex.1990), we
limited recovery of damages for loss of parental consortium
The comment states that an intelligent exercise of discretion is to those cases where the parent has sustained “serious,
impossible when a prosecutor is provided false information. permanent, and disabling” physical injuries. There is no
This is not literally true in all instances. Prosecutors may well reason to have one rule for parental relationships and another
suspect that information they receive is unreliable and decide rule for spousal relationships. We are bound by Reagan to
not to initiate criminal proceedings. What is true is that a hold that damages for loss of spousal consortium are not
person who provides false information cannot complain if recoverable absent proof of physical injury.
a prosecutor acts on it; he cannot be heard to contend that
the prosecutor should have known better. Such a person has Furthermore, we believe that the conflicting policies
procured the resulting prosecution, regardless of the actions underlying malicious prosecution actions require that
of the prosecutor, and the causation element for malicious recovery of damages be limited to the person prosecuted,
prosecution is satisfied. This rule does not assist the Liecks. and should not extend to members of his family. A person
The jury found that Meszaros did not make full and fair who provides information leading to *295 the prosecution
disclosure to investigating officers. This is not the equivalent of another should not face liability for damages other than to
of a finding that Meszaros made statements he knew were the person prosecuted.
false.
Nydia cites decisions by four intermediate appellate courts
Petitioners have cited no authority from any other jurisdiction in other states which have permitted recovery of consortium
which supports their argument, and we are aware of none. damages in malicious prosecution cases without proof of
They argue that a person would not be liable for defamation physical injury. See Minion v. Gaylord's Int'l Corp., 541
of a public official, like Lieck, without proof that statements So.2d 209 (La.Ct.App.1989); Rivers v. Ex–Cell–O Corp.,
made were known to be false, and that the same rule 100 Mich.App. 824, 300 N.W.2d 420 (1980); Zalewski v.
should apply in a malicious prosecution case. Otherwise, Gallagher, 150 N.J.Super. 360, 375 A.2d 1195 (1977); Dunn
they argue, the imposition of civil liability will infringe v. Alabama Oil & Gas Co., 42 Tenn.App. 108, 299 S.W.2d 25
upon constitutionally guaranteed freedom of speech. We are (Tenn.Ct.App.1956). She does not cite a case from any state's
not persuaded. As we noted above, the conflicting policies highest court, and we are aware of none. We decline to follow
underlying malicious prosecution actions must be carefully these authorities.
balanced. The requirements that a person make statements
without probable cause and with malice, and the stringent Accordingly, we hold that Nydia is not entitled to recover
requirement of procurement, are sufficient protection to those damages for loss of consortium.
cooperating with law enforcement officials.
******
Accordingly, we conclude that the trial court did not err in
refusing to instruct the jury that Meszaros could not be liable For the reasons explained, we reverse the judgment of the
for malicious prosecution unless he knew the statements he court of appeals, remand Kenneth Lieck's action against BFI
made to investigators to be false. and Meszaros to the trial court for further proceedings, and
render judgment that Nydia Lieck take nothing.
V
DOGGETT, J., joins in Parts I–IV only, and notes his dissent
[2] We turn finally to the question whether Nydia Lieck to Part V.
is entitled to damages for loss of consortium when Lieck
suffered no physical injury. Although we have never held that GONZALEZ, J., not sitting.
damages for loss of spousal consortium cannot be recovered
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Browning-Ferris Industries, Inc. v. Lieck, 881 S.W.2d 288 (1994)
All Citations
881 S.W.2d 288
Footnotes
1 The jury found Lieck's damages to be $50,000 for past loss of earning capacity, $0 for future loss of earning capacity,
$50,000 for past mental anguish, $100,000 for future mental anguish, $500,000 for injury to reputation, and $6,500
attorney fees to defend the criminal charges.
2 “A private person who initiates or procures the institution of criminal proceedings against another who is not guilty of
the offense charged is subject to liability for malicious prosecution if (a) he initiates or procures the proceedings without
probable cause and primarily for a purpose other than that of bringing an offender to justice, and (b) the proceedings
have terminated in favor of the accused.”
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
H
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
its intent to annex. V.T.C.A., Local Government
Code § 43.052(c).
246 S.W.3d 621
Supreme Court of Texas. 1 Cases that cite this headnote
CITY OF ROCKWALL, Texas, Petitioner,
v. [2] Municipal Corporations
Vester T. HUGHES, as Sole Independent Executor of Notice
the Estate of W.W. Caruth, Deceased, Respondent. If an area is exempt from the three-year notice
requirement, then annexation can take place by
No. 05–0126. | Argued Jan. 25, use of abbreviated procedures with less notice
2006. | Decided Jan. 25, 2008. of a city's intent to annex. V.T.C.A., Local
| Rehearing Denied April 4, 2008. Government Code § 43.052(h).
Synopsis 1 Cases that cite this headnote
Background: After city proposed to annex land under
“sparsely populated” exemption from three-year annexation
[3] Appeal and Error
plan, declined landowner's petition to include land in
Cases Triable in Appellate Court
annexation plan, and refused to arbitrate the dispute,
landowner sought order compelling arbitration. The 382nd Statutory construction is a legal question
Judicial District Court, Rockwall County, Paul Banner, J., Supreme Court reviews de novo.
granted city's plea to the jurisdiction. Landowner appealed.
55 Cases that cite this headnote
The Dallas Court of Appeals, 153 S.W.3d 709, reversed and
remanded. City petitioned for review.
[4] Statutes
Language and intent, will, purpose, or
policy
Holdings: The Supreme Court, Johnson, J., held that:
In construing statutes, courts ascertain and give
[1] statute did not create a substantive private right for effect to the Legislature's intent as expressed by
landowner to compel arbitration, and thus landowner lacked the language of the statute.
standing, and
80 Cases that cite this headnote
[2] landowner could pursue a quo warranto action.
[5] Statutes
Defined terms; definitional provisions
Judgment of Court of Appeals reversed and judgment Statutes
rendered. Technical terms
In construing statutes, courts use definitions
Willett, J., dissented and filed opinion in which Hecht,
prescribed by the Legislature and any technical
O'Neill, and Brister, JJ., joined.
or particular meaning the words have acquired.
V.T.C.A., Government Code § 311.011(b).
West Headnotes (17) 71 Cases that cite this headnote
[6] Statutes
[1] Municipal Corporations
Relation to plain, literal, or clear meaning;
Notice
ambiguity
A municipality generally must annex land
Statutes
pursuant to a plan giving three years' notice of
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
Plain Language; Plain, Ordinary, or Quo warranto proceedings are used by the State
Common Meaning to protect itself and the good of the public
Courts construe a statute's words according through agents of the State who control the
to their plain and common meaning, unless a proceedings.
contrary intention is apparent from the context,
3 Cases that cite this headnote
or unless such a construction leads to absurd
results.
[11] Quo Warranto
248 Cases that cite this headnote Exclusiveness of remedy by quo warranto
Quo Warranto
[7] Statutes Exercise of powers by municipality
Plain, literal, or clear meaning; ambiguity Unless an annexation is wholly void or the
Courts may consider legislative history in Legislature has expressly granted a private right
construing a statute that is not ambiguous. to challenge the annexation in some manner,
V.T.C.A., Government Code § 311.023(3). a quo warranto proceeding brought by the
State is the only proper means of attacking a
4 Cases that cite this headnote municipality's annexation in court.
6 Cases that cite this headnote
[8] Statutes
Absence of Ambiguity; Application of
Clear or Unambiguous Statute or Language [12] Alternative Dispute Resolution
Statutes Remedies and Proceedings for Enforcement
Extrinsic Aids to Construction in General
When a statute's language is clear and Statute providing that “if the municipality fails
unambiguous, it is inappropriate to resort to rules to take action on the petition [to include the
of construction or extrinsic aids to construe the area in the municipality's annexation plan], the
language. petitioner may request arbitration of the dispute,”
allows arbitration to be requested if the city
58 Cases that cite this headnote did not bring the landowner's petition up for
consideration, or, if it was brought up for
consideration, the city failed to take action on it
[9] Alternative Dispute Resolution
one way or the other, but not if the city denied the
Nature and form of proceeding
petition and refused to put the land into a three-
Statute providing that “if the municipality fails
year plan. V.T.C.A., Local Government Code §
to take action on the petition [to include the
43.052(i).
area in the municipality's annexation plan], the
petitioner may request arbitration of the dispute,” Cases that cite this headnote
did not create a substantive private right for
landowner to compel arbitration when city took
[13] Statutes
action on landowner's petition by denying it,
Plain Language; Plain, Ordinary, or
and thus landowner lacked standing to pursue
Common Meaning
action to compel arbitration. V.T.C.A., Local
Government Code § 43.052(i). Ordinary citizens should be able to rely on the
plain language of a statute to mean what it says.
1 Cases that cite this headnote
7 Cases that cite this headnote
[10] Quo Warranto
Nature and scope of remedy [14] Constitutional Law
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
Inquiry Into Legislative Judgment
Attorneys and Law Firms
Supreme Court's standard for construing statutes
is not to measure them for logic. *622 Terry D. Morgan, Terry Morgan & Associates, P.C.,
James W. Morris Jr., Goins *623 Underkofler Crawford &
1 Cases that cite this headnote
Langdon, L.L.P., Dallas, F. Dayton Eckert Jr., Law Offices
of F. Dayton Eckart Jr., Garland, Bob E. Shannon, Joseph R.
[15] Alternative Dispute Resolution Knight, Alice G. McAfee, Baker Botts LLP, Austin, TX, for
Remedies and Proceedings for Enforcement Petitioner.
in General
R. Matthew Molash, James A. Baker, Robert H. Mow Jr.,
Subchapter of Local Government Code
Dwight A. Shupe, Matthew R. Miller, Garon R. Horton,
setting out annexation procedures for areas
Hughes & Luce, L.L.P., Dallas, TX, for Respondent.
included in three-year plans provides different
methodologies for arbitration in three different Theodore Paul Gorski Jr., City of Fort Worth, Fort Worth,
situations: (1) disputes about a landowner's Edwin M. Snyder, City Attorney's Office, Denton, M. Scott
petition to include an area in the municipality's Norman Jr., Texas Association of Builders, Scott Houston,
annexation plan, (2) disputes during negotiations Texas Municipal League, Austin, Darrin M. Coker, City
for services to be provided by the municipality, Attorney for City of Pearland, Pearland, Brian D. Shannon,
and (3) disputes about whether the service Texas Tech University School of Law, Lubbock, L. Stanton
plan has been fulfilled; disputes arising under Lowry, Boyle & Lowry, LLP, Irving, TX, for Amicus Curiae.
each different section and its dispute resolution
provision must be construed in its own context. Opinion
V.T.C.A., Local Government Code §§ 43.052(i),
43.056(l ), 43.0564. Justice JOHNSON delivered the opinion of the Court, in
which Chief Justice JEFFERSON, Justice WAINWRIGHT,
Cases that cite this headnote Justice MEDINA, and Justice GREEN joined.
[1] [2] A municipality generally must annex land pursuant
[16] Quo Warranto to a plan giving three years' notice of its intent to annex. If an
Exercise of powers by municipality area is exempt from the three-year notice requirement, then
Landowner, whose petition to include property annexation can take place by use of abbreviated procedures
in city's three-year annexation plan was denied with less notice of a city's intent to annex.
by city, could pursue a quo warranto action.
V.T.C.A., Local Government Code § 43.052(i). In this case, a landowner sought inclusion in the City of
Rockwall's three-year annexation plan. The City denied the
4 Cases that cite this headnote request, claimed the proposed annexation was statutorily
exempt from the three-year requirement, and gave notice of
[17] Constitutional Law intent to annex the landowner's territory under abbreviated
Judicial rewriting or revision procedures. The landowner requested that the City arbitrate
Changing the meaning of a statute by adding the dispute. When the City refused, the landowner sought
words to it is a legislative function, not a judicial a court order compelling arbitration. The trial court refused
function. to compel arbitration and dismissed the landowner's case
for lack of jurisdiction. The court of appeals held that the
7 Cases that cite this headnote City must arbitrate. We reverse the judgment of the court of
appeals and affirm the trial court's judgment dismissing the
suit.
I. Background
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
separate tracts of land on which one or more residential
dwellings are located on each tract....
A. Annexation Law
(i) A municipality may not circumvent the requirements
The Texas Constitution confers on cities the power to annex
of this section by proposing to separately annex two
land. TEX. CONST. art. XI, § 5. The Legislature prescribes
or more areas described by Subsection (h)(1) if no
procedures to be used by cities in conducting annexations.
reason exists under generally accepted municipal planning
See TEX. LOC. GOV'T CODEE ch. 43; 1 Alexander Oil principles and practices for separately annexing the areas.
Co. v. City of Seguin, 825 S.W.2d 434, 439 (Tex.1991). If a municipality proposes to separately annex areas in
Statutory annexation procedures require municipalities to violation of this section, a person residing or owning land in
prepare annexation plans specifically identifying areas which the area may petition the municipality to include the area in
may be annexed beginning on the third anniversary of the the municipality's annexation plan. If the municipality fails
date the plan is adopted or amended (a “three-year plan”). to take action on the petition, the petitioner may request
See TEX. LOC. GOV'T CODEE § 43.052(c). Subchapter 43C arbitration of the dispute. The petitioner must request the
sets out annexation procedures for areas included in such appointment of an arbitrator in writing to the municipality.
three-year plans. See id. §§ 43.051–.057. Sections 43.0564(b), (c), and (e) apply to the appointment
of an arbitrator and the conduct of an arbitration proceeding
Section 43.052(h) lists several types of exemptions from under this subsection.
three-year plans. One type of area exempted is a “sparsely-
populated” area. Id. § 43.052(h)(l ). If an area is exempt
from inclusion in a three-year plan, annexation occurs
according to procedures set out in subchapter 43C–1. See id. B. The Controversy
§ 43.061 (“This subchapter applies to an area proposed for
The estate of W.W. Caruth (the Estate) owns 405 acres of
annexation that is not required to be included in a municipal
land (the Caruth property) within a part of the extraterritorial
annexation plan under Section 43.052.”). *624 Annexations
jurisdiction of the City, a home-rule city. In August 2004,
of section 43.052(h)(l ) sparsely-populated areas may be
the Estate applied to the City for initial approval of a
initiated subject to 30 days' notice of the first hearing on
residential development plan for the Caruth property. After
the proposed annexation. Id. § 43.062(b). Annexations under
the Estate filed its application, the City initiated annexation
subchapter 43C–1 procedures generally must be completed
procedures pursuant to section 43.052(h)(l ) in regard to
within ninety days of the time proceedings are begun.
two areas: one included the Caruth property and another
Id. § 43.064. Cities are prohibited from using the section
included land not contiguous to the Caruth property. The
43.052(h)(1) “sparsely populated” exemption to circumvent
requirements that annexations be pursuant to a three-year City sent notices of annexation to affected persons 2 pursuant
plan. Id. § 43.052(i). to subchapter 43C–1 procedures for areas exempted from
three-year annexation plans. The Estate objected to the
The controversy before us primarily involves subsections City's attempt to annex using subchapter 43C–1 procedures
43.052(c), (h), and (i) which in pertinent part provide as and petitioned the City to include the Caruth property in
follows: the City's three-year annexation plan. The Rockwall City
Council adopted a resolution rejecting the Estate's request.
(c) A municipality shall prepare an annexation plan The Estate then asserted that the City was circumventing
that specifically identifies annexations that may occur section 43.052(c)'s requirement that annexations be carried
beginning on the third anniversary of the date the out pursuant to a three-year plan and requested arbitration
annexation plan is adopted. The municipality may amend pursuant to section 43.052(i). The City responded by advising
the plan to specifically identify annexations that may occur the Estate that the proposed annexations were exempt from
beginning on the third anniversary of the date the plan is inclusion in a three-year plan *625 and the Estate's “request
amended. for arbitration [was] not appropriate.”
.... The Estate filed suit in district court seeking an order
compelling arbitration pursuant to section 43.052(i) and
(h) This section [43.052] does not apply to an area proposed
a temporary restraining order and temporary injunction
for annexation if: (1) the area contains fewer than 100
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
preventing the City from proceeding with annexation (Tex.2006). We use definitions prescribed by the Legislature
pending completion of arbitration, including related appeals, and any technical or particular meaning the words have
if any. The City responded, in part, by filing a plea acquired. TEX. GOV'T CODE § 311.011(b). Otherwise, we
to the jurisdiction asserting that the Estate did not construe the statute's words according to their plain and
have standing because the dispute concerned annexation common meaning, Texas Department of Transportation v.
procedures, the suit was a collateral attack on the annexation City of Sunset Valley, 146 S.W.3d 637, 642 (Tex.2004),
ordinances and proceedings and the only way to challenge unless a contrary intention is apparent *626 from the
alleged annexation procedural irregularities was through quo context, Taylor v. Firemen's and Policemen's Civil Service
warranto proceedings. In support of its plea to the jurisdiction, Commission of City of Lubbock, 616 S.W.2d 187, 189
the City argued, in part, that section 43.052(i) authorized the (Tex.1981), or unless such a construction leads to absurd
Estate to request arbitration if the City did not take action on results. Univ. of Tex. S.W. Med. Ctr. v. Loutzenhiser, 140
the Estate's petition to be included in a three-year plan but that S.W.3d 351, 356 (Tex.2004); see also Tex. Dep't of Protective
the City took action on the petition by denying it. The trial and Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d
court denied the Estate's applications, granted the City's plea 170, 177 (Tex.2004) (noting that when statutory text is
to the jurisdiction and dismissed the action. unambiguous, courts must adopt the interpretation supported
by the statute's plain language unless that interpretation would
The Estate appealed. The court of appeals agreed with the lead to absurd results). We presume the Legislature intended
Estate's interpretation of section 43.052(i): a just and reasonable result by enacting the statute. TEX.
GOV'T CODE § 311.021(3). 6 When a statute's language is
[W]e read the plain language of the
clear and unambiguous, it is inappropriate to resort to rules
statute to provide that, if the City
of construction or extrinsic aids to construe the language.
fails to take action on the petition to
See St. Luke's Episcopal Hosp. v. Agbor, 952 S.W.2d 503,
include the area in the [three-year]
505 (Tex.1997); Ex parte Roloff, 510 S.W.2d 913, 915
annexation plan, the landowner may
(Tex.1974).
request arbitration of the dispute.
153 S.W.3d 709, 713–14 (emphasis added). The court of
appeals reversed and remanded with instructions that the trial III. Analysis
court compel arbitration and enjoin the City from proceeding
with annexation pending the outcome of arbitration. Id. at [9] The statutory language on which the issue turns
714. provides: “If the municipality fails to take action on
the petition, the petitioner may request arbitration of the
In this Court, the City, supported by amicus curiae, 3 dispute....” TEX. LOC. GOV'T CODEE § 43.052(i). The
maintains that the court of appeals erred in concluding that Estate urges that the statute be read differently than the plain
section 43.052(i) grants a private right to the Estate to elect, language reads. The Estate says that the statute “expressly
and thereby require, arbitration of the Estate's claim even provides for arbitration between a landowner and a city when
though the City took action on the Estate's petition by denying the city, upon the petition of a landowner, fails to act to
include the landowner's property in a three year annexation
it. 4 The Estate, also supported by amicus curiae, 5 claims it
plan.” (Emphasis added). The Estate asks that we affirm the
has standing because section 43.052(i) grants it a substantive,
court of appeals' construction to that effect. We decline to do
private right to require the City to arbitrate the Estate's claim.
so.
We first address the City's standing argument. In challenging
II. Standard of Review the Estate's standing, the City cites Alexander Oil Co.
v. City of Seguin, 825 S.W.2d 434 (Tex.1991), for the
[3] [4] [5] [6] [7] [8] Statutory construction isproposition
a that the Estate does not have standing because the
legal question we review de novo. In construing statutes, validity of the City's annexation can only be challenged by
we ascertain and give effect to the Legislature's intent as a quo warranto proceeding unless the proposed annexation
expressed by the language of the statute. See State, Texas is wholly void. See id. at 436 (“The only proper method
Parks and Wildlife Dept. v. Shumake, 199 S.W.3d 279, 284 for attacking the validity of a city's annexation of territory
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
is by quo warranto proceeding, unless the annexation is annexation law, the cornerstone of the changes was section
wholly void.”). The City reasons that the trial court lacked 43.052(c)'s requirement that municipalities must prepare
jurisdiction to hear a suit to compel arbitration because the annexation plans specifically identifying areas that may be
Estate does not allege that the City has no power to annex annexed beginning on the third anniversary of the date the
the areas in question or that the annexation proceedings are plan is adopted or amended. According to the Estate, the
otherwise wholly void, but rather alleges only that the City exemptions of section 43.052(h) have been used regularly
must annex pursuant to the three-year plan procedures of by cities to circumvent the three-year planning requirement.
subchapter 43C as opposed to using the more expedited The Estate posits that by enacting section 43.052(i), the
procedures of subchapter 43C–1. Legislature must have intended to protect against such abuse
by requiring arbitration if a municipality fails to take action
[10] [11] In Alexander Oil, the City of Seguin passed an on a landowner's petition to incorporate the land into the
ordinance annexing land owned by Alexander Oil Company. city's three-year plan and that any other interpretation of the
Id. at 435. Alexander Oil filed suit alleging that Seguin statute would lead to absurd results. As part of its argument,
failed to comply with procedures required by the Municipal the Estate references the policy of the State which favors
7 arbitration of disputes and the short time frame necessary
Annexation Act such as providing proper notice for
hearings, conducting the required hearings, and providing an to complete arbitration if there are no appeals from the
annexation plan. Id. at 436. Seguin responded that because the arbitration award. See Jack B. Anglin Co. v. Tipps, 842
ordinance annexing Alexander Oil's *627 property was not S.W.2d 266, 268 (Tex.1992). The Estate also argues that
it would be illogical for the Legislature to have crafted a
void, a quo warranto 8 proceeding by the State was the only
detailed statutory framework around the requirement that
proper way to collaterally attack the ordinance and the case
municipalities enact three-year annexation plans, provide
should be dismissed. Id. The Court agreed with Seguin that
for exemptions to the three-year plan requirement, allow
procedural irregularities render ordinances voidable, not void.
landowners to contest whether a city is circumventing the
Id. at 439. The Court also noted that the Legislature had not
three-year plan requirement by requesting inclusion in a
expressly provided a private action to set aside annexations
three-year plan, yet require a city to arbitrate the contest only
where an annexation ordinance is merely voidable. Id. at
if the city ignores, or “pocket vetoes,” the petition.
437. Thus, Alexander Oil affirmed the rule that unless an
annexation is wholly void or the Legislature has expressly
[12] But we are not persuaded that the process and
granted a private right to challenge the annexation in some
result called for by the plain language of the statute is
manner, a quo warranto proceeding brought by the State is the
illogical, much *628 less absurd. Subchapters 43C and
only proper means of attacking a municipality's annexation in
43C–1 contain extensive provisions in regard to annexations.
court. Id.
Section 43.052(i) is detailed in specifying how and when the
landowner may present a complaint to the city. It incorporates
The Estate does not urge that the City's annexation proceeding
by reference part, but not all, of section 43.0564's arbitration
is void or that the City lacks power to annex the area
procedures. And in the midst of the detailed language, we find
in question. Nor does the Estate challenge the authorities.
that the Legislature specifically addressed when arbitration
The City cites various cases for its contention that the
may be requested: “If the municipality fails to take action
annexation process in general is procedural. See Werthmann
on the petition....” In regard to “logic,” it seems to us
v. City of Fort Worth, 121 S.W.3d 803 (Tex.App.-Fort
that by crafting language specifying when arbitration of the
Worth 2003, no pet.); City of Balch Springs v. Lucas,
dispute could be requested, legislators logically would have
101 S.W.3d 116 (Tex.App.-Dallas 2002, no pet.); City of
considered that there are two instances in which a dispute
San Antonio v. Hardee, 70 S.W.3d 207 (Tex.App.-San
would need to be resolved. The first instance is if the city did
Antonio 2001, no pet.). The Estate says those authorities
not bring the landowner's petition up for consideration, or,
simply are not applicable because none of them interpret
if it was brought up for consideration, the city failed to take
the language of section 43.052(i) which is the issue in
action on it one way or the other (what the parties refer to in
this case. The Estate maintains that it has standing because
this case as a “pocket veto”). The second instance is if the city
subsequent to Alexander Oil the Legislature expressly granted
denied the petition and refused to put the land into a three-
landowners a substantive private right to arbitration by
year plan. It follows, logically, that because the statutory
enacting section 43.052(i). It argues that when the Legislature
language as enacted allows arbitration to be requested only in
enacted comprehensive changes in 1999 to impose order in
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
the first instance, the Legislature's intent was not to provide arbitration essentially is a dispute resolution process agreed
for arbitration in the second instance. See Cameron v. Terrell to by the parties. In the event multiple landowners submit
& Garrett, Inc., 618 S.W.2d 535, 540 (Tex.1981) (“It is a rule petitions, the city might delay acting on the petitions in an
of statutory construction that every word of a statute must be attempt to have all the petitioning landowners agree to join in
presumed to have been used for a purpose ... [and] we believe one arbitration to resolve the issue(s). If an agreement cannot
every word excluded from a statute must also be presumed to be reached to join in one arbitration, the city might choose
have been excluded for a purpose.”). to either grant or deny each petition. The landowners whose
petitions are denied have the option of seeking institution of
[13] Contrary to the Estate's position, we see benefits from a quo warranto action in which the claims of all landowners
reading the statute's language literally. One significant benefit will be resolved, instead of the city and each landowner being
is that by not reading language into the statute when the involved in individual arbitration proceedings.
legislature did not put it there, we do not risk crossing the
line between judicial and legislative powers of government The literal language of the statute can be viewed as a
as prescribed by article II of the Texas Constitution. TEX. legislative attempt to encourage cities and landowners to
CONST. art. II, § 1. (“[N]o person, or collection of persons, resolve their conflicts without court action. First, if the statute
being of one of these [three governmental] departments, is interpreted according to its literal language—not mandating
shall exercise any power properly attached to either of the arbitration if a landowner's petition is denied—the result is
others, except in the instances herein expressly permitted.”). that neither landowners nor cities have lost protections which
Another benefit is that by interpreting statutes such as this they had prior to the statute's amendment. Landowners will
in a straightforward manner, we build upon the principle continue to have the right to seek a quo warranto action to
that “ordinary citizens [should be] able ‘to rely on the plain challenge the annexation. Cities will continue to be protected
language of a statute to mean what it says.’ ” Fitzgerald because a disinterested party such as the attorney general
v. Advanced Spine Fixation Sys., 996 S.W.2d 864, 866 or a county or district attorney will review and weigh the
(Tex.1999) (quoting Addison v. Holly Hill Fruit Prods. Inc., strength of landowner claims before cities are subjected to
322 U.S. 607, 618, 64 S.Ct. 1215, 88 L.Ed. 1488 (1944)). litigation and disruption of their annexation processes. By
giving landowners the right to request arbitration if cities
As presented in this case, construing the statute's language delay taking action on their petitions, the Legislature gave
to mean what it says results in a landowner having the landowners leverage to push the processes to conclusion,
right to request arbitration only if a city refuses to include prevent pocket vetoes of petitions to be included in three-year
the area in question in a three-year plan, fails to deny the plans and, if necessary, bolster arguments to state's attorneys
petition, and fails to otherwise accommodate the landowner. in support of quo warranto actions to challenge proposed
The statute as written, in effect, provides a structured method annexations.
for landowners to seek redress from cities if landowners
believe cities are annexing in violation of section 43.052(c). [14] But in any event, our standard for construing statutes
If a landowner petitions to be included in a three-year plan is not to measure them for logic. See Lee v. City of Houston,
and the city acts on the petition in a way that is acceptable 807 S.W.2d 290, 293 (Tex.1991) (“Our function is not to
to the landowner, there is no dispute to be resolved. If the question the wisdom of the statute; rather, we must apply it
city denies the landowner's petition, then the landowner has as written.”). As previously noted, our standard is to construe
notified the city of its specific complaint in writing and statutes to effectuate the intent of the Legislature, with the
pursued and exhausted a legislatively-provided method for language of the statute as it was enacted to be our guide unless
seeking redress before asking a State's attorney to disrupt the the context or an absurd result requires another construction.
city's annexation process by filing a quo warranto action. See See Fitzgerald, 996 S.W.2d at 866 (Tex.1999) (“[I]t is a fair
TEX. CIV. PRAC. & REM.CODE § 66.002(c) (quo warranto assumption that the Legislature tries to say what it means,
proceedings may be brought by the attorney general or county and therefore the words it chooses should be the surest guide
or district attorney on his or her own motion or at the request to legislative intent.”); Jones v. Del Andersen & Assocs.,
of an individual). And a city has the option of taking no *629 539 S.W.2d 348, 350 (Tex.1976) (“[The intention of the
action to either grant or deny the landowner's petition and, Legislature] is to be found in the language of the statute
thereby, effectively agreeing to arbitration of the dispute if the itself ... we cannot give Section 28 the limited construction
landowner requests arbitration. Under this last scenario, the advocated by Andersen. To do so would require that we
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
read into the statute words which are not there.”). In this with section 43.0565. Section 43.0565(d) specifies three
instance, the context does not indicate that the plain meaning options available to an arbitrator if the arbitrator finds that
of the language was not intended. The sentence in question the municipality has not complied with its service plan
addresses a separate subject from the surrounding language: requirements. But that same subsection provides that the
the circumstances under which a city can be requested to municipality has the option of disannexing the area in lieu
arbitrate. It would not have been inconsistent with the context of complying with its service plan. In other words, even if
of the sentence for the Legislature to have provided that a an arbitration occurs pursuant to section 43.056(l ), however
landowner could request arbitration if the municipality failed it comes about, the municipality retains the right to make
to act favorably upon the landowner's petition or failed to its own decision as to annexation or disannexation of the
include the landowner's property in a three-year annexation property. That prerogative is expressly not ceded to an
plan. Clearly, though, there is a difference between the arbitrator by the statute.
meaning of the statute as it is written and the statute as
contended for by the Estate. Section 43.052(i), on the other hand, provides only that
sections 43.0564(b), (c), and (e) apply to the arbitration
*630 The dissent agrees as to the standards for interpreting referenced in 43.052(i). Those sections address procedures
the statute and that “words matter” and “context matters.” The for selecting an arbitrator, setting a hearing, giving notice
dissent, however, says that “the most natural reading” of the of the hearing, and powers of the arbitrator in regard
statute results from adding words to make it mean something to conducting the arbitration. Section 43.052(i) does not
other than what the plain words mean. For the reasons we prescribe or incorporate any provisions as to issues to be
have set out, we disagree that the proper reading of the statute decided by the arbitrator, how long the arbitration is to take,
results from changing the language of the statute. when the arbitrator is to issue a decision, or whether the
parties have a right to appeal the arbitrator's decision—all
The dissent also references section 43.056(l ), the provision of which are provided by subsections of 43.0564 but not
for resolving disputes over whether a municipality has incorporated by 43.052(i). Nor does section 43.052(i) specify
complied with the service plan adopted to provide full what remedies an arbitrator may impose, as does section
municipal services to the area to be annexed, and that 43.0565(d).
section's use of the “[i]f the municipality fails to take action”
language. A municipality's service plan must be adopted [15] In sum, subchapter 43C provides different
by the municipality's governing body and is a contractual methodologies for arbitration in three different situations:
obligation of the municipality by statute. See TEX. LOC. (1) disputes under section 43.052(i), (2) disputes during
GOV'T CODEE § 43.056(j), (k). Whatever construction is negotiations for services to be provided by the municipality,
eventually given to the language of section 43.056(l )— see section 43.0564, and (3) disputes about whether the
and we venture none here because there is no controversy service plan has been fulfilled. Disputes arising under each
before us as to that section—it will be according to statutory different section and its dispute resolution provision must be
construction principles. And that construction, when and if construed in its own context. That is what we do as to the
it occurs, must take into consideration the context of the *631 controversy presented by this case: we construe the
language: section 43.056 addresses controversies regarding language of section 43.052(i) in its context.
whether the municipality is fulfilling its service plan
contractual commitment. The controversy presented by the [16] The dissent also states that under our construction of the
present case and the statutory language of section 43.052(i) statute, if a city rejects the landowner's petition, the landowner
do not involve the question of whether a municipality is has no further recourse. That is incorrect. The statute does not
fulfilling a contractual obligation. The controversy involves deprive the landowner of the right to a quo warranto action,
a governmental decision of whether to annex territory, and if which is the recourse long available to landowners.
so, how.
[17] If the Legislature desires to amend the statute to add
In this regard, we note that sections 43.052(i) and 43.056(l words so that the statute will then say what is contended
) not only differ in the types of disputes they address, but for by the Estate, we are confident it will do so. However,
also in how arbitrations of those disputes are to be conducted. changing the meaning of the statute by adding words to it, we
Arbitration under section 43.056(l ) must be in accordance believe, is a legislative function, not a judicial function. See
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
67 TEX. JUR. 3d Statutes § 85 (2003) (noting that it is for by the City of Houston their statutory right to arbitrate the
the Legislature, not the courts, to remedy deficiencies, if any, City's failure to provide municipal services to the annexed
in laws). area if the City rejects the residents' petition to enforce
the service plan. As the Court reads “fails to take action,”
Houstonians deprived of basic city services will have no
private remedy.
V. Conclusion
We decline to read additional language into the statute Read as a whole, the statutory scheme—in both section
as the Estate urges us to do. We go no further than the 43.052(i) and in section 43.056(l )—is straightforward and
unambiguous language of the statute to interpret it. Section cannot bear the narrow meaning the Court ascribes to it.
43.052(i) does not create a substantive private right for a The Court's unduly restrictive *632 reading is foreclosed by
landowner to compel arbitration if a municipality takes action statutory context, and because context matters, I respectfully
on the landowner's petition by denying it, as the City did. dissent.
Accordingly, the Estate lacks standing to pursue the suit it
filed.
I. When Searching for Statutory Meaning,
We reverse the judgment of the court of appeals and render Words Matter—And So Does Context
judgment dismissing the Estate's suit.
The Court aptly describes, then misapplies, the pertinent
ground rules for construing statutory language. Words and
phrases must be read “in context and construed according to
Justice WILLET filed a dissenting opinion, in which Justice
HECHT, JUSTICE O'NEILL, and Justice BRISTER joined. the rules of grammar and common usage.” 1 The import of
language, plain or not, must be drawn from the surrounding
context, particularly when construing everyday words and
Justice WILLETT, joined by Justice HECHT, Justice
phrases that are inordinately context-sensitive. 2 Given the
O'NEILL, and Justice BRISTER, dissenting.
power of context to transform the meaning of language, courts
The Court espouses sound principles of statutory construction
should resist rulings anchored in hyper-technical readings
but unsoundly applies them. Basically, it takes literalism
too literally. Read naturally, section 43.052(i) means this: of isolated words or phrases, 3 or forced readings that are
landowners who request inclusion of their land in a city's exaggerated or, at the other extreme, constrained. 4
annexation plan may arbitrate the city's failure to include it.
This “context matters” maxim—a cardinal rule not only of
The City's position—arbitration is only available if the statutory construction but “of language itself” 5 —is rooted
City ignores the petition, not if it rejects it—makes little
in common sense, 6 Texas statutory law, 7 and caselaw from
sense. Studied in context, the arbitration-triggering phrase
“fails to take action” in section 43.052(i) has a more both this Court 8 and the United States Supreme Court. 9
substantively coherent meaning than “fails to take any
action”; it necessarily means “fails to take favorable action.” *633 Accordingly, when interpreting the (h)(1) exemption
Landowners are seeking a specific outcome: inclusion in the for quick annexation of rural land and the arbitration remedy
city's annexation plan. The statute grants arbitration if the in subsection (i), we must consult the text and structure of
property remains excluded, and exclusion persists just as surrounding and related provisions. Doing so yields a clear
surely through adverse action as through inaction. and forthright interpretation that confirms the statute's natural
meaning while giving effect to every part of the statute.
The meaning of “fails to take action” is best revealed by
how this phrase is used in another Chapter 43 arbitration Subsection (i) begins: “A municipality may not circumvent
provision. Applying today's wooden construction to that the [three-year plan] requirement[ ] by proposing to
provision dictates an illogical result that lays bare the Court's separately annex two or more areas described by Subsection
misinterpretation. As discussed more fully below, the Court's (h)(1) if no reason exists under generally accepted municipal
literalist interpretation would deny residents of areas annexed planning principles and practices for separately annexing
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
the areas.” This proscriptive language sets the context; Houston residents and landowners to request arbitration to
lawmakers intended arbitration to curb the overzealous use of force compliance with the City's service plan, and, strikingly,
expedited, piecemeal annexations under subsection (h)(1) in it uses the very same “fails to take action” phrase that appears
order to evade the three-year planning requirement. in section 43.052(i). Subsection (l ) provides:
Ignoring this context, the Court adopts the City's view that
“fails to take action” means “fails to take any action,” in other A person residing or owning land in an annexed area ... may
words, when a city succumbs to bureaucratic inertia and does enforce a service plan by petitioning the municipality for a
nothing. But if a city rejects a petition outright, the landowner change in policy or procedures to ensure compliance with
the service plan. If the municipality fails to take action with
has no further recourse. 10 This interpretation subverts the
regard to the petition, the petitioner may request arbitration
Legislature's effort to curb abusive annexation tactics.
of the dispute.... 14
The City complains that Hughes's interpretation requires Under long-settled authority, “fails to take action” must mean
arbitration of all requests, no matter how groundless, the same thing here as it does in section 43.052(i). 15 The
but the City's rigid interpretation enables it to deny all multiple parallels at work here—the same phrase enacted the
requests, no matter how meritorious. The Court's holding will same day in the same bill describing the same proceeding—
effectively prescribe, not proscribe, the very circumvention could not present a more “classic case for application of the
that subsection (i), by its terms, was intended to cure. 11 normal rule of statutory construction that identical words used
in different parts of the same act are intended to have the same
In context, the phrase “fails to take action” captures not only meaning.” 16
a city's inaction but also a city's overt denial of favorable
action. The word “favorable” is implicit, honors the phrase's I venture this prediction: if today's case centered not on
(and the overall statute's) common-sense meaning, and gives subsection (i) but on subsection *635 (l ) and a Houston
full effect to the statute's objective: giving landowners a resident's request to arbitrate the City's alleged breach of
specific and workable remedy against abuse of the (h)(1) a service plan, the Court would read “fails to take action”
exemption. *634 In my view, the language cannot fairly be exactly as I read it in subsection (i). Studied consistently
read any other way, and the Court's reading almost certainly and contextually, the meaning is self-evident: someone in an
undermines the Legislature's intent. annexed area can request arbitration to enforce the service
plan if the city grants no relief on the petition.
Applying today's construction of “fails to take action,”
II. The Court's Strained Reading Invites Absurd Results
however, if the City of Houston denied a service-plan
The Court acknowledges that any interpretation, literal or not, enforcement petition, arbitration would be unavailable. This
reading runs head-long into subsection (l )'s two-step process
that produces absurd results should be discarded. 12 In my
for enforcing City of Houston service plans: (1) a petition
view, the Court's interpretation works multiple absurdities.
urging the City to comply, then (2) arbitration if the petition
produces no compliance. The notion that arbitration is
possible only if the City refuses to move a bureaucratic
A. The Undeniable Meaning of “Fails to Take muscle is conceptually untenable. The paramount goal of
Action” Elsewhere in Chapter 43 Undercuts the service-plan enforcement is illusory if the City of Houston
Court's Literalist Construction of Subsection (i) can foreclose a service-plan challenge simply by rejecting
the petition outright. Such a result would render subsection
Most disconcerting is that the Court's noncontextual analysis (l ) wholly impotent and allow the concerns that prompted
cannot be squared with other parts of Chapter 43, principally
its enactment to thrive unchecked. 17 The landowner is
section 43.056, which centers on the City of Houston's
seeking to compel obedience to the service plan—a formal
contractual duty to provide must-have services to areas slated
for annexation (e.g., fire and police protection, EMS, road “contractual obligation” 18 —and vital city services will
maintenance, solid waste collection, water and wastewater remain unprovided whether the City rejects the petition or
facilities). 13 The Legislature in subsection (l ) authorizes
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
ignores it; granting arbitration only if the City's response is nothing. Under this view, if a city (for reasons I cannot
dilatory, but not if it is direct, works an absurd result. imagine) wanted to cede some of its planning authority,
it would ignore the petition. But if a city wanted to
The very next sentence in subsection (l ) removes any retain unfettered control, it would deny the petition. Given
doubt that the Legislature intended “fails to take action” how cities prize and safeguard their municipal annexation
to mean “fails to take favorable action.” It authorizes authority, 23 no rational city would ever renounce power by
persons living outside of Houston to apply for a writ ignoring a petition when it could redouble power by denying
of mandamus to prod service-plan compliance from their it. If the Legislature intended only to authorize cities to
respective cities. 19 It cannot possibly be the law that volunteer for arbitration, then no statute was necessary as
every Texan outside the Houston city limits can freely and home-rule cities already possess “all the powers of the state
immediately seek mandamus relief to enforce their cities' not inconsistent with the Constitution, the general laws, or
service plans while Houstonians deprived of basic services the city's charter.” 24 A city that wants to arbitrate something
and whose enforcement petitions are rejected must hope does not need a statute granting it permission. Because “the
exclusively for a State-led quo warranto action. Again,
legislature is never presumed to do a useless act,” 25 we
this result defeats the fundamental purpose (and contractual
must presume that it intended something more than voluntary
promise) of the service-plan statute, but it is necessitated by
arbitration.
the Court's construction of section 43.052(i).
More revealing, though, is the City's argument that all
Chapter 43 is most coherent and consistent when “fails
this sound and fury about arbitration and inclusion in the
to take action” means the same thing in both provisions.
city's annexation plan signifies nothing because the fast-track
The Court, however, cites “context” to reserve the right
nature of (h)(1) annexations will quickly moot the entire
to interpret subsection (l ) differently because “sections
dispute. As the City noted at oral argument: “If the *637
43.052(i) and 43.056(l ) not only differ in the types of disputes
landowner asks to be included in a three-year plan, the city
they address, but also in how arbitrations of those disputes
sits on it, that remedy or rather any consideration of whether
are to be conducted.” 20 That is true, but also irrelevant; it should be in a three-year plan is lost [once the area is
the decisive “fails to take action” language is word-for- annexed].”
word identical and operates the same way—the triggering
phrases are grammatical and structural twins—and there is no The underlying facts illustrate the City's position that all
principled basis for distinguishing the indistinguishable. 21 landowner action under subsection (i) is ultimately futile:
• the Estate proposed to the City a high-density housing
plan in the City's extraterritorial jurisdiction (ETJ)
*636 B. The City Says Arbitration Is
Possible “Only Under the Narrowest of • five days later the City directed its staff to begin
Circumstances”—Namely, When a City Volunteers expeditious (h)(1) annexation (goal: to bring the
property within the City limits so it could impose low-
The City's view, at its core, is that a landowner entitled to density development restrictions)
request arbitration is never entitled to receive arbitration.
Rather, subsection (i) is “an essentially consensual remedy • the Estate then petitioned for inclusion in the City's three-
of limited applicability,” something vested in the City's year plan (goal: to delay the (h)(1) annexation so it could
absolute discretion. 22 I disagree that cities are only subjected vest the property's high-density development plan)
to arbitration if they choose to be. Section 43.052(i), like
the identically worded section 43.056(l ), grants an actual Under the City's position, heads the city wins and tails the
remedy, not a “consensual” one and not merely a request for landowner loses. The calendar is inexorable. Arbitration is
one. forever a mirage because even if a landowner is theoretically
entitled to arbitration, the City's annexation—the very
The Court's “consensual remedy” holding endorses a path by annexation being challenged—zooms along the (h)(1) fast
which cities may circumvent the legislatively preferred three- track, thus short-circuiting the dispute.
year plan: “Just Say No”—deny everything and arbitrate
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
C. The City's “Pocket Veto” III. The Legislature Enacted a Specific
Analogy Is Facially off the Mark Alternative to Quo Warranto in Cases
of Alleged Abuse of Subsection (h)(1)
The City says arbitration is possible in exactly one situation:
“when a city refuses to consider or evaluate the request The Court says landowners are no worse off given the
—exercising the proverbial ‘pocket veto.’ ” The pocket- possibility of State-initiated quo warranto intervention. The
veto analogy is inapposite because a pocket veto, classically Court reasons that annexation law is largely procedural and
understood, quickly yields a definitive outcome: rejection. 26 that our 1991 decision in Alexander Oil Co. v. City of Seguin
declared quo warranto the exclusive mechanism to challenge
Accepting arguendo the City's pocket-veto characterization, improperly conducted annexations. 32 The Court's analysis is
the Legislature, unlike the United States Constitution, has unconvincing.
failed to define the contours, and the Court avoids addressing
these concerns, 27 most notably (1) how much time must The Legislature is presumed to understand extant law
elapse before the landowner may request arbitration? and (2) when it enacts legislation, 33 and if it intended that quo
what form of “action” suffices to derail arbitration? 28 warranto remain a landowner's sole remedy against post–
1999 annexation abuses, it would not have enacted a statute
*638 Subsection (i) is open-ended and sets no decision- that explicitly grants a private arbitration right. 34 This
making deadline by which a city must respond to a Court recently held that the “truest manifestation” of what
landowner's petition. If a city sits idle, a landowner has lawmakers intended is what lawmakers enacted—the text
no way of knowing whether the city has merely failed to they actually voted on—and the intent to supersede Alexander
open its mail or, alternatively, has in fact reviewed the Oil is found in a statute that does exactly that. 35
petition but quietly decided not to grant it. What length
of city inaction is sufficient before a landowner may seek *639 We decided Alexander Oil in 1991 largely on
arbitration? Meanwhile, as the landowner awaits a formal the basis that the Legislature had not yet given private
response, the city continues speedily annexing the targeted individuals a way to challenge annexations. Eight years
property under subsection (h)(1). later, the Legislature did so, granting landowners a defined
arbitration right. 36 The Legislature, we must presume,
Moreover, the Court, while purporting to construe “fails
understood the role of quo warranto in challenging annexation
to take action” literally, actually spurns its own literalist
proceedings when it provided for arbitration in subsection
method. The Court says arbitration is unavailable because
(i), but the Legislature's comprehensive overhaul makes no
the City's categorical refusal amounts to “action.” The word
mention of quo warranto, much less retains the exclusivity
“action,” however, encompasses a wide range of activities:
of such relief. The City insists the Legislature's failure to
reviewing a petition, conducting research, convening a
unequivocally declare that it was superseding Alexander Oil
hearing, deliberating, etc. 29 Why are these actions not indicates it never intended to do so. We have never required
“action”? The Court implicitly limits the word “action” such declarations, and Alexander Oil overtly disclaims the
to mean dispositive action—when a city formally denies necessity for any such declaration: quo warranto, we said in
a petition—but the Court cites nothing to explain why that case, is the way to attack annexation irregularities unless
nondispositive action fails to qualify. By restricting “action” the Legislature has “acted to expressly provide a private
to a yes-or-no decision, 30 the Court has in fact abandoned action.” 37 The Legislature did precisely that post-Alexander
literalism by reading the statute to mean “fails to take
Oil. 38
final action,” a locution that, notably, lawmakers have used
elsewhere in the Local Government Code regarding land use
This 1999 legislative exception to the general quo warranto
regulation, but not here. 31 The Court thus allows context to rule provides a simple yet substantive remedy that is complete
inform the meaning of “action,” but it does so selectively, unto itself: the landowner petitions for inclusion in the three-
picking and choosing when it will permit context to guide its year plan, and if the land is not added, the landowner may
statutory analysis. seek arbitration. Subsection (i) never states or suggests that
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
The statute in this case speaks for itself. The Court mutes
quo warranto remains part of the legal landscape or that quo
the statute, however, by *640 fixating on four words
warranto must precede arbitration as an intermediate step.
divorced from the surrounding statutory framework. I agree
judges must adhere to the language that lawmakers voted
Finally, the City's reliance on three courts of appeals'
on, but statutes operate as a whole and must be read as
decisions construing section 43.052 as strictly procedural, and
a whole, not as a hodgepodge of isolated fragments. The
thus subject only to quo warranto challenge, is misplaced. 39
Court's noncontextual reading is incompatible with related
While those courts held that quo warranto is the sole means
provisions (including one identical provision) in the same
to attack a city's alleged violation of 43.052, none of those
statute. Literalism can sometimes border on trivialism and
decisions considered the (h)(1) exemption or interpreted
should not be confused with textualism, which considers
subsection (i), focusing instead on other portions of section
both statutory text and statutory context to ascribe meaning.
43.052.
Today's decision is literalism gone bad.
The remedy for abuse of the sparsely-populated-area
Hughes is statutorily entitled to arbitration, and because
exemption is arbitration, which subsection (i) clearly
the Court “fails to take action” to enforce that remedy, I
authorizes.
respectfully dissent.
IV. Conclusion All Citations
246 S.W.3d 621, 51 Tex. Sup. Ct. J. 349
Footnotes
1 Further references to Local Government Code provisions will generally be by reference to the chapter, section, or
subsection number.
2 Section 43.052(i) refers to “persons residing or owning land in the area.” We will refer to such persons as “landowners”
for ease of reference.
3 This Court has received briefs in support of the City's position from the Texas Municipal League and the Texas cities of
Fate, Fort Worth, Denton, and Pearland.
4 The City also maintains that even if section 43.052(i) grants a right to arbitration, the Estate still lacks standing because
section 43.052(i) comprises a procedural part of the annexation process and violations of procedural requirements can
only be challenged through quo warranto proceedings. We do not reach the argument and express no opinion on it.
5 This Court has received briefs in support of the Estate from Brian Shannon, Associate Dean and Charles “Tex” Thornton
Professor of Law at Texas Tech University and by the Texas Association of Builders.
6 We may also consider legislative history in construing a statute that is not ambiguous. See TEX. GOV'T CODE §
311.023(3). In this instance we are at a disadvantage because the language in question was crafted by a conference
committee, and legislative history does not provide illumination as to how it was formulated.
7 TEX.REV.CIV. STAT. art 970a §§ 6, 10, repealed by Act of May 1, 1987, 70th Leg., R.S., ch. 149, § 49, 1987 Tex.
Gen. Laws 1306, now codified as TEX. LOC. GOV'T CODEE § § 43.052, .053, .056. Further references are to the Local
Government Code.
8 Quo warranto proceedings are used by the State to protect itself and the good of the public through agents of the State
who control the proceedings. See Fuller Springs v. State ex rel. City of Lufkin, 513 S.W.2d 17, 19 (Tex.1974); State ex
rel. Candler v. Court of Civil Appeals, Fourth Supreme Judicial Dist., 123 Tex. 549, 75 S.W.2d 253 (1934); Staples v.
State, 112 Tex. 61, 245 S.W. 639 (1922).
1 TEX. GOV'T CODE § 311.011(a).
2 Id. Some familiar words, depending on how they are used, convey polar opposite meanings. For example, the word
“sanction” may indicate approval (“I sanction eating that bowl of ice cream.”) or disapproval (“My wife will sanction me for
eating that bowl of ice cream.”). See WEBSTER'S NEW WORLD DICTIONARY & THESAURUS 566 (Michael Agnes,
ed., 2d ed.2002). Its meaning—permission or prohibition—turns entirely on context.
3 Tex. Dep't of Transp. v. City of Sunset Valley, 146 S.W.3d 637, 642 (Tex.2004) (“We must read the statute as a whole
and not just isolated portions.”).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
4 Cities of Austin, Dallas, Ft. Worth, & Hereford v. Sw. Bell Tel. Co., 92 S.W.3d 434, 442 (Tex.2002).
5 Deal v. United States, 508 U.S. 129, 132, 113 S.Ct. 1993, 124 L.Ed.2d 44 (1993).
6 As noted above, some words are auto-antonyms that can mean diametrically opposite things depending on the context.
The word “fast,” for example, can mean “swift” or “firmly fastened.” See WEBSTER'S, supra note 2, at 233. The word
“cleave” can mean “to adhere” or “to divide.” See id. at 112. In my view, the Court's decision today “cleaves” to a myopic
approach that “cleaves” literal meaning from plain meaning.
7 See TEX. GOV'T CODE § 311.011(a).
8 For example, in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex.2006), our sole objective was to define the meaning of
“sue and be sued”-type language. Rather than concluding that these simple and apparently unambiguous words have
one, definitive meaning, we recognized that “the import of these phrases cannot be ascertained apart from the context
in which they occur.” Id. at 329; see also, e.g., City of Sunset Valley, 146 S.W.3d at 642.
9 In Deal, the Court identified numerous possible meanings of “conviction” in a bank robbery statute but reasoned that “of
course susceptibility of all of these meanings does not render the word ‘conviction,’ whenever it is used, ambiguous; all
but one of the meanings is ordinarily eliminated by context.” 508 U.S. at 131–32, 113 S.Ct. 1993.
The author of Deal, Justice Scalia, was determined to drive home this point, as he wrote a dissent two weeks later in
Smith v. United States, 508 U.S. 223, 241–47, 113 S.Ct. 2050, 124 L.Ed.2d 138 (1993), which centered on the meaning
of “using a firearm” and where Justice Scalia again stressed the importance of giving words their fair meaning:
To use an instrumentality ordinarily means to use it for its intended purpose. When someone asks, “Do you use a
cane?,” he is not inquiring whether you have your grandfather's silver-handled walking stick on display in the hall;
he wants to know whether you walk with a cane. Similarly, to speak of “using a firearm” is to speak of using it for
its distinctive purpose, i.e., as a weapon.
Id. at 242, 113 S.Ct. 2050.
The Court is equally attuned to context in civil cases. In Textron Lycoming Reciprocating Engine Division v. UAW of
America, 523 U.S. 653, 118 S.Ct. 1626, 140 L.Ed.2d 863 (1998) (construing “suits for violation of contracts”), the Union
urged a narrow focus on the meaning of the preposition “for,” but the Court refused to turn statutory interpretation into
a brain teaser and instead insisted on a natural reading that examined each word in context, not under a microscope.
Id. at 656–58 (“It is not the meaning of the word ‘for’ we are seeking here, but the meaning of ‘[s]uits for violation of
contracts.’ ” (alteration in original)).
10 While this opinion uses the term “landowner” for simplicity, section 43.052(i) makes clear that a petitioner may be either
“a person residing or owning land in the area.” Id.
11 The record suggests that few cities enact three-year municipal annexation plans. In fact, amicus curiae The Texas
Municipal League (“TML”), an association of more than 1,070 incorporated cities that advocates municipal interests,
notes that many of its member “cities will have a one page plan stating that they do not intend to annex any area for
which an annexation plan is required.” See SCOTT N. HOUSTON, TEX. MUN. LEAGUE, MUNICIPAL ANNEXATION
IN TEXAS: “IS IT REALLY THAT COMPLICATED?” 13 (2003, updated Nov. 2004), available at htt p://www.tml.org/
legal_ pdf/ANNEXATION111704.pdf. The City of Rockwall's annexation “plan” is a near carbon copy: “[t]he City does not
intend to annex any territory that in order to be annexed, is required to be in an annexation plan.” City of Rockwall, Tex.,
Ordinance 99–49 (Dec. 20, 1999). Hughes argues that such “plans” clash with a key objective underlying the Legislature's
1999 rewrite, that annexation decisions should be driven not by circumvention of the three-year planning process but by
order, thoughtfulness, and predictability. Judging by the myriad amicus briefs filed by Texas cities, expedited annexations
under (h)(1) are so common that (h)(1) is actually the rule. TML's brief admits as much, saying the (h)(1) exception “is
routinely used by most home rule cities. Only a handful of cities annex under an annexation plan” at all.
12 See 246 S.W.3d. 627.
13 The statute defines the service plan as a contract between the city and the annexed area. TEX. LOC. GOV'T CODEE §
43.056(k) (“On approval by the governing body, the service plan is a contractual obligation....”). This contract establishes
the method that the city will follow in extending services to the newly annexed area. TEX. LOC. GOV'T CODE E §
43.056(b).
14 TEX. LOC. GOV'T CODEE § 43.056(l ) (emphasis added). Compare this statute with section 43.052(i): “If the municipality
fails to take action on the petition, the petitioner may request arbitration of the dispute.” It seems beyond serious dispute
that “fails to take action with regard to the petition” in subsection (l ) means exactly the same thing as “fails to take action
on the petition” in subsection (i).
15 See Comm'r of Internal Revenue v. Lundy, 516 U.S. 235, 249–50, 116 S.Ct. 647, 133 L.Ed.2d 611 (1996), superseded
by statute, Taxpayer Relief Act of 1997, Pub.L. No. 105–34, sec. 1282(a), 111 Stat. 1037 (codified as amended at 26
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
U.S.C. § 6512); see also Dallas County Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 873 (Tex.2005) (“We must interpret a
statute according to its terms, giving meaning to the language consistent with other provisions in the statute.”); Paddock
v. Siemoneit, 147 Tex. 571, 218 S.W.2d 428, 435 (Tex.1949) (observing that the same words must be given the same
meaning unless context dictates otherwise).
16 Lundy, 516 U.S. at 250, 116 S.Ct. 647 (internal quotation marks omitted) (quoting Sullivan v. Stroop, 496 U.S. 478, 484,
110 S.Ct. 2499, 110 L.Ed.2d 438 (1990)); see also Paddock, 218 S.W.2d at 435.
17 See HOUSTON, supra note 11, at 5–8 (describing the furor surrounding the City of Houston's annexation of suburban
Kingwood in 1996, a controversy that fueled the Legislature's 1999 overhaul of Texas annexation law).
18 See supra note 13.
19 TEX. LOC. GOV'T CODEE § 43.056(l ) (“A person residing or owning land in an annexed area ... may enforce a service
plan by applying for a writ of mandamus....”).
20 246 S.W.3d 630.
21 Besides eviscerating the arbitration provision in section 43.056(l ) regarding service-plan enforcement, the Court's holding
also nullifies parts of section 43.056(i) above and beyond the arbitration provision itself. For example, subsection (i)
features a cost-shifting penalty provision whereby arbitrators can sanction landowners if the petition was “groundless or
requested in bad faith or for the purposes of harassment.” It is inconceivable, however, that any right-minded city would
ever submit to city-funded arbitration of any petition, much less a baseless one, if it knew that it could dodge arbitration
just by denying the petition outright.
22 At oral argument, the City insisted that a valid arbitration request alone cannot trigger arbitration or justify a court order
compelling arbitration:
COURT: So does 43.052 give a private landowner any right at any time under any circumstances to sue for an order
compelling arbitration?
RESPONSE: No, it doesn't....
COURT: So even when the city fails to act one way or the other, they sit on it for whatever reason, there is still no
private right of action to compel arbitration?
RESPONSE: Well, that's correct. We take that position....
23 Cities regard the broad, unilateral power to annex as a matter of municipal life and death: “According to many national
authorities, this annexation power is the primary difference between the flourishing cities of Texas and the declining urban
areas in other parts of the nation.” See HOUSTON, supra note 11, at 10.
24 Proctor v. Andrews, 972 S.W.2d 729, 733 (Tex.1998) (observing that the Legislature may restrict the power of home-rule
cities that derive their plenary power directly from the Constitution); see also TEX. CONST. Art. XI, § 5.
25 Hunter v. Fort Worth Capital Corp., 620 S.W.2d 547, 551 (Tex.1981); see also Travis County v. Pelzel & Assocs., Inc.,
77 S.W.3d 246, 249–50 (Tex.2002), superseded by statute, TEX. LOC. GOV'T CODEE § 262.007; Liberty Mut. Ins. Co.
v. Garrison Contractors, Inc., 966 S.W.2d 482, 485 (Tex.1998).
26 A true pocket veto occurs when the President fails to sign a bill passed by Congress within ten days, if Congress is not
in session at the end of those ten days. U.S. CONST. art. I, § 7, cl. 2; see also The Pocket Veto Case, 279 U.S. 655,
49 S.Ct. 463, 73 L.Ed. 894 (1929). Timing is the critical element. The President can only kill legislation with a pocket
veto if Congress adjourns before the ten days expire; if Congress remains in session, and ten days elapse, then the bill
automatically becomes law without the President's signature. U.S. CONST. art. I, § 7, cl. 2.
27 246 S.W.3d 628.
28 The City argues that two other Texas statutes use the phrase “fails to take action” to mean “fails to take any action” and not
overt rejection. See TEX. LOC. GOV'T CODEE § 232.096 (authorizing commissioner's courts to approve or disapprove
plat decisions of a land planning commission and providing that if the court “fails to take action” within thirty days, the
commission's decision becomes final); TEX. OCC.CODE § 262.1025 (authorizing the State Board of Dental Examiners to
review rules proposed by an advisory committee and providing that if the board fails to take action on the recommendation
within ninety days, it must adopt the recommendation). These two statutes are facially different. In both, one governmental
body is reviewing the prior decision or proposal of another governmental body; if the reviewing body “fails to take action”
for a specified number of days, the prior decision is ratified by operation of law. The annexation statute, by contrast, lacks
this critical “deeming” feature. The City's theory leaves the landowner in perpetual limbo since inaction is never treated
as either approval or rejection of the landowner's petition, no matter how much time elapses. Meanwhile, the challenged
annexation proceeds unabated. The reason the identical phrase “fails to take action” is interpreted differently in these
other statutes is because the surrounding language is different in these other statutes. Again, context controls.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
City of Rockwall v. Hughes, 246 S.W.3d 621 (2008)
51 Tex. Sup. Ct. J. 349
29 According to BLACK'S LAW DICTIONARY, “action” means “[t]he process of doing something; conduct or behavior.”
BLACK'S LAW DICTIONARY 31 (8th ed.2004).
30 See, e.g., 246 S.W.3d 628 (“[T]he city failed to take action on it one way or the other....”).
31 The Legislature, for example, says if a county planning commission “fails to take final action” on a completed plat
application within sixty days, the applicant may seek mandamus relief “to compel the planning commission to approve or
disapprove the plat.” TEX. LOC. GOV'T CODE E § 232.096(g) (emphasis added).
32 825 S.W.2d 434, 436–37 (Tex.1991).
33 In re Pirelli Tire, L.L.C., 247 S.W.3d 670 (Tex.2007).
34 Again, “the legislature is never presumed to do a useless act.” Hunter v. Fort Worth Capital Corp., 620 S.W.2d 547,
551 (Tex.1981).
35 Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651–52 (Tex.2006).
36 Act of May 31, 1999, 76th Leg., R.S., ch. 1167, § 4, sec. 43.052(i), 1999 Tex. Gen. Laws 4074, 4076–77.
37 Alexander Oil, 825 S.W.2d at 437.
38 The Court posits the specter of multiple “individual arbitration proceedings” as another basis for its pro-quo-warranto
holding. 246 S.W.3d. 629. To be sure, the City and various amici predict calamitous and “drastic implications” if we
interpret the statute to provide a private arbitration right. I concede that landowner-invoked arbitration may well saddle
cities with real and nonincidental costs. I also understand the City's fear that developers will (1) target areas within
the ETJ for dense, out-of-character projects that clash with the city's overall vision for the area and (2) use arbitration
under subsection (i) as a delaying tactic or as negotiating leverage. These arguments, however, are rooted in policy
and prudential concerns, which are quintessential legislative judgments, not judicial ones. Burdensome or not, the costs
and hassles attending arbitration were, I would conclude, presumed acceptable by the Legislature, and in any event,
avoidable if cities scrupulously complied with the statute's three-year annexation plan requirement in lieu of successive
fast-track annexations under (h)(1).
39 The City cites Werthmann v. City of Fort Worth, 121 S.W.3d 803, 807 (Tex.App.-Fort Worth 2003, no pet.); City of Balch
Springs v. Lucas, 101 S.W.3d 116, 122 (Tex.App.-Dallas 2002, no pet.); City of San Antonio v. Hardee, 70 S.W.3d 207,
212 (Tex.App.-San Antonio 2001, no pet.).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
I
City of San Antonio v. Talerico, 98 Tex. 151 (1904)
81 S.W. 518
action are fundamental, and may be reviewed on
appeal without assignments of error, although,
98 Tex. 151
in addition to the general demurrer, there were
Supreme Court of Texas.
special exceptions, which might have been well
CITY OF SAN ANTONIO taken, and which could only be reviewed under
v. specific assignments of error.
TALERICO et al.
21 Cases that cite this headnote
June 16, 1904.
[4] Limitation of Actions
Error to Court of Civil Appeals of Fourth Supreme Judicial Indemnity
District.
A person injured by a defect in a sidewalk
caused by a property owner, who was therefore
Action by Willie Talerico against the city of San Antonio, in
primarily liable, sued the city, which impleaded
which the St. Joseph's Orphan Asylum was impleaded. There
the property owner. Held that, as no cause of
was a judgment of the Court of Civil Appeals (for opinion,
action in favor of the city against the property
see 78 S. W. 28) affirming a judgment for plaintiff against
owner accrued in favor of the former until it
defendant city and dismissing the orphan asylum from the
had suffered damage by the latter's act, i.e. until
case, and defendant city brings error. Judgment for plaintiff
recovery against it, the fact that the city did not
affirmed, and judgment of dismissal reversed.
file its answer impleading the property owner
until two years after the injury to plaintiff did not
bar the city's action for indemnity.
West Headnotes (5)
37 Cases that cite this headnote
[1] Appeal and Error
[5] Municipal Corporations
Incompetent or immaterial evidence
Parties
The admission of incompetent testimony to
In an action against a city for injuries caused by a
contradict other incompetent testimony is
defective sidewalk, a pleading, filed by the city,
harmless.
showing that a property owner caused the defect
Cases that cite this headnote without the city's knowledge or consent, made a
case for impleading such property owner as the
party primarily liable.
[2] Appeal and Error
Necessity 11 Cases that cite this headnote
Appellate courts may consider without
assignment of errors, rulings of trial courts which
are fundamental in character, or which determine
a question upon which the very right of the case Attorneys and Law Firms
depends.
*152 **519 William Aubrey and Chas. C. Cresson, for
19 Cases that cite this headnote plaintiff in error.
*153 P. H. Swearingen, H. C. Carter, and Perry J. Lewis, for
[3] Appeal and Error defendant in error Talerico.
Pleadings and rulings thereon
Rulings of trial courts sustaining or overruling T. F. Shields, for defendant in error orphan asylum.
general demurrers to a petition on the ground of
its insufficiency or sufficiency to state a cause of
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
City of San Antonio v. Talerico, 98 Tex. 151 (1904)
81 S.W. 518
it is the practice of the appellate courts to consider without
Opinion assignment rulings of the trial courts which are ‘fundamental
in character,’ or which determine ‘a question upon which the
*154 WILLIAMS, J.
very right of the case depends.’ Wilson v. Johnson, 94 Tex.
Willie Talerico, one of the defendants in error, brought 276, 60 S. W. 242. It has always been regarded as proper
this action against the city to recover damages for personal for the appellate court, before affirming a judgment, to see
injuries received by him in stepping in a hole which the city that the petition states a good cause of action, since nothing
had negligently allowed to exist in a sidewalk on one of its short of that will sustain a judgment in favor of a plaintiff.
streets. The city caused the St. Joseph's Orphan Asylum to be Dean v. Lyons, 47 Tex. 18; Browne v. Johnson, 29 Tex. 40.
made a party defendant, and sought judgment over against it It is true that this court has said in a number of its opinions
in case plaintiff recovered. The pleading by which this was that assignments of error specifying the overruling of general
done appears to be full and specific in all its allegations. It and special exceptions, of which there were several, were
will be sufficient for the purposes of this opinion to state that too general. But we think it may be safely assumed that
such pleading, construed, as it must be, in connection with in such cases the pleadings were regarded as sufficient to
plaintiff's petition, fully alleged that the dangerous condition sustain the judgments based upon them, and that all that was
of the sidewalk was created by the action of the St. Joseph's meant was that the assignments were insufficient to raise any
Orphan Asylum, and that the injury for which plaintiff sought question requiring an assignment. Were it otherwise, those
to recover was caused by its negligence in making the decisions would be in conflict with the practice established
sidewalk with the hole in it, and the bridge by which the by many others. If the overruling a general demurrer going
hole was hidden from plaintiff, in consequence of which he to the foundation of the action will be examined without
stepped into it, and that this was done without the knowledge an assignment, ‘it would seem to follow,’ as is well said
or consent of the city. It also set up ordinances by which by Mr. Justice Fly in Hall v. Jackson (Tex. Civ. App.) 40
it was made the duty of lot owners to keep the sidewalks S. W. 47, ‘that a judgment sustaining a general demurrer,
in front of their property in repair, and subjected such which is a declaration that no cause of action exists, would
owners to prescribed penalties for not repairing sidewalks be fundamental, and therefore should be considered, although
within a given time after notice to do so, and also made it the error is not assigned.’ The Court of Civil Appeals were of
unlawful for any person to place obstructions in streets, etc. the opinion that the rule referred to would not apply in this
St. Joseph's Orphan Asylum, to this pleading, answered by case because there were, in addition to the general demurrer,
general demurrer and 10 further exceptions, styled by the special exceptions, which may **520 have been properly
pleader ‘special exceptions.’ The general demurrer and all sustained, and the merits of which would only be examined
special exceptions except the one setting up limitation were under specific assignments of error. But the fact, if it existed,
sustained, this defendant was dismissed from the case, and that special exceptions to the form and manner of stating the
plaintiff recovered judgment against the city. Upon appeal the cause of action were well taken, would not sustain a ruling on
Court of Civil Appeals refused to consider the assignment general demurrer that plaintiff had no cause of action. Everett
of error made by the city attacking the ruling in favor of St. v. Henry, 67 Tex. 405, 3 S. W. 566; Porter v. Burkett, 65
Joseph's Orphan Asylum, and affirmed the judgment in favor Tex. 387. We think it clear that the general demurrer was
of plaintiff against the city. improperly sustained. The pleading showed that St. Joseph's
Orphan Asylum was the original and active perpetrator of th
In its application for writ of error the city has assigned many wrong for which the city, without participation therein, but
rulings made in the trial between it and plaintiff, and also only by reason of its passive negligence, was sought to be held
the action in the court below in favor of St. Joseph's Orphan responsible. A case was made for impleading the party thus
Asylum. We have examined all of the points urged, and see primarily liable. City of San Antonio v. Smith, 94 Tex. 266,
no reason to disturb the judgment in favor of the plaintiff. 59 S. W. 1109, and authorities cited.
The assignment of error made in the Court of Civil Appeals Most of the other exceptions were either mere repetitions
against the St. Joseph's Orphan Asylum was to the ‘sustaining of the general demurrer, or reasons assigned, which, if well
the general demurrer and special exceptions' of that party and founded, would have justified sustaining it. What we have
dismissing the cause *155 as to it. We may concede that said answers most of them. We may remark, however, that
this is too general to require the court to consider any ruling the view of the pleading by which it is held to show a cause
to present which an assignment of error is necessary. But of action is not based upon the charter and ordinances of the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
City of San Antonio v. Talerico, 98 Tex. 151 (1904)
81 S.W. 518
Inhabitants of Veazie v. The Penobscot Railroad Co., 49 Me.
city. Whether or not, as alleged, they would impose a liability
119. It is permitted by our law to bring into the suit against
of the character asserted, it is unnecessary to decide. The view
it the party whom it seeks to hold liable as an indemnitor, in
taken is based upon the general principles of law laid down in
order that protection may be given to it by the same judgment
the authorities cited, by which the active wrongdoer may be
that fixes its liability; but this does not make the limitation
made to *156 indemnify one who has been subjected to, or is
applicable to the cause of action of the plaintiff control its
sought to be held liable for, damage through his wrong. This
action over against the indemnitor. In bringing in another
is enough to show that the general demurrer was improperly
party it has no right to delay the suit of the plaintiff, to which
sustained.
such other party is not essential, and it is not at all necessary
St. Joseph's Orphan Asylum, in the Court of Civil Appeals, that the plaintiff's rights should be further involved in the
made a cross-assignment of error upon the overruling of the litigation between the two defendants.
exception invoking the two-years statute of limitations. The
The judgment in favor of the plaintiff against the city may
pleadings showed that the injury to plaintiff happened more
be affirmed, and that in favor of St. Joseph's Orphan Asylum
than two years before the filing of the answer of the city
may be reversed, and the cause remanded for a trial of the
impleading the asylum. The ruling was correct. No limitation
issues between it and the city, without prejudicing the rights
against the city ever commenced to run so long as it had
of any of the parties. City of San Antonio v. Smith, supra. It
no cause of action, and a cause of action could only arise
is accordingly so ordered.
in its favor when it sustained damage from the act of the
asylum. According to the strict rules of the common law it
could not have brought any other party into this litigation, All Citations
and could have maintained no independent action, until the
suit had terminated by judgment, or it had paid the damages 98 Tex. 151, 81 S.W. 518
to plaintiff. Hence no limitation would have run against it.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
J
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
come into existence that authorize a claimant to
seek a judicial remedy.
460 S.W.3d 714
Court of Appeals of Texas, Cases that cite this headnote
Dallas.
Stephen W. Clark, Appellant [2] Limitation of Actions
v. Questions for Jury
Dillard's, Inc. and The Campbell The date a cause of action accrues is normally a
Agency, Inc., Appellees question of law.
No. 05–13–01503–CV | Cases that cite this headnote
Opinion Filed March 25, 2015
[3] Implied and Constructive Contracts
Synopsis
Unjust enrichment
Background: Fashion model brought action against
department store and modeling agency, alleging claims Unjust enrichment occurs when the defendant
including misappropriation of likeness and unjust enrichment has wrongfully secured or passively received
based on assertion that photographs of model were used a benefit from another that would be
without his permission. After jury trial, the 44th Judicial unconscionable to retain, and the defendant
District Court, Dallas County, entered judgment in favor of obtained the benefit from the plaintiff by fraud,
model as to unjust enrichment claim and entered take-nothing duress, or the taking of an undue advantage.
judgment as to other claims. Model appealed.
Cases that cite this headnote
[4] Limitation of Actions
Holdings: The Court of Appeals, Myers, J., held that:
Contracts; warranties
[1] store's use of model's image on packages of underwear Department store's use of fashion model's image
was not inherently undiscoverable, and therefore discovery on packages of underwear was not inherently
rule did not apply to toll limitations period on model's claim undiscoverable, and therefore discovery rule
for unjust enrichment; did not apply to toll limitations period on
model's claim for unjust enrichment based on
[2] model did not establish an imminent threat of irreparable use of image, despite argument that model
injury, as could support grant of injunctive relief; and spent large parts of each year outside country
and, even when in county, never went to that
[3] model's complaint failed to state claim for unfair particular department store; image was used on
competition. packaging for products prominently displayed in
stores open to the public and thus was readily
observable and on public display. Tex. Civ. Prac.
Affirmed in part, reversed in part, and rendered. & Rem. Code Ann. § 16.003.
Cases that cite this headnote
West Headnotes (31)
[5] Limitation of Actions
In general; what constitutes discovery
[1] Limitation of Actions The discovery rule is a very limited exception to
Causes of action in general statutes of limitations that defers the accrual of
A cause of action generally accrues, and the the cause of action until the injury was or could
statute of limitations begins to run, when facts have reasonably been discovered.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
discovery rule to toll limitations period, if it
Cases that cite this headnote generally is capable of detection within the time
allotted for bringing such suits.
[6] Limitation of Actions
Cases that cite this headnote
In general; what constitutes discovery
The discovery rule applies to toll the statute of
limitations only when the nature of the plaintiff's [11] Limitation of Actions
injury is both inherently undiscoverable and In general; what constitutes discovery
objectively verifiable. Limitation of Actions
Questions for Jury
Cases that cite this headnote
Whether an injury is inherently undiscoverable,
as could support application of discovery rule to
[7] Limitation of Actions toll limitations period, is a legal question decided
Questions for Jury on a categorical basis rather than case-specific
Whether the discovery rule applies to toll the basis.
statute of limitations in a given context is a
Cases that cite this headnote
question of law.
Cases that cite this headnote [12] Appeal and Error
Particular orders or rulings reviewable in
[8] Limitation of Actions general
In general; what constitutes discovery Trial court's denial of fashion model's motion for
An injury being inherently undiscoverable, as summary judgment on claim against department
could support application of discovery rule store for misappropriation of likeness was not
to toll limitations period, does not mean appealable, where trial court also denied store's
that plaintiff failed to discover injury within motion for summary judgment on claim, and
limitations period; instead, court determines claim was subsequently tried on merits before a
whether an injury is inherently undiscoverable jury.
on a categorical basis in which the focus is on the
Cases that cite this headnote
type of injury rather than a particular injury.
Cases that cite this headnote [13] Injunction
Protection of name or likeness
[9] Limitation of Actions Fashion model did not establish an imminent
In general; what constitutes discovery threat of irreparable injury, as could support
An injury is inherently undiscoverable, as could grant of injunctive relief in model's action against
support application of discovery rule to toll department store seeking injunction to restrain
limitations period, if by its nature, it is unlikely store's allegedly unauthorized use of model's
to be discovered within the limitations period likeness on packaging of underwear, where store
despite due diligence. had changed its packaging of the underwear to
show a different model's picture.
Cases that cite this headnote
Cases that cite this headnote
[10] Limitation of Actions
In general; what constitutes discovery [14] Injunction
Grounds in general; multiple factors
A wrong or injury is not inherently
undiscoverable, as could support application of
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
To be entitled to an injunction, a plaintiff Antitrust and Trade Regulation
must plead and prove: (1) a cause of action Sponsorship, approval, or connection,
against the defendant; (2) a probable right to the representations concerning
relief sought; and (3) a probable, imminent, and Antitrust and Trade Regulation
irreparable injury. Passing off or Palming off
Cases that cite this headnote Unfair competition is a common law tort that
occurs when one business entity “palms off” its
products as those of another; the determinative
[15] Injunction question is whether the tortfeasor's practices are
Irreparable injury likely to mislead customers into believing that
Injunction the product emanates from or has been endorsed
Recovery of damages by the claimant, and the test is likelihood of
An assertedly imminent injury is irreparable, as confusion.
could support grant of injunction, if the injured
Cases that cite this headnote
party cannot be compensated in damages or if
the damages cannot be measured by any certain
monetary standard. [19] Declaratory Judgment
Pendency of other action
Cases that cite this headnote
A declaratory judgment is not available to settle
legal disputes already pending before the court.
[16] Antitrust and Trade Regulation
Particular cases Cases that cite this headnote
Fashion model's complaint against department
store failed to state claim for unfair competition, [20] Declaratory Judgment
in case in which model alleged that store Pendency of other action
engaged in unauthorized use of model's image Disputes encompassed by declarations sought by
on underwear packaging, where complaint did fashion model to determine what rights, if any,
not allege that store's use of image created a of model were transferred, affected, or otherwise
likelihood of confusion of the public. released by any agreement among modeling
agency, third party contractor, and department
Cases that cite this headnote
store were already before the trial court in
model's action alleging misappropriation of his
[17] Antitrust and Trade Regulation likeness by store, and thus disputes could not
Sponsorship, approval, or connection, be subject of declaratory judgment, where store's
representations concerning defense to model's misappropriation of likeness
The tort of unfair competition concerns the claim was that it paid for full use of model's
use of another's good will with the public to image and that contractor told store that it would
gain a competitive advantage in the market; have the right to reproduce photographs of model
any practice which may mislead customers into at will so long as invoice for photographs was
believing that the product of the defendant paid.
is endorsed by or somehow connected to the
Cases that cite this headnote
plaintiff falls within the parameters of the tort.
Cases that cite this headnote [21] Appeal and Error
Grounds for Sustaining Decision Not
[18] Antitrust and Trade Regulation Considered
Confusion or deception
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
An appellant must attack every ground on which Nature of the relation in general
summary judgment could have been granted in To prove agency, a party must prove the alleged
order to obtain a reversal. principal has the rights: (1) to assign the agent's
task, and (2) to control the means and details of
Cases that cite this headnote
the process by which the agent will accomplish
that task.
[22] Appeal and Error
Grounds for Sustaining Decision Not Cases that cite this headnote
Considered
If an appellant fails to challenge one of the [28] Principal and Agent
grounds for summary judgment, an appellate Contractor
court may affirm the summary judgment on that It is primarily the extent of the principal's control
ground alone. over the details of the agent's accomplishing the
assigned task that distinguishes an agent from an
1 Cases that cite this headnote
independent contractor.
[23] Fraud Cases that cite this headnote
Fiduciary or confidential relations
A fiduciary relationship is an extraordinary one [29] Appeal and Error
and will not be created lightly. Reply briefs
An appellant may not present arguments for the
Cases that cite this headnote
first time in a reply brief.
[24] Fraud 1 Cases that cite this headnote
Fiduciary or confidential relations
The mere fact that one party to a relationship [30] Appeal and Error
subjectively trusts the other does not indicate the Instructions
existence of a fiduciary relationship. Trial court's statement in off-the-record
conference, that to the extent to which court's
Cases that cite this headnote
jury charge included instructions or questions
which either party had not included in its
[25] Fraud proposed charge, “the request to excise same is
Presumptions and burden of proof denied” did not constitute a specific objection by
The party claiming a fiduciary duty has the fashion model to two jury questions as allegedly
burden of proving that a fiduciary duty exists. internally inconsistent and incorrect as matter of
law, as would be required to preserve objection
Cases that cite this headnote for appeal, in model's action against department
store for misappropriation of likeness and unjust
[26] Principal and Agent enrichment.
Nature of the relation in general
Cases that cite this headnote
Agency is a consensual relationship between two
parties by which one party acts on behalf of the
[31] Evidence
other subject to the other's control.
Records and decisions in other actions or
Cases that cite this headnote proceedings
Trial court was not required to take judicial
notice of complaint filed in another action, which
[27] Principal and Agent
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
fashion model alleged was relevant to issue jury questions. Dillard's brings a cross-appeal, contending
of punitive damages in model's action against the trial court erred by granting judgment for Clark because
department store alleging misappropriation of Clark's claims of misappropriation of likeness and unjust
likeness and unjust enrichment from store's use enrichment were barred by the statute of limitations.
of model's image, where jury did not find that
model's harm resulted from store's malice and We reverse the trial court's judgment in part and render
thus never reached the punitive damages stage. judgment that Clark take nothing on his claim against
Tex. R. Evid. 201(d). Dillard's for unjust enrichment, and we affirm the trial court's
judgment in all other respects.
Cases that cite this headnote
BACKGROUND
*717 On Appeal from the 44th Judicial District Court, In 1998, Dillard's hired Mollie McKool Photography, Inc. in
Dallas County, Texas, Trial Court Cause No. DC–11–12848– Dallas to submit photographs of men modeling underwear
B. Eric Moye, Judge. from Dillard's house brand, Roundtree & Yorke. McKool
contacted TCA to provide a model. Clark was a fashion
Attorneys and Law Firms
model and used TCA and other modeling agencies to obtain
Stephen A. Kennedy, Dallas, TX, for appellants. modeling jobs. TCA contacted Clark about the modeling
job, and Clark agreed to do it. McKool paid TCA Clark's
Ophelia Camina, Andrew Robertson, Michael James standard rate for two days of modeling, and after deducting
Noordsy, Brian Sheguit, Dallas, TX, for appellees. its commission, TCA paid Clark. The testimony showed it
was customary for models in Dallas to be paid a bonus in
Before Justices Bridges, Lang–Miers, and Myers addition to their standard rate if their picture from the photo
shoot was used for product packaging. Clark testified he was
not paid anything for further use of the photos and that he
OPINION did not agree to Dillard's commercial use of the photos for
product packaging.
Opinion by Justice Myers
This case involves claims by a fashion model, Stephen *718 Beginning in about 2001 or 2002, Dillard's used
W. Clark, against a department store, Dillard's, Inc., and a photographs showing Clark from the tip of his nose
modeling agency, The Campbell Agency, Inc. (TCA). Clark to his waist on its packaging of Roundtree and Yorke
sued Dillard's and TCA after pictures of Clark were used men's underwear. In September 2005, Dillard's changed its
without his permission on packages of underwear that were packaging and used pictures showing Clark from midthigh or
sold in Dillard's stores nationwide. Based on the jury's verdict, waist to the top of his head and showing Clark's entire face.
the trial court awarded Clark damages of $4,500 against Dillard's used these pictures on the packaging of Roundtree
Dillard's for unjust enrichment and ordered that Clark take & Yorke underwear from September 2005 to September
nothing on his other claims. 2011. Clark testified he never went into a Dillard's store until
December 2009 and was unaware of Dillard's use of his image
Clark brings seven issues on appeal, contending the trial court on packaging for Roundtree & Yorke underwear.
erred by (1) denying Clark's motion for summary judgment
on misappropriation of likeness; (2) granting Dillard's motion In November 2009, while Clark was living in Europe, a friend
for summary judgment on some of Clark's claims against in the United States told him she had seen his photograph
it; (3) granting TCA's motion for summary judgment on in a Dillard's store on its products. The next month, when
all of Clark's claims against it; (4) constructively striking Clark traveled to Arkansas, he went to a Dillard's store and
Clark's expert witness; (5) failing to take judicial notice of saw his image on the packaging of Roundtree and Yorke
past pleadings; (6) refusing to consider requiring Dillard's underwear. He contacted his “mother agency” in New York to
disgorgement of profits as a remedy in this case; and (7) investigate. In January 2010, that agency contacted Dillard's.
overruling Clark's objections to incorrect and inconsistent Dillard's asked the agency to provide a contract from the 1998
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
photo shoot, but Clark no longer had the paperwork. In 2011, unjust-enrichment claims as barred by the statute of
Clark contacted Nancy Campbell, the president of TCA, for limitations. Dillard's moved for directed verdict on the ground
assistance in pursuing his claim against Dillard's. Campbell of the statute of limitations, and the trial court implicitly
told Clark she had shredded all documents from 1998 and that denied the motion. Because the trial court rendered a take-
TCA no longer had the vouchers and other documents from nothing judgment on the misappropriation-of-likeness claim
the photo shoot. Campbell refused to write to Dillard's, but and the only relief granted Clark was on his claim for
she agreed to search TCA's premises for any records from the unjust enrichment, we consider the question of the statute of
1998 photo shoot; she found no records. limitations only on the unjust-enrichment claim.
In September 2011, Dillard's changed its packaging on
Roundtree & Yorke underwear, including changing the image
Standard of Review
on the packaging by using new photographs and a different
model. Dillard's paid the model $4,500 for the right to use his Claims of unjust enrichment are governed by the two-year
image on the packaging for the life of the products. statute of limitations in section 16.003 of the Texas Civil
Practice and Remedies Code. Elledge v. Friberg–Cooper
On October 5, 2011, Clark filed his original petition against Water Supply Corp., 240 S.W.3d 869, 871 (Tex.2007) (per
Dillard's and TCA for misappropriation of likeness, unjust curiam); see TEX. CIV. PRAC. & REM.CODE ANN.
enrichment, and other claims. Clark later amended his § 16.003(a) (West Supp.2014). Because the statute of
petition, including adding claims against TCA for breach limitations is an affirmative defense, the defendant has the
of contract and breach of fiduciary duty. Clark, Dillard's, burden to plead, prove, and secure findings to support the
and TCA each moved for summary judgment. The trial defense. See TEX.R. CIV. P. 94 (limitations is affirmative
court denied Clark's motion. The court granted Dillard's defense); Woods v. William M. Mercer, Inc., 769 S.W.2d
motion for summary judgment on all of Clark's claims except 515, 517 (Tex.1988) (affirmative defense of limitations must
misappropriation of likeness and unjust enrichment. The be proven by asserting party). To prevail on a motion for
court granted TCA's motion as to all of Clark's claims and directed verdict, the movant must prove the grounds asserted
rendered judgment that Clark take nothing on his claims as a matter of law. Thus, to prevail on a motion for directed
against TCA. verdict on the ground of limitations, Dillard's had to have
(1) proved as a matter of law when the cause of action
The court held a jury trial on Clark's claims against Dillard's accrued and (2) negated the discovery rule if it applied and
for misappropriation of likeness and unjust enrichment. The if Clark both pleaded it and presented evidence in support
jury found Dillard's misappropriated Clark's likeness and that of it. See Woods, 769 S.W.2d at 518 & n. 2; see also
his damages for the unauthorized use of his image were Hua Xu v. Lam, No. 14–13–00730–CV, 2014 WL 5795475,
$9,000. However, the jury also found the misappropriation at *13 (Tex.App.–Houston [14th Dist.] Nov. 6, 2014, no
of his likeness “was excused as a result of a mistake.” 1 On pet.) (mem.op.) (defendant moving for directed verdict on
Clark's unjust-enrichment claim, the jury found Dillard's was limitations had no burden to negate discovery rule even
unjustly enriched and that Clark's damages were $4,500. On though discovery rule was pleaded unless plaintiff presented
Clark's assertion of the discovery rule to Dillard's defense of evidence supporting application of discovery rule). In this
the statute of limitations, the jury found Clark “should ... have case, Clark pleaded the discovery rule and presented evidence
discovered the benefits obtained by Dillard's” by December 6, of when he learned Dillard's used his image.
2009. The court's judgment ordered that Clark take nothing on
his misappropriation-of-likeness claim and ordered that Clark
recover *719 $4,500 from Dillard's, presumably on Clark's
Accrual of the Unjust–Enrichment Cause of Action
unjust-enrichment claim.
[1] [2] A cause of action generally accrues, and the statute
of limitations begins to run, when facts come into existence
DILLARD'S CROSS–APPEAL that authorize a claimant to seek a judicial remedy. Schneider
Nat'l Carriers, Inc. v. Bates, 147 S.W.3d 264, 279 (Tex.2004).
In its cross-appeal, Dillard's contends the trial court erred The date a cause of action accrues is normally a question
by not dismissing Clark's misappropriation-of-likeness and
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
of law. Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620, 623 cause of action accrued in 1999, 2001, 2002, or 2005, Dillard's
(Tex.2011) (per curiam). failed to prove the accrual date as a matter of law. However, to
prove the accrual date as a matter of law, Dillard's did not have
Dillard's asserts the evidence established as a matter of to prove the exact date on which the cause of action accrued.
law that the unjust-enrichment claim accrued no later than Instead, Dillard's had only to prove as a matter of law the
September 2005 when the packaging was changed to use latest date by which the cause of action accrued. See Williams
an image showing Clark's entire face. Dillard's argues that v. Wachovia Mortg. Corp., 407 S.W.3d 391, 398 (Tex.App.–
because Clark filed his lawsuit in October 2011, more than Dallas 2013, pet. denied) (court need not determine the exact
six years after the accrual of the cause of action, Clark's date the cause of action accrued because regardless of the date
unjust-enrichment claim was barred by the two-year statute applied, suit was filed outside the limitations period).
of limitations.
The evidence was uncontroverted that the packaging showing
Dillard's General Merchandise Manager, William Shields, Clark's entire face first went on display in September 2005
testified that the 2005 packaging showing Clark's entire face and that this packaging replaced the previous packaging that
was first displayed in Dillard's stores in September 2005 showed Clark's image from his nose to his waist. Therefore,
and continued to be displayed for sale in the stores until the evidence established Clark's image was first displayed
September 2011. Clark argues that Shields's testimony should on Roundtree & Yorke underwear packaging no later than
not have been considered because the trial court erred by September 2005.
overruling Clark's *720 objection to Shields's testifying.
Clark argued to the trial court that Shields was identified [3] Unjust enrichment occurs when the defendant has
as a fact witness for the first time on November 27, 2012, wrongfully secured or passively received a benefit from
which he asserted was after the August or September 2012 another that would be unconscionable to retain, and the
discovery deadline. 2 The trial court considered the objection defendant obtained the benefit from the plaintiff by fraud,
at a pretrial hearing. At the hearing, Dillard's asserted that duress, or the taking of an undue advantage. Heldenfels Bros.,
the discovery deadline was January 13, 2013, and that the Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex.1992);
November 27, 2012 identification of Shields was before the Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor
discovery deadline. After considering the parties' arguments Concepts, Inc., 300 S.W.3d 348, 367 (Tex.App.–Dallas 2009,
and examining the documents they presented to support pet. denied). On Clark's unjust-enrichment claim, facts came
their positions, the trial court overruled Clark's objection. into existence that authorized Clark to seek a judicial remedy
On appeal, Clark continues to argue that the discovery when Dillard's first used Clark's image for packaging without
deadline was in August 2012, but he presents no argument, having paid Clark for the right to use his image on product
explanation, or authority as to why the trial court could packaging. The evidence *721 conclusively established that
not have concluded from the documents before it that the Dillard's initial use of Clark's image without paying him
discovery deadline was after Dillard's identified Shields as a occurred no later than September 2005, which was over six
fact witness. We conclude Clark has not shown that Shields's years before Clark filed suit in October 2011. Therefore,
testimony could not be considered. unless the discovery rule applies, Clark filed his suit outside
the two-year limitations period.
Dillard's Vice President for Merchandising, Michael McNiff,
testified that the earlier packaging using Clark's image from
his nose to his waist was first displayed in stores in “[l]ate Discovery Rule
2001, 2002.” McNiff later testified that he did not know when
Clark's image was first used. In affidavits and his deposition, [4] Clark pleaded that the discovery rule delayed
McNiff stated the earlier packaging may have first been used commencement of the limitations period until he learned in
in 1991 (an impossible date since the photograph was taken November or December 2009 that Dillard's used his image,
in 1998) and 1999. which was less than two years before he filed suit in October
2011. Dillard's contends that the discovery rule does not apply
Clark argues that Dillard's failed to establish as a matter of law as a matter of law.
the accrual date of Clark's cause of action. Clark appears to
argue that because the evidence was conflicting whether the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
[5] [6] [7] The purpose of statutes of limitations is to *722 The supreme court has discussed the types of
compel the assertion of claims within a reasonable period cases in which the wrong and injury to the plaintiff were
while the evidence is fresh in the minds of the parties and inherently undiscoverable. See S.V. v. R.V., 933 S.W.2d 1, 6–
witnesses. Computer Assocs. Int'l, Inc. v. Altai, Inc., 918 7 (Tex.1996). The cases where the court concluded the wrong
S.W.2d 453, 455 (Tex.1996). The discovery rule is “a very and injury were inherently undiscoverable were ones in which
3 the wrong and the injury were, by their nature, difficult or
limited exception to statutes of limitations,” id. that “defers
the accrual of the cause of action until the injury was or impossible to detect until circumstances changed. See id.
could have reasonably been discovered,” Shell Oil Co. v. (discussing inherently undiscoverable nature of undetectable
Ross, 356 S.W.3d 924, 929–30 (Tex.2011). “The discovery medical malpractice, latent construction defects, false credit
rule applies ‘only when the nature of the plaintiff's injury is report, and corporate self-dealing). 4 “The common thread in
both inherently undiscoverable and objectively verifiable.’ ” these cases is that when the wrong and injury were unknown
Id. (quoting Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d to the plaintiff because of their very nature and not because
732, 734 (Tex.2001)). The supreme court has “restricted the of any fault of the plaintiff, accrual of the cause of action was
discovery rule to exceptional cases to avoid defeating the delayed.” Id. at 7.
purposes behind the limitations statutes.” Via Net v. TIG Ins.
Co., 211 S.W.3d 310, 313 (Tex.2006) (per curiam). Whether Clark argues he could not have discovered Dillard's use of his
the discovery rule applies to a given context is a question image because he spent large parts of each year outside the
of law. Velocity Databank, Inc. v. Shell Offshore, Inc., 456 United States and, even when in this country for brief periods,
S.W.3d 605, 609 (Tex.App.–Houston [1st Dist.] 2014, pet. he never went to a Dillard's store. He states he was never
filed); Steel v. Rhone Poulenc, Inc., 962 S.W.2d 613, 618 informed that Dillard's intended to use the pictures from the
(Tex.App.–Houston [1st Dist.] 1997), aff'd, 997 S.W.2d 217 photo shoot for packaging, so he had no reason to research the
(Tex.1999). use of his image by Dillard's. Clark also asserts that fashion
models pose for thousands of photos and cannot know which
[8] [9] [10] [11] “Inherently undiscoverable” doespictures are actually used. He argues that “[t]he sheer volume
not mean that the plaintiff failed to discover the injury of a successful international model's body of work would
within the limitations period. Wagner & Brown, 58 S.W.3d make discovering product packaging exclusive to a chain of
at 735. “Instead, we determine whether an injury is U.S. stores in limited areas virtually impossible, even when
inherently undiscoverable on a categorical basis because exercising due diligence and relying on internet searches.”
such an approach ‘brings predictability and consistency
to the jurisprudence.’ ” Id. (quoting Apex Towing Co. v. The type of wrong or injury in this case is a company's unjust
Tolin, 41 S.W.3d 118, 122 (Tex.2001)). “The focus is on enrichment by using a model's image without payment on
whether a type of injury rather than a particular injury packaging for products prominently displayed in stores open
was discoverable.” Via Net, 211 S.W.3d at 314. “An injury to the public. Unlike the wrongs and injuries to which the
is inherently undiscoverable if by its nature, it is unlikely supreme court has applied the discovery rule, this type of
to be discovered within the limitations period despite due injury is not by its nature hidden or undetectable but is readily
diligence.” Id. at 313 (quoting Wagner & Brown, 58 S.W.3d observable and on public display. See S.V., 933 S.W.2d at 6–
at 734–35). The question is whether Clark's injury is “the 7 (discussing cases applying the discovery rule). This type
type of injury that generally is discoverable by the exercise of wrong or injury is generally capable of detection within
of reasonable diligence.” Wagner & Brown, 58 S.W.3d at two years by the plaintiff entering the store and seeing the
735 (quoting HECI Exploration Co. v. Neel, 982 S.W.2d display. The fact that a particular plaintiff might not enter
881, 886 (Tex.1998)). A wrong or injury is not inherently one of the stores where the product is on display within
undiscoverable if it “generally is capable of detection two years of the first display does not make the company's
within the time allotted for bringing such suits.” Computer unjust enrichment inherently undiscoverable. See Via Net,
Assocs., 918 S.W.2d at 457. Whether an injury is inherently 211 S.W.3d at 314 (issue is whether a type of injury and
undiscoverable is a legal question “decided on a categorical not a particular *723 injury is discoverable within the
basis rather than case-specific basis.” Via Net, 211 S.W.3d at limitations period). “[P]ermitting application of the discovery
314. rule exception in these cases would do no more than permit
the litigation of stale claims.” Computer Assocs., 918 S.W.2d
at 457.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
We review a no-evidence summary judgment under the same
We conclude as a matter of law the discovery rule does legal sufficiency standard used to review a directed verdict.
not apply. Clark's cause of action for unjust enrichment See TEX.R. CIV. P. 166a(i); Flood v. Katz, 294 S.W.3d
accrued when Dillard's first displayed the Roundtree & Yorke 756, 762 (Tex.App.–Dallas 2009, pet. denied). “Thus, we
packaging with Clark's image without having paid Clark for must determine whether the nonmovant produced more than
the use of his image on product packaging. The evidence a scintilla of probative evidence to raise a fact issue on the
conclusively established this first display occurred no later material questions presented.” Flood, 294 S.W.3d at 762.
than September 2005. Clark's suit filed in October 2011 was “More than a scintilla of evidence exists when the evidence
not brought within two years of the accrual of the unjust- ‘rises to a level that would enable reasonable and fair-
enrichment cause of action. We conclude the trial court erred minded persons to differ in their conclusions.’ ” King Ranch,
by denying Dillard's motion for directed verdict on Clark's Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex.2003) (quoting
claim for unjust enrichment. We sustain Dillard's cross-point Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711
as to unjust enrichment. (Tex.1997)). “Less than a scintilla of evidence exists when
the evidence is ‘so weak as to do no more than create a mere
surmise or suspicion’ of a fact.” Id. (quoting Kindred v. Con/
Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983)).
SUMMARY JUDGMENT
[12] In his first three issues, Clark contends the trial court
erred by denying his motion for summary judgment and by Clark's Motion for Summary Judgment
granting Dillard's and TCA's motions for summary judgment.
The standard for reviewing a traditional summary judgment In his first issue, Clark contends the trial court erred by
is well established. See Nixon v. Mr. Prop. Mgmt. Co., 690 denying his motion for *724 summary judgment on his
S.W.2d 546, 548 (Tex.1985); McAfee, Inc. v. Agilysys, Inc., claim for misappropriation of likeness. A party cannot appeal
316 S.W.3d 820, 825 (Tex.App.–Dallas 2010, no pet.). The the denial of a summary judgment unless (a) both sides moved
movant has the burden of showing that no genuine issue of for summary judgment on the same issues and the trial court
material fact exists and that it is entitled to judgment as a granted one motion for summary judgment and denied the
matter of law. TEX.R. CIV. P. 166a(c). In deciding whether other, or (b) a statute expressly permits appeal of the denial
a disputed material fact issue exists precluding summary of the motion for summary judgment. Valence Operating Co.
judgment, evidence favorable to the nonmovant will be v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005); see, e.g., TEX.
taken as true. Nixon, 690 S.W.2d at 548–49; In re Estate CIV. PRAC. & REM.CODE ANN. § 51.014(a)(5), (6), (12)
of Berry, 280 S.W.3d 478, 480 (Tex.App.–Dallas 2009, no (West 2015). In this case, no statute authorizes an appeal from
pet.). Every reasonable inference must be indulged in favor the denial of Clark's motion for summary judgment. Although
of the nonmovant and any doubts resolved in its favor. City both Clark and Dillard's moved for summary judgment on
of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex.2005). A Clark's claim for misappropriation of likeness, the trial court
defendant moving for summary judgment is not required denied both motions, and the claim was tried on the merits
to prove the plaintiff cannot succeed on any conceivable before a jury. In this situation, the denial of the motion
theory; “he is only ‘required to meet the plaintiff's case as for summary judgment is not appealable. See Ackermann
pleaded.’ ” SmithKline Beecham Corp. v. Doe, 903 S.W.2d v. Vordenbaum, 403 S.W.2d 362, 365 (Tex.1966); Moore
347, 355 (Tex.1995) (quoting Cook v. Brundidge, Fountain, v. Jet Stream Invs., Ltd., 261 S.W.3d 412, 427 (Tex.App.–
Elliott & Churchill, 533 S.W.2d 751, 759 (Tex.1976)); see Texarkana 2008, pet. denied) (“Where a motion for summary
Via Net v. TIG Ins. Co., 211 S.W.3d 310, 313 (Tex.2006) judgment is denied by the trial court and the case is tried
(per curiam) (“Defendants are not required to guess what on its merits, the order denying the summary judgment
unpleaded claims might apply and negate them.”). We review cannot be reviewed on appeal.”); Anderton v. Schindler, 154
a summary judgment de novo to determine whether a party's S.W.3d 928, 931 (Tex.App.–Dallas 2005, no pet.) (“The
right to prevail is established as a matter of law. Dickey v. denial of a motion for summary judgment when followed by
Club Corp. of Am., 12 S.W.3d 172, 175 (Tex.App.–Dallas a conventional trial on the merits does not finally decide any
2000, pet. denied). issue pending before the trial court; the denial of a motion
for summary judgment presents nothing for review.”). We
conclude Clark may not appeal the trial court's order denying
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
his motion for summary judgment. We overrule Clark's first
issue.
Unfair Business Practices
[16] Clark alleged that an agreement existed among or
Dillard's Motion for Summary Judgment between the defendants Dillard's, TCA, and Mollie McKool
Photography, Inc. 5 to use Clark's image on product
In his second issue, Clark contends the trial court erred by packaging and that this conduct constituted an unfair business
granting Dillard's motion for summary judgment on Clark's practice, depriving him of control of his image for business
claims for injunctive relief, unfair business practices, and purposes, preventing him from earning fees to which he
declaratory relief. was otherwise entitled, and causing him damages. Clark
brought this cause of action as an alternative to his claim for
misappropriation of likeness.
Injunctive Relief
Dillard's moved for summary judgment on the grounds that
[13] In his original petition, filed in 2011, Clark pleaded (1) there was no such cause of action recognized in Texas 6
for “an injunction precluding Dillard's further unauthorized and (2) Clark had no evidence that Dillard's conduct (a) was
use of Clark's likeness.” Clark asserted that unless Dillard's an unfair business practice; (b) deprived Clark of control of
was restrained from unauthorized use of Clark's likeness, his image for business purposes; (c) prevented Clark from
“Clark will continue to suffer irreparable injury for which benefitting from the use of his image; (d) prevented Clark
he has no adequate remedy at law.” In his first and second from earning fees to which he would otherwise have been
amended petitions (the second amended petition is Clark's rightfully entitled; and (e) caused Clark damages.
live pleading), Clark omitted the allegations supporting an
injunction, but his prayer included a request for “judgment In his response to the motion for summary judgment and
enjoining further unauthorized use of Clark's likeness.” on appeal, Clark asserts that he was damaged not only
by Dillard's failure to pay him for the use of his image,
[14] [15] To be entitled to an injunction, a plaintiff must but also because he lost the opportunity for “the publicity
plead and prove (1) a cause of action against the defendant; and exposure that otherwise could have resulted from an
(2) a probable right to the relief sought; and (3) a probable, advertising campaign lasting over 10 years” “preventing
imminent, and irreparable injury. Butnaru v. Ford Motor Co., hi[m] from benefitting from the use of that image and
84 S.W.3d 198, 204 (Tex.2002). An injury is irreparable if thereby preventing him from earning fees to which he would
the injured party cannot be compensated in damages or if otherwise have been rightfully entitled.” However, in his
the damages cannot be measured by any certain monetary response to Dillard's motion for summary judgment, Clark did
standard. Id. not point to any evidence that he would likely have had other
fee-earning opportunities that did not arise due to his being
Dillard's moved for summary judgment on the ground that unaware of Dillard's use of his image.
there was no evidence to support one of the elements
for injunctive relief, namely, imminent irreparable injury. [17] [18] Concerning Dillard's argument that Texas does
In its motion for summary judgment, Dillard's presented not recognize a cause of action for “unfair business practices”
evidence that in September 2011 it changed its packaging of as pleaded by Clark, Clark cites no authority that such a
Roundtree & Yorke underwear and used a different model's claim is viable under Texas law. Clark argues in his reply
picture on the packaging. On appeal, Clark does not identify brief that his “unfair business practices” cause of action is
any evidence that Dillard's past misappropriation of Clark's actually a claim for “unfair competition.” We disagree. The
likeness poses an imminent threat of irreparable injury. We tort of unfair competition concerns the use of “another's good
conclude Clark has not shown the trial *725 court erred by will with the public to gain a competitive advantage in the
granting Dillard's motion for summary judgment on Clark's market.” Nat'l Bank of Commerce v. Shaklee Corp., 503
request for injunctive relief. F.Supp. 533, 541 (W.D.Tex.1980). “[A]ny practice which
may mislead customers into believing that the product of
the defendant is endorsed by or somehow connected to the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
plaintiff falls within the parameters of the tort.” Id. As another Clark's consent. In its first amended answer, Dillard's asserted
court defined it, the defense of payment, alleging it paid for full use of Clark's
image because “[p]ayment was made to Mollie McKool
Unfair competition is a common photo studio, which in turn paid The Campbell Agency,
law tort that occurs when one which in turn paid Plaintiff [Clark].” Subsequently, Dillard's
business entity *726 “palms off” filed a motion to designate Mollie McKool Photography,
its products as those of another. The Inc. as a responsible third party under section 33.004 of
determinative question is whether the the civil practice and remedies code. See CIV. PRAC. §
tortfeasor's practices are likely to 33.004 (West 2015). In the motion, Dillard's stated that
mislead customers into believing that McKool sent Dillard's an invoice with the photographs and
the product emanates from or has been told Dillard's that it “would have the right to reproduce
endorsed by the claimant.... [T]he test the photographs at will so long as the invoice was *727
is likelihood of confusion.
paid.” 8 Clark then amended his petition and requested a
Ky. Fried Chicken Corp. v. Diversified Packaging Corp., declaratory judgment declaring “what rights, if any, of the
549 F.2d 368, 382 (5th Cir.1977) (citations omitted). Clark's Plaintiff were transferred, affected or otherwise released by
pleading of unfair business practices did not allege that any agreement among McKool, Dillard's and Campbell.”
Dillard's use of his image created a “likelihood of confusion” Clark also requested specific declarations that there were no
of the public. Id. Instead, Clark's petition and his response agreements between the parties that transferred the usage
to Dillard's motion for summary judgment asserted that his rights of Clark's image to Dillard's for product packaging.
unawareness of Dillard's use of his image deprived him of the The record shows that the disputes encompassed by these
opportunity to obtain other fee-earning modeling assignments requested declarations were already before the trial court.
arising from Dillard's use of his image for packaging. That is Accordingly, we conclude the trial court did not err by
not the tort of unfair competition. granting Dillard's motion for summary judgment on Clark's
claim for declaratory judgment.
We conclude Clark has not shown the trial court erred by
granting Dillard's motion for summary judgment on the claim We conclude Clark has not shown the trial court erred
of unfair business practices. by granting Dillard's motion for summary judgment. We
overrule Clark's second issue.
Declaratory Judgment
TCA's Motion for Summary Judgment
[19] [20] Clark also asserts the trial court erred by granting
Dillard's motion for summary judgment on Clark's claim for In his third issue, Clark contends the trial court erred by
granting TCA's motion for summary judgment. Clark sued
declaratory relief. 7 A declaratory judgment is a remedial
TCA for breach of fiduciary duty and breach of contract for
action that determines the rights of the parties and affords
not assisting him when he informed it of Dillard's use of his
relief from uncertainty with respect to rights, status, and
image.
legal relations. TEX. CIV. PRAC. & REM.CODE ANN. §
37.002 (West 2015). “A court of record within its jurisdiction
has power to declare rights, status, and other legal relations
whether or not further relief is or could be claimed.” Id. § Breach of Contract
37.003(a). However, a declaratory judgment is not available
to settle legal disputes already pending before the court. [21] [22] TCA moved for summary judgment on Clark's
Hydroscience Techs., Inc. v. Hydroscience, Inc., 401 S.W.3d claim for breach of contract on several grounds, including
783, 801 (Tex.App.–Dallas 2013, pet. denied). that there was no evidence of a written contract between TCA
and Clark and that any oral contract would have violated the
Clark pleaded in his original petition that Dillard's statute of frauds. See TEX. BUS. & COM.CODE ANN. §
misappropriated his likeness by displaying his image 26.01(b)(6) (West 2009). Clark did not respond to this ground
prominently on packaging for men's undergarments without in his response to TCA's motion for summary judgment,
and he does not argue on appeal that the trial court would
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
have erred by granting summary judgment on that ground. it and Clark. A fiduciary relationship is an extraordinary one
An appellant must attack every ground on which summary and will not be created lightly. In re Estate of Kuykendall,
judgment could have been granted in order to obtain a 206 S.W.3d 766, 771 (Tex.App.–Texarkana 2006, no pet.).
reversal. See Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, The mere fact that one party to a relationship subjectively
121 (Tex.1970); Trevino & Assocs. Mech., L.P. v. Frost trusts the other does not indicate the existence of a fiduciary
Nat'l Bank, 400 S.W.3d 139, 144 (Tex.App.–Dallas 2013, no relationship. Id.; see also Crim Truck & Tractor Co. v.
pet.). If an appellant fails to challenge one of the grounds Navistar Int'l Transp. Corp., 823 S.W.2d 591, 595 (Tex.1992)
for summary judgment, an appellate court may affirm the (“[M]ere subjective trust alone is not enough to transform
summary judgment on that ground alone. See Trevino & arms-length dealing into a fiduciary relationship.”). The party
Assocs., 400 S.W.3d at 144. Because Clark does not challenge claiming a fiduciary duty has the burden of proving that a
on appeal TCA's ground that there was no written contract fiduciary duty exists. Marathon Oil Co. v. Moye, 893 S.W.2d
and that any oral contract would have violated the statute of 585, 591 (Tex.App.–Dallas 1994, orig. proceeding). Whether
frauds, we affirm the trial court's grant of summary judgment a fiduciary duty exists is a question of law. Id. A fiduciary
on Clark's claim for breach of contract on that ground. relationship may arise as a matter of law in a principal-agent
relationship. McAfee, Inc. v. Agilysys, Inc., 316 S.W.3d 820,
829 (Tex.App.–Dallas 2010, no pet.).
Breach of Fiduciary Duty
[26] [27] [28] Agency is a consensual relationship
TCA moved for summary judgment on Clark's claim for between two parties “by which one party acts on behalf
breach of fiduciary duty on several grounds, including that of the other subject to the other's control.” Suzlon Energy
no fiduciary relationship existed at any time between it and Ltd. v. Trinity Structural Towers, Inc., 436 S.W.3d 835, 841
Clark, and that no fiduciary relationship existed between it (Tex.App.–Dallas 2014, no pet.) (quoting Reliant Energy
and Clark when Clark sought its assistance to contact Dillard's Servs., Inc. v. Cotton Valley Compression, L.L.C., 336
in 2011. S.W.3d 764, 782–83 (Tex.App.–Houston [1st Dist.] 2011,
no pet.)). To prove agency, a party must prove the alleged
Clark first argues that the trial court erred by granting the principal has the rights (1) to assign the agent's task and (2)
motion for summary judgment because the motion was based to control the means and details of the process by which the
entirely on defensive grounds not disclosed in response to agent will accomplish that task. Happy Indus. Corp. v. Am.
Clark's discovery requests. In support of this argument, Clark Specialties, Inc., 983 S.W.2d 844, 852 (Tex.App.–Corpus
cites *728 Hernandez v. Mid–Loop, Inc., 170 S.W.3d 138 Christi 1998, pet. dism'd w.o.j.); see Suzlon, 436 S.W.3d at
(Tex.App.–San Antonio 2005, no pet.), and Chasewood Oaks 841. It is primarily the extent of the principal's control over
Condominiums Homeowners Ass'n v. Amatek Holdings, Inc., the details of the agent's accomplishing the assigned task
977 S.W.2d 840 (Tex.App.–Fort Worth 1998, pet. denied). that distinguishes an agent from an independent contractor.
These two cases concerned plaintiffs who, after filing suit, Walker Ins. Servs. v. Bottle Rock Power Corp., 108 S.W.3d
actively frustrated all legitimate attempts by the defendants to 538, 549 (Tex.App.–Houston [14th Dist.] 2003, no pet.);
define the causes of action and investigate potential defenses. Happy Indus., 983 S.W.2d at 852.
The trial courts in those cases dismissed the plaintiffs' claims,
and the appellate courts affirmed. See Hernandez, 170 S.W.3dClark pleaded that TCA breached fiduciary duties arising
at 144; Chasewood Oaks, 977 S.W.2d at 845. Neither of from TCA's position as Clark's agent. TCA asserted in
those cases involved a motion for summary judgment filed its motion for summary judgment that no principal-agent
by a defendant who had failed to disclose its theories of relationship existed with Clark as a matter of law because
the case. We conclude Clark has not shown the trial court Clark did not have control over the means and details of
erred by granting the motion for summary judgment due to the process by which TCA conducted its representation of
TCA's failure to supplement its discovery responses with him. In his response to the motion for summary judgment
the defensive theories asserted in the motion for summary and in his brief on appeal, Clark argues that fact issues
judgment. exist concerning the extent of TCA's duties to him in their
relationship, but Clark does not argue that he had control
[23] [24] [25] One of TCA's grounds for summary over the means and details of TCA's representation of him.
judgment was that no fiduciary relationship existed between An appellant must attack *729 every ground upon which
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
summary judgment could have been granted in order to obtain use of his image for packaging. The jury answered “No” to
a reversal. See Malooly Bros., 461 S.W.2d at 121; Trevino & question 3. Jury question 4 asked if the jury found Dillard's
Assocs., 400 S.W.3d at 144. If an appellant fails to challenge misappropriation was excused by mistake, and the question
one of the grounds for summary judgment, an appellate court contained definitions for “mutual mistake” and “unilateral
may affirm the summary judgment on that ground alone. mistake.” The jury answered “Yes” to question 4. Clark
See Trevino & Assocs., 400 S.W.3d at 144. Because Clark contends that jury questions 3 and 4 were incorrect as a matter
does not challenge on appeal TCA's ground that it disproved of law and were internally inconsistent.
Clark's claim of agency as a matter of law because Clark had
no right to control the means and details of the process by Dillard's asserts that Clark did not preserve any error because
which TCA represented him, we affirm the grant of summary the record does not show Clark presented the objection to
judgment on that ground. 9 the trial court. “Any complaint as to a question, definition,
or instruction, on account of any defect, omission, or fault
[29] In his reply brief, Clark argues for the first time that in *730 pleading, is waived unless specifically included
his claim of breach of fiduciary duty was not based on a in the objection.” TEX.R. CIV. P. 274. Clark argues that
formal relationship created between the parties by contract the following excerpt from the reporter's record shows he
but was instead based on modeling industry standards that objected and that his objection was overruled:
give rise to a special relationship of good faith and fair
[The Court:] We are off the record.
dealing. An appellant may not present arguments for the
first time in a reply brief. Cebcor Serv. Corp. v. Landscape (Discussion off the record ensued.)
Design & Constr., Inc., 270 S.W.3d 328, 334 (Tex.App.–
Dallas 2008, no pet.); Dall. Cnty. v. Gonzales, 183 S.W.3d 94, (Recess from 11:30 to 12:45 p.m.)
104 (Tex.App.–Dallas 2006, pet. denied). Moreover, Clark's
claim in his petition is clearly one for breach of fiduciary The Court: We're back on the record.
duty based on an alleged principal-agent relationship between
I have given to—I discussed with counsel the form of the
Clark and TCA. Clark did not plead a cause of action for
proposed charge to give to the jury.
breach of a duty of good faith and fair dealing. TCA was not
required to move for summary judgment on claims that were To the extent that either Plaintiff or Defendant has
not pleaded. See Via Net v. TIG Ins. Co., 211 S.W.3d 310, requested instructions or questions that are not included
313 (Tex.2006) (“Defendants are not required to guess what with the charge—in my charge, the request to include same
unpleaded claims might apply and negate them.”); SmithKline is denied, the objection to the failure to include same is
Beecham Corp. v. Doe, 903 S.W.2d 347, 355 (Tex.1995) overruled.
(defendant need not show that plaintiff cannot succeed on any
theory conceivable in order to obtain summary judgment but To the extent that the Court's charge includes instructions
is only required to “meet the plaintiff's case as pleaded”). and/or questions which either party has not included in its
proposed charge, the request to excise same is denied, the
We conclude Clark has not shown the trial court erred by objection to the failure to excise same is overruled. Okay?
granting TCA's motion for summary judgment. We overrule
[Clark's attorney]: Yes, Your Honor.
Clark's third issue.
The Court: I think that covers all the objections to the
charge.
JURY CHARGE
We disagree with Clark. This portion of the record does not
[30] In his seventh issue, Clark contends the trial court show that Clark made any objection to jury questions 3 and 4,
erred by overruling his objections to questions 3 and 4 of much less that he asserted they were incorrect as a matter of
the jury charge. Jury question 3 asked whether Dillard's law and internally inconsistent. Nor does any other part of the
misappropriation of Clark's likeness was excused because (a) record establish that Clark timely objected to jury questions 3
Dillard's paid Clark for the use of his image for packaging; and 4. We conclude Clark has not preserved any error from the
(b) Clark authorized or consented to Dillard's use of his trial court's submission of jury questions 3 and 4. We overrule
image for packaging; or (c) Clark released Dillard's from the Clark's seventh issue.
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Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
complaint. Clark's attorney explained, “it really has to do with
punitive damages so perhaps it is part of the bifurcation that
should be considered then.” The trial court stated, “If it's only
ISSUES ON CLARK'S DAMAGES with regard to the punitive damages we'll jump off that bridge
when we get to it.” The court's written order regarding the
In his fourth issue, Clark contends the trial court abused
pretrial hearing stated, “Plaintiff's Request for Judicial Notice
its discretion by constructively striking Dr. Peter Sealey,
filed July 10, 2013 is denied.” Because the jury did not find
Clark's expert witness on the damages Clark suffered. In his
that Clark's harm resulted from Dillard's malice, the jury did
sixth issue, Clark contends the trial court erred by excluding
not reach the punitive damages stage. See TEX. CIV. PRAC.
evidence supporting disgorgement of Dillard's profits from
& REM. CODE ANN.. § 41.003(a) (West 2015). Therefore,
the sale of Roundtree & Yorke underwear with Clark's image
the Henley complaint never became relevant. We conclude
on the packaging. Clark's claim for unjust enrichment was
Clark has not shown the trial court erred by denying this
barred by the statute of limitations, and Clark has not shown
request for judicial notice.
the trial court erred by rendering a take-nothing judgment
on the misappropriation-of-likeness claim based on the jury's
On July 17, 2013, the first day of trial, Clark filed three more
finding that claim was excused by mistake. Therefore, our
requests for judicial notice of (1) the federal district court's
resolution of Clark's issues concerning his damages is not
opinion in Henley v. Dillard Department Stores, (2) the trial
necessary to final disposition of this appeal. See Guerra v.
court's order granting TCA's motion for summary judgment,
Wal–Mart Stores, Inc., 943 S.W.2d 56, 60–61 (Tex.App.–San
and (3) the trial court's order finding McKool a responsible
Antonio 1997, writ denied). Accordingly, we do not address
third party. Although Clark states in his brief, “Incredibly, the
Clark's fourth and sixth issues. See TEX.R.APP. P. 47.1.
trial court did not take judicial notice of these documents,”
Clark does not cite to any place in the record showing the
court refused to take judicial notice, and nothing in the record
JUDICIAL NOTICE shows the court refused to take judicial notice. We conclude
that the record does not support Clark's contention that the
[31] In his fifth issue, Clark contends the trial court erred by trial court did not take judicial notice of these items. We
failing to take judicial notice of past pleadings. Specifically, overrule Clark's fifth issue.
Clark wanted the trial court to take judicial notice of (1) the
order granting TCA's motion for summary judgment, (2) the
complaint and judicial opinion in the federal case Henley v.
CONCLUSION
Dillard Department Stores, 10 and (3) the trial court's finding
that McKool was a responsible third party in the case. Rule We reverse the trial court's judgment awarding Clark damages
of evidence 201 states, “A court shall take judicial notice [of of $4,500, and we render judgment that Clark take nothing
adjudicative facts] if requested by a party and supplied with on his claim for unjust enrichment. In all other respects, we
the necessary information.” TEX.R. EVID. 201(d). affirm the trial court's judgment.
On July 10, 2013, Clark filed a pretrial motion requesting that
the court take judicial *731 notice of the Henley complaint, All Citations
and Clark attached a certified copy of the complaint to the
motion. At the pretrial hearing on July 16, 2013, the trial 460 S.W.3d 714
court considered the request for judicial notice of the Henley
Footnotes
1 Whether mistake excuses a misappropriation of likeness is not properly before us, and we do not address that issue.
2 Clark was inconsistent concerning the date of the discovery deadline. In his written objection to Shields's testifying, he
asserted the discovery deadline was September 10, 2012. At the pretrial hearing, he stated the discovery deadline was
August 12, 2012, and in his cross-appellee's brief on appeal, he states the discovery deadline was August 15, 2012.
3 Clark states in his cross-appellee's brief, “The presumption is that the discovery rule applies,” and cites Woods v. William
M. Mercer, Inc., 769 S.W.2d 515, 518 (Tex.1988). The supreme court stated in Woods that the party asserting the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
Clark v. Dillard's, Inc., 460 S.W.3d 714 (2015)
discovery rule bears the burden of pleading, proving, and securing favorable findings on the rule. Id. Thus, contrary to
Clark's assertion, there is no “presumption ... that the discovery rule applies.”
4 The supreme court cited the following cases as illustrative of the types of cases to which the discovery rule applied. (The
parenthetical descriptions of the cases are the supreme court's parenthetical descriptions in S.V. of these cases.) Willis
v. Maverick, 760 S.W.2d 642, 645 (Tex.1988) (lawyer's error could not be discovered by client who was ignorant of the
law); Nelson v. Krusen, 678 S.W.2d 918, 923 (Tex.1984) (malpractice in muscular dystrophy gene screening could not
be discovered by parents until child showed symptoms); Kelley v. Rinkle, 532 S.W.2d 947, 949 (Tex.1976) (false credit
report could not be discovered until credit denied); Hays v. Hall, 488 S.W.2d 412, 414 (Tex.1972) (“One who undergoes a
vasectomy ... and then after tests is told that he is sterile, cannot know that he is still fertile ... until either his wife becomes
pregnant or he is shown to be fertile by further testing.”); Gaddis v. Smith, 417 S.W.2d 577, 578 (Tex.1967) (“it is often
difficult, if not impossible, to discover that a foreign object has been left within the body within the statutory period of
limitation”); Int'l Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 580 (Tex.1963) (disinterested directors could not
discover certain corporate self-dealing); Ruebeck v. Hunt, 142 Tex. 167, 176 S.W.2d 738, 739 (1943) (homeowner could
not discover faulty construction of roof); Hous. Waterworks Co. v. Kennedy, 70 Tex. 233, 8 S.W. 36, 38 (1888) (cut into
plaintiff's building not discoverable until walls cracked). S.V., 933 S.W.2d at 6–7.
5 Clark sued Mollie McKool Photography, Inc. in his second amended petition, but he later nonsuited his claims against it.
6 Dillard's also specially excepted to the pleading, asserting the cause of action was not recognized under Texas law. The
appellate record does not show that the trial court ruled on the special exception. Clark does not contend on appeal that
the issue should have been resolved by special exception instead of summary judgment. Clark also does not complain
on appeal that he lacked opportunity to amend his pleading. See Chambers v. Huggins, 709 S.W.2d 219, 223 (Tex.App.–
Houston [14th Dist.] 1986, no writ) (special exception should be filed before moving for summary judgment attacking
pleadings for failing to state a cause of action to provide nonmovant an opportunity to amend and correct a pleading
defect; summary judgment is appropriate when pleadings “fail to set forth any cause of action whatsoever”).
7 Dillard's presented two grounds in its motion for summary judgment on Clark's claim for declaratory judgment. Dillard's
asserted that the Declaratory Judgment Act “does not allow for the requested declarations.” In the alternative, Dillard's
asserted that any declarations the trial court made on the issues should support Dillard's position on those issues. The trial
court's order on the motion simply “granted” Dillard's motion on the claim for declaratory judgment and did not expressly
make any declarations. The final judgment observed that the court had rendered summary judgment in favor of Dillard's
on the claims for declaratory judgment, injunctive relief, and unfair business practices, and the judgment ordered that
Clark take nothing on those claims. The judgment made no declarations requested by Clark in his petition or by Dillard's
in its motion for summary judgment. Therefore, it appears the trial court granted Dillard's motion for summary judgment
on the ground that the Declaratory Judgment Act “does not allow for the requested declarations.” Clark did not object in
the trial court or argue on appeal that this ground was not sufficiently specific; accordingly, we do not address that issue.
8 Clark alleged in his live pleading that he filed a motion to strike the designation of McKool as a responsible third party but
that the trial court denied the motion to strike, “apparently finding that disputed facts existed as to whether McKool was
responsible for a portion of the injuries or damages claimed by Plaintiff.” The trial court's order simply stated that Clark's
motion to strike was denied and that Dillard's was granted leave to designate McKool as a responsible third party.
9 Any fact issues concerning the extent of TCA's duties would not be material fact issues on Clark's claim for breach
of fiduciary duty unless a principal-agent relationship existed. Clark has not shown the trial court would have erred by
determining that no principal-agent relationship existed; therefore, any fact issues concerning the extent of TCA's duties
are not material to Clark's claim for breach of fiduciary duty.
10 See 46 F.Supp.2d 587 (N.D.Tex.1999).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
K
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
with voter-approved bond funds that were legally available
and allocated for that purpose;
123 S.W.3d 735
Court of Appeals of Texas,
[3] trial court's submission of single broad-form liability
Houston (14th Dist.).
question to jury incorporating an invalid theory of recovery
CLEAR LAKE CITY WATER was harmful error;
AUTHORITY, Appellant/Cross–Appellee,
v. [4] district's counsel's statement during closing argument to
the effect that developers provided compensable work to
KIRBY LAKE DEVELOPMENT, LTD.,
district was not judicial admission of liability in quantum
Miter Development Company, LLC, Taylor
meruit;
Lake, Ltd., and University Development,
Inc., Appellees/Cross–Appellants. [5] trial court's declaratory judgment was not alternative
ground upon which to sustain underlying judgment awarding
No. 14–01–00976–CV. | Dec. 9, 2003.
actual damages to developers; and
Synopsis
Background: Developers, which were not paid by municipal [6] district's use and control of developer's water, sewer, and
water district for district's use of their water, sewage, and drainage facilities did not constitute a taking of developers'
drainage facilities as result of lack of voter approval of property without compensation in violation of takings clause
bond funds, sued district for, among other things, breach of state constitution.
of underlying contracts between district and developers,
which provided for, among other things, developers to
Affirmed in part, reversed and rendered in part, and reversed
lease facilities at no charge until district purchased them,
and remanded in part.
and for district to reimburse developers 70 percent of
costs of constructing facilities. The 113th District Court,
Harris County, Patricia Ann Hancock, J., ultimately awarded
actual damages for breach of the four underlying contracts West Headnotes (30)
totaling $1,696,171, attorney's fees, pre-and post-judgment
interest, and costs to developers, declared that district was
obligated, under its contracts with developers, to purchase [1] Contracts
their facilities, and ordered district to levy, assess, and collect Construing whole contract together
taxes or assessments to pay the judgment. District appealed, Primary concern of a court in construing a
and developers cross-appealed from trial court's grant of written contract is to ascertain the true intent
directed verdict to district on their claim that district's use and of the parties as expressed in the instrument;
control of facilities was a taking in violation of takings clause to achieve this objective, courts examine and
of state constitution. consider the entire writing in an effort to
harmonize and give effect to all the provisions
of the contract so that none will be rendered
meaningless.
Holdings: The Court of Appeals, Leslie Brock Yates, J., held
that: 2 Cases that cite this headnote
[1] three of the contracts unambiguously required district to
[2] Contracts
reimburse developers only with voter-approved bond funds
Subject, object, or purpose as affecting
that were legally available and allocated for that purpose and,
construction
thus, district's failure to pay developers prior to voter approval
of such funds was not breach of underlying contracts; Courts construe a contract from a utilitarian
standpoint, bearing in mind the particular
[2] contract with fourth developer was ambiguous/did not business activity sought to be served.
unambiguously require district to reimburse developers only
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
Grounds for admission of extrinsic evidence
2 Cases that cite this headnote
In context of contract interpretation, only when a
contract is first determined to be ambiguous, may
[3] Contracts the courts consider the parties' interpretation and
Existence of ambiguity admit extraneous evidence to determine the true
Contracts meaning of the instrument.
Ambiguity in general
1 Cases that cite this headnote
If a written contract is so worded that it can be
given a definite or certain legal meaning, then
it is not ambiguous and it can be construed as a [8] Contracts
matter of law. Existence of ambiguity
For purposes of contract interpretation, an
Cases that cite this headnote ambiguity does not arise simply because the
parties advance conflicting interpretations of
[4] Evidence the contract; for an ambiguity to exist, both
Grounds for admission of extrinsic evidence interpretations must be reasonable.
Parol evidence is not admissible for the purpose Cases that cite this headnote
of creating an ambiguity in context of contract
interpretation.
[9] Municipal Corporations
Cases that cite this headnote Contracts relating to use of sewer system
Water Law
[5] Contracts Contracts
Existence of ambiguity Municipal water district's contracts with
For purposes of contract interpretation, if the developers providing for, among other things,
language of a contract is subject to two or more developers to lease water and sewer facilities
reasonable interpretations, it is ambiguous. constructed by them to district at no charge
until district purchased them, and for district
Cases that cite this headnote to reimburse developers 70 percent of costs of
constructing facilities, unambiguously required
[6] Contracts district to reimburse developers only with
Construction as a whole voter-approved bond funds that were legally
available and allocated for that purpose and,
Contracts
thus, district's failure to pay developers prior to
Extrinsic circumstances
voter approval of such funds was not breach
Contracts of underlying contracts; payment provision of
Ambiguity in general contracts unambiguously provided that district's
Whether a contract is ambiguous is a question obligation to pay was expressly conditioned
of law for the court to decide by looking at the upon receipt of voter-approved bond funds.
contract as a whole in light of the circumstances
present at the time the contract was executed. 4 Cases that cite this headnote
Cases that cite this headnote
[10] Contracts
What are conditions precedent in general
[7] Contracts A condition precedent may be either a condition
Construction by Parties to the formation of a contract or to an obligation
Evidence to perform an existing agreement.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
acknowledged voter approval of issuance of
1 Cases that cite this headnote bonds in certain election, and it was susceptible
to two competing interpretations, namely, that
[11] Contracts developer was to be paid for with voter-approved
Nature and scope in general funds or with other funds specified.
Contracts 4 Cases that cite this headnote
What are conditions precedent in general
“Conditions precedent” to an obligation to
[14] Municipal Corporations
perform are those acts or events, which occur
Construction and operation
subsequently to the making of a contract, that
must occur before there is a right to immediate Public Contracts
performance and before there is a breach of Performance or Breach
contractual duty; however, when the intent of the Once a governmental entity exercises its
parties is doubtful or when a condition would discretion to enter into a valid and enforceable
impose an absurd or impossible result, then contract, it no longer has unfettered “legislative
the agreement will be interpreted as creating a discretion” to decide what its obligations are and
covenant rather than a condition. how it will perform those obligations.
Cases that cite this headnote 1 Cases that cite this headnote
[12] Contracts [15] Water Law
Nature and scope in general Contracts
Contracts Issue of whether contracts entered into by
Conditions Precedent in General municipal water district, as governmental entity,
Because of their harshness in operation, are enforceable and whether the district breached
conditions are not favorites of the law; thus, them is subject to review by the courts.
in construing a contract, forfeiture by finding
Cases that cite this headnote
a condition precedent is to be avoided when
another reasonable reading of the contract is
possible. [16] Trial
Contracts
Cases that cite this headnote
Trial court's submission of single broad-form
liability question to jury was error, in lawsuit
[13] Municipal Corporations for breach of contract, where underlying petition
Contracts relating to use of sewer system alleged multiple theories of breach of contract.
Water Law
Cases that cite this headnote
Contracts
Municipal water district's contract with
developer contemplating, among other things, [17] Appeal and Error
developer to lease water and sewer facilities Submission of Issues or Questions to Jury
constructed by it to district at no charge until Trial court's submission of single broad-form
district purchased them and for district to liability question to jury incorporating an invalid
reimburse developer 70 percent of costs of theory of recovery was harmful error, in breach-
constructing facilities, did not unambiguously of-contract proceedings.
require district to reimburse developers only
with voter-approved bond funds that were legally Cases that cite this headnote
available and allocated for that purpose; contract
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
clear, deliberate, and unequivocal admission of
[18] Appeal and Error quantum meruit liability.
Submission of Issues or Questions to Jury
When a single broad-form liability question Cases that cite this headnote
submitted to jury erroneously commingles valid
and invalid liability theories and defendant's [22] Evidence
objection to said question is timely and specific, Judicial Admissions
such error is harmful when it cannot be
A judicial admission must be clear, deliberate,
determined whether the improperly submitted
and unequivocal.
theories formed the sole basis for the jury's
finding. Cases that cite this headnote
Cases that cite this headnote
[23] Implied and Constructive Contracts
Contract for Services
[19] Implied and Constructive Contracts
Work and labor in general; quantum meruit Recovery in quantum meruit is generally not
available when there is an express contract
“Quantum meruit” is an equitable remedy
covering the services or materials furnished.
which does not arise out of a contract, but is
independent of it. Cases that cite this headnote
2 Cases that cite this headnote
[24] Declaratory Judgment
Determination and disposition of cause
[20] Implied and Constructive Contracts
Work and labor in general; quantum meruit Trial court's declaratory judgment, that
municipal water district was obligated under its
To recover under “quantum meruit,” a claimant
contracts with plaintiffs/developers to purchase
must prove that: (1) valuable services were
their sewer, water, and drainage facilities, which
rendered or materials furnished; (2) for the
was a constituent part of judgment in favor of
person sought to be charged; (3) which services
developers in their lawsuit against district for
and materials were accepted by the person sought
breach of contract, was not alternative ground
to be charged, used and enjoyed by him; (4)
upon which to sustain underlying judgment
under such circumstances as reasonably notified
awarding actual damages to developers for
the person sought to be charged that the plaintiff
breach of contract upon district's appeal from
in performing such services was expecting to be
said judgment; validity of trial court's declaration
paid by the person sought to be charged.
was wholly dependent on existence of contract
1 Cases that cite this headnote liability.
1 Cases that cite this headnote
[21] Evidence
Construction
[25] Declaratory Judgment
Water district's counsel's statement during Scope and extent of relief in general
closing argument to the effect that developers
A declaratory judgment action is not necessarily
provided compensable work to district was not
an action for affirmative relief.
judicial admission of liability in quantum meruit,
in developers' breach-of-contract lawsuit against Cases that cite this headnote
district, where it was evident from context of
argument that counsel was arguing that quantum
[26] Eminent Domain
meruit was not applicable; statement was not a
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
What Constitutes a Taking; Police and district disputed developers' contention that it
Other Powers Distinguished was obligated under the subject contracts to pay
To recover under a theory that property has been developers as soon as possible with funds other
taken by a governmental entity without adequate than voter-approved bond funds; district lacked
compensation, a plaintiff must establish the requisite intent. Vernon's Ann.Texas Const. Art.
following: (1) that the government entity 1, § 17.
intentionally performed certain acts; (2) that
3 Cases that cite this headnote
resulted in the taking of the property; (3) for
public use. Vernon's Ann.Texas Const. Art. 1, §
17. [30] Eminent Domain
Government contracts
Cases that cite this headnote
A governmental entity does not have the
requisite intent under constitutional-takings
[27] Eminent Domain jurisprudence when it withholds property or
Public Use money from an entity in a contract dispute.
For purposes of state constitutional provision Vernon's Ann.Texas Const. Art. 1, § 17.
prohibiting the taking of private property
Cases that cite this headnote
by a governmental entity without adequate
compensation, property is taken for a public
use only when there results to the public some
definite right or use in the undertaking. Vernon's
Ann.Texas Const. Art. 1, § 17. Attorneys and Law Firms
Cases that cite this headnote *739 Barry Abrams, Houston, for appellants.
Ramon G. Viada, III, Houston, for appellees.
[28] Eminent Domain
Questions for jury Panel consists of Justice LESLIE BROCK YATES and
Justice HUDSON.
Whether particular facts are enough to constitute
a taking in violation of state constitutional
provision prohibiting the taking of private
property by a governmental entity without OPINION
adequate compensation is a question of law.
LESLIE BROCK YATES, Justice.
Vernon's Ann.Texas Const. Art. 1, § 17.
Appellant Clear Lake City Water Authority (“the Authority”)
Cases that cite this headnote
appeals a judgment awarding actual damages for breach of
four contracts totaling $1,696,171, attorney's fees, pre-and
[29] Eminent Domain post-judgment interest, and costs in favor of appellees. The
Waters and Water Courses; Flooding judgment also declared that the Authority was obligated,
Eminent Domain under its contracts with appellees, to purchase appellees'
Drains and sewers sewer, water, and drainage facilities. Additionally, the
Authority board of directors was ordered to levy, assess, and
Water district's use and control of developer's
collect taxes or assessments to pay the judgment. For the
water, sewer, and drainage facilities pursuant
reasons stated below, we reverse and render the claims of
to underlying contracts with developers did
three of the plaintiffs, and reverse and remand the claims of
not constitute a taking of developers' property
the remaining plaintiff.
without compensation in violation of takings
clause of state constitution, although district
failed to compensate developers due to lack of
requisite voter approval of bond funds, where
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
Gayle Yoder, then a member of the board of directors of
the Authority and later its President, became concerned that
FACTUAL BACKGROUND
voters should be given a choice about authorizing bonds
The Authority is a conservation and reclamation district for developer reimbursements. She favored separating the
created by the Texas Legislature in 1963 to provide bond propositions to distinguish between what she termed the
water, sewer, and drainage facilities to the Clear *740 “necessities” of keeping the system running and developer
Lake area. Between 1993 and 1998, the Authority entered “subsidies.” She objected to the inclusion of developer
into contracts with appellees Kirby Lake Development, reimbursements in Proposition 1, and publicly took a position
Ltd. (“Kirby Lake”), Miter Development Company, LLC against the bond election as structured. Her opinion became
(“Miter”), Taylor Lake Ltd. (“Taylor Lake”), and University the subject of local newspaper articles, and at one point,
Development, Inc. (“University”), to pay a portion of the she distributed a memorandum detailing her opposition in
costs incurred in constructing water and sewer facilities her neighborhood of Taylor Lake Village. The memorandum
reflected that it was from “Gayle I. Yoder, Director, Clear
on properties appellees developed within the Authority. 1
Lake City Water Authority.”
Under each contract, entitled “Sales Agreement and Lease of
Facilities,” the developer agreed to lease the facilities to the
The May 2 election also included several directors' positions.
Authority at no charge until the Authority purchased them,
Two incumbent directors were challenged by Don Johnson
and the Authority agreed to reimburse the developer 70% of
and Elliott Cooper, who both ran on an anti-bond platform.
the costs of constructing the facilities. All of the contracts
They prepared “Vote No Bond$” campaign signs, some
except University's contract contained substantially the same
of which *741 Yoder distributed. The signs also stated
payment language.
“Stop using taxes to subsidize developers” and “CLC Water
The contracts contemplated that the primary source of funds Authority.” 2 Johnson posted a number of signs around the
for developer reimbursements would be the proceeds from Authority's building.
bond sales. In 1989, the voters within the Authority had
authorized the sale of $43.6 million in bonds for the purpose All the propositions submitted to the voters in the May
of reimbursing developers and paying for the installation 2 election failed, and Johnson and Cooper defeated the
and upkeep of the Authority's water, sewer, and drainage incumbent directors. Of the three voting precincts in the
system. The Authority subsequently reimbursed University Authority, the precinct that included Yoder's neighborhood of
for the facilities constructed in two of the four sections in its Taylor Lake Village (where she had distributed her memo to
development with the proceeds of one of the bond sales. By residents) defeated the bonds by the widest margin.
1997, however, all of the bonds authorized in 1989 had been
sold, so the Authority decided to call another bond election Because Proposition 1 failed and the Authority still required
to obtain voter approval for the sale of additional bonds to funds for maintenance and expansion of its system, the
be used for system needs and to pay for reimbursements to Authority decided to hold another bond election in October
developers, including University and the other appellees. 1998. This time, system needs were separated from developer
reimbursements into two propositions. As before, the “Vote
On March 12, 1998, the Authority voted to call a bond No Bond $” signs reappeared around the Authority building
election for May 2, 1998. It also voted to submit its and elsewhere, this time prompting a letter from the
bond proposals in three different propositions. Proposition 1 Authority's counsel requesting they be taken down because
requested voter authorization for bonds for system needs and they could be read to imply that the Authority was taking a
current developer reimbursements, including reimbursements position against the bonds.
to appellees. Propositions 2 and 3 were for future developer
reimbursements. The Authority also approved DEV–90, Ultimately, Proposition 1, requesting bonds for system needs,
which put into written policy the practice of requiring passed. However, Proposition 2, requesting bonds for funds
developers to pay 100% of the construction costs for facilities to reimburse developers—including appellees—failed. One
in their developments up front, and reimbursing them 70% of month later, in November 1998, the Authority changed
the costs from voter-approved bond funds. its DEV–90 policy on reimbursing developers to require
developers to pay 100% of the cost of water, sewer, and
drainage facilities they install in new subdivisions.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
motions, including a motion for directed verdict and judgment
When appellees were not paid for the facilities, they brought notwithstanding the verdict. This appeal followed.
suit against the Authority alleging breach of contract,
quantum meruit, and an unconstitutional taking based on the
Authority's use of the facilities to provide water, sewer, and
ISSUES ON APPEAL
drainage services to customers in appellees' developments.
Appellees also sought a writ of mandamus and a declaratory On appeal, the Authority raises seventeen issues (not
judgment that the Authority was obligated to fulfill its including subparts) that can be grouped in the following
obligation to purchase the facilities “as soon as possible” broad categories: (1) contract construction; (2) charge error;
with funds on hand or with the issuance of revenue bonds, (3) attorney fees; (4) pre- and post-judgment interest; and
which would not require voter approval. Appellees pleaded (5) quantum meruit. By cross-appeal, the appellees contend
for attorney's fees and costs based on sections 37.009 and the trial court erred in granting a directed verdict on their
38.001 of the Texas Civil Practice and Remedies Code, and takings claim. Our disposition of the Authority's contract
requested a jury trial. construction and charge error issues make it unnecessary
for us to address its remaining issues. We will then take
At trial, during questioning from appellees' attorney, Yoder up the appellees' alternative grounds for recovery based on
took the position that the revised DEV–90 policy requiring their quantum meruit claim and the trial court's declaratory
developers to pay 100% of the cost of constructing water, judgment. Lastly, we will address appellees' cross-point that
sewer, and drainage facilities within their developments the trial court erred in granting a directed verdict on their
applied to appellees, even though it was not in effect when takings claim.
they signed their contracts, and appellees' agreements call for
the Authority to pay 70% of the costs. However, she also
stated that the full board had not voted on whether to apply the I. The Authority's Issues
new policy to appellees. Don Johnson, when asked whether
he was opposed to spending any money the Authority has on A. The Construction of the Contracts
The Authority contends the payment provisions of the
hand to reimburse appellees, stated that the Authority “has
contracts were unambiguous and the Authority did not breach
evolved beyond the point of paying any kind of developer
those provisions. In response, appellees do not directly
subsidies. I think we are past that.” Johnson also testified
address whether the contracts were ambiguous. Instead, they
that he thought the Authority could just continue the lease
take aim at specific contract language and assert that, as they
arrangement indefinitely, so it would not have to pay for the
construe the language, the Authority breached the contracts
facilities and taxpayers would not be charged.
in several ways. Because the parties' arguments regarding the
contract language and the facts are often at cross-purposes,
The jury found breach of contract and awarded Kirby Lake
we will incorporate into our discussion as much of the parties'
$748,675.00, Miter $74,252.00, Taylor Lake $510,000.00,
arguments as required to resolve the issues raised.
and University $363,244.00. 3 The jury also *742 found
that appellees were entitled to recover in quantum meruit
and awarded the same amount of damages. The issue of 1. Were the Contracts Unambiguous?
attorney's fees was tried to the court. Appellees elected to The trial court determined the contracts were ambiguous
recover for breach of contract, and the trial court entered and instructed the jury to interpret them. However, the
judgment for $1,696,171.00 in actual damages, $442,398.56 trial court did not include special issues asking the jury to
in prejudgment interest, and $362,014.75 in attorney's fees, interpret specific provisions, so we do not know how the
plus post-judgment interest and costs. The trial court also jury interpreted the contracts or on what basis they found
declared that the Authority was obligated to purchase breach of contract. The Authority contends the payment
the facilities and ordered it to take any and all actions provisions of the contracts unambiguously provide that the
required to purchase them. The trial court further ordered the developers were to be paid only out of legally available
Authority, pursuant to Texas Water Code section 49.066(b), and allocated voter-approved bond funds, and while the
to levy, assess, and collect taxes or assessments to pay Authority could use funds from other sources to pay the
the judgment. The court denied the Authority's post-verdict developers, it was not obligated to do so. In contrast, appellees
contend the Authority agreed to pay “as soon as possible”
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
from any available source, including revenue bonds, which instrument. Columbia Gas Transmission Corp. v. New Ulm
4 Gas, Ltd., 940 S.W.2d 587, 589 (Tex.1996).
do not require voter approval. The payment provisions of
all *743 the contracts at issue are similarly worded, with
the exception of the University contract, which is discussed [8] An ambiguity does not arise simply because the parties
separately. advance conflicting interpretations of the contract. Forbau
v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex.1994);
We hold that the Authority is correct with regard to three of Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726, 727
the four contracts at issue: the Kirby Lake, Miter, and 1994 (Tex.1981). For an ambiguity to exist, both interpretations
Taylor Lake contracts. Accordingly, we reverse and render must be reasonable. Nat'l Union Fire Ins. Co., 907 S.W.2d at
judgment in favor of the Authority as to those contracts. With 520; see also Glover v. Nat'l Ins. Underwriters, 545 S.W.2d
regard to the University contract, we find that it is ambiguous. 755, 761 (Tex.1977). Thus, the appellate court must decide
However, as discussed in section I.B. below, charge error whether there is more than one reasonable interpretation of
requires that University's claims be remanded for new trial. the contract such that a fact issue was created concerning the
parties' intent. Columbia Gas Transmission, 940 S.W.2d at
589.
(a) The applicable law
[1] [2] The primary concern of a court in construing a
written contract is to ascertain the true intent of the parties as (b) The Kirby Lake, Miter, and 1994 Taylor Lake
expressed in the instrument. Lenape Res. Corp. v. Tennessee contracts
Gas Pipeline Co., 925 S.W.2d 565, 574 (Tex.1996); Coker The first two “whereas clauses” of the Kirby Lake, Miter, and
v. Coker, 650 S.W.2d 391, 393 (Tex.1983). To achieve this 1994 Taylor Lake contracts are identical:
objective, we examine and consider the entire writing in an
WHEREAS, the Authority is authorized to provide, among
effort to harmonize and give effect to all the provisions of the
other things, water supply, waste disposal and drainage
contract so that none will be rendered meaningless. Coker,
facilities to the land within its boundaries;
650 S.W.2d at 393. We construe a contract from a utilitarian
standpoint, bearing in mind the particular business activity WHEREAS, the Developer is developing land within the
sought to be served. Lenape Res., 925 S.W.2d at 574. Authority and desires *744 that water supply, waste
disposal, and drainage facilities be provided to such land
[3] [4] [5] If a written contract is so worded that it prior to the time at which the Authority can obtain voter
can be given a definite or certain legal meaning, then it approval and pay for the construction or acquisition of such
is not ambiguous and it can be construed as a matter of facilities with the proceeds of its bonds;....
law. Wal–Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 728
(Tex.2001); Lenape Res., 925 S.W.2d at 574. Parol evidence The three contracts also contain substantially the same
is not admissible for the purpose of creating an ambiguity. payment provision:
Nat'l Union Fire Ins. Co. of Pittsburgh, Pennsylvania, v. CBI
Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995). However, if PURCHASE AND ASSIGNMENT. Subject to other
the language of a contract is subject to two or more reasonable terms and provisions hereof, the Developer agrees to sell
interpretations, it is ambiguous. Id.; see also Lenape Res., 925 and the Authority agrees to purchase all completed portions
S.W.2d at 574. of the Facilities ... as soon as possible, but not more than
30 days after receipt of bond proceeds legally available
[6] [7] Whether a contract is ambiguous is a question and allocated by the Authority for payment therefore, in
of law for the court to decide by looking at the contract consideration of the purchase price defined in the following
as a whole in light of the circumstances present at the Section. It is expressly acknowledged and agreed by the
time the contract was executed. Nat'l Union Fire Ins. Co., parties hereto, that the Authority has no existing voter
907 S.W.2d at 520; see also Coker, 650 S.W.2d at 394. authorization to issue any bonds to pay for the cost of
Only when a contract is first determined to be ambiguous the Facilities, and does not anticipate that funds will be
may the courts consider the parties' interpretation and admit available for such costs without a voter approved bond
extraneous evidence to determine the true meaning of the sale for such purchase. The Authority intends to call a
bond election in the near future, but is not obligated to
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
do so, and the Authority cannot predict when, if ever, [10] [11] [12] Appellees argue that the payment provision
such an election and bond sale will occur, or when, if constitutes the Authority's promise to pay for the facilities,
ever, the Authority will have other funds available and and voter approval to sell bonds is not a condition precedent
allocated for the purchase of the Facilities. The Authority that excuses the Authority's obligation to pay. A condition
shall have the right to purchase the Facilities with funds precedent may be either a condition to the formation of
available from a source other than a bond sale for such a contract or to an obligation to perform an existing
purpose, but shall have no obligation to do so. The agreement. Hohenberg Bros. Co. v. George E. Gibbons &
Authority does agree, however, that it shall include in Co., 537 S.W.2d 1, 3 (Tex.1976). Conditions precedent to
any bond election it does hold subsequent to the effective an obligation to perform are those acts or events, which
date of this Agreement bond authorization in an amount occur subsequently to the making of a contract, that must
sufficient to pay the purchase price of the Facilities. The occur before there is a right to immediate performance and
Authority further agrees that it shall include purchase of before there is a breach of contractual duty. Id. However,
the Facilities in any bond issue sold subsequent to any when the intent of the parties is doubtful or when a
condition would impose an absurd or impossible result, then
such election. 5
the agreement will be interpreted as creating a covenant
rather than a condition. Id. Because of their harshness in
[9] We have carefully reviewed the contracts in their
operation, conditions are not favorites of the law. Criswell v.
entirety, and conclude that the language of the above
European Crossroads Shopping Ctr., Ltd., 792 S.W.2d 945,
provisions, as well as the remainder of the contracts,
948 (Tex.1990). Thus, in construing a contract, forfeiture by
demonstrate that these contracts unambiguously require the
finding a condition precedent is to be avoided when another
Authority to reimburse appellees only with voter-approved
reasonable reading of the contract is possible. Id.
bond funds that are legally available and allocated for that
purpose. While the Authority obligated itself to purchase the
We reject appellees' contention that the receipt of voter-
completed facilities “as soon as possible,” that requirement
approved bond funds is not a condition precedent, because
did not arise until after the Authority received the proceeds
the payment provision of the contracts unambiguously
of voter-approved bond funds. That the bond funds were to
provides that the Authority's obligation to pay is expressly
be voter-approved bond funds, as opposed to other types of
conditioned upon the receipt of voter-approved bond funds.
bonds or funds, is also evident in the payment provision: “It
See McWilliams v. Gilbert, 715 S.W.2d 761, 763–64
is expressly acknowledged and agreed by the parties hereto,
(Tex.App.-Houston [1st Dist.] 1986, no writ) (holding
that the Authority has no existing voter authorization to issue
that indemnity agreement unambiguously restricted general
any bonds to pay for the cost of the Facilities, and does not
partners' reimbursement from partner to designated specific
anticipate that funds will be available for such costs without a
source); see also City of Seymour v. Municipal Acceptance
voter approved bond sale for such purchase.” This statement,
Corp., 96 S.W.2d 814, 816–17 (Tex.Civ.App.-Dallas 1936,
in the context of the entire provision, and in conjunction with
writ dism'd by agreement) (holding that contract with city
other sections of the contracts, unequivocally indicates that
limiting source of payment to net revenues of light plant
the only funds the Authority was required to use to purchase
created a condition precedent to city's liability). To construe
the facilities was voter-approved bond funds. This conclusion
the payment provisions another way would be contrary to the
is confirmed by the explicit language that the Authority could,
plain language of the contracts.
but was not obligated to, use other sources of payment: “The
Authority *745 shall have the right to purchase the Facilities
Moreover, the failure of the condition precedent at a given
with funds available from a source other than a bond sale
time does not result in a forfeiture, only a delay in payment.
for such purpose, but shall have no obligation to do so.”
Nowhere in the contracts does it provide that the failure
Additionally, there is no obligation on the Authority to ensure
to obtain voter approval forfeits appellees' right to receive
that a bond election occurs, or that the voters give their
payment for their facilities. The Authority is not excused
approval: “The Authority cannot predict when, if ever, such
from performing its obligation to pay when voters do not,
an election and bond sale will occur, or when, if ever, the
in a particular election, approve the sale of bond funds to
Authority will have other funds available and allocated for the
pay appellees; its obligation to pay simply does not arise
purchase of the Facilities.”
at that time. That it may have appeared highly unlikely,
at the time appellees entered to these contracts, that voters
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
would not approve a bond sale is no reason to rewrite the to reasonably and efficiently integrate any and all other
plain language of the contracts. This conclusion is further eligible Authority projects in such sale. The Authority
supported by the fact that, under the contracts, the Authority agrees to proceed with due diligence to consummate the
was permitted to lease the facilities until such time as it issuance of such bonds and the acquisition of the Facilities
purchased them—a provision that demonstrates the parties under such circumstances.
contemplated a continuing contractual relationship of an
According to appellees, the Authority breached its “due
unspecified duration. 6
diligence” obligation by drawing the public's attention
to a misleading distinction between system needs and
*746 Appellees contend that even if the receipt of voter-
developer “subsidies,” opposing the bond propositions, and
approved bond funds is a condition precedent to payment, the
separating the propositions for developer reimbursements
Authority's actions amount to a repudiation of the contracts.
from the proposition for system needs, which caused the
Specifically, appellees argue that (1) the trial testimony of
bond elections to fail. Appellees also contend these actions
Yoder and Johnson amounts to a judicial admission that the
constituted a violation of the Authority's ethical duties. We
Authority has no intention of complying with the contracts,
disagree.
(2) voters authorized bonds to be sold to reimburse University
and Kirby Lake, and (3) the Authority had over $5 million
As an initial matter, it is plain that the provision imposes no
in surplus funds from voter-approved bond sales it could
obligation on the Authority *747 to obtain voter approval:
have used to pay appellees for their facilities. First, while the
“the Authority is not obligated to obtain approval from
statements of Yoder and Johnson may reflect their individual
the voters of bonds to finance the purchase of facilities....”
beliefs, appellees cite no authority to support their contention
The remainder of the sentence also makes clear that this
that these statements may be attributed to the Authority,
provision does not apply until such time as voter approval is
and the jury was charged that action by the Authority
obtained: “but if voter approval is obtained, then it shall seek
requires a vote of at least a quorum of the directors in a
Commission approval of the bonds, and shall proceed with
public meeting in compliance with the Open Meetings Act.
due diligence to consummate the issuance of the bonds and
Second, the record shows that the voters approved the sale of
acquisition of the facilities” (emphasis added). The remainder
bonds for improvements within the Authority's boundaries,
of the paragraph details the Authority's obligations “upon the
not specifically to University and Kirby Lake, as appellees
successful passage of a bond election.” We do not interpret
contend. Third, as we have held, while the Authority could
this provision to require the Authority to proceed with due
use other funds to pay for appellees' facilities, it was not
diligence to obtain voter approval. Even if the provision
obligated to do so with any funds other than those from
could be read as appellees suggest, Yoder's actions, such
a voter-approved bond sale for that purpose; there was no
as distributing memorandums in her neighborhood, publicly
obligation that the Authority use funds from previous bond
opposing the structure of the propositions, and referring to
sales.
the reimbursements as “subsidies,” are not official acts of the
Authority. Webster v. Texas & Pac. Motor Transp. Co., 140
(c) Appellees' evidence of breach Tex. 131, 134–35, 166 S.W.2d 75, 76–77 (1942) (holding
Appellees place great emphasis on the following provision that individual members acting separately and not in a public
in the contracts, which appellees call the “due diligence” meeting do not bind the board of a governmental entity); King
requirement: v. Guerra, 1 S.W.2d 373, 374 (Tex.Civ.App.-San Antonio
1927, writ ref'd) (same); see also City of Corpus Christi v.
ISSUANCE OF BONDS: The Authority shall have no Bayfront Assoc., Ltd., 814 S.W.2d 98, 105–06 (Tex.App.-
obligation to obtain approval from the voters of bonds to Corpus Christi 1991, writ denied) (inappropriate statements
finance purchase of the Facilities, but if such voter approval by city council member on city stationery were not binding
is obtained, the Authority shall sell Authority bonds for on city). Appellees cite no contradictory authority.
the purpose of purchasing the Facilities. The Authority
agrees to commence to obtain approval by the [Texas Appellees also point to the Authority's “official acts”
Natural Resource Conservation] Commission of the bonds of issuing official newsletters which, appellees contend,
to finance purchase of the facilities upon the successful signaled the voters to vote against the propositions, and
passage of a bond election subsequent to the effective date separating the propositions in the October 1998 elections.
of this Agreement, but subject to the right of the Authority However, appellees identify nothing in the newsletters that
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
indicated that the Authority was advising voters to vote election in which the voters approved the issuance of $43.6
against the bond proposition for developer reimbursements. million in bonds: 9
We also find no language in the contracts to support the
contention that separating the propositions was a breach
of contract. The contracts contain no requirement that the WHEREAS, the Authority is authorized to provide, among
ballot language be structured in any particular way; all that other things, water supply, waste disposal, and drainage
was required was that the developers be included in any facilities to the land within its boundaries and held a bond
subsequent election, and they were. 7 election on October 14, 1989 at which the voters authorized
the issuance of $43.6 million in bonds for those purposes;
Appellees similarly argue the “consents and approvals” The second and third whereas clauses provide as follows:
paragraph that appears in each of the contracts obligated
WHEREAS, the Authority desires that such facilities be
the Authority not to unreasonably withhold its consent or
provided prior to the sale of its bonds to pay therefor,
approval to use other available funds to pay appellees. This
because the interim growth of taxable values in the
paragraph, which appears toward the end of the contracts
Authority should make such bonds saleable upon better
along with other miscellaneous provisions, provides as
terms and will permit the Authority to meet more easily
follows:
debt service requirements on such bonds and because
CONSENTS AND APPROVALS. Whenever the consent timely construction of such facilities will prevent further
or approval of either party hereto, or of any engineer of escalation of construction costs;
[sic] agent therefore, shall be required under the provisions
WHEREAS, the Authority desires that such facilities be
hereof, such consent or approval shall not be unreasonably
provided prior to the sale of its bonds to pay therefor,
withheld.
because the interim growth of taxable values in the
We disagree with appellees' interpretation of this provision. Authority should make such bonds *749 saleable upon
The payment provisions contain no language that the better terms and will permit the Authority to meet
Authority is required to “consent” or give its “approval” to more easily debt service requirements on such bonds
and because timely construction of such facilities will
make this provision applicable. 8 *748 Moreover, appellees'
prevent further escalation of construction costs;
interpretation conflicts with the express acknowledgment in
the contracts that the Authority “shall have the right to The University contract also contains additional language
purchase the Facilities with funds available from a source not found in the payment provisions of the other contracts,
other than a bond sale for such purpose, but shall have which is indicated by added italics:
no obligation to do so.” We cannot agree that this general
provision trumps the express language of the payment Section 2.01. PURCHASE AND ASSIGNMENT.
provisions. Subject to the other terms and provisions hereof, the
Developer agrees to sell and the Authority agrees to
Therefore, we hold that the Kirby Lake, Miter, and Taylor purchase all completed portions of the Facilities ... as
Lake contracts unambiguously require the receipt of legally soon as possible, but not more than 30 days after receipt
available and allocated voter-approved bond funds as a of bond proceeds, or other funds not required for the
condition precedent to reimbursement. We further hold that payment of operating and maintenance expenses or the
the actions of Yoder and the other Authority board members payment of debt service on any bonds of the Authority,
in connection with the bond elections, the statements of Yoder legally available and allocated by the Authority for
and Johnson at trial, and the wording of the bond propositions payment therefor, in consideration of the purchase price
in May and October of 1998 do not constitute a breach of the in the following Section.
contracts as a matter of law.
This section does not contain the express acknowledgments
and “no obligation” language found in the other contracts.
(d) The University contract Appellees do not address whether the contract is
[13] The University contract, however, is different. Unlike ambiguous, but they interpret this provision to mean that
the other contracts, the University contract expressly the Authority agreed to purchase the facilities as soon as
acknowledges, in the first whereas clause, the 1989 bond possible from any available source of funds. We disagree
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
with appellees' interpretation and find that the University authorization is available (such authorization is presently
contract is ambiguous. limited) or would be included in a future bond authorization
The first whereas clause of the University contract election that would require voter approval.” Kawaja testified
specifically acknowledges that voters authorized the issuance that he understood that he was to be paid as described in
of $43.6 million in bonds for the purpose of the development Molbert's letter.
of water supply, waste disposal, and drainage facilities on
land within the Authority, including the land later purchased However, as noted above, the “Purchase and Assignment”
by University. In the second and third whereas clauses, the section provides that the Authority agrees to pay for the
parties acknowledge that the development of the facilities facilities with either bond proceeds or “other funds not
prior to the time the Authority can pay for them with bond required for the payment of operating and maintenance
proceeds is desired and advantageous to both parties. The expenses or the payment of debt service on any bonds of the
bonds referred to in the second and third whereas clauses refer Authority.” Additionally, in the “Purchase Price” section's
back to the bonds authorized by the voters in the first whereas provision for the payment of interest, the parties agree to
clause. Therefore, the contract appears to contemplate that a formula for the calculation of the interest, “provided,
University was to be paid with voter-approved bond funds. 10 however, that if such purchase price is paid in whole or in
part from proceeds of bonds of the Authority, such purchase
Other provisions in the University contract similarly price or part thereof shall be subject to the Rules and
demonstrate that such bond funds were the intended source applicable orders of the Commission, and the Development
of payment. In the “Purchase Price” section, the Authority Policies of the Authority then in effect” (emphasis added).
agreed to pay an amount equal to specified costs of the This language further suggests that an alternate, or additional,
developer, plus interest based on the interest rate “borne by source of funding was contemplated. Moreover, unlike the
the Authority's bonds issued to reimburse the Developer for other contracts, the University contract does not contain the
these amounts....” In the next section, the Authority agreed express language that the Authority may, but is not obligated
to “proceed with due diligence” to obtain the Commission's to, pay for the facilities with funds other than bond funds.
approval of a bond offering to finance the purchase of
University's contemplated facilities. In a separate section, the Nevertheless, the extent to which the “other funds” language
timing of University's obligation to build street improvements may apply is unclear. It does not appear to encompass a
is tied to the Authority's “delivery of its bonds issued to complete alternative to payment with bond proceeds, because
finance the acquisition and construction of the Facilities.” the references to bond funds throughout the contract indicate
Similarly, the developer agrees to provide a letter of credit that such funds were intended to be at least a primary source
to cover the cost of street improvements unless the street of funding. Additionally, there is no alternative language for
improvements are completed by the date the Authority those provisions of the contract that are tied to the issuance
advertises “the sale of its bonds issued to finance acquisition or sale of bonds, with the exception of the calculation of
and construction of the Facilities.” interest. Consequently, the University contract is susceptible
to two competing interpretations: the facilities are to be paid
Moreover, evidence of the circumstances surrounding the for with voter-approved bond funds; or, the facilities are to
execution of the contract support the construction that the be paid for with either voter-approved bond funds or the
facilities *750 were to be paid for with voter-approved “other funds” specified. Therefore, we find that the payment
bond funds. The minutes of the October 14, 1993 board of language of the University contract, in contrast to the other
directors meeting of the Authority reflects that the board contracts discussed above, is ambiguous.
approved University's project “to be funded with bond
funds.” In a follow-up letter to University's principal, George [14] [15] Having found that the University contract
Kawaja, from the Authority's general manager, Wilbert is ambiguous, we must next address the Authority's
Molbert, Kawaja was informed that the Authority had agreed arguments that any interpretation of the contracts must be
to participate in the construction costs for the proposed harmonized with certain “special considerations” applicable
water, sewer, and drainage facilities for the project “in to government contracts, or else the contracts will be rendered
accordance with the Authority's developmental policies.” void. As an initial matter, the Authority argues that, as a
Kawaja also was informed that the Authority's contribution governmental entity, it has legislative discretion to allocate
was to be financed “by a future bond sale if adequate bonding public bond funds for the benefit of the public, and the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
courts have no authority to interfere unless the governing (Tex.App.-Houston [1st Dist.] 1995, writ denied); City of
body has acted illegally or abused its substantial discretion. Houston v. Moody, 572 S.W.2d 13 (Tex.Civ.App.-Houston
See Barrington v. Cokinos, 161 Tex. 136, 338 S.W.2d [1st Dist.] 1978, writ ref'd n.r.e.); Brady v. Hidalgo County
133, 142–43 (1960); Inverness Forest Improvement Dist. v. Water Control & Improvement Dist. No. 12, 56 S.W.2d 298
Hardy Street Investors, 541 S.W.2d 454, 460 (Tex.Civ.App.- (Tex.Civ.App.-San Antonio 1932), aff'd, 127 Tex. 123, 91
Houston [1st Dist.] 1976, writ ref'd n.r.e.). However, once S.W.2d 1058 (1936). 11
the Authority exercises its discretion to enter into a valid
and *751 enforceable contract, it no longer has unfettered The Authority also argues that the Texas Constitution directly
“legislative discretion” to decide what its obligations are limits the power of water districts to incur debt. See TEX.
and how it will perform those obligations. Whether the CONST. art. XVI, § 59(c). Article XVI, section 59(c)
contracts here are enforceable and whether the Authority provides in part that “[t]he Legislature *752 shall authorize
breached them is subject to review by the courts. See, e.g., all such indebtedness as may be necessary to provide all
Winograd v. Clear Lake City Water Auth., 811 S.W.2d 147 improvements and the maintenance thereof requisite to the
(Tex.App.-Houston [1st Dist.] 1991, writ denied) (affirming achievement of the purposes of this amendment.” See id. The
judgment against Authority on jury verdict finding breach only limitation on that indebtedness is the requirement of
of contract and denial of due process and equal protection); voter approval for indebtedness to be paid by taxes. See id.;
Clear Lake City Water Auth. v. Clear Lake Utils. Co., 549 Lower Colorado River Auth. v. McCraw, 125 Tex. 268, 274,
S.W.2d 385 (Tex.1977) (construing Authority's obligations 83 S.W.2d 629, 633 (1935); City of Houston v. Moody, 572
under a contract); see also TEX. WATER CODE § 49.066(a) S.W.2d 13, 15–16 (Tex.Civ.App.-Houston [1st Dist.] 1978,
(“district may sue and be sued in the courts of this state”). writ ref'd n.r.e.). The Authority cites no case law applying this
constitutional provision to invalidate or limit a water district's
The Authority also contends that the contracts must be contract in analogous circumstances.
construed to allow it to decide whether and how it will
pay because the Authority cannot surrender its legislative In summary, we hold that the University contract is
discretion to decide whether and how to allocate public funds. ambiguous, and we reject the Authority's arguments that our
In essence, the Authority argues a “future board” of the construction of the contract violates constitutional principles
Authority cannot be required to allocate funds for developer or impermissibly impinges on its governmental or legislative
reimbursement. In support of this assertion, the Authority functions. However, as discussed in the next section, we find
cites a single case, Marco Dev. Corp. v. City of Cedar the trial court erred in submitting a single liability question
Falls, 473 N.W.2d 41 (Iowa 1991). In Marco Development, incorporating an invalid theory of recovery. Accordingly, we
the court refused to enforce the city's agreement to widen reverse the trial court's judgment in favor of University and
a street next to the developer's mall project because it
remand for trial. 12
found that the city could not contract for the performance
of its governmental functions. See id. at 42–43. We find
Marco Development inapplicable because here the Authority B. Casteel Charge Error
has only agreed to pay for facilities; the fact that the The Authority next contends that there is Casteel error
payment is to be “allocated” for that purpose does not, in the broad-form submission of the breach of contract
in this circumstance, impermissibly restrict its ability to liability question, because it cannot be determined whether
undertake its governmental functions. Indeed, the Authority the jury applied an invalid theory to find a breach. For the
is authorized by statute to contract for the joint construction, same reason, the Authority asserts the damages question
financing, ownership, and operation of water and drainage is defective. Specifically, the Authority contends that the
facilities, and such contracts may be of unlimited duration. developers alleged three theories of breach of contract in their
See TEX. WATER CODE §§ 49.211, 213(a) & 49.213(c) pleadings, and that all three are invalid: (1) breach of the pay
(4). Nothing in the statutes governing the Authority limits provision, (2) the “prevention doctrine,” and (3) the “split
its ability to pay its contractual obligations, and Texas courts format” theory. As to the first of these—breach of the pay
have routinely enforced contracts requiring water districts provision—we have determined that University's breach of
to pay in the future. See, e.g., Quincy Lee Co. v. Lodal & contract claim was properly before the jury. However, we
Bain Eng'rs, Inc., 602 S.W.2d 262, 264 (Tex.1980); Harris agree with the Authority that the other breach of contract
County Mun. Util. Dist. No. 48 v. Mitchell, 915 S.W.2d 859 theories were invalid and should not have been considered
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
by the jury as a basis for breach of contract. Because we the error was harmful, and reverse and remand University's
cannot determine from the jury's answers the basis for their claims for new trial.
finding that the Authority failed to comply with its contracts,
we find that the error is harmful, and we reverse and remand
University's claims for trial. II. Appellees' Alternative Grounds for Recovery
A. Quantum Meruit
[16] [17] Here, the trial court submitted a single question
[19] [20] Alternatively, appellees argue that they should be
on liability under the contracts, which asked the jury the
allowed to recover on their quantum meruit claim. Quantum
following: “Did the Water Authority fail to comply with the
meruit is an equitable remedy which does not arise out of a
sales agreements, if any, entered into with the respective
contract, but is independent of it. Vortt Exploration Co. v.
Plaintiffs?” 13 Beneath the question was a line for each Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex.1990). To
developer in which the jury was to answer “yes” or “no.” At recover under quantum meruit, a claimant must prove that: (1)
the charge conference, the Authority timely and specifically valuable services were rendered or materials furnished; (2)
objected to the question on the grounds now raised. The for the person sought to be charged; (3) which services and
jury answered “yes” for each appellee, except as to the 1998 materials were accepted by the person sought to be charged,
Taylor Lake contract. used and enjoyed by him; (4) under such circumstances as
reasonably notified the person sought to be charged that the
[18] As stated above, the two theories we find invalid are, plaintiff in performing such services was expecting to be paid
as referred to by the Authority, the “prevention doctrine” by the person sought to be charged. Id.
and the “split format” theory. The “prevention doctrine”
refers to actions of certain members of the Authority's board [21] Appellants first contend that they are entitled to recover
during *753 the May and October 1998 bond elections on quantum meruit because liability was judicially admitted
because the developers allege that those actions prevented the by the Authority's counsel in closing argument. Appellants
passage of the bond proposals that would have authorized point to the statements by the Authority's counsel during his
the sale of additional bonds to pay them. The “split format discussion of the jury charge, when he said that the jury
theory” refers to the developers' argument that the Authority's question on quantum meruit liability should be answered
decision to split the bond propositions in the October 1998 “yes” and told the jury that, as to whether appellees provided
bond election into one for developer reimbursements and compensable work to the Authority, “Of course. We've never
one for water system necessities caused the bond proposition disputed that. This issue isn't whether the private developers
for developer reimbursements to fail. Both were specifically did something of value. The issue is when and how they
alleged in appellees' petition as bases for breach of contract. ought to be paid.” Appellees also point to the Authority's
As we have already discussed in section I.A.(1)(c) above, counsel's arguments to the jury that they should not award
we do not find either the prevention doctrine or the split more than the 70% figure calculated by appellees' expert, and
format theory to be a valid basis for breach of contract in requesting that the jury award that amount as the reasonable
this case. Under Crown Life Insurance Co. v. Casteel, 22 value of the compensable work performed by the plaintiffs.
S.W.3d 378 (Tex.2000), “when a single broad-form liability We have reviewed the record and find that the statements of
question erroneously commingles valid and invalid liability the Authority's counsel do not constitute a judicial admission.
theories and the appellant's objection is timely and specific,
the error is harmful when it cannot be determined whether the *754 [22] A judicial admission must be clear, deliberate,
improperly submitted theories formed the sole basis for the and unequivocal. Regency Advantage Ltd. P'ship v. Bingo
jury's finding.” Id. at 389. Here, we are unable to determine Idea–Watauga, Inc., 936 S.W.2d 275, 278 (Tex.1996).
whether the jury based its conclusion on the actions of Yoder During closing argument, the Authority's counsel began his
or other board members in opposing the bond propositions for discussion of the jury question on quantum meruit liability
developer reimbursement, or on the Authority's decision to by stating that “this one should not be applicable.” He went
split the bond propositions, or something else. The problem on to argue that whether appellees did something of value
is compounded by the trial court's instruction to the jury to was undisputed—what was at issue was whether they had
interpret the contracts without specifying which provisions contractually agreed to be paid for that work when the voters
they were to interpret. Therefore, we must conclude that approved payment from bond proceeds:
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Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
not argue that any of these exceptions are applicable to them.
This issue isn't whether the private developers did In any event, we do not find the stated exceptions applicable
something of value. The issue is how and when they ought to the facts of this case; therefore, we hold that the existence
to be paid. of express contracts prohibits appellees from recovering on
the alternative ground of quantum meruit.
Question three should be answered yes. They were going
to be paid 70 percent of their reimbursable expenses out of
voter-approved bond funds. That's an easy one. They may B. Declaratory Judgment
still be paid, if, as and when a future election authorizes the [24] [25] Appellees also argue that the trial court's
use of funds to pay them. And as the Court told you, this is declaratory judgment is an alternative ground for the
an unlimited duration contract. judgment which the Authority did not appeal. Appellees refer
to that part of the reformed final *755 judgment in which
The Authority's counsel also addressed the question of
the trial court ordered that “Pursuant to Chapter 37 of TEX.
quantum meruit damages by arguing that under the contracts,
CIV. PRAC. & REM CODE, the Clear Lake City Water
the developers were only going to get reimbursed 70% of
Authority is obligated under its contract with Plaintiffs to
the cost of the facilities, and therefore they should not be
purchase Plaintiffs' sewer, water, and drainage Facilities and
compensated for the reasonable value of their services in an
its Board of Directors shall take any and all actions required to
amount greater than the amount they would have received
purchase the Facilities.” Appellees contend that the Authority
under the contracts.
did not raise any challenge in its brief to this declaration, and
any complaint about it is therefore waived. They also contend
We do not find the Authority's statements to be a “clear,
that the Authority judicially admitted what a reasonable price
deliberate, and unequivocal” admission of quantum meruit
for the facilities would be. For this assertion, appellees again
liability. It is evident from the context that counsel was
rely on the Authority's counsel's closing remarks about the
arguing that quantum meruit was not applicable, but if the
reasonable value of the compensable work performed by the
jury was going to answer it in favor of appellees, they should
plaintiffs in his statements to the jury regarding their answer
award no more than the amount they agreed to be paid
to the quantum meruit damages question discussed above.
under the contracts. Even if counsel's statement that it was
However, a declaratory judgment action is not necessarily
“undisputed” that appellees “did something of value” were
an action for affirmative relief. See Republic Ins. Co. v.
construed as an admission, at most it addresses only the first
Davis, 856 S.W.2d 158, 164 (Tex.1993). The relief provided
of the four necessary elements of quantum meruit. Therefore,
under the Declaratory Judgments Act is remedial only, and it
we reject appellees' argument that the Authority judicially
serves only “ ‘to settle and to afford relief from uncertainty
admitted liability in quantum meruit.
and insecurity with respect to rights, status, and other legal
relations.’ ” Id. (citing TEX. CIV. PRAC. & REM.CODE §
[23] Appellees next argue that they satisfy the elements
37.002(b)). Here, the Authority has requested that we reverse
of quantum meruit because the Authority has accepted the
“the judgment,” which subsumes the declaratory judgment,
facilities and is using them to provide water and sewer
because appellees' contract claims are infirm. The viability
services to customers within its boundaries in accordance
of the trial court's declaration is wholly dependent upon the
with its statutory duties, and it was reasonably notified
existence of the contract liability the Authority challenges.
that appellees expected payment for the facilities. However,
Because we have found the Authority is not liable under its
recovery in quantum meruit is generally not available when
contracts with appellees, the relief granted pursuant to the Act
there is an express contract covering the services or materials
cannot be sustained. Therefore, we hold that the trial court's
furnished. See Vortt, 787 S.W.2d at 944. In their brief,
declaration does not constitute an alternative ground upon
appellees mention that the existence of an express contract
which to sustain the judgment.
will not defeat a recovery in quantum meruit when the
contract is deemed invalid, abandoned, or if it is partially
performed without the fault of the party seeking to recover in III. Appellees' Cross–Point on Their Takings Claim
quantum meruit, citing W & W Oil Co. v. Capps, 784 S.W.2d [26] [27] [28] In a single cross-point, appellees contend
536, 537–38 (Tex.App.-Tyler 1990, no writ), and Angroson, the trial court erred in granting the Authority's directed verdict
Inc. v. Independent Communications, Inc., 711 S.W.2d 268, on their claim that the Authority's use and control of the
271–72 (Tex.App.-Dallas 1986, writ ref'd n.r.e.), but they do facilities constitutes a taking of appellees' property without
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
of right to the extent it had a good faith belief that its
compensation in violation of Article I, Section 17 of the
actions were justified due to disagreements over payment
Texas Constitution. To recover under a theory that property
due or performance under the contract.”). Here, the Authority
has been taken by a governmental entity without adequate
disputed appellees' contention that it was obligated under
compensation, a plaintiff must establish the following: (1)
the contracts to pay appellees for their facilities as soon
that the government entity intentionally performed certain
as possible with any available funds; therefore, it lacks the
acts; (2) that resulted in the taking of the property; (3)
requisite intent. Accordingly, we overrule appellees' cross-
for public use. Gen. Servs. Comm'n v. Little–Tex Insulation
point.
Co., 39 S.W.3d 591, 598 (Tex.2001); Loyd v. ECO Res.,
Inc., 956 S.W.2d 110, 128 (Tex.App.-Houston [14th Dist.]
1997, no writ). Property is taken for a public use only when
there results to the public some definite right or use in the CONCLUSION
undertaking. Loyd, 956 S.W.2d at 128. Whether particular
facts are enough to constitute a taking is a question of law. We hold that the Kirby Lake, Miter, and Taylor Lake
Little–Tex Insulation, 39 S.W.3d at 598. contracts unambiguously require the receipt of voter-
approved bond funds as a condition precedent to payment by
[29] [30] Appellees argue that the evidence was sufficient the Authority; accordingly, we reverse and render judgment
to submit the claim to the jury, because it showed that in favor of the Authority against Kirby Lake, Miter, and
the Authority, a governmental entity, took possession of Taylor Lake. We further hold that University's breach of
appellees' facilities for public use to provide residents of the contract claims are reversed and remanded for a new trial.
district with water, sewer, and drainage services, but has We further hold that the trial court did not err in granting the
not, and said it will not, pay for the facilities. However, Authority's motion for directed verdict on appellees' takings
a governmental entity does not have the requisite intent claim.
under constitutional-takings jurisprudence when it withholds
property or money from an entity in a contract dispute.
See Little–Tex, 39 S.W.3d at 598–99; see also Green Int'l, Former Chief Justice SCOTT BRISTER not participating.
Inc. v. State, 877 S.W.2d 428, 434 (Tex.App.-Austin 1994,
writ dism'd) (“Even if the government were to withhold All Citations
property or payment it believed to be due the *756 other
party, the government would still be acting within the color 123 S.W.3d 735
Footnotes
1 Kirby Lake, Miter and University each entered into one contract with the Authority. Taylor Lake entered into two contracts
with the Authority, one in 1994 and one in 1998, because the Authority was not immediately able to annex a portion of
the property Taylor Lake sought to develop.
2 Apparently, the signs also included a date that was taped over for use in the later bond election held in October 1998.
3 The jury found that the Authority failed to comply with each of the contracts except the 1998 Taylor Lake contract, and
did not award damages for that contract. Taylor Lake does not appeal this finding.
4 In addition to revenue bonds, appellees contend that the Authority could pay with surplus funds from the sale of ad
valorem tax bonds or cash on hand.
5 The bold and italicized portions are reproduced as they appear in the Kirby Lake and Miter contracts. The provision in the
1994 Taylor Lake contract consists of uniform characters without emphasis. The 1994 Taylor Lake contract also specifies
that “The Authority intends to call a bond election in March or May of 1994” instead of “in the near future.”
6 The Authority, in addition to arguing that the receipt of voter-approved bond funds is a condition precedent to payment
under the contracts, also contended that the language in the payment provision of the contracts that the funds must be
“legally available” likewise constituted a condition precedent to payment. Because no funds became “legally available” for
payment, the Authority urges, the condition precedent was not fulfilled and there can be no breach of contract. However,
we do not find the phrase “legally available” in the context of the payment provisions to constitute a condition precedent.
At most, it simply recognizes the manner and mechanism by which the Authority would authorize the expenditures.
7 The Authority also argues, as additional support for its contention that it did not breach the contracts by refusing to
combine the bond elections, that the October 1998 election was outside the scope of the Kirby Lake, Miter, and Taylor
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
Clear Lake City Water Authority v. Kirby Lake Development, Ltd., 123 S.W.3d 735 (2003)
Lake contracts because it was only required to include a proposition for developer reimbursements in one election. We
express no opinion on the Authority's interpretation of the provision, as appellees make no argument in response and
neither party raises this interpretation of the provision as an issue.
8 In contrast, other provisions of the contracts expressly incorporate this provision. For example, section 1.01 of the
University contract, dealing with construction of the facilities, provides “[a]ny and all Contracts or change orders to the
Contracts shall be subject to approval by the board of Directors of the Authority (the “Board”) (which approval shall not be
unreasonably withheld).” Likewise, in section 4.01, dealing with the construction of street improvements, the developer
agrees to complete and pay for street improvements in the subdivision “as described in the respective plats thereof (as
the same may hereafter be amended either without effect to the size or location of such Street Improvements or with
the consent of the Authority) in accordance with the plans and specifications therefor approved by the engineers for the
Authority, which approval shall not unreasonably be withheld....”
9 Appellees also contend the area that became the subject of the Kirby Lake contract was included in the 1989 bond
election, but there is no reference to the bond election in the Kirby Lake contract, which was executed in July of 1997,
as there is in the University contract. Moreover, Kirby Lake did not enter into its contract with the Authority until after
all the 1989 bond proceeds had been spent or allocated for other purposes. As reflected in the minutes of the public
meeting in which the Authority voted to authorize the contract with Kirby Lake, Jack Beard, Kirby Lake's principal, and
the Authority stipulated to the following:
Developer reimbursements are strictly subject to the availability of appropriate bond funds. At this time the Authority
and the Developer, Kirby Lake Development, Inc. acknowledge that such funds are not available and that the
availability of such funds is subject to voter approval.
10 Sections 1 and 2 of the University development were ultimately included in a 1997 bond sale, and University was paid
for those sections out of those proceeds. Sections 3 and 4 were put on the May 1998 ballot, but the proposition failed,
and University was not paid for those sections.
11 In connection with this issue, the Authority argues that because the Texas Constitution limits the legislature's discretion
to create debt, see TEX. CONST. art. III, §§ 44, 49a, 50; art. IV, § 14; art. VIII, § 6, the Authority, as a creation of the
legislature, is similarly limited and therefore cannot bind “future boards” of the Authority to allocate funds to pay for the
facilities. We are unpersuaded that the constitutional limitations on legislative appropriations is applicable here, and the
Authority cites no case law in which these limitations were applied to a water district's contractual obligations. Similarly, the
Authority argues that any interpretation of the contract that implies a requirement to appropriate future public funds, when
no such requirement clearly and unmistakably appears on the face of the contract, violates the constitutional requirement
of separation of powers. Again, we disagree that the contractual agreement to pay a portion of the cost of the facilities
in these contracts impinges on the Authority's governmental functions.
12 Because of our disposition of the case, we do not reach the Authority's argument that there was legally and factually
insufficient evidence of developer interest, which was part of the damages award.
13 The question also included this instruction: “It is your duty to interpret the meaning of the written agreements of the parties
in this case. To interpret each agreement, you must consider, in addition to the language in the agreements, the facts
and circumstances surrounding the making of the agreement, the interpretation placed on the agreement by the parties,
and the conduct of the parties.”
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 17
L
Cosgrove v. Grimes, 774 S.W.2d 662 (1989)
[3] Attorney and Client
KeyCite Yellow Flag - Negative Treatment Nature of Attorney's Duty
Declined to Extend by McIntyre v. Commission for Lawyer Discipline,
In a legal malpractice action, the jury must
Tex.App.-Dallas, March 6, 2008
evaluate the attorney's conduct based on the
774 S.W.2d 662 information the attorney had at the time of the
Supreme Court of Texas. alleged act of negligence.
Frank COSGROVE, Petitioner, 30 Cases that cite this headnote
v.
Walter GRIMES et al., Respondents. [4] Attorney and Client
Pleading and Evidence
No. C–8089. | June 28, 1989.
Determination that attorney was negligent in his
Client sued attorneys for negligence, breach of contract, and representation of client in personal injury action
violation of state Deceptive Trade Practices Act under theory and that such negligence adversely affected
of breach of implied warranty. The 334th District Court, client was supported by sufficient evidence.
Harris County, Marsha D. Anthony, J., rendered take-nothing
Cases that cite this headnote
judgment as to one attorney after client dropped second
attorney from suit and third attorney died, and client appealed.
The Court of Appeals, 757 S.W.2d 508, affirmed and client [5] Attorney and Client
applied for writ of error. The Supreme Court, Spears, J., held Damages and Costs
that: (1) no subjective good-faith excuse existed for attorney Proper amount of damages in legal malpratice
negligence; (2) client was entitled to recover in negligence; action for negligent misrepresentation in a
and (3) attorney waived objections to damage instructions. personal injury action is amount of damages
recoverable and collectible by client from
Reversed and rendered. personal injury defendant if suit had been
properly prosecuted.
22 Cases that cite this headnote
West Headnotes (8)
[6] Appeal and Error
[1] Attorney and Client Instructions
Elements of Malpractice or Negligence
Attorney's failure to distinctly point out any
Action in General
error in damage instructions in legal malpractice
An attorney malpractice action is based on action resulted in waiver of issue of whether
negligence. instructions were proper.
53 Cases that cite this headnote 9 Cases that cite this headnote
[2] Attorney and Client [7] Damages
Skill and Care Required Particular Cases
There is no subjective good-faith excuse for Plaintiff in legal malpractice action was entitled
attorney negligence, but rather a lawyer is held to recover for mental anguish suffered as a result
to the standard of care which would be exercised of attorney's negligence.
by a reasonably prudent attorney.
58 Cases that cite this headnote
63 Cases that cite this headnote
[8] Trial
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Cosgrove v. Grimes, 774 S.W.2d 662 (1989)
Particular Actions or Issues that he was leaving the state and was turning his automobile
Legal malpractice plaintiff's failure to tender collision claim over to Grimes. It is disputed at what point
to court a properly worded jury issue on Grimes was notified of the circumstances surrounding the
breach of implied warranty under Deceptive automobile collision. At some time before the statute of
Trade Practices Act waived any ground of limitations ran, however, Grimes filed suit against Purnell.
recovery based on Act. Vernon's Ann.Texas
Rules Civ.Proc., Rule 278; V.T.C.A., Bus. & C. After the statute of limitations had run, Cosgrove learned that
§ 17.41 et seq. suit had been filed against the wrong person. Grimes, alleging
that he had relied on Cosgrove's information, had filed suit
13 Cases that cite this headnote against the passenger in the car which struck Cosgrove, rather
than Stephens, the car's driver. Cosgrove also discovered that
Grimes had alleged the wrong location of the accident.
Attorneys and Law Firms Based upon errors in the suit filed, Cosgrove sued attorneys
Bass and Grimes, and another attorney, Don Hendrix. 1
*663 Timothy H. Pletcher, Helm, Pletcher, Hogan, Bowen
Cosgrove's malpractice suit alleged negligence, breach of
& Saunders, Houston, for petitioner.
contract, false representations and Deceptive Trade Practices
George D. Gordon, Baggett & Gordon, Richard S. Browne, Act (“DTPA”) violations under a theory of breach of implied
Houston, for respondents. warranty. 2 This suit was consolidated with Cosgrove's
personal injury claim.
OPINION ON MOTION FOR REHEARING Eventually, the defendant Hendrix was dropped, and the suit
against the remaining defendants proceeded to trial before
SPEARS, Justice. a jury. Most of the evidence at trial regarding the legal
malpractice claim concerned only Grimes. Grimes insisted
Our opinion and judgment of April 19, 1989 are withdrawn that he had no knowledge of Cosgrove's cause of action
and the following substituted therefor: until July 10, 1978, five days before the two-year statute of
limitations would run. Grimes testified that on that date he
The issues in this case concern the applicability of the “good met with Cosgrove and received information concerning the
faith” defense in legal malpractice actions. The trial court name of the party to sue and the accident's location. Grimes
held that the exception barred client Frank Cosgrove from also stated he had not been notified that his name was on
recovering on his claim. The court of appeals affirmed. 757 the power of attorney executed by Cosgrove, and that he had
S.W.2d 508. We reverse and render judgment for Cosgrove. never been engaged in a partnership with Bass. Cosgrove
testified that he contacted and met with Grimes shortly after
In July 1976, Cosgrove was injured when the automobile Bass left the state. Cosgrove said the contact, five days before
he was driving was struck from the rear by a car driven by limitations ran, was actually only a telephone inquiry about
Will Michael Stephens. Timothy Purnell was a passenger the status of the case.
in Stephens' car at the time of the accident which occurred
on Decker Drive, south of the intersection with Airhart in The jury found that Stephens, the driver of the car that hit
Baytown, Texas. The Baytown Police Department was called, Cosgrove, had been negligent and that such negligence was a
and an accident report was made by the responding officer. proximate cause of the accident. The jury *664 also found
that Cosgrove would probably have collected $2,000 from
Soon after the accident, Cosgrove contacted attorney Ed W. Stephens as damages resulting from the collision.
Bass, Jr. regarding the accident. Cosgrove executed a power
of attorney which designated Bass and Walter Grimes, also an The jury also found that Grimes had been negligent and
attorney, to represent his interest in the claim. Bass apparently that such negligence was a proximate cause of damages to
performed no investigation of the circumstances surrounding Cosgrove. Further, the jury found that Grimes had failed
the case and no lawsuit was filed by Bass. Some time after this to use “reasonable and ordinary care and diligence” in
initial meeting and before July 1978, Bass notified Cosgrove prosecuting the suit arising from the automobile collision,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Cosgrove v. Grimes, 774 S.W.2d 662 (1989)
that this failure adversely affected Cosgrove, and that $500.00 S.W. 146 (Tex.Civ.App.), rev'd on other grounds, 100 Tex.
would compensate Cosgrove for the mental anguish he 103, 94 S.W. 324 (1906). Some courts have held that if an
suffered as a result of Grimes' representation. No issues were attorney makes an error in judgment, but acted in good faith
submitted regarding the role of attorney Bass. and in what the attorney believed was the client's best interest,
the attorney is not liable for malpractice. See e.g., Cook v.
Grimes submitted proposed issues which included a good Irion, 409 S.W.2d 475 (Tex.Civ.App.—San Antonio 1966, no
faith defense to a legal malpractice claim. Cosgrove objected writ). In the instant case the jury found that Grimes had acted
to these issues as merely evidentiary, as submitting an in good faith in relying on the information Cosgrove allegedly
inferential rebuttal issue, and as failing to properly submit furnished to Grimes, and the trial court rendered judgment for
all elements of any good faith defense, should one exist. Grimes.
The trial court submitted the two issues over Cosgrove's
objections. The jury found Grimes had in good faith relied on [2] [3] There is no subjective good faith excuse for attorney
the information given to him by Cosgrove, and based upon negligence. A lawyer in Texas is held to the standard of care
that information, Grimes had acted in Cosgrove's best interest. which would be exercised by a reasonably prudent attorney.
The jury must evaluate his conduct based on the information
Having received favorable jury answers on their submitted the attorney has at the time of the alleged act of negligence.
issues, both Cosgrove and Grimes moved for judgment on In some instances an attorney is required to make tactical
the verdict. Cosgrove later filed a motion to disregard the or strategic decisions. Ostensibly, the good faith exception
special issues concerning Grimes' good faith and whether his was created to protect this unique attorney work product.
actions were in Cosgrove's best interest. The trial court denied However, allowing the attorney to assert his subjective good
this motion, and judgment was rendered that Cosgrove take faith, when the acts he pursues are unreasonable as measured
nothing in his suit against the passenger, Purnell, and that he by the reasonably competent practioner standard, creates too
take nothing against Grimes or Bass. great a burden for wronged clients to overcome. *665 The
instruction to the jury should clearly set out the standard
The court of appeals affirmed, holding that the good faith for negligence in terms which encompass the attorney's
exception to attorney negligence applied when the attorney reasonableness in choosing one course of action over another.
exercised his best judgment in what he believed was his
client's best interests. 757 S.W.2d 508. The court of appeals If an attorney makes a decision which a reasonably prudent
also ruled that the issue of good faith was defensive, rather attorney could make in the same or similar circumstance, it
than an inferential rebuttal, and thus its submission in this is not an act of negligence even if the result is undesirable.
case was proper. Finally, the court held that Cosgrove had not Attorneys cannot be held strictly liable for all of their
properly submitted issues concerning his DTPA claim, and clients' unfulfilled expectations. An attorney who makes a
thus the trial court properly denied him recovery on that cause reasonable decision in the handling of a case may not be
of action. held liable if the decision later proves to be imperfect. The
standard is an objective exercise of professional judgment,
In his application for writ of error in this court Cosgrove not the subjective belief that his acts are in good faith.
advances two arguments. First, he contends the good faith To the extent that some Texas courts have recognized an
exception to attorney negligence should be abolished because exception to attorney negligence based on the subjective
it allows attorney conduct to be measured by a lower standard good faith of the attorney, those cases are disapproved. E.g.,
of care than that of other professions. Second, he argues that Tijerina v. Wennermark, 700 S.W.2d 342 (Tex.App.—San
the jury's answers to the issues submitted establish his right Antonio 1985, no writ); Medrano v. Miller, 608 S.W.2d 781
to recover based on negligence and also breach of implied (Tex.Civ.App.—San Antonio 1980, writ ref'd n.r.e.); State v.
warranty under the DTPA. Baker, 539 S.W.2d 367 (Tex.Civ.App.—Austin 1976, writ
ref'd n.r.e.); Hicks v. State, 422 S.W.2d 539 (Tex.Civ.App.
[1] An attorney malpractice action in Texas is based on —Houston [14th Dist.] 1967, writ ref'd n.r.e.); Cook v. Irion,
negligence. Fireman's Fund Amer. Ins. Co. v. Patterson & 409 S.W.2d 475 (Tex.Civ.App.—San Antonio 1966, no writ).
Lamberty, Inc., 528 S.W.2d 67 (Tex.Civ.App.—Tyler 1975,
writ ref'd n.r.e.); Patterson & Wallace v. Frazer, 79 S.W. Disregarding the jury's findings concerning good faith, we
1077 (Tex.Civ.App. 1904, no writ), appeal after remand, 93 must now determine whether Cosgrove may recover on his
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Cosgrove v. Grimes, 774 S.W.2d 662 (1989)
anguish suffered as a result of Grimes' negligence. This issue
claim of malpractice. An action for negligence is based on
properly assessed damages incurred by Cosgrove because
four elements. The plaintiff must prove that there is a duty
of Grimes' negligent handling of the first suit. Therefore,
owed to him by the defendant, a breach of that duty, that
Cosgrove is entitled to recover this amount based upon the
the breach proximately caused the plaintiff injury and that
jury's finding.
damages occurred. McKinley v. Stripling, 763 S.W.2d 407
(Tex.1989).
[8] Cosgrove also argues that issue number 5 and issue
number 6 embrace a DTPA claim based on breach of an
[4] In this case Cosgrove submitted seven special
implied warranty. Assuming arguendo such a cause of action
issues regarding his professional malpractice claim against
existed against an attorney under the 1977 version of the
Grimes. 3 The jury found in issue number 5 that Grimes had
DTPA, the issues requested by Cosgrove did not properly
been negligent in his representation of Cosgrove and in issue
place the matter before the jury. At best the language of
number 6 that such negligence adversely affected Cosgrove.
the submission vaguely alluded to a standard of care, not
There is evidence in the record to support these findings.
to an implied warranty. Because the issue did not inquire
whether Grimes breached an implied warranty, Cosgrove may
[5] [6] Issues number 7 and 8 inquired about damages
not recover on such a claim. Cosgrove's failure to tender a
Cosgrove would have recovered and collected as a result of
properly worded jury issue to the court for inclusion in the
the *666 collision. The two issues should have inquired as
jury charge constituted waiver of any ground of recovery
to the amount of damages recoverable and collectible from
based on the DTPA. Tex.R.Civ.P. 278.
Stephens if the suit had been properly prosecuted. See 3
State Bar of Texas, Texas Pattern Jury Charges PJC 85.01
We hold that the trial court erred in submitting issues to
(1982). Although these issues were defectively submitted,
the jury concerning Grimes' good faith. Based on the jury's
Grimes failed to object to them by distinctly pointing out any
answers to the remaining issues, we reverse the judgment of
error. Because Grimes waived the error in the submission, we
the court of appeals and render judgment that Cosgrove be
render judgment that Cosgrove recover $2000 in accordance
awarded $2500.00 as compensation for damages suffered as
with the jury's finding on issues number 7 and 8. See
a result of Grimes' negligent prosecution of Cosgrove's cause
Tex.R.Civ.P. 274; see also 34 G. Hodges & T. Guy, The Jury
of action.
Charge in Texas Civil Litigation § 149, at 271–74 (Texas
Practice 2d ed. 1988).
All Citations
[7] The jury found in response to issue number 9, that $500
would fairly and reasonably compensate Cosgrove for mental 774 S.W.2d 662
Footnotes
1 After the death of Bass, his estate was made a party defendant.
2 The DTPA claim was brought under the 1977 version of that act, thus all references to the DTPA concern the act in
effect in 1977.
3 The five special issues relevant here are set out below:
SPECIAL ISSUE NO. 5
Do you find that Defendant Walter Grimes failed to exercise reasonable and ordinary care and diligence in applying
the skill and knowledge at hand in the prosecution of the lawsuit arising from the July 15, 1976 collision?
Answer “Yes” or “No.”
ANSWER: Yes
If your answer to Special Issue No. 5 was “Yes,” and only in that event, then answer Special Issue No. 6 below.
SPECIAL ISSUE NO. 6
Did such failure adversely affect Frank Cosgrove?
Answer “Yes” or “No.”
ANSWER: Yes
SPECIAL ISSUE NO. 7
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Cosgrove v. Grimes, 774 S.W.2d 662 (1989)
Find from a preponderance of the evidence what sum of money, if any, if paid now in cash, would fairly and reasonably
compensate Frank Cosgrove for his loss, if any, resulting from the occurrence in question?
You are to consider each element of damage separately, so as not to include damages for one element in any other
element.
You are instructed that you shall award the sum, if any, that Frank Cosgrove would have in reasonable probability
recovered as a result of the July 15, 1976 collision.
Consider the following elements of damage, if any, and none other and answer separately in dollars and cents, if any:
(a) Physical pain and mental anguish in the past; loss of earning capacity in the past; disfigurement in the past and
physical impairment in the past.
$2,000.00
(b) Disfigurement and physical impairment that, in reasonable probability, he will suffer in the future.
$0
SPECIAL ISSUE NO. 8
Find from a preponderance of the evidence the amount of damages you found in Special Issue No. 7 that Frank
Cosgrove would have in reasonable probability collected from WILL MICHAEL STEPHENS as a result of the collision?
Answer in dollars and cents, if any.
$2,000.00
SPECIAL ISSUE NO. 9
Find from a preponderance of the evidence what sum of money, if any, if paid now in cash, would fairly and reasonably
compensate Frank Cosgrove for the mental anguish he has suffered if any, as a result of the actions of Walter Grimes
in connection with his representation of Mr. Cosgrove regarding the July 15, 1976 collision?
Answer in dollars and cents, if any.
ANSWER: $500.00
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
M
Dixon v. Southwestern Bell Tel. Co., 607 S.W.2d 240 (1980)
Court of Civil Appeals or Supreme Court upon
material question of law. Vernon's Ann.Civ.St.
607 S.W.2d 240
arts. 1728, subd. 2, 1821.
Supreme Court of Texas.
1 Cases that cite this headnote
Oleta Gravitt DIXON, Individually
and as Executrix et al., Petitioners,
v. [2] Trial
SOUTHWESTERN BELL Questions of Law or Fact in General
TELEPHONE COMPANY, Respondent. Issue which is normally question of fact can be
proved so conclusively by evidence at trial that
No. B-8208. | Oct. 22, 1980. it becomes question of law rather than question
| Rehearing Denied Nov. 19, 1980. of fact.
Former employee and executrix of deceased former employee 5 Cases that cite this headnote
brought action against employer alleging conspiracy, oral
and written defamation, invasion of privacy, and economic
[3] Courts
duress. The 166th District Court, Bexar County, Peter
Review by or Certificate to Supreme Court
Michael Curry, J., entered judgment in favor of employee and
by Court of Civil Appeals of Questions Where
executrix on a jury verdict imposing liability on employer
Its Decision Conflicts with or Overrules That of
for slander, and employer appealed. The Court of Civil
Another Court of Civil Appeals or That of the
Appeals, Murray, J., 575 S.W.2d 596, reversed and rendered
Supreme Court
a take nothing judgment against plaintiffs, who petitioned for
review. The Supreme Court, Pope, J., held that holding of Holding of Court of Civil Appeals that
Court of Civil Appeals that conditional privilege of employer conditional privilege of employer to make
to make inquiries or investigations so as to render statements inquiries or investigations so as to render
made by employer or representatives of employer during statements made by employer or representatives
such investigations conditionally privileged for purposes of of employer during such investigations
slander action existed as matter of law under facts in the case conditionally privileged for purposes of slander
did not conflict with cited cases which held that under those action existed as matter of law under facts in
records issue of conditional privilege was question of fact for the case did not conflict with cited cases which
jury; therefore, Supreme Court had no jurisdiction to review held that under those records issue of conditional
decision of the Court of Civil Appeals. privilege was question of fact for the jury so
as to give Supreme Court jurisdiction to review
Application dismissed for want of jurisdiction. decision of Court of Civil Appeals. Vernon's
Ann.Civ.St. arts. 1728, subds. 1, 2, 1821.
45 Cases that cite this headnote
West Headnotes (3)
[1] Courts
Attorneys and Law Firms
Review by or Certificate to Supreme Court
by Court of Civil Appeals of Questions Where *240 Law Offices of Pat Maloney, Pat Maloney and Jack
Its Decision Conflicts with or Overrules That of Pasqual, San Antonio, for petitioners.
Another Court of Civil Appeals or That of the
Supreme Court Green & Kaufman, Hubert W. Green, Groce, Locke &
In slander case wherein justices of Court of Hebdon, Jack Hebdon, James E. Barden, San Antonio, for
Civil Appeals did not disagree, jurisdiction of respondent.
Supreme Court, if it existed at all, had to rest
upon conflict with prior decision of another
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Dixon v. Southwestern Bell Tel. Co., 607 S.W.2d 240 (1980)
state of facts that the decision of one case is necessarily
Opinion conclusive of the decision in the other. In other words, the
rulings alleged to be in conflict must be upon the same
POPE, Justice.
question, and, unless this is so, there can be no conflict.’
This is a slander case. The trial court rendered judgment Garitty v. Rainey, 112 Tex. 369, 247 S.W. 825, 827. It is
essential, moreover, that such conflict appear on the face of
for Oleta Gravitt Dixon 1 and James H. Ashley, in their
the opinions themselves and that the same be specifically
suit against Southwestern Bell Telephone Company. The
pointed out in the application for writ of error. State v.
court of civil appeals reversed the judgment and rendered a
Wynn, supra (157 Tex. 200, 301 S.W.2d 76) ....” (Emphasis
take-nothing judgment against the plaintiffs, holding that the
added.)
undisputed facts in the case established Southwestern Bell's
defense of conditional privilege to conduct an investigation
Petitioners, Mrs. Dixon and Ashley, urge that the court of
and that there was no evidence of malice *241 which would
civil appeals misapplied the law of defamation to hold that
overcome the privilege. 575 S.W.2d 596. The application is
the defense of conditional privilege is a question of law. They
dismissed for want of jurisdiction.
assert that such a holding is in conflict with three prior courts
of civil appeals decisions, to wit: Houston Belt & Terminal
Since the Legislature has limited our jurisdiction of slander
Ry. Co. v. Wherry, 548 S.W.2d 743 (Tex.Civ.App.-Houston
cases, we must determine at the outset if we have jurisdiction.
(1st Dist.) 1976, writ ref'd n. r. e.); Stearns v. McManis,
Article 1821 2 provides in part that in all cases of slander, “the 543 S.W.2d 659 (Tex.Civ.App.-Houston (1st Dist.) 1976,
judgments of the Courts of Civil Appeals shall be conclusive writ dism'd w. o. j.); Buck v. Savage, 323 S.W.2d 363
on the law and facts” and no “writ of error (shall) be allowed (Tex.Civ.App.-Houston 1959, writ ref'd n. r. e.). We disagree.
thereto from the Supreme Court ....” The only exceptions
permitted by this statute are from an appealable judgment “in Wherry was a libel action wherein the court of civil appeals
which the judges of the Courts of Civil Appeals may disagree affirmed a jury verdict for plaintiff. Although the court
upon any question of law material to the decision, or in which held that the defendant railroad had waived its defense of
one of the Courts of Civil Appeals holds differently from a conditional privilege, it quoted the rule set forth in Denton
prior decision of another Court of Civil Appeals or of the Publishing Company v. Boyd, 460 S.W.2d 881 (Tex.1970),
Supreme Court upon a question of law, as provided for in as follows:
Subdivisions (1) and (2) of Article 1728.”
“Where the facts are undisputed and the language used in
[1] The justices of the court of civil appeals did not disagree the publication is not ambiguous, the question of privilege
here, and our jurisdiction, if it exists at all, must rest upon a is ordinarily one of law for the court. ... (citations omitted)
conflict as provided for in Subdivision 2 of Article 1728. 3
*242 “It is for the jury, however, to resolve any dispute
We have concluded that the requisite conflict does not exist
in the evidence as to the circumstances under which the
and that the application for writ of error must be dismissed
publication was made. ...”
for want of jurisdiction.
Stearns was a suit for slander wherein the court of civil
The applicable rules for determining the requisite conflict
appeals affirmed a jury verdict for plaintiff after finding, on
of decisions under Subdivision 2 of Article 1728 were
rehearing, that the evidence summarized there supported the
summarized by this court in John Farrell Lumber Company
jury finding that defendant acted with malice in making the
v. Wood, 400 S.W.2d 307 (Tex.1966), as follows:
defamatory statement. The court quoted with approval from
“When a conflict of decisions is made the basis of Supreme 36 Tex.Jur.2d 475 Libel and Slander s 149 which provides in
Court jurisdiction, the conflict must be such that one part:
decision would operate to overrule the other in case
“In cases involving qualifiedly
they were both decided by the same court. International
privileged defamation, although the
Harvester Co. v. Stedman, supra (159 Tex. 593, 324
existence of actual or express malice
S.W.2d 543). ‘An apparent inconsistency in the principles
is not presumed as a matter of
announced, or in the application of recognized principles,
law and must be proved, it need
is not sufficient. The rulings must be so far upon the same
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Dixon v. Southwestern Bell Tel. Co., 607 S.W.2d 240 (1980)
be established as a matter of law. Nor did the courts in the
not be proved by direct or extrinsic
three cases asserted to be in conflict hold that the question
evidence; its existence is sufficiently
of conditional privilege or malice would always be a fact
shown by evidence of facts and
question for the jury. It is fundamental that an issue, which is
circumstances from which it is
normally a question of fact, can be proved so conclusively by
reasonably inferable. ...”
the evidence at trial that it becomes a question of law, rather
than a question of fact. Cf. Texas & N. O. R. Co. v. Burden,
In Buck the court of civil appeals reformed and affirmed a
146 Tex. 109, 203 S.W.2d 522 (1947).
plaintiff's judgment for actual and exemplary damages for
libel and slander. The court held that the evidence enumerated
Since there was no objection to the New York Times standard
in its opinion was sufficient to raise the issue of malice and
of malice which was submitted by the trial court, the court
that defendant's conditional privilege was lost by the jury
of civil appeals did not find it necessary to determine the
finding of malice. The following rules were recognized by the
proper standard to be applied against a non-media defendant.
court:
See: New York Times Co. v. Sullivan, 376 U.S. 254,
“A qualified or conditional privilege, as we understand 84 S.Ct. 710, 11 L.Ed.2d 686 (1964); Gertz v. Robert
the rule, comprehends bona fide communications, oral Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789
or written, upon any subject in which the author or the (1974); Foster v. Laredo Newspapers, Inc., 541 S.W.2d 809
public has an interest or with respect to which he has a (Tex.1976); Dun and Bradstreet, Inc. v. O'Neil, 456 S.W.2d
duty to perform to another owing a corresponding duty. 896 (Tex.1970); El Paso Times, Inc. v. Trexler, 447 S.W.2d
Such privilege is termed conditional or qualified because a 403 (Tex.1969); Roegelein Provision Co. v. Mayen, 566
person availing himself of it must use it in a lawful manner S.W.2d 1 (Tex.Civ.App.-San Antonio 1978, writ ref'd n. r.
and for a lawful purpose. The effect of the privilege is to e.). It held only that there was no evidence to support the jury
justify the communication when it is made without actual finding of malice.
malice. ...
[3] Without considering the merits of this appeal, we
“The law, therefore, places the burden on the plaintiff to conclude that the holding of the court of civil appeals that
prove that the defendant in the exercise of a conditional conditional privilege of Southwestern Bell exists as a matter
privilege was prompted or partially prompted by malice or of law under the facts in this cause does not conflict with the
a want of good faith. ... cited cases which held that under those records the issue of
a *243 conditional privilege was a question of fact for the
“While actual or express malice must be proved, it need not jury.
be proved by direct or extrinsic evidence. Proof of facts and
circumstances from which it may be reasonably inferred is Our order granting the application for writ of error is set aside
sufficient. ...” and the application is dismissed for want of jurisdiction.
[2] In the instant case, the court of civil appeals held that,
under the facts proved at trial, Southwestern Bell's conditional
privilege to make the investigation arose as a matter of law GARWOOD, J., not sitting.
and that there was no evidence of malice or improper motive
All Citations
to cause Southwestern Bell to lose the conditional privilege. It
did not hold that under all facts a conditional privilege would 607 S.W.2d 240
Footnotes
1 Mrs. Dixon is the surviving widow and Independent Executrix of the Estate of T. O. Gravitt, Deceased.
2 All statutory references are to Texas Revised Civil Statutes Annotated.
3 Subdivision 2 of Article 1728 reads as follows:
“Those in which one of the Courts of Civil Appeals holds differently from a prior decision of
another Court of Civil Appeals, or of the Supreme Court upon any question of law material to
a decision of the case.”
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Dixon v. Southwestern Bell Tel. Co., 607 S.W.2d 240 (1980)
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
N
Edlund v. Bounds, 842 S.W.2d 719 (1992)
Instructed verdict is proper if: specifically
indicated defect in opponent's pleading makes
842 S.W.2d 719
it insufficient to support judgment; evidence
Court of Appeals of Texas,
proves conclusively truth of fact propositions
Dallas.
that, under substantive law, establish right of
James A. EDLUND, Appellant, movant, or negate right of his opponent, to
v. judgment; or evidence is insufficient to raise fact
R.W. BOUNDS, Appellee. issue as to one or more fact propositions that
must be established for opponent to be entitled
No. 05–90–00085–CV. | Sept. 14, to judgment.
1992. | Rehearing Denied Oct. 26, 1992.
27 Cases that cite this headnote
Payee brought action against maker to enforce promissory
note, and maker counterclaimed. The 98th Judicial District [3] Trial
Court, Dallas County, Joe Brown, J., entered judgment for Insufficiency to support other verdict;
payee, and maker appealed. The Court of Appeals, Enoch, conclusive evidence
C.J., held that: (1) valuable consideration supported note;
Instructed verdict is warranted when evidence is
(2) payee was proper party to enforce note; (3) issue of
such that no other verdict can be rendered and
whether majority shareholder converted note receivables and
moving party is entitled, as matter of law, to
real estate brokerage franchise was for jury; and (4) payee was
judgment.
entitled to recover 15% of amount of principal and interest
owing at time of judgment as attorney fees. 5 Cases that cite this headnote
Affirmed in part, modified in part, and reversed and remanded
in part. [4] Trial
Sufficiency to present issue of fact
It is error for trial court to instruct verdict when
material issue is raised by evidence.
West Headnotes (38)
6 Cases that cite this headnote
[1] Appeal and Error
Effect of evidence and inferences therefrom [5] Trial
on direction of verdict Conflicting evidence
In reviewing instructed verdict, appellate If there is any conflicting evidence of probative
court considers all evidence in light most value in record, determination of issue is for jury.
favorable to party against whom verdict was
instructed, disregarding all contrary evidence 4 Cases that cite this headnote
and inferences.
[6] Bills and Notes
7 Cases that cite this headnote
Nature and essentials in general
Note used to secure purchase of brokerage firm
[2] Trial was promissory note as defined by Business and
Sufficiency to present issue of fact Commerce Code; note was signed by maker and
Trial contained unconditional promise to pay $75,000
Insufficiency to support other verdict; to order of payee, note contained due date
conclusive evidence and was clearly designated “promissory note.”
Trial V.T.C.A., Bus. & C. § 3.104(a, b).
Nature and Grounds
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Edlund v. Bounds, 842 S.W.2d 719 (1992)
must be showing of some type of trickery, deceit,
2 Cases that cite this headnote or device employed by payee as well as showing
that payee represented to maker that he would not
[7] Bills and Notes be liable on note.
Nature and essentials in general
1 Cases that cite this headnote
“Note” is written unconditional promise to pay
another certain sum of money at certain time.
V.T.C.A., Bus. & C. § 3.104(a, b). [12] Bills and Notes
Parties Plaintiff
5 Cases that cite this headnote Payee was proper party to enforce promissory
note used to apportion debt between partners
[8] Bills and Notes who purchased brokerage firm, although sole
Weight and Sufficiency of Evidence consideration for note used to purchase firm was
owned by third-party corporation in which payee
To collect on note, holder need only establish
was majority shareholder; corporation's absence
that there is a note, that he is legal owner and
did not prevent existing parties from obtaining
holder of note, that maker signed note, and that
complete relief, note was between maker and
certain balance was due and owing on note.
payee, and corporation was not mentioned on
10 Cases that cite this headnote note.
Cases that cite this headnote
[9] Bills and Notes
Sufficiency
[13] Limitation of Actions
Valuable consideration supported note; maker
Bills and notes
agreed to be liable on $75,000 note to payee
Four-year statute of limitations applicable to
in return for payee's pledge of real property
actions for debt began running at maturity date of
worth over $150,000 to secure purchase of
promissory note, notwithstanding maker's ability
brokerage firm, maker benefitted by acquisition
to prepay.
of firm, and there was detriment to payee
in securing purchase of firm with property 5 Cases that cite this headnote
belonging to corporation in which he was
majority shareholder.
[14] Bills and Notes
Cases that cite this headnote General rules of construction
Rules of construction governing contracts are
[10] Bills and Notes applicable to notes, and note must be construed
Mistake, fraud, or duress as a whole.
Maker failed to establish that note was obtained 4 Cases that cite this headnote
by payee through fraud where maker testified at
trial that payee never told him that he would have
no responsibility on note. [15] Contracts
Conflicting clauses in general
Cases that cite this headnote When provisions of contract appear to conflict,
they should be harmonized if possible to reflect
[11] Evidence intentions of parties.
Fraud
7 Cases that cite this headnote
To establish fraud in the inducement sufficiently
to allow exception to parol evidence rule, there
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Edlund v. Bounds, 842 S.W.2d 719 (1992)
[16] Contracts Cases that cite this headnote
Intention of Parties
Contracts [21] Conversion and Civil Theft
Conflicting clauses in general Assertion of ownership or control in general
Parties to contract intend every clause to have “Conversion” is wrongful exercise of dominion
some effects and court will not strike down any and control over another's property in denial of
portion of contract unless there is irreconcilable or inconsistent with property owner's rights.
conflict.
12 Cases that cite this headnote
6 Cases that cite this headnote
[22] Conversion and Civil Theft
[17] Contracts Measure of damages in general
Questions for Jury
Measure of damages in conversion action is
If written instrument is so worded that it can value of property at time and place of conversion.
be given certain or definite legal meaning or
interpretation, then it is not ambiguous and court 4 Cases that cite this headnote
will construe contract as matter of law.
2 Cases that cite this headnote [23] Conversion and Civil Theft
Money and commercial paper; debt
Action for conversion of money will lie if money
[18] Bills and Notes
can be identified as specific chattel.
Time of Maturity
Words “on or before” on promissory notes are 12 Cases that cite this headnote
well understood to mean, “immediately at or at
any time in advance of” period named.
[24] Conversion and Civil Theft
4 Cases that cite this headnote Money and commercial paper; debt
Action for conversion of money may be brought
where money is: delivered for safekeeping;
[19] Limitation of Actions
intended to be kept segregated; substantially in
Bills and notes
form in which it is received or intact fund; and
When note is payable at definite time, limitations not subject of title claim by keeper.
begins to run at maturity of note.
26 Cases that cite this headnote
5 Cases that cite this headnote
[25] Appeal and Error
[20] Conversion and Civil Theft Time of bringing suit, limitations, and
Questions for jury laches
Issue of whether majority shareholder converted Majority shareholder failed to preserve issue
note receivables and real estate brokerage of whether minority shareholder's conversion
franchise was for jury in counterclaim for claim was barred by limitations where majority
conversion brought by minority shareholder shareholder did not obtain trial court's ruling on
where allegedly converted items were identified his limitations defense. Rules App.Proc., Rule
chattels of which minority shareholder adduced 52(a).
evidence of their value on date of their alleged
conversion. 1 Cases that cite this headnote
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Edlund v. Bounds, 842 S.W.2d 719 (1992)
not entitled to affirmative defense of offset
[26] Corporations and Business Organizations by assignment in suit on note; note was not
Allegations as to interest of or injury to disposed of by divorce decree and there was no
plaintiff evidence of judgment determining former wife's
Corporations and Business Organizations ownership interest in note. V.T.C.A., Family
Necessity of allegation of demand and Code § 3.91.
refusal
1 Cases that cite this headnote
Corporations and Business Organizations
Allegations of excuse for failure to demand;
futility [29] Appeal and Error
Corporations and Business Organizations Contracts in general
Derivative or direct action Trial court did not err in excluding testimony
Derivative suit for conversion could not be of witness for maker in suit on promissory
brought by counterclaimant on behalf of note; maker failed to show relevancy of witness'
corporation where counterclaimant failed to testimony and that its exclusion resulted in
establish that he was owed individual duty improper judgment.
by plaintiff in any transactions regarding
1 Cases that cite this headnote
corporation, and counterclaimant's pleadings
failed to allege that he was record or beneficial
owner of shares at time of alleged conversion and [30] Appeal and Error
his efforts to have suit brought for corporation Necessity of Setting Forth Evidence
by board of directors, or reasons for not Excluded
making such efforts. V.A.T.S. Bus.Corp.Act, Error is not shown in exclusion of evidence
art. 5.14, subd. B(2); Vernon's Ann.Texas Rules unless complaining party brings before appellate
Civ.Proc., Rule 42. court record that clearly shows not only what
evidence would have been if admitted, but also
2 Cases that cite this headnote
its relevancy.
[27] Corporations and Business Organizations Cases that cite this headnote
Actions by or Against Directors, Officers,
or Agents in General [31] Bills and Notes
When corporation is fully functional, cause of Mode and Sufficiency of Payment
action for breach of director's fiduciary duties Maker of promissory note was not entitled to jury
normally belongs to corporation and cannot question asking it to determine what amount of
be brought by shareholder, unless shareholder note remained unpaid where no evidence was
establishes that he is owed individual duty by introduced that any payments were made on note
corporation, its officers, directors, or majority or that any credits were applied to note.
shareholders.
Cases that cite this headnote
1 Cases that cite this headnote
[32] Bills and Notes
[28] Bills and Notes Attorney fees
Particular Grounds
Payee was entitled to 15% of principal and
Divorce interest owing at time of judgment as attorney
Property not disposed of by judgment or fees in action to collect amount owing on
decree promissory note; payee proved his entitlement to
Former wife of payee had no interest in attorney fees based on contractual provision as
promissory note and, therefore, maker was matter of law and maker presented no evidence
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Edlund v. Bounds, 842 S.W.2d 719 (1992)
on unreasonableness of requested fees, nor did he Supersedeas bond is not intended to secure
prove lesser amount that was reasonable under speculative damages or damages that have not
circumstances. been finally determined.
5 Cases that cite this headnote 1 Cases that cite this headnote
[33] Appeal and Error [37] Execution
Interrogatories and special verdicts Nature and form
Appeal and Error Execution cannot issue on judgment that is not
Extent of Review final.
Appeal and Error
2 Cases that cite this headnote
Sufficiency of Evidence in Support
Appeal and Error
Against Weight of Evidence [38] Judgment
Final judgment
In reviewing “matter of law” challenge, appellate
court uses two-pronged test: first, court examines Judgment for plaintiff that does not dispose of
record for evidence that supports jury's findings, defendant's counterclaim is not final judgment.
while ignoring all evidence to contrary; second,
Cases that cite this headnote
if there is no evidence to support fact finder's
answer, court will examine entire record to see
if contrary proposition was established as matter
of law.
Attorneys and Law Firms
1 Cases that cite this headnote
*722 John Alan Goren, Dallas, for appellant.
[34] Appeal and Error Will Ford Hartnett, Jack Kent Davenport, Dallas, for appellee.
Void or defective appeal or other
proceeding Before ENOCH, C.J., and BISSETT 1 and ONION 2 , JJ.
Surety's obligations on supersedeas bond would
be discharged in suit to collect amount owing on
promissory note since maker's counterclaim was OPINION ON REHEARING
still pending, judgment was not final, and Court
ENOCH, Chief Justice.
of Appeals could not render judgment against
surety on bond. We withdraw our opinion of July 3, 1992. This is now the
opinion of the court. R.W. Bounds sued James A. Edlund on a
3 Cases that cite this headnote
promissory note. Edlund answered with a general denial and
asserted affirmative defenses and a counterclaim. Edlund now
[35] Appeal and Error appeals the trial court's judgment rendered in favor of Bounds.
Nature of obligation Bounds cross-appeals the judgment on the issue of attorney's
Purpose of supersedeas bond is to secure fees. We affirm in part, modify and affirm in part, and reverse
appellee and abate remedies he would otherwise and remand in part.
have for realizing his judgment.
3 Cases that cite this headnote
FACTUAL BACKGROUND
[36] Appeal and Error Bounds testified that he and Edlund formed the real estate
Nature of obligation brokerage company, K–John Real Estate, Inc. (K–John) in the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Edlund v. Bounds, 842 S.W.2d 719 (1992)
early 1980s. Bounds owned fifty-one percent of the shares. money in K–John. To expand their business, they agreed
Edlund was president of K–John, ran its day-to-day affairs, to purchase the Frances Powell Gallery of Homes. Edlund
and owned forty-nine percent of the shares. In February, would not have signed the note to Bounds had he known
1981, they agreed to purchase the Frances Powell Gallery of that Bounds did not own the Plano property securing the
Homes for $150,000. The purchase was accomplished with a Frances Powell note. In January, 1982, Edlund and Bounds
$150,000 promissory note to Frances Powell in which both formed Zanz Corporation (Zanz) for franchise transactions.
Bounds and Edlund were personal guarantors. Frances Powell In February, 1982, Bounds and Edlund agreed to close the
required security of at least 125% of $150,000, which Bounds businesses because they were losing money. They thought
satisfied by pledging a 9.7 acre tract of real property located that they “could settle out of the relationship on an equal
in Plano. The property was owned by R–Co Corporation (R– basis,” and Edlund “would make up the difference” if they did
Co), a corporation in which Bounds owned a majority of not break even. Bounds never told Edlund that K–John was
the shares. Bounds further testified that since Edlund had no over $400,000 in debt. Edlund stated that in addition to the
security to pledge, Edlund voluntarily signed a $75,000 note $150,000 Frances Powell debt, K–John owed about $30,000
payable to Bounds. In 1982, Edlund informed Bounds that to $40,000 to various creditors. Bounds told Edlund that K–
he was leaving K–John and surrendered his stock to him. John expected to collect about $70,000 in income during
Bounds agreed to wind up the affairs of K–John. The business the winding up period. Edlund testified that their settlement
was “broke” and owed over $400,000 to various creditors. agreement included the forgiveness of the $75,000 note and
Per Edlund's request, Bounds told Edlund that he could delay the distribution of the furniture and over $51,000 to Bounds.
payment of the $75,000 note until after Edlund sold his home. Edlund never had any stock in Zanz to surrender. Bounds
Bounds testified that he never agreed to forgive the $75,000 stated that he left K–John in March, 1982, and left Dallas after
note. Edlund sold his home, moved to New York, and failed he sold his home in August, 1984. In January, 1987, Bounds
to pay Bounds the $75,000 due him. In the meantime, Bounds requested payment of $75,920.09. Edlund believed that the
sold the Plano property and with the sale proceeds paid $75,920.09 represented the net difference between amounts
Frances Powell $150,000. Bounds filed suit against Edlund on collected and debts owed and included interest and a credit
June 23, 1987 to collect on the note. Bounds also mentioned on the $75,000 note.
that he was awarded the $75,000 note in his divorce from
Suzanne Stringer. Richard Euting testified that he was president and forty-nine
percent owner of R–Co. The remainder of his testimony was
Kent Davenport testified that reasonable and necessary legal excluded by the court as not relevant.
expenses for trying this case for Bounds was $20,000, to
appeal this case to the court of appeals would cost $7,500, and Robert Bounds was called for the defense. He explained that
to file an application for writ of error with the Texas Supreme the figures totalling $75,920.09 that he supplied to Edlund
Court would cost $2,500. If the Supreme Court granted the in January, 1987, reflected figures Bounds copied from K–
writ, Bounds would incur an additional $2,500 in fees. John's files. The $75,920.09 represented a settlement offer
to prevent a lawsuit. Bounds stated that he never agreed to
For the defense, Suzanne Stringer testified that she was forgive Edlund's $75,000 note and that Edlund had paid him
formerly Bounds's wife. At the time of their divorce, she was nothing on the note to date. Bounds was able to elucidate
unaware of the $75,000 note. She stated that she claimed some of the credits and debts received during the winding-
a one-half interest in this note because she was married to up period, but could not explain all of the figures provided to
Bounds at the time it was executed. The divorce decree was Edlund.
admitted into evidence. She also stated that she received
nothing from Edlund when she assigned her interest in the Edlund was recalled and testified that he never told Bounds
note to him on January 13, 1988. that he would pay off the note after he sold his house. Bounds
never told him that payment of $75,920.09 would prevent a
Edlund testified that he became acquainted with Bounds lawsuit.
when Bounds sold him a *723 home. Bounds appeared to
be a successful real estate developer and builder. Edlund Bounds called Lawrence Kruger, K–John's accountant, by
agreed to go into business with Bounds, and they formed deposition as a rebuttal witness. Kruger stated that the files he
K–John in February, 1981. They invested equal amounts of produced were complete records for K–John. He was never
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Edlund v. Bounds, 842 S.W.2d 719 (1992)
told of any settlement agreement between Bounds and Edlund
concerning the $75,000 note. Edlund told Kruger that he
PROMISSORY NOTE
would be owed some money during the winding-up period
but to write it off on his income tax return. Edlund reported [6] In Edlund's first point of error, he contends that the trial
a $36,000 loss. court erred by granting Bounds's motion for instructed verdict
and in rendering judgment because the evidence proves that
Edlund urged a motion for instructed verdict which was the $75,000 note was not a conventional promissory note in
overruled. Bounds presented a motion for instructed verdict which he would be considered the maker and Bounds the
which was granted with respect to Edlund's defenses of payee. Edlund argues that the evidence shows that the note
fraud in the inducement, limitations, and improper plaintiff, was actually security for the Frances Powell transaction.
and all of Edlund's counterclaims. The jury determined
reasonable and necessary attorney's fees for legal services in [7] The Texas Business and Commerce Code defines a
the preparation and trial of the cause to be one dollar and promissory note. It provides that a writing is a negotiable
found that Bounds did not agree to an accord and satisfaction instrument if it (1) is signed by the maker; (2) contains
of the $75,000 note. an unconditional promise or order to pay a sum certain;
(3) is payable on demand or at a definite time; and (4) is
payable to order or to bearer. TEX.BUS. & COM.CODE
STANDARD OF REVIEW ANN. § 3.104(a) (Vernon 1968). It further provides that “[a]
writing which complies with the requirements of this section
[1] [2] [3] [4] [5] In reviewing an instructed verdict, is ... (4) a “note” if it is a promise other than a certificate
we consider all of the evidence in the light most favorable of deposit.” TEX.BUS. & COM.CODE ANN. § 3.104(b)
to the party against whom the verdict was instructed, (Vernon 1968). In short, a note is a written unconditional
disregarding all contrary evidence and inferences. We promise to pay another a certain sum of money at a certain
determine whether there is any evidence of probative force to time. FDIC v. Eagle Properties, Ltd., 664 F.Supp. 1027, 1034
raise fact issues on the material questions presented. C & C (W.D.Tex.1985).
Partners v. Sun Exploration & Prod. Co., 783 S.W.2d 707,
712 (Tex.App.—Dallas 1989, writ denied). An instructed Here, the $75,000 note was signed by Edlund and contained
verdict is proper if (1) a specifically indicated defect in an unconditional promise to pay $75,000 to the order of
the opponent's pleading makes it insufficient to support a Bounds. The note stated that it was “due on or before February
judgment; (2) the evidence proves conclusively the truth 3, 1984.” It was clearly designated a “promissory note.” See
of fact propositions that, under the substantive *724 law, Clark v. Dedina, 658 S.W.2d 293, 297 (Tex.App.—Houston
establish the right of the movant, or negate the right of his [1st Dist.] 1983, writ dism'd). We conclude that the $75,000
opponent, to judgment; or (3) the evidence is insufficient to note was a promissory note as defined by the Texas Business
raise a fact issue as to one or more fact propositions that must and Commerce Code and, accordingly, overrule Edlund's first
be established for the opponent to be entitled to judgment. point of error.
Fort Worth State School v. Jones, 756 S.W.2d 445, 446
(Tex.App.–Fort Worth 1988, no writ). An instructed verdict
is warranted when the evidence is such that no other verdict
DAMAGES
can be rendered and the moving party is entitled, as a matter
of law, to judgment. C & C Partners, 783 S.W.2d at 712. It [8] Edlund argues, in his second point of error, that the
is error for the trial court to instruct a verdict when a material judgment is improper because there is no evidence that
issue is raised by the evidence. Graziadei v. D.D.R. Mach. Bounds suffered any damages. The holder of a note need only
Co., 740 S.W.2d 52, 55–56 (Tex.App.–Dallas 1987, writ establish that there is a note, that he is the legal owner and
denied). An instructed verdict is improper when reasonable holder of the note, that the maker signed the note, and that a
minds may differ as to the truth of the controlling facts. Id. at certain balance was due and owing on the note. Clark, 658
56. If there is any conflicting evidence of probative value in S.W.2d at 295. Since Bounds sufficiently established these
the record, determination of the issue is for the jury. White v. elements, we overrule Edlund's second point of error.
Southwestern Bell Tel. Co., 651 S.W.2d 260, 262 (Tex.1983).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Edlund v. Bounds, 842 S.W.2d 719 (1992)
[12] Edlund's fifth point asserts that the trial court erred
in granting Bounds's motion for instructed verdict and
CONSIDERATION
rendering judgment on his affirmative defense of improper
[9] In his third point, Edlund asserts that the trial court party plaintiff. The record reveals that Edlund verified
erred in granting Bounds's motion for instructed verdict and the affirmative defense of improper party plaintiff. See
in rendering judgment against him on his affirmative defense TEX.R.CIV.P. 93. However, Edlund has failed to prove this
that there was no consideration or a failure of consideration affirmative defense.
to support the $75,000 note. The record reveals that Edlund
verified these affirmative defenses. See TEX.R.CIV.P. 93. A Edlund argues that R–Co was a necessary party since the sole
sworn plea of no consideration places the burden of proof on consideration for the Frances Powell note was an asset owned
Edlund to show that there was none. Clark, 658 S.W.2d at by R–Co. A party must be joined if (1) his absence prevents
297. Our review shows that Edlund failed to meet this burden. granting complete relief to existing parties in the lawsuit, or
(2) he claims an interest in the subject matter and his absence
“Valuable consideration for a contract may consist of either in the lawsuit may impair or impede his ability to protect
a benefit to the promisor or a detriment to the promisee.” this interest or leave the parties already present in the lawsuit
*725 Clark, 658 S.W.2d at 297 (emphasis in original). Here, subject to substantial risk of incurring double, multiple, or
Edlund agreed to be liable on the $75,000 note to Bounds inconsistent obligations. TEX.R.CIV.P. 39.
in return for Bounds's pledge of real property worth over
$150,000 to secure the Frances Powell note. The pledge Here, R–Co's absence does not prevent the existing parties
was necessary for K–John to acquire the Frances Powell from obtaining complete relief. The $75,000 note is between
brokerage firm. As president and shareholder of K–John, Edlund, the maker, and Bounds, the payee. Nowhere on the
Edlund benefitted from the acquisition of the Frances Powell note is R–Co mentioned. Any claim on the $75,000 note
brokerage firm. See Texas Export Dev. Corp. v. Schleder, can be adjudicated without R–Co's presence. Additionally,
519 S.W.2d 134, 138 (Tex.Civ.App.—Dallas 1974, no writ). we cannot conclude that R–Co's interests are impaired or
Additionally, there was a detriment to Bounds in securing that Edlund was subjected to substantial risk of incurring
the Frances Powell note with property belonging to R–Co, double liability. “Under the provisions of ... Rule 39 it would
a corporation in which he was a majority shareholder. Since be rare indeed if there were a person whose presence was
Edlund failed to establish his affirmative defense of failure of so indispensable in the sense that his absence deprives the
or want of consideration, we overrule his third point. court of jurisdiction to adjudicate between the parties already
joined.” Cooper v. Texas Gulf Ind., Inc., 513 S.W.2d 200, 204
(Tex.1974). We overrule Edlund's fifth point.
FRAUD
[10] [11] In his fourth point, Edlund asserts that the STATUTE OF LIMITATIONS
trial court erred in granting Bounds's motion for instructed
verdict and rendering judgment against him on his affirmative [13] Edlund's sixth and seventh points of error contend
defense that the note was obtained by Bounds through fraud. that the trial court erred in granting Bounds's motion
To establish fraud in the inducement sufficiently to allow an for instructed verdict and in denying Edlund's motion for
exception to the parol evidence rule, there must be a showing judgment n.o.v. and motion for new trial. Edlund argues that
of some type of trickery, deceit, or device employed by the the lawsuit was barred by the four-year statute of limitations.
payee as well as a showing that the payee represented to See TEX.CIV.PRAC. & REM.CODE ANN. § 16.004(a)(3)
the maker that he would not be liable. Clark, 658 S.W.2d (Vernon 1986). The instrument consisted of a preprinted form
at 296. Edlund testified at trial that Bounds never told him wherein blank lines were completed with typewritten words.
that he would have no responsibility on the $75,000 note. We The first line of the instrument reads: “$ 75,000.00 Plano,
overrule Edlund's fourth point of error. Texas, August 24 A.D. 1981.” The second line begins: “Due
upon demand after date....” Edlund argues that this language
makes the instrument a demand note which matured on the
date of execution. See Loomis v. Republic Nat'l Bank of
IMPROPER PARTY PLAINTIFF Dallas, 653 S.W.2d 75, 77 (Tex.App.—Dallas 1983, writ
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Edlund v. Bounds, 842 S.W.2d 719 (1992)
ref'd n.r.e.) (limitations begins to run on a *726 demand the corporations; and (2) Edlund adduced no evidence of
note on the date of making). However, at the lower left-hand what assets were purportedly converted, their value, and
corner of the note, the printed word “Due” precedes a blank the date of their conversion. In his motion for rehearing,
line. Typed upon the blank line are the words: “On or before Bounds also asserts that Edlund's conversion claim is barred
February 3, 1984.” by limitations.
[14] [15] [16] [17] It is well established in Texas thatOn appeal, Edlund argues that he is entitled to an accounting,
the rules of construction governing contracts are applicable to a constructive trust, and damages for Bounds's “failure to
notes, and a note must be construed as a whole. Amarillo Nat'l distribute the net assets resulting from the winding up of
Bank v. Dilday, 693 S.W.2d 38, 41 (Tex.App.—Amarillo affairs of K–John and Zanz.” However, Edlund's second
1985, no writ). When the provisions of a contract appear amended answer and counterclaim states:
to conflict, they should be harmonized if possible to reflect
the intentions of the parties. Ogden v. Dickinson State Bank, On February 20, 1984, K–John
662 S.W.2d 330, 332 (Tex.1983). The parties to a contract forfeited its charter and was
intend every clause to have some effect and a court will involuntarily dissolved pursuant to
not strike down any portion of the contract unless there is Article 7.010(B) of the Texas
an irreconcilable conflict. Id. If the written instrument is so Corporations Act. At that time,
worded that it can be given a certain or definite legal meaning Plaintiff seized control of all assets
or interpretation, then it is not ambiguous and the court will of K–John and converted them to
construe the contract as a matter of law. Coker v. Coker, 650 his personal benefit. Defendant hereby
S.W.2d 391, 393 (Tex.1983). sues Plaintiff for 49% of all assets
of K–John, for an accounting of all
[18] [19] We find no ambiguity in the terms of the $75,000 assets of K–John between March 1982
note. The $75,000 was due, at the latest date, on February and the present, and for a constructive
3, 1984. Edlund could prepay this amount at his option. See trust over all assets which should
Fortson v. Burns, 479 S.W.2d 722, 724 (Tex.Civ.App.— have been allocated by Plaintiff to
Waco 1972, writ ref'd n.r.e.). The words “on or before” on Defendant's 49% interest, the value
promissory notes are well understood to mean, “immediately of which Defendant asserts to be in
at or at any time in advance of” a period named. Lovenberg v. excess of $75,000 before interest.
Henry, 104 Tex. 550, 140 S.W. 1079, 1080 (Tex.1911). Upon
the passing of the due date of February 3, 1984, the option Similar arguments were made with respect to Zanz. When
ceased to prepay and the note became an obligation to pay at Bounds asserted his motion for instructed verdict with respect
all events. See id. When a note is payable at a definite time, to Edlund's counterclaims, Bounds formulated his arguments
limitations begins to run at the maturity of the note. Loomis, based on a conversion claim. Edlund responded to the
653 S.W.2d at 77. Here, the note matured on February 3, conversion issues and added: “It would be our position once
1984. As this lawsuit was filed on June 23, 1987, filing the assets come out of that corporation, [Bounds] has got to
occurred within the four-year statute of limitations applicable give Mr. Edlund his half, seems obvious.”
to actions for debt. We overrule Edlund's sixth and seventh
points of error. Allegations contained in the pleadings define the nature and
character of a suit. *727 Bobby Smith Brokerage, Inc. v.
Bones, 741 S.W.2d 621, 622 (Tex.App.—Fort Worth 1987,
no writ). Here Bounds had the right to assume that the case
CONVERSION
made by the pleadings was the only case he was called upon
[20] In his eighth point of error, Edlund asserts that the trial to defend. See id. Edlund must recover on the basis on which
court erred in granting Bounds's motion for instructed verdict he sued and upon proof of facts stated in his pleadings, and
and rendering judgment against Edlund on his counterclaims he cannot recover through a right not asserted. Id. Therefore,
for a constructive trust, damages, or distribution of the net Edlund's request for the remedies of a constructive trust,
assets of K–John and/or Zanz. Bounds responds that (1) damages, or distribution stem from a claim of conversion as
Edlund lacks standing to sue because his claims belong to set forth in his second amended answer and counterclaim.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Edlund v. Bounds, 842 S.W.2d 719 (1992)
we now address Bounds's assertion that Edlund presented no
evidence of what assets were purportedly converted, their
The record shows that the Secretary of State revoked K–
value, and the date of the conversion of K–John's assets.
John's right to do business on September 15, 1983, and its
charter on February 20, 1984, for failure to file a franchise
[21] [22] [23] [24] Conversion is the wrongful exercise
tax report. The effect of the Secretary of State's forfeiture is
of dominion and control over another's property in denial of
summarized as follows:
or inconsistent with the property owner's rights. Tripp Village
The Supreme Court of Texas has Joint Venture v. MBank Lincoln Centre, N.A., 774 S.W.2d
held that where the Secretary of State 746, 750 (Tex.App.—Dallas 1989, writ denied). The measure
has entered on the record in his of damages is the value of the property at the time and place
office forfeiture of the right of the of the conversion. Matter of Village Mobile Homes, Inc., 947
corporation to do business in this state, F.2d 1282, 1283 (5th Cir.1991); Prewitt v. Branham, 643
the charter of the corporation has not S.W.2d 122, 123 (Tex.1982) (per curiam). An action for the
thereby been cancelled nor has the conversion of money will lie if the money can be identified
corporation been dissolved. The effect as a specific chattel. Eckman v. Centennial Sav. Bank, 757
of such a forfeiture is to prohibit the S.W.2d 392, 398 (Tex.App.—Dallas 1988, writ denied).
corporation from doing business in the “When an indebtedness can be discharged by payment of
state, and to deny to it the right to money generally, an action in conversion is inappropriate.”
sue or defend in any court of the state Id. An action for the conversion of money may be brought
except in a suit to forfeit its charter. where money is (1) delivered for safe keeping; (2) intended
The legal title to the assets remains to be kept segregated; (3) substantially in the form in which it
in the corporation, but the beneficial is received or an intact fund; and (4) not the subject of a title
title to the assets of the corporation is claim by the keeper. Houston Nat'l Bank v. Biber, 613 S.W.2d
in the stockholders. This being true, 771, 774–75 (Tex.Civ.App.—Houston [14th Dist.] 1981, writ
and since the right to sue has been ref'd n.r.e.).
denied to the corporation by forfeiture,
the stockholders, as beneficial owners At trial, Bounds testified that he owned fifty-one percent
of the assets of the corporation, may and Edlund owned forty-nine percent of K–John. They began
prosecute or defend such actions in the losing money and agreed to dissolve K–John in 1982. Bounds
courts as may be necessary to protect was charged with the duty of closing up the offices, collecting
their property rights. any funds owed to K–John, and paying any debts.
Regal Constr. Co. v. Hansel, 596 S.W.2d 150, 153 Edlund testified about an exhibit admitted into evidence
(Tex.Civ.App.—Houston [1st Dist.] 1979, writ ref'd n.r.e.) representing three pages of figures that Bounds presented to
(citing Humble Oil & Refining Co. v. Blankenburg, 149 Tex. Edlund in January, 1987, when Bounds requested payment of
498, 235 S.W.2d 891, 894 (Tex.1951)). Since Edlund is one $75,920.09. This document reflects a total of $20,433.80 in
of the beneficial owners of the assets of K–John, Edlund is fees collected and $5,749.55 paid. The figures are itemized
entitled to pursue his cause of action for conversion against with a description of each transaction, and then summarized
Bounds to protect his property right. See Regal Constr. Co., as follows:
596 S.W.2d at 153. Concluding that Edlund is so entitled,
Note—Date Aug. 24, 1981
$75,000 @ 10% for 9 mos. – 5,626.00
47,651.54 @ 10% 4 yrs. 9 mos.
Int. through Feb. 1, 1987 – 22,637.55
(397.15 per mo.)
Prip. – 47,657.54
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Edlund v. Bounds, 842 S.W.2d 719 (1992)
75,920.09
TEX.R.APP.P. 52(a). Since Bounds did not obtain the trial
*728 Additional documents were admitted into evidence
court's ruling on his limitations defense, he has failed to
to demonstrate that some of K–John's financial obligations
preserve error. We sustain Edlund's eighth point of error as
were relieved. Another exhibit reflected that K–John received
to K–John.
$25,000 on March 18, 1982 from Sanger Suburban Realty,
Inc. for the Coit Road office. This figure was not reflected
[26] [27] We do not reach the same conclusion regarding
in the document shown to Edlund in January, 1987. Edlund
Edlund's claim that Bounds converted the assets of Zanz.
also stated that Elizabeth Carrol Enterprises bought their
No evidence was introduced at trial that Zanz's right to do
Plano office on October 31, 1981. Bounds's personal financial
business had been revoked or that its charter was forfeited.
statement reflects a $76,800 note receivable from Elizabeth
We must, therefore, assume that Zanz, unlike K–John, is
Carrol Enterprises.
a fully functional corporation. When a corporation is fully
functional, a cause of action for the breach of a director's
Bounds's testimony included the explanation of his June
fiduciary duties normally belongs to the corporation and
31, 1982 personal financial statement reflecting an asset of
cannot be brought by a shareholder, unless the shareholder
$360,000 for the Gallery of Homes franchise. Bounds stated
establishes that he is owed an individual duty by the
that the asset was probably left over from K–John. Bounds
corporation, its officers, directors, or majority shareholders.
also testified that a note receivable from Hallmark Gallery of
Schautteet v. Chester State Bank, 707 F.Supp. 885, 887
Homes for $10,000 was due to the sale of a K–John office.
(E.D.Tex.1988). Here, Edlund has failed to establish that he
was owed an individual duty by Bounds in any transactions
Viewing the evidence in the light most favorable to Edlund,
regarding Zanz.
the party against whom the verdict was instructed, we find
that there is sufficient evidence to raise a fact issue on
A derivative suit may be brought by Edlund on behalf of Zanz
Edlund's counterclaim for conversion on the note receivables
if his pleadings allege (1) that he was a record or beneficial
and the Gallery of Homes franchise. These are specifically
owner of shares at the time of the transaction of which he
identified chattels of which Edlund adduced evidence of their
complains, and (2) specifically his efforts to have suit brought
value on the date of their conversion. Bounds's personal
for the corporation by the board of directors, or the reasons
financial statement reflects Bounds's valuation of the Gallery
for not making such efforts. See TEX.R.CIV.P. 42; *729
of Homes franchise. Additionally, the actual sales price of
TEX.BUS.CORP.ACT ANN. art. 5.14(B)(2) (Vernon 1980).
property provides some evidence of fair market value. See
Since Edlund failed to comply with these derivative suit
Religious of the Sacred Heart of Texas v. City of Houston, 836
requirements, we hold that the trial court properly granted
S.W.2d 606, 616 (Tex.1992). However, any claims involving
Bounds's motion for instructed verdict and rendered judgment
the conversion of money must fail because they involve
against Edlund on his claim for conversion of Zanz's assets.
alleged indebtedness that can be discharged by the payment
of money generally.
We sustain Edlund's eighth point of error asserting that
the trial court erred in granting Bounds's motion for
[25] We next address Bounds's contention that the
instructed verdict and rendering judgment against him on his
conversion claim was barred by limitations. In Bounds's
counterclaims for the conversion of nonmonetary assets of K–
motion for instructed verdict, Bounds asserted that
John. We overrule this point as to Zanz.
Edlund failed to comply with TEX.R.CIV.P. 42 and
TEX.BUS.CORP.ACT ANN. art. 5.14(B)(2) (Vernon 1980).
Bounds also contended that there was no evidence of the value
of the assets, dates of the conversion, and that Bounds seized SUPPLEMENTAL TRANSCRIPT
the assets. The same arguments were made with respect to
Zanz. Bounds did not assert his limitations defense although On rehearing, Edlund has requested to supplement the
he did raise the issue in his pleadings. In order to preserve record with his first amended answer and counterclaim to
error for appellate review, a party must obtain a ruling upon a show the date on which he first asserted his conversion
timely and specific request, objection, or motion for a ruling. counterclaim. This request was in response to Bounds's
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Edlund v. Bounds, 842 S.W.2d 719 (1992)
contention that the conversion claim is barred by limitations. Under section 3.63 of the Family Code, a court shall, in a
Due to our disposition of Bounds's limitations argument, we decree of divorce, order a division of the estate of the parties
deny Edlund's motion to supplement the record. See K & S in a manner that the court deems just and right having due
Interests v. Texas Am. Bank/Dallas, 749 S.W.2d 887, 891–92 regard for the rights of each party. TEX.FAM.CODE ANN. §
(Tex.App.—Dallas 1988, writ denied) (op. on reh'g). 3.63 (Vernon Supp.1992). Should the court not do so, section
3.90 provides, in part: “Property not divided or awarded to a
spouse in a final decree of divorce ... may be divided in a suit
THE STRINGER ASSIGNMENT under this subchapter.” 4 *730 TEX.FAM.CODE ANN. §
3.90(a) (Vernon Supp.1992). Section 3.91 provides, in part:
[28] In his ninth and tenth points, Edlund contends that the “If a final decree of divorce or annulment rendered by a
trial court erred in granting Bounds's motion for instructed Texas court failed to dispose of property subject to division
verdict and rendering judgment on his affirmative defense under Section 3.63 of this code ..., the court shall divide the
of offset by assignment. Before trial, Edlund obtained an property in a manner that the court deems just and right.”
assignment from Bounds's ex-wife, Suzanne Stringer, of any TEX.FAM.CODE ANN. § 3.91(a) (Vernon Supp.1992).
community property interest she may have had in the $75,000
note. If the divorce decree did not partition the note, Edlund Thus, the “just and right” division rule applies also to property
argues, then Bounds and Stringer are joint owners of the note. not covered by the final divorce decree. Stringer has no
To the contrary, Bounds argues that the divorce decree awards ascertainable interest in the note until there is a division under
the note to him and, therefore, the trial court acted properly. the “just and right” standard of section 3.63 of the Family
Bounds cites the court to the following portions of his divorce Code. A suit filed pursuant to section 3.90 is a prerequisite to
decree awarding Bounds, as his sole property: “Any and determine Stringer's assignable interest in the note. As there is
all sums ... related to any profit-sharing plan, retirement no evidence of a judgment determining Stringer's ownership
plan, pension plan, ... or other benefit program existing by interest in the note, we cannot assign error to the trial court's
reason of [Bounds's] past, present, or future employment judgment against Edlund on his affirmative defense of offset
[and] all stocks, bonds, and securities registered in the name by assignment. We overrule Edlund's ninth and tenth points
of [Bounds].” of error.
Property held or acquired by a spouse during marriage
is presumed to be community property. Southern Title
EXCLUDED TESTIMONY
Guar. Co., Inc. v. Prendergast, 494 S.W.2d 154, 157
(Tex.1973); see also TEX.FAM.CODE ANN. § 5.02 (Vernon [29] In his eleventh point of error, Edlund asserts that
Supp.1992). As the note in this case was acquired during the trial court erred in excluding the testimony of Richard
Bounds's marriage, it is presumed to be community property. Euting, a forty-nine percent shareholder of R–Co. In his bill
It was not disposed of by the divorce decree—the above cited of exceptions, Euting testified that he invested in the R–Co
portions of the divorce decree do not apportion the $75,000 property, but Bounds had not. Bounds was the controlling
note. owner of R–Co. Euting was unaware that Bounds made an
unauthorized pledge of the R–Co property as security for the
Next, we address the validity of the Stringer assignment Frances Powell note. Euting would not have agreed to such
absent the disposition of the $75,000 note in the divorce a pledge. Euting stated that he was also unaware that the
decree. Texas common law once provided that when a property had been sold until he researched the deed records
divorce decree did not dispose of community property, the at the courthouse. Euting stated that he would assign Edlund
parties became owners of the property as tenants in common. his stock in R–Co “if it would help [Edlund] in his situation.”
Each owned an undivided one-half interest in the property. Euting further stated that Bounds offered to transfer the R–Co
Thompson v. Thompson, 500 S.W.2d 203, 207 (Tex.Civ.App. property to him if he would assume all indebtedness against
—Dallas 1973, no writ). However, sections 3.90 and 3.91 it. He refused the offer. Bounds objected to the testimony as
of the Family Code, added by the Legislature in 1987, now being irrelevant and likely to confuse the issues before the
require a different result. 3 jury. Edlund's attorney, outside of the jury's presence, said
that he just wanted to “disclose to the jury that Mr. Edlund
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Edlund v. Bounds, 842 S.W.2d 719 (1992)
was fraudulently induced to sign the note and there was no the amount still unpaid under the note. No evidence was
consideration given by Mr. Bounds.” introduced that any payments were made on the note or that
any credits were applied to the note. Accordingly, we overrule
[30] Error is not shown in the exclusion of evidence unless Edlund's twelfth and thirteenth points of error.
the complaining party brings before the appellate court a
record that clearly shows not only what the evidence would
have been if admitted, but also its relevancy. Rio Grande
ATTORNEY'S FEES
Valley Sugar Growers, Inc. v. Campesi, 580 S.W.2d 850, 861
(Tex.Civ.App.—Corpus Christi), rev'd on other grounds, 592 [32] [33] Bounds sets forth three cross points challenging
S.W.2d 340 (Tex.1979). Additionally, Edlund has the burden the jury's finding of one dollar as reasonable attorney's fees.
of proving that reversible error occurred by demonstrating Bounds bases his attack on the theories that (1) the jury
that the exclusion of Euting's testimony was reasonably finding is immaterial, (2) the amount of the fees was proven
calculated to cause and probably did cause the rendition of as a matter of law, and (3) the finding is against the great
an improper judgment. TEX.R.APP.P. 81(b)(1); Rio Grande weight and preponderance of the evidence. In reviewing a
Valley Sugar Growers, Inc., 580 S.W.2d at 861. We find “matter of law” challenge, we use a two-pronged test. First,
that Edlund has failed to demonstrate the relevancy of this we examine the record for evidence that supports the jury's
testimony and failed to show that its exclusion resulted in an findings, while ignoring all evidence to the contrary. Second,
improper judgment. We overrule Edlund's eleventh point of if there is no evidence to support the factfinder's answer, then
error. we examine the entire record to see if the contrary proposition
was established as a matter of law. Sterner v. Marathon Oil
Co., 767 S.W.2d 686, 690 (Tex.1989).
CREDITS AGAINST THE NOTE
The evidence consists of the promissory note itself and the
[31] Edlund's twelfth and thirteenth points of error challenge testimony of Bounds's attorney. The relevant portion of the
the trial court's failure to submit a question to the jury asking note provides: “It is further expressly agreed that if this note ...
it to determine what amount of the note remained unpaid. is collected ... through other legal proceedings ... to pay the
Edlund testified at trial that in their agreement to dissolve owner or holder of this note fifteen per cent additional on
K–John, he and Bounds would “settle out of the relationship the principal and interest then due hereon as attorney's fees.”
on an equal basis.” Edlund also stated that, although Bounds Bounds's attorney testified about the amount and kind of
may not have stated it specifically, he agreed to forgive the work done and the reasonableness of the fees he charged
$75,000 note as part of the settlement. Edlund further stated: Bounds. On cross-examination, Edlund only asked Bounds's
attorney how much he had been paid to date and whether that
The terms of the settlement that we amount related solely to the lawsuit. Since Edlund presented
had reached was that [Bounds] was no evidence on the unreasonableness of the requested fees,
going to stay on and finish up closing nor did he prove a lesser amount that was reasonable under
the various offices, collect the money; the circumstances, he is not entitled to a fee reduction. F.R.
and that based upon how much I was Hernandez Constr. & Supply Co., Inc. v. National Bank of
owed and how much he was owed, that Commerce of Brownsville, 578 S.W.2d 675, 677 (Tex.1979);
it would *731 about cover the debts see also Long v. Tascosa Nat'l Bank of Amarillo, 678 S.W.2d
and I was going to take the difference, 699, 706 (Tex.App.—Amarillo 1984, no writ).
which I did take, and my accountant
took this and I wrote the rest of it off We hold that Bounds proved his entitlement to attorney's
in income tax as a loss. * * * I think it fees based on the contractual provision as a matter of law.
was over forty thousand dollars. We render judgment that Bounds recover fifteen percent of
the amount of principal and interest owing at the time of
We find that this evidence raised a fact issue as to Edlund's judgment as attorney's fees. Bounds is not entitled to recover
affirmative defense of accord and satisfaction. This issue was an additional amount for attorney's fees for appealing the
properly submitted to the jury. We find nothing in the record judgment. 5
to support the submission of a jury question to determine
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
Edlund v. Bounds, 842 S.W.2d 719 (1992)
SUPERSEDEAS BOND
Since in this case Edlund's counterclaim is still pending,
[34] In his motion for reconsideration, Bounds requests that the judgment is not final, and we cannot render judgment
we enter judgment against the surety on Edlund's supersedeas against the surety on the supersedeas bond. Accordingly,
bond. Edlund responds that judgment should not be entered our judgment will reflect that the surety's obligations on the
against the surety because our remand of the counterclaim supersedeas bond are discharged.
renders the amount of the surety's liability uncertain. Edlund
further argues that it is improper to render judgment against
a surety without a final judgment. He asserts that Bounds's
DISPOSITION
judgment against him cannot be final until the trial court
disposes of his counterclaim. We affirm the trial court's judgment as to Edlund's liability
under the note, his affirmative defenses, and his counterclaim
*732 [35] [36] [37] [38] When a court of appealson the conversion of Zanz's assets. We modify the attorney's
affirms the trial court's judgment, it shall render judgment fees award and we render judgment that Edlund pay, as
against the appellant and the sureties on his appeal or attorney's fees, fifteen percent of the trial court's award of
supersedeas bond, if any, for such costs as are taxed against principal and interest owing at the time of judgment, and
him. TEX.R.APP.P. 82. The purpose of a supersedeas bond affirm that part of the judgment as modified. We reverse
is to secure the appellee and abate the remedies he would the judgment on Edlund's counterclaim for conversion of
otherwise have for realizing his judgment. Carter Real Estate K–John's assets and remand that portion of the cause for a
& Dev., Inc. v. Builder's Serv. Co., 718 S.W.2d 828, 830 new trial in accordance with this opinion. We grant Edlund's
(Tex.App.—Austin 1986, no writ). A supersedeas bond is not motion for rehearing and Bounds's motions for rehearing
intended to secure speculative damages or damages that have and reconsideration. We deny Edlund's motion to supplement
not been finally determined. Hughes v. Habitat Apartments, the record. The parties are ordered to bear their own costs
828 S.W.2d 794, 795 (Tex.App.—Dallas 1992, n.w.h.). incurred by reason of this appeal. The obligations of the
Execution cannot issue on a judgment that is not final. Id. A supersedeas bond surety, Fidelity and Deposit Company, are
judgment for a plaintiff that does not dispose of a defendant's ordered discharged.
counterclaim is not a final judgment. Springwoods Shopping
Ctr., Inc. v. University Sav. Ass'n, 610 S.W.2d 177, 178
(Tex.Civ.App.—Houston [1st Dist.] 1980, writ ref'd n.r.e.). All Citations
842 S.W.2d 719
Footnotes
1 The Honorable Gerald T. Bissett, Justice, Court of Appeals, Thirteenth District of Texas at Corpus Christi, Retired, sitting
by assignment.
2 The Honorable John F. Onion, Jr., Presiding Judge, Court of Criminal Appeals, Retired, sitting by assignment.
3 The Legislature changed the application of these sections so they apply to decrees of divorce and annulment rendered
before, on, or after November 1, 1987. Act approved June 14, 1989, 71st Leg., R.S., ch. 371, 1989 Tex.Gen.Laws 1466
(emphasis added).
4 The statute further provides: “(b) The suit may be brought by either former spouse. (c) The suit must be filed before two
years after the date on which a former spouse unequivocally repudiates the existence of the ownership interest of and
communicates that repudiation to the other spouse.” TEX.FAM.CODE ANN. § 3.90(b), (c) (Vernon Supp.1992). We make
no finding as to whether the statute of limitations now prevents a suit to determine proper division of the note.
5 Bounds, in his pleadings, relies on the contractual provision for his claim for attorney's fees. He did not plead an entitlement
under the statute which allows for attorney's fees in suits on a written contract. See TEX.CIV.PRAC. & REM.CODE ANN.
§ 38.001(8) (Vernon 1986). Thus, Bounds is entitled only to fifteen percent of the amount owing on the note. Additionally,
being limited by his pleadings, there was no proper question before the trial court on the issue of Bounds's attorney's
fees in case of appeal. Edlund properly objected to the submission of question number one. Subparts (b), (c), and (d) of
question number one, requesting findings for reasonable and necessary attorney's fees if the case was appealed, have
no basis in the pleadings and should not have been presented to the jury. See TEX.R.CIV.P. 278.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
Edlund v. Bounds, 842 S.W.2d 719 (1992)
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
O
Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
refinery had not obtained an adequate settlement
for client and his wife in underlying suit they
415 S.W.3d 259
had brought against refinery was insufficient to
Supreme Court of Texas.
establish that client and his wife had suffered
Jose L. ELIZONDO and damages resulting from former attorney's alleged
Guillermina Elizondo, Petitioners, malpractice, as expert offered only conclusory
v. and speculative opinions, and he did not evaluate
what underlying case would have yielded by way
Ronald D. KRIST, The Krist Law Firm, P.C., Kevin
of a judgment if case had gone to trial, nor did he
D. Krist, and William T. Wells, Respondents.
compare the settlement reached with other actual
No. 11–0438. | Argued Dec. 5, settlements obtained in litigation involving the
explosion.
2012. | Decided Aug. 30, 2013.
| Rehearing Denied Dec. 13, 2013. 3 Cases that cite this headnote
Synopsis
Background: Client and his wife brought action against [2] Attorney and Client
their former attorneys for professional negligence, breach Damages and costs
of fiduciary duty, violations of the Deceptive Trade In a legal-malpractice case, damages consist
Practices Act (DTPA), common law fraud, fraudulent of the amount of damages recoverable and
misrepresentations, negligent representations, and fraudulent collectible if the suit had been properly
inducement. The 129th District Court, Harris County, S. prosecuted.
Grant Dorfman, J., entered judgment in favor of attorneys.
Client and his wife appealed. The Houston Court of Appeals, 2 Cases that cite this headnote
338 S.W.3d 17, affirmed. Client and his wife filed petition for
review.
[3] Attorney and Client
Damages and costs
Legal malpractice damages are the difference
[Holding:] The Supreme Court, Don R. Willett, J., held that between the result obtained for the client and
summary judgment affidavit of expert for client and his wife the result that would have been obtained with
was insufficient to establish legal malpractice damages. competent counsel; damages in such cases are
the difference between the result obtained and
the case's “true value,” defined as the recovery
Affirmed.
that would have been obtained following a trial
in which the client had reasonably competent,
Boyd, J., dissented, with opinion, in which Lehrmann, J.,
malpractice free counsel.
joined.
1 Cases that cite this headnote
West Headnotes (9) [4] Trial
Expert and other opinion evidence
[1] Judgment Bare, baseless opinions will not support a
Matters of fact or conclusions judgment even if there is no objection to their
admission in evidence.
Judgment
Attorneys 2 Cases that cite this headnote
Conclusory statements in summary judgment
affidavit of expert witness that former attorney
[5] Judgment
for client who was injured in explosion at oil
Matters of fact or conclusions
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
A conclusory statement of an expert witness is Pleading and evidence
insufficient to create a question of fact to defeat Method available to establish attorney
summary judgment. malpractice damages requiring an analysis
of settlements made under comparable
9 Cases that cite this headnote
circumstances requires expert testimony.
[6] Evidence Cases that cite this headnote
Necessity and sufficiency
A claim will not stand or fall on the mere ipse
dixit of a credentialed witness.
Attorneys and Law Firms
2 Cases that cite this headnote
*260 Andrew D. Kumar, Michael J. Lowenberg, The
O'Quinn Law Firm, Brian K. Tully, Jesse R. Pierce &
[7] Evidence Associates, P.C., Donald B. McFall, Kenneth R. Breitbeil,
Necessity and sufficiency McFall, Breitbeil & Smith, P.C., Levon G. Hovnatanian,
Expert testimony fails if there is simply too Martin Disiere Jefferson & Wisdom LLP, Houston, TX, for
great an analytical gap between the data and the Jose L. Elizondo.
opinion proffered.
Jane M.N. Webre, Ryan Squires, Stephen E. McConnico,
2 Cases that cite this headnote Scott Douglass & McConnico, L.L.P., Austin, TX, for
Respondent Kevin Krist.
[8] Appeal and Error Jeffrey L. Oldham, Bracewell & Guiliani LLP, Jennifer
Judgment Rustay, William Fred Hagans, Hagans Burdine Montgomery
Attempts by former attorneys for client, who Rustay, P.C., Warren W. Harris, Bracewell & Giuliani, LLP,
was injured in explosion at oil refinery, to Houston, TX, for Respondent Ronald D. Krist.
limit client's discovery of information about
other settlements that had been reached with Diana L. Faust, Cooper & Scully, P.C., Dallas, TX,
others injured in explosion, did not estop John Wesley Raley, Raley & Bowick LLP, Kirsten Anne
former attorneys from arguing that summary Davenport, Davenport Law Firm PC, Houston, TX, for
judgment affidavit of client's expert was Respondent William T. Wells.
insufficient to establish that client had suffered
Opinion
damages resulting from former attorney's alleged
malpractice in failing to obtain an adequate Justice WILLETT delivered the opinion of the Court, in
settlement for client in client's legal malpractice which Chief Justice JEFFERSON, Justice GREEN, Justice
suit against former attorneys; former attorneys JOHNSON, Justice GUZMAN, and Justice DEVINE joined.
argued within bound of zealous advocacy in
contending that the information regarding other In this legal-malpractice case, the clients sued their former
settlements reached should not be disclosed even attorneys, complaining the attorneys had obtained an
if it might be helpful to client, and client did not inadequate settlement. The trial court granted summary
take position in trial court that discovery of dollar judgment for the attorneys, and the court of appeals affirmed.
amount of other settlements in similar cases We affirm the court of appeals' judgment.
was needed so their expert could make a valid,
nonconclusory determination of adequacy of
client's settlement or better describe his analysis.
I. Background
1 Cases that cite this headnote
In March 2005, an explosion occurred at the Texas City
refinery of BP Amoco Chemical Company (BP), killing
[9] Attorney and Client fifteen workers and injuring many others. Approximately
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
4000 claims were filed against BP, and BP settled them all. A contends his representation of Jose had ended months earlier.
handful of cases proceeded to trial but settled before a verdict. The Elizondos also claimed that because Guillermina did not
sign the release her claim was never settled, and the Attorneys
Jose Elizondo was working for a BP contractor at the plant should have pursued her claim before it became time-barred.
on the day of the explosion. The blast threw him about
twenty feet. He received medical treatment for neck and back The Attorneys filed several motions for summary judgment
injuries. He returned to work a few days later but claimed on grounds of no evidence of damages, impermissible
he continued to suffer from psychological problems. His “claim splitting,” and no attorney-client relationship with
wife, Guillermina, claimed that she too suffered, from loss of Guillermina, as well as other grounds. In response to the
consortium. Jose met with attorney William Wells and signed motions regarding damages, the Elizondos submitted the
a power of attorney *261 retaining Wells to represent him expert affidavit of attorney Arturo Gonzalez.
on “all claims I may have against BP and others” arising from
the March 2005 explosion. The trial court granted some of the summary-judgment
motions, including the motions regarding damages. The court
Wells sent a demand letter to BP asking for a settlement of $2 of appeals affirmed, holding that because the Elizondos had
million on the Elizondos' claims. The settlement demand was not presented more than a scintilla of competent evidence
made on behalf of both husband and wife. 1 A few months of damages, the trial court did not err in granting summary
later, an attorney for BP offered to settle “any and all claims of judgment on this ground. 2
Jose L. Elizondo and his family members” for $50,000. In an
effort to increase the settlement in this and three other cases,
Wells associated Ronald Krist, Kevin Krist, and the Krist Law
*262 II. Discussion
Firm as additional counsel. Ronald and Kevin Krist met with
BP, but could not obtain a larger settlement for the Elizondos.
A. The Gonzalez Affidavit Did Not Raise a Genuine
Wells and Kevin Krist met with Jose to discuss the settlement Issue of Material Fact on Malpractice Damages.
offer. They went through a form release prepared by BP.
[1] The parties disagree on whether the Gonzalez affidavit
Jose decided to accept the settlement offer and signed
was sufficient to defeat summary judgment on the issue of
the release in February 2006. The release covers Jose
and Guillermina, defining the “RELEASORS” as “JOSE malpractice damages. 3 Summary judgment was warranted
ELIZONDO, GUILLERMINA ELIZONDO, and any of their for the Attorneys if, after adequate time for discovery, they
heirs, executors, agents, trustees, assignees, representatives, demonstrated that the Elizondos had failed to offer competent
attorneys, advisors, administrators, successors and assigns.” summary judgment evidence raising a genuine issue of
The release had signature lines for Jose and Guillermina, but material fact as to damages. 4
only Jose signed it. Guillermina testified that she cannot speak
or read English. Jose contends that when he met with his In his eight-page affidavit, Gonzalez recites his general
counsel, he asked whether Guillermina needed to sign the qualifications and his specific involvement in the BP
agreement and was told it was not necessary. litigation. He worked for two firms that represented claimants
in litigation arising from the plant explosion and was
In August 2007, Jose brought this suit against Wells, appointed by the 212th district court as plaintiffs' liaison
Kevin Krist, Ronald Krist, and the Krist Law Firm (the counsel. He attested that these experiences familiarized him
Attorneys). Guillermina was later added as a plaintiff, but all with the settlement of many claims. He stated that BP focused
the Attorneys deny ever representing Guillermina. The suit on ten criteria in determining the general value of a case
claimed that the Attorneys represented both Elizondos and for settlement purposes: (1) proximity to ground zero; (2)
failed to obtain an adequate settlement on their behalf. The when injury was reported to a supervisor; (3) corroboration
petition asserted claims of professional negligence, breaches of proximity and reporting of injuries to supervisor or
of fiduciary duty, and fraud, as well as other claims. It management; (4) age of victim; (5) wage earning capacity and
contended that Jose was “sold down the river” so that wage loss (present and future); (6) injuries and bio-mechanics
Ronald Krist could represent BP. After Jose accepted BP's of injuries—e.g., nature, extent, and duration; (7) medical
settlement offer, Ronald Krist did represent BP, but he treatment received and duration thereof (physical and mental/
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
PTSD); (8) surgical versus non-surgical interventions; (9) in excess *263 of the $50,000 offer
single or married/residual consortium claims; and (10) onsite which was supposedly the most that
versus offsite claims. The affidavit describes the basic facts BP would ever pay.
regarding Jose's injuries, family situation, and work history.
It then states: It then concludes that, in light of the risk of punitive
damages in the BP explosion cases, “these cases were heavily
Based on the factual information evaluated and settlements obtained were significantly higher
provided and reviewed by me, my as compared to the average personal injury lawsuit in the
experience in the BP litigation, [S]tate of Texas.”
my knowledge of general settlement
values and in the criteria and At the outset, the Attorneys contend that the Gonzalez
protocol relied upon to establish affidavit is defective because a legal-malpractice suit is a “suit
general settlement values in the BP within a suit,” and proof of malpractice damages requires
litigation, it is my opinion that for a proof of what the plaintiff would have recovered by way of
plaintiffs' attorney acting within the a judgment after trial absent his attorney's negligence. For
standard of care applicable to the example, the Attorneys argue in their brief that plaintiffs
same or similar circumstances, using alleging malpractice damages “must prove that the ‘true
reasonable due diligence, the Elizondo value’ of their case is a collectible recovery, after a trial, that
case would have had a general value, is greater than the actual result they received,” and that “[t]o
by way of settlement or verdict, in show the existence of malpractice damages, the Elizondos
the range of between Two Million had to show the true value of their claims was greater than
($2,000,000.00) and Three Million what they received, i.e., that they would have recovered by
($3,000,000.00) dollars. Guillermina way of judgment an amount greater than they did from BP.”
Elizondo's individual claim would They contend that Gonzalez only analyzed why the settlement
represent some part of that value, was inadequate for various reasons, and he did not discuss
but Jose's claim would represent the what amount the Elizondos would have recovered if the case
majority of that value. The settlement had proceeded to judgment after a trial. We disagree with this
value of the Elizondo claim is not argument.
distinguished as compensatory, non-
economic or exemplary in nature, but [2] We have recognized that in a legal-malpractice case
instead is a single value offered by BP damages consist of “the amount of damages recoverable and
so that BP could avoid a trial or jury collectible ... if the suit had been properly prosecuted.” 5 In
verdict. Keck, Mahin & Cate v. National Union Fire Insurance Co.,
we described damages in such cases as the difference between
The affidavit sets out the information reviewed by Gonzalez the result obtained and the case's “true value,” defined as the
and details why, in Gonzalez's opinion, the Attorneys failed recovery that would have been obtained “following a trial”
to exercise due diligence in their representation of the in which the client had “reasonably competent, malpractice-
Elizondos. It then states: free” counsel. 6
The settlement offer made by
[3] These cases recognize that legal-malpractice damages
BP for the Elizondos' claim
are the difference between the result obtained for the client
was basically for nuisance value.
and the result that would have been obtained with competent
Given the extraordinary circumstances
counsel. They do not require that damages can only be
surrounding the BP explosion[ ]
measured against the result the client would have obtained if
claims, a reasonably competent
the case had been tried to a final judgment.
plaintiff's lawyer should have
continued to prosecute the claim until a
In this case, it is undisputed that BP, a large, solvent
fair and reasonable offer was made by
corporation, made the decision to settle every case arising
BP. In my opinion, had that been done,
from the plant explosion. Here, where the same defendant
the Lawyers would have garnered far
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
settled thousands of cases, and indeed made the business investigate and assess individual claims.” 15 The trial court
decision to settle all cases and not try any to a verdict, granted summary judgment for the attorneys on grounds that
we see no reason why an expert cannot base his opinion the settlements were fair and reasonable and therefore the
of malpractice damages on a comparison of what similarly clients had suffered no actual damages and were not entitled
situated plaintiffs obtained from the same defendant. This
to the forfeiture of fees they sought. 16
data is perhaps the best evidence of the real-world settlement
value of the case. Under Evidence Rule 703, experts may
We held that the affidavits submitted by the attorneys were
base their testimony on facts or data that are “of a type
conclusory and therefore insufficient to entitle the attorneys to
reasonably relied upon by experts in the particular field in
summary judgment. We considered three affidavits. The most
forming opinions or inferences upon the subject.” 7 That test detailed affidavit, from retained expert-attorney Malinak,
is met when, in a mass tort litigation involving thousands set out numerous criteria that were important in evaluating
of similar claimants and arising out of the same event, the settlements in the case, including the underlying liability
expert measures the “true” settlement value of a particular facts, the identity of the employer, the elements of damages
case by persuasively comparing all the circumstances of the
available to each plaintiff, and the losses to each plaintiff. 17
case to the settlements obtained in other cases with similar
The expert then declared that he had evaluated the criteria as
circumstances arising from the event.
to each plaintiff and had concluded that the settlement as to
*264 Nevertheless, the Attorneys argue that the Gonzalez each was reasonable and fair. 18 We held that the affidavit
affidavit was conclusory, while the Elizondos maintain that it was *265 too conclusory to sustain a summary judgment on
was sufficiently specific to raise a fact issue on damages. the element of damages:
[4] [5] [6] [7] “Bare, baseless opinions will not support
The affidavit says no more than that Malinak, an
a judgment even if there is no objection to their admission
experienced attorney, has considered the relevant facts
in evidence,” 8 and we have “often held that such conclusory and concluded that the Clients' settlements were all fair
testimony cannot support a judgment.” 9 “A conclusory and reasonable.... Credentials qualify a person to offer
statement of an expert witness is insufficient to create a opinions, but they do not supply the basis for those
question of fact to defeat summary judgment.” 10
Further, opinions. The opinions must have a reasoned basis which
“a claim will not stand or fall on the mere ipse dixit of a the expert, because of his “knowledge, skill, experience,
training, or education [,”] is qualified to state. That basis
credentialed witness.” 11 Expert testimony fails if there is
is missing in Malinak's affidavit. He does not explain
“simply too great an analytical gap between the data and
why the settlements were fair and reasonable for each
the opinion proffered.” 12 Courts are not required “to ignore of the Clients. His affidavit ... is nothing more than a
13
fatal gaps in an expert's analysis or assertions.” Stated sworn denial of plaintiffs' claims and no more entitles the
another way, in a legal-malpractice case, we have observed Attorneys to summary judgment than a lawyer's equally
that even where an attorney-expert was qualified to give conclusory affidavit stating that the Clients had suffered
expert testimony, his affidavit “cannot simply say, ‘Take my $10 million damages would entitle them to summary
word for it, I know: the settlements were fair and reasonable.’ judgment.... [T]he issue is whether Malinak's affidavit
” 14 Conversely, in this case, an attorney-expert, however states a sufficient basis for his opinions. Malinak might
well qualified, cannot defeat summary judgment if there are have analyzed the Clients' injuries by type, or related
fatal gaps in his analysis that leave the court to take his word settlement amounts to medical reports and expenses, or
that the settlement was inadequate. compared these settlements to those of similar claims, or
provided other information showing a relationship between
Our decision in Burrow v. Arce is instructive. In that case the plaintiffs' circumstances and the amounts received.
as in today's case, attorneys had settled numerous suits in a He did not do so. The absence of such information
mass tort proceeding arising out of a plant explosion. The did not merely make the affidavit unclear or indirect; it
plaintiffs, former clients of the attorneys, contended that deprived Malinak's opinions of any demonstrable basis.
the settlements they received were inadequate for various We therefore conclude that summary judgment could not
reasons, including the failure of the attorneys to “fully rest on Malinak's affidavit. 19
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
The Gonzalez affidavit in today's case is similarly conclusory. the settlement here was inadequate. In this regard, we agree
Like the Malinak affidavit, the Gonzalez affidavit is from an with the court of appeals:
experienced attorney whose credentials are not the problem.
The problem is the lack of a demonstrable and reasoned
basis on which to evaluate his opinion that the settlement [A]lthough Gonzalez lists specific criteria he contends
was inadequate. Like the Malinak affidavit, the Gonzalez BP “focused on” when determining settlement values, he
affidavit explains in some detail the factors or criteria that offers no analysis to explain how these factors would be
should inform a determination of the value of the case. Like applied to the Elizondos' situation. He also fails to link
the Malinak affidavit, the Gonzalez affidavit confirms that settlement amounts to specific injuries and circumstances,
the affiant considered the facts relevant to the case, but it and provides no comparison of settlement amounts of
fails to offer specifics on why the value of the case was $2– similar claims. Thus, Gonzalez's affidavit offers only
3 million as opposed to the $50,000 received in settlement. conclusory and speculative opinions. 21
A fatal analytical gap divides the recitation of the facts of the We conclude, therefore, that the affidavit did not raise a
Elizondo case and the declaration of its settlement value. genuine issue of material fact sufficient to defeat summary
judgment.
Gonzalez did not evaluate what the Elizondo case would
have yielded by way of a judgment if the case had gone The dissent reasons that the affidavit raised a fact issue on
to trial. On the contrary, he based his opinion on what the whether competent counsel would have obtained a settlement
Attorneys should have obtained in settlement. The affidavit in excess of $50,000, which Gonzalez characterized as
makes clear throughout that Gonzalez's opinion of the value nuisance value. We differ because, for the reasons stated, the
of the case stems from his opinion of the settlement the affidavit was devoid of a demonstrable basis, whether we
Attorneys should have obtained. As noted above, none of consider that portion of the affidavit claiming the case had a
the approximately 4000 claims arising from the BP plant settlement value of $2–3 million, or that portion declaring the
explosion was tried to a verdict. Gonzalez states in the settlement value was “far in excess of the $50,000” actually
affidavit that through his experience he gained knowledge of received. These assertions are equally conclusory, suffer from
the “settlement ranges or case values” in the BP litigation. the same fatal gap in analysis, and, as in Burrow, rely on
He then lists the criteria BP used in “determining the general nothing more than the ipse dixit of the expert. We are simply
value of a case for settlement purposes.” He states his value left to take the expert's word as to the adequacy of the
of the case based on his “knowledge of general settlement settlement, the same defect we recognized in Burrow.
values and ... the criteria and protocol relied upon to establish
general settlement values.” He states that “[t]he settlement
offer made by BP ... was basically for nuisance value”
B. Discovery Disputes in the Trial
and that, given the extraordinary circumstances of the BP
Court Did Not Warrant Denial of the
plant explosion, “a reasonably competent plaintiff's lawyer
Summary Judgment Motions on Damages.
should have continued to *266 prosecute the claim until a
fair and reasonable offer was made by BP.” He concludes [8] The court of appeals dissent noted that at various points
by stating that the Attorneys could have “greatly enhanced in the litigation the Lawyers objected to the discovery of
the settlement value of the Elizondo claim” by developing information about other settlements, and this dissent thought
facts supporting exemplary damages. As explained above, it “fundamentally unfair for the Lawyers to thwart discovery
we conclude that an analysis of settlements of cases with as to other settlements and at the same time use the lack
injuries and circumstances similar to the Elizondo case might
of that information to strike Gonzalez's affidavit.” 22 It
be sufficient to raise a fact issue as to the inadequacy of the
noted that “[t]he Elizondos asked for a court order to allow
settlement, but Gonzalez did not undertake to compare the
Gonzalez to reveal specifics from the BP settlements, and
Elizondo settlement with other actual settlements obtained
in the BP litigation. As in Burrow, the expert might have the Lawyers opposed the order.” 23 On the other hand, the
compared this settlement “to those of similar claims, or court of appeals majority concluded that the Elizondos did
provided other information showing a relationship between not assign as error on appeal that the trial court erred in
the plaintiffs' circumstances and the amounts received [but denying their request to obtain discovery on or otherwise
he] did not do so.” 20 We are simply left to take his word that reveal information regarding settlements in other cases. 24
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
On this issue, *267 we ultimately are not persuaded by the affidavit.” As detailed above, 28 even if we consider the entire
court of appeals dissent—essentially urging that, because the Gonzalez affidavit, including the portions struck by the trial
Lawyers objected to discovery regarding other settlements, court, we still conclude that it failed to raise a material issue
the Lawyers should be estopped from prevailing on grounds of fact as to damages.
that the Gonzalez affidavit was inadequate. Nevertheless, we
find the issue difficult and discuss it at some length herein. As noted above, the Elizondos filed a motion, mentioned
by the court of appeals majority and dissent, seeking a
The settlement agreements in the BP cases contained a trial court order allowing Gonzalez to reveal information
confidentiality provision prohibiting disclosure of the details regarding other settlements under a proposed protective
of the settlements to third parties. The Elizondos' expert,
order. 29 But from the record before us the Attorneys were
Gonzalez, stated in his affidavit that he was bound by
this provision. The Attorneys were also bound by this not actually opposing such disclosures. 30 In fact, the motion
sought entry of an order allowing Gonzalez to testify in
provision. 25 To the extent the Attorneys contended as
his deposition about other settlements because the Elizondos
an initial discovery response that they and others could
anticipated that the Lawyers would ask about these other
not disclose information regarding other settlements for
contractual reasons, we believe they argued within the bounds settlements. 31 Gonzalez sought a court order because the
of zealous advocacy in contending that the information should settlement agreements authorized disclosure of settlement
not be disclosed even if it might be helpful to the Elizondos. amounts if “required by law or court order.”
Further, we can find no place in the record where the In several pleadings in our record the Elizondos requested
Elizondos contended that their expert needed to review and a continuance or more discovery before the trial court ruled
reveal information about other specific settlements in order on the summary judgment motions. These requests met with
to prepare a valid expert opinion. The voluminous record some success, in that the trial court agreed not to set a hearing
before us indicates several pretrial skirmishes where other on the summary judgment motions until two weeks after
the depositions of the Lawyers were taken. In a motion for
settlements came up. 26 But the Elizondos point to nothing
continuance filed in April 2008, the Elizondos contended
in the record indicating that, but for objections raised by the
that they needed settlement-related documents pertaining to
Attorneys, Gonzalez would have augmented his affidavit with
other BP clients of the Lawyers. However, this pleading
a more revealing analysis and comparison of other specific
disclaimed any need for information regarding the amounts of
settlements obtained in similar cases. On the contrary, he
other settlements, stating that the Elizondos were content with
stated in his affidavit that “I am precluded pursuant to the
redaction of settlement amounts if that information raised
confidentiality provisions from divulging specific settlement
amounts related to the monetary payments by BP to specific confidentiality concerns 32 and that the Attorneys' *269
plaintiffs.” Gonzalez did not indicate that he wished to summary judgment motions on damages were based on a
analyze and describe other specific settlements to buttress “faulty premise,” namely that the “only way of proving
his opinion but had been thwarted by the objections of the damages is by showing that someone else with identical
Attorneys. injuries and claims against BP received a larger settlement.”
A pleading styled “Demonstration of Need for Additional
In addition, the Elizondos did not ask the trial court to Discovery Prior to Hearing on Defendants' Sixteen Motions
defer ruling on the summary judgment motions until they for Summary Judgment,” also filed in April 2008, stated
could obtain from the Lawyers or third parties evidence of that the Elizondos needed settlement documents related to
other settlements. The Elizondos should have made such other BP clients of the Lawyers, but the stated need was to
refute the Lawyers' contention that they did not represent
a request if they thought their expert needed this data. 27
Guillermina, the wife of the plaintiff directly injured in the
Moreover, they do not even now *268 contend that they
blast. At least two other pleadings—plaintiffs' April 2008
needed discovery of other settlements so that Gonzalez could
motion for continuance and a March 2008 motion to compel
provide a comparison of them in opining on the adequacy of
production of documents—made the same argument. Again,
the Elizondo settlement. In their principal brief, they argue
the Demonstration of Need disclaimed any need for discovery
to us only that the Lawyers' refusal to produce information
of the amounts of the other settlements, stating that “Plaintiffs
about other settlements should lead us to hold “that the trial
would not object to limited redactions necessary to comply
court abused its discretion in striking portions of Gonzalez's
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Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
with confidentiality provisions, such as dollar amounts....” 33 case settled for $50,000. Even if the Elizondos suffered
Another motion for continuance, filed in October 2008 some compensable damages, they suffered as a result of
and relating specifically to the summary judgment motions the Attorneys' conduct only if, absent malpractice, they
on damages, made no request for additional discovery on probably would have recovered a settlement for more than
settlements in other cases. It contended, on the contrary, that $50,000. As explained above, the general measure of damages
the Gonzalez affidavit was adequate to refute all the Lawyers' in a legal-malpractice case is the difference between the
arguments in favor of summary judgment on grounds that amount the plaintiff probably would have recovered in the
no evidence had been presented on damages, including the absence of malpractice, and the amount recovered. While
Lawyers' argument that “Plaintiffs cannot identify anyone a “suit within a suit” analysis is not required in a case
who obtained a larger settlement for the same claims, much like this one, for the reasons explained, the alternative
less the amount received, which demonstrates that Plaintiffs method available to establish attorney-malpractice damages
cannot prove damages.” It asked for a continuance only if requires an analysis of settlements made under comparable
the Court was considering granting summary judgment on circumstances. While this alternative method is sometimes
grounds that Guillermina had no consortium claim because available, we conclude that such an analysis requires expert
Jose's injuries were not sufficiently “serious, permanent, and testimony. We have in the past noted that proof of attorney
disabling,” grounds unrelated to the alleged inadequacy of malpractice requires expert testimony, because establishing
the Elizondo settlement that might be revealed by an expert such negligence requires knowledge beyond that of most
comparison of other BP settlements. laypersons. 34 The same is true of proof of damages under a
theory that a settlement was inadequate. The Elizondos' own
In sum, none of these discovery skirmishes indicate that the expert attested that a calculation of a reasonable settlement in
Elizondos took the position in the trial court that (1) discovery this case required an analysis of at least ten factors considered
of the dollar amount of other settlements in similar cases was by BP in determining settlement values, a balancing and
needed so their expert could make a valid, non-conclusory evaluation of which is surely “beyond the ken of most
determination of the adequacy of the Elizondo settlement jurors.” 35 We conclude that even these factors are inadequate
or better describe his analysis, and (2) consideration of the if considered in a vacuum without evaluation of settlements
summary judgment motions on damages should be continued of comparable cases. Given the complexity of these factors,
until such discovery was provided. Accordingly, we do not we conclude that such an analysis requires expert testimony.
agree with the court of appeals dissent insofar as it would It cannot be based solely on the testimony of the claimants,
hold that the Lawyers were not entitled to summary judgment particularly where Jose testified that he did not know the value
because of their attempts to limit discovery regarding other of his claim, he testified that he had “no idea” of the value of
settlements. his wife's claim, and both husband and wife testified that they
did not know whether anyone had received a larger settlement
in a case involving similarly situated claimants.
C. The Lay Testimony of the Elizondos
Did Not Raise a Genuine Issue of The Elizondos also argue that summary judgment was not
Material Fact on Malpractice Damages. warranted as to Guillermina because she recovered nothing.
They argue that Guillermina did not sign the release and
The Elizondos contend that their own deposition testimony therefore still had an unsettled claim, and that she received
raised fact issues as to damages sufficient to defeat summary nothing in the settlement. The parties disagree on whether
judgment. Jose testified about his pain and suffering, and the Lawyers ever represented Guillermina. But even if
Guillermina testified *270 about her loss of consortium. The Guillermina is correct that the Lawyers represented her and
Elizondos contend that these unliquidated damages are best had a duty to obtain a settlement for her, or at least advise
left to a jury and that summary judgment therefore was not her that her claim should be pursued before limitations ran,
warranted. we cannot agree that she raised a fact issue on damages in
light of the Elizondos' own evidence proffered in response to
[9] We agree with the Lawyers that even if the Elizondos the summary judgment motions. The Elizondos offered proof
presented some evidence of actual damages, this does not that (1) William Wells advised BP that he represented Jose
mean they raised a material issue of fact as to malpractice and Guillermina and made a settlement demand on behalf of
damages. The two are not the same here, because the both husband and wife; (2) BP responded with a settlement
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Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
offer to settle “all claims of Jose L. Elizondo and his *271 imposes too strict a standard at this summary judgment stage.
family” for $50,000; (3) the settlement offer was accepted, Because the expert based his opinion on facts that could
and BP drafted a release to be signed with disbursement of support a finding that the Elizondos' claims had substantial
the settlement proceeds, defining the “releasors” to include merit but were settled as if they had no merit at all, I would
both Jose and Guillermina; (4) the release had signature lines hold that the Elizondos created a fact issue on the existence
for both husband and wife; (5) Jose alone met with Wells of malpractice damages. I therefore respectfully dissent.
and Kevin Krist to go over the release; (6) Jose was told
that Guillermina (who could not speak or read English) did
not need to sign the release; and (7) Jose signed the release
I.
and received the settlement proceeds. To prevail under the
theory that Guillermina received nothing on her claim of
loss of consortium, she would have to prove that her claim Standard of Review
survived the release because Jose did not have authority to
This is an appeal from a summary judgment. We must
sign the release and accept the settlement proceeds on behalf
consider the evidence in the light most favorable to
of both of them, and that she and her lawyers tricked BP
the Elizondos, indulging every reasonable inference and
into paying $50,000 to settle both claims and BP remained
resolving any doubts in their favor. See City of Keller v.
liable on the loss of consortium claim. She would also have to
Wilson, 168 S.W.3d 802, 824 (Tex.2005); see also Shah v.
prove that BP could have been persuaded to pay an additional
settlement or a trier of fact could have been persuaded to Moss, 67 S.W.3d 836, 844 (Tex.2001). The trial court found
that the Elizondos submitted no evidence that they incurred
award additional damages in such unsavory circumstances.
any damages *272 as a result of the defendants' alleged
We have reviewed the record and conclude that Guillermina
breaches. At this stage of the case, the Elizondos did not
failed to proffer evidence, expert or otherwise, upon which
have to prove the amount of their damages; they only had to
a reasonable and fair-minded trier of fact could have found
create a fact issue as to the existence of damages—that is,
damages for her under such a novel theory. 36
whether they sustained any damages at all. To do this, they
had to “produce some evidence from which a reasonable jury
could infer” that they sustained some damages. See Garcia
III. Conclusion v. Gomez, 319 S.W.3d 638, 642 (Tex.2010) (observing that
even though there was no evidence of amount of damages,
We affirm the court of appeals' judgment. there was evidence that some damages were incurred); see
also Alexander v. Turtur & Assocs., Inc., 146 S.W.3d 113,
117 (Tex.2004) (noting that plaintiff must “produce evidence
Justice BOYD filed a dissenting opinion, in which Justice from which a jury may reasonably infer that the attorney's
LEHRMANN joined. conduct caused the damages alleged”) (citing Haynes &
Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179, 181
Justice HECHT did not participate in the decision. (Tex.1995)). If they have done this, we must reverse the trial
court's summary judgment.
Justice BOYD, joined by Justice LEHRMANN, dissenting.
To prove the existence of legal malpractice damages, clients
who sue their attorneys must establish that “the result II.
obtained for the client” was less (or lower or worse) than
“the result that would have been obtained with competent
A Qualified Expert Witness
counsel.” See ante at 263. The Court holds that Jose and
Guillermina Elizondo failed to submit any evidence that could The Elizondos relied primarily on the affidavit of their
meet that burden, despite their expert's testimony that, in his expert witness, Arturo J. Gonzalez. According to his affidavit,
opinion, the attorneys' breaches of their duties caused the Gonzalez is a Texas lawyer who has specialized in personal
Elizondos to settle their claims “basically for nuisance value,” injury claims for over twenty years. Following a 2005
and “a reasonably competent plaintiff's lawyer ... would have explosion at BP Amoco Chemical Company's plant in
garnered far in excess” of that amount. I believe the Court Texas City, Gonzalez assisted in the representation of over
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Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
525 plaintiffs who, like the Elizondos, asserted claims for 229, 236 (Tex.1999) (noting that the expert “might have ...
damages against BP. For most of that time, Gonzalez served compared these settlements to those of similar claims”), and
as the plaintiffs' court-appointed liaison counsel to facilitate I agree with it. I also agree with the Court's holding that
discovery and the exchange of information between the Gonzalez's affidavit was insufficient under this “comparison-
parties. He “was intimately involved on a day to day basis of-settlements” method. Gonzalez “did not undertake to
with the settlement process” involving these claims, and compare the Elizondo settlement with other actual settlements
participated in numerous settlement conferences with BP's obtained in the BP litigation.” Ante at 266. He did not state
representatives and attorneys. He was “directly responsible” the values for which any of the other cases settled, and he did
for negotiating and settling three cases, and has personal not assert that the Elizondos' claims were comparable to, but
knowledge of the values for which most of the other settled for less than, any of the other cases. 2
claims were settled. The defendants may ultimately dispute
Gonzalez's assertions and qualifications and, at trial, would be But the Elizondos did not rely on the comparison-of-
free to disprove them or otherwise undermine his credibility settlements method. Instead, they challenged the defendants'
or the reliability of his opinions. But for purposes of “faulty premise” that the “only way of proving damages is by
summary judgment, as the Court acknowledges, Gonzalez's showing that someone else with identical injuries and claims
affidavit establishes that he is “an experienced attorney whose received a larger settlement.” See ante at 269. I agree with
credentials are not the problem.” 1 Ante at 265. the Elizondos that the suit-within-a-suit and the comparison-
of-settlements methods are not the only ways to prove the
existence of legal malpractice damages. Just as our decisions
“do not require that damages can only be measured against
III.
the result the client would have obtained if the case had been
tried in court to a final judgment,” ante at 263, they also do
An Acceptable Method of Proof not require that damages can only be measured against the
result the client would have obtained if the case had settled for
We have previously held that a client who was the plaintiff in the amounts for which similar cases settled. Since malpractice
an underlying case can establish the existence of malpractice damages are “the difference between the result obtained and
damages by proving that the amount the client recovered was the case's ‘true value,’ ” see ante at 263, I would hold that any
less than the amount “that would have been recoverable and method that provides competent evidence that the case's “true
collectible if the other case had been properly prosecuted.” value” was greater than the “results obtained” will suffice to
Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & raise a fact issue on the existence of malpractice damages.
Research Corp., 299 S.W.3d 106, 112 (Tex.2009). Because And I would hold that, by submitting sufficient expert opinion
we have focused on the recoverable and collectible amount of evidence that their claims had merit but were settled as if they
a judgment following trial, courts often refer to this method of had none, the Elizondos satisfied that burden.
proving damages as a “suit-within-a-suit.” See, e.g., *273
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d
178, 183 (Tex.App.–Houston [1st Dist.] 2012, no pet.) (“This
causation burden in this type of legal malpractice claim IV.
has been called the ‘suit-within-a-suit’ requirement.”) (citing
Greathouse v. McConnell, 982 S.W.2d 165, 173 (Tex.App.– Sufficient Expert Opinions
Houston [1st Dist.] 1998, pet. denied)).
Gonzalez did not utilize the comparison-of-settlements
Today, the Court holds that a client who was a plaintiff method because confidentiality agreements prohibited him
“in a mass tort litigation involving thousands of similar from disclosing the amounts for which other cases settled.
claimants and arising out of the same event” can also establish Nor did he utilize the suit-within-a-suit method, presumably
the existence of malpractice damages by proving that the because BP settled every one of the 2005 explosion claims
amount the client received in settlement is lower than the prior to the entry of any judgment. Instead, after stating his
amounts of “the settlements obtained in other cases ... arising experience and qualifications, explaining the confidentiality
from the event.” Ante at 263. This holding is consistent of BP's settlement amounts, listing the *274 factors that
with the Court's comments in Burrow v. Arce, 997 S.W.2d BP considered when determining the settlement value of a
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Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
case, stating his opinion of the general settlement value of as ‘untriable’ or otherwise legally untenable on an applicable
the Elizondos' claims, listing the sources on which he relied, dispositive motion for merits review”). 3
describing the things that a reasonably diligent attorney would
have done to pursue the Elizondos' claims, and listing the *275 Reading Gonzalez's affidavit in the light most
specific ways in which the attorney defendants failed to meet favorable to the Elizondos, and indulging every reasonable
that standard, Gonzalez stated his opinions as follows: inference in their favor, it is Gonzalez's opinion that the
Elizondos were paid as if their claims had no merit, when
The settlement offer made by
in fact they had substantial merit. If, in fact, the Elizondos'
BP for the Elizondos' claim
claims had substantial merit but were settled as if they had
was basically for nuisance value.
no merit, a reasonable jury could at least infer that the
Given the extraordinary circumstances
Elizondos sustained damages of some amount. Although
surrounding the BP explosions claims,
Gonzalez's opinions could not establish any particular amount
a reasonably competent plaintiff's
of damages, in my view they are sufficient to create a fact
lawyer should have continued to
issue on the existence of damages.
prosecute the claim until a fair and
reasonable offer was made by BP. In
my opinion, had that been done, the
Lawyers would have garnered far in V.
excess of the $50,000 offer[.]
(Emphasis added.) In Gonzalez's opinion, the $50,000 that An Adequate Factual Basis
the Elizondos received to settle their claim was “basically for
Gonzalez's opinions, however, are not enough. Absent an
nuisance value” and not a “fair and reasonable” amount based
adequate factual basis, an expert's bare opinion that a claim
on the merits of the claim.
had merit or that it was settled for nuisance value would be
conclusory and, therefore, incapable of creating a fact issue to
Although Gonzalez did not define “nuisance value,” its
avoid summary judgment. Gonzalez cannot just expect us to
meaning is common knowledge, at least among American
“take his word” for it, see ante at 264; he must provide facts to
litigators and judges: a nuisance value settlement is a
support his opinions. See, e.g., Jelinek v. Casas, 328 S.W.3d
settlement of meritless, frivolous, or groundless claims for an
526, 536 (Tex.2010) (“We have rejected expert opinions not
amount that is less than the defendant would have to spend
grounded in a sound evidentiary basis: ‘[I]f no basis for the
to defeat them. See, e.g., Valores Corp. v. McLane Co., 945
opinion is offered, or the basis offered provides no support,
S.W.2d 160, 169 (Tex.App.–San Antonio 1997, writ denied)
the opinion is merely a conclusory statement and cannot be
(noting that summary judgment rule was intended to dispose
considered probative evidence, regardless of whether there is
of “groundless actions instituted by plaintiffs seeking to
no objection.’ ” (citation omitted)); see also Elizondo v. Krist,
harass defendants into nuisance value settlements”) (quoting
338 S.W.3d 17, 25–28 (Tex.App.–Houston [14th Dist.] 2010)
Roy W. McDonald, Summary Judgment, TEX. L.REV. 286,
(Christopher, J., dissenting) (discussing Gonzalez affidavit).
286 (1952)); Wolcott v. Trailways Lines, Inc., 774 So.2d
In my view, Gonzalez's affidavit recites numerous facts that,
1054, 1055 n. 1 (La.App. 2nd Cir.2000) (“The ‘nuisance
taken in the light most favorable to the Elizondos, constitute
value’ of a claim is generally considered to be the cost of
evidence that the Elizondos' claims had merit but were settled
defending a claim in which it is doubtful the plaintiff will
for nuisance value, as if they did not.
prevail, but is unwilling to simply dismiss.”); Fletcher v.
City of Fort Wayne, Ind., 162 F.3d 975, 976 (7th Cir.1998)
(“[a] compromise for less than the cost of defense is a good A. Facts supporting merit
working definition of a nuisance-value settlement”); R. Kozel
& D. Rosenberg, Solving the Nuisance–Value Settlement Gonzalez provided an extensive recitation of facts supporting
Problem: Mandatory Summary Judgment, 90 VA. L.REV. his conclusion that the Elizondos' claims had merit. First, he
1849, 1851 (2004) (defining a nuisance-value settlement as listed ten “criteria or factors” that BP “focused on” when
“a payoff extracted by a threat to litigate a meritless claim or determining the value of claims arising out of the 2005
defense that both parties know the court would readily dismiss explosion:
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Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
• proximity to ground zero of the explosion; • Jose was first treated for mental anguish or emotional
distress by Dr. Susana Rosin on May 6, 2005. He
• when injury was reported to a supervisor; attended additional therapy sessions on May 20, July 6,
and August 3, 2005. His treatment lasted approximately
• corroboration of proximity and reporting of injuries to
three months.
supervisor or management;
• Jose is married to Guillermina Elizondo, and they had four
• age of the victim;
children at the time of the explosion. They now have five
• wage earning capacity and wage loss (present and future); children.
• injuries and biomechanics of injuries—e.g., nature, • Jose earned about $23 per hour at the time of the
extent, and duration; explosion, and worked about 50 to 60 hours each week.
• medical treatment received and duration of (physical and • Jose missed work as a result of the explosion.
mental/PTSD);
• Jose has not been physically or medically restricted from
• surgical vs. nonsurgical intervention(s); working, but he was injured in the explosion.
• single or married/residual consortium claims; and Based on these facts and the “criteria and protocol relied upon
to establish general settlement values in the BP litigation,”
• onsite vs. offsite claims. Gonzalez opined that the Elizondo case “would have had a
general value, by way of settlement or verdict, in the range
He then listed the facts of the Elizondos' claims that were of between Two Million ... and Three Million ... dollars,” and
relevant to these factors: he later summarized his view by opining that the claims were
worth “far in excess” of the $50,000 that BP paid. Whether
• On the date of the explosion, Jose was working for a
the facts that Gonzalez recited were sufficient to support his
subcontractor at the BP facility. He was 37 years old.
$2–3 million valuation is doubtful (at best), but, in my view,
*276 • Jose was approximately 200 to 300 feet from the they constitute some evidence that the Elizondos' claims had
blowdown stack when the explosion occurred. The force merit.
of the explosion blew him a number of feet into a port-
a-potty.
B. Facts supporting nuisance value
• Jose was near Mr. Eamello at the time of the blast.
Next, Gonzalez recited facts to support his view that the
• Jose sustained injuries to his neck and lower back and claims were settled “basically for nuisance value,” as if they
suffered such mental anguish and emotional distress that had no merit. First, he described in some detail what a
he was considered to have post-traumatic stress disorder. “plaintiff's attorney using reasonable due diligence” would
have done to establish the claims' merit. Specifically, a
• Jose was first treated for his neck and back injuries by Dr. reasonably diligent attorney would have:
Ron Kirkwood and Dr. English of Kirkwood Medical
Associates, on March 26, 2005. taken steps that included prosecuting
the case to its fullest extent including
• Jose saw Dr. David Winberly at Fondren Orthopedic on investigation, prosecution and filing
April 1, 2005, for complaints of neck and lower back of a lawsuit ..., the taking of
pain, and had a follow-up visit on June 7, 2005 for depositions or sworn statements of
persistent neck and back pain. important witnesses, requesting or
obtaining and reviewing liability
• Jose received physical therapy at TIRR twelve times over
documents, coordinating efforts to
the six-week period between April 7 and May 19, 2005.
develop liability and damages in this
matter, interviewing other potential
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Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
fact witnesses that can determine the this, the Court explained, he “might have analyzed the Clients'
extent and location of the injuries injuries by type, or related settlement amounts to medical
sustained by their client, determining reports and expenses, or compared the settlements to those
any and all responsible parties, of similar claims, or provided other information showing
determining all claims that their clients a relationship between the plaintiffs' circumstances and the
could respectfully (sic) have ..., and amounts received.” Id. at 236.
addressing and developing facts and
issues relevant to establishing the In the present case, the Court concludes that Gonzalez's
egregious conduct of BP. affidavit is “similarly conclusory” because it “fails to offer
specifics on why the value of the case was $2–3 million as
He then described specifically how the attorneys failed to opposed to the $50,000 received in settlement.” Ante at 265.
do these things: they did *277 not file a lawsuit; conduct But to avoid summary judgment, Gonzalez did not have to
any investigation into the liability and damages facts; send establish that the case was worth $2–3 million as opposed to
out any discovery requests; take any depositions; investigate $50,000; he only had to establish that the case was worth more
and develop evidence of gross negligence; or investigate than $50,000. By providing specifics on why $50,000 reflects
and determine how BP valued the explosion claims. Instead, the value of a case that had “basically” no merit, and specifics
Gonzalez asserted, the attorneys “perform[ed] no work other on why the Elizondos' case had merit, I would hold that he
than to review a demand package prepared by a referring has done that.
lawyer.”
Burrow is distinguishable from this case in all material
These facts, if true, would certainly support the duty and aspects. In Burrow, the defendants sought and obtained a
breach elements of the Elizondos' malpractice claims. But in traditional summary judgment—they had the burden to prove
my view, they also support Gonzalez's opinion that the claims the absence of damages as a matter of law. 997 S.W.2d at
were settled for nuisance value, as if they had no merit. If, in 234. Here, the Elizondos are defending against a no-evidence
fact, the attorney defendants did nothing to develop the claims summary judgment—they need only raise a question of fact
and establish their merit, a reasonable jury could infer that the on the existence of damages. More importantly, the expert
amount BP paid reflected the cost of defense and the claims' in Burrow provided no facts to support his opinion that the
lack of merit, and that the amount was lower than BP would “fair and reasonable” amounts the plaintiffs received were
have paid for a meritorious claim. Again, although this cannot equal to or greater than their true value. Here, by contrast,
constitute evidence of any particular amount of damages, Gonzalez provided extensive facts to support his conclusion
in my view it does constitute evidence of the existence of that the Elizondos' settlement was “basically for nuisance
damages. value,” meaning it did not reflect any merit at all. Because a
reasonable jury can infer that a claim that lacks merit is worth
less than a claim that has merit, I would hold that Gonzalez's
VI. *278 testimony was sufficient to defeat summary judgment,
and that Burrow does not counsel otherwise.
Distinguishing Burrow v. Arce
In rejecting Gonzalez's affidavit, the court of appeals relied VII.
heavily on our decision in Burrow v. Arce, 997 S.W.2d 229
(Tex.1999), as does this Court. In Burrow, the defendants'
Conclusion
expert testified by affidavit that he had considered the
relevant factors (including the underlying facts, the identity In response to the attorney defendants' motions for summary
of the defendant, the elements of damages available, and judgment, the Elizondos' expert testified that, in his opinion,
the losses each plaintiff incurred) and concluded based on their claims had merit but were settled as if they had no
these factors that each plaintiff was “reasonably and fairly merit, and he did so in an affidavit in which he identified
compensated.” Id. at 235. The Court held that this affidavit numerous facts that support each of these two propositions.
was conclusory because the expert “[did] not explain why the Because I would hold that the expert's affidavit constitutes
settlements were fair and reasonable.” Id. at 235–36. To do
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Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
competent evidence from which a reasonable jury could infer
All Citations
the existence of damages, I respectfully dissent.
415 S.W.3d 259, 56 Tex. Sup. Ct. J. 1074
Footnotes
1 The letter begins “Re: Our Clients: Jose Elizondo and spouse Guillermina Elizondo.” It states that “Our office represents
Jose Elizondo and his wife Guillermina Elizondo” regarding the BP explosion and requests “settlement to the Elizondos”
of $2 million. It describes the family life and background of both spouses. It details Jose's physical and psychological
injuries. It states that “Mr. Elizondo and his wife have the privilege and responsibility of providing for, nurturing and raising
four daughters. The events of March 23rd and following disrupted their family existence and security.”
2 338 S.W.3d 17, 24.
3 The trial court struck certain portions of the affidavit after the Attorneys complained that it was conclusory. Unlike the
court of appeals, we do not separately analyze this ruling but address whether the affidavit, considered in its entirety,
raised a material issue of fact as to damages.
4 See TEX.R. CIV. P. 166a(i).
5 Cosgrove v. Grimes, 774 S.W.2d 662, 666 (Tex.1989); see also Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev.
& Research Corp., 299 S.W.3d 106, 112 (Tex.2009).
6 20 S.W.3d 692, 703 n. 5 (Tex.2000).
7 TEX.R. EVID. 703.
8 City of San Antonio v. Pollock, 284 S.W.3d 809, 816 (Tex.2009).
9 Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 (Tex.2004).
10 McIntyre v. Ramirez, 109 S.W.3d 741, 749–50 (Tex.2003).
11 Burrow v. Arce, 997 S.W.2d 229, 235 (Tex.1999).
12 Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 726 (Tex.1998) (quoting Gen. Elec. Co. v. Joiner, 522 U.S.
136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997)).
13 Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 912 (Tex.2004).
14 Burrow, 997 S.W.2d at 236.
15 Id. at 232.
16 Id. at 233.
17 Id. at 235.
18 Id.
19 Id. at 235–36 (quoting TEX.R. EVID. 702).
20 Id. at 236.
21 338 S.W.3d at 21–22.
22 Id. at 28 (Christopher, J., concurring and dissenting).
23 Id. (footnote omitted).
24 The court of appeals majority noted:
The Elizondos sought to obtain discovery regarding various documents relating to the BP settlements and, in
response, the Lawyers asserted various objections. The Elizondos also asked for a court order under which Gonzalez
could reveal specific information regarding the BP settlements, and the Lawyers opposed this motion. But, the
Elizondos have not asserted on appeal that the trial court sustained the Lawyers' discovery objections or denied
this motion, and the Elizondos have not cited any place in the record in which the trial court made any ruling in this
regard. In addition, the Elizondos have not assigned error or presented argument challenging any such ruling by
the trial court.
Id. at 21 n. 2 (majority opinion).
25 The Elizondo release applies to the Elizondos and their attorneys and other agents, and provides: “The parties agree to
keep confidential and not to disclose to third parties any of the consideration paid under this Agreement or any of the
other terms of this Agreement, except that any party may disclose such portions of the Agreement, and to such limited
extent, as may be necessary for obtaining tax or legal advice or as may be required by law or court order.”
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
26 For example, the Elizondos sought from the Lawyers production of settlement documents of other BP explosion clients
and sought production of settlement documents from third-party law firms who had represented BP. They also sought the
production of any matrix or grid used by BP in valuing claims. The Lawyers raised various objections to these requests.
27 See Tex.R. Civ. P. 166a(g) (“Should it appear from the affidavits of a party opposing the [summary judgment] motion
that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the
application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or
discovery to be had or may make such other order as is just.”); Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 647
(Tex.1996) (“When a party contends that it has not had an adequate opportunity for discovery before a summary judgment
hearing, it must file either an affidavit explaining the need for further discovery or a verified motion for continuance.”).
28 See supra note 3 and Part II.A.
29 See supra notes 23–24 and accompanying text. The protective order would have limited disclosure to this lawsuit only.
30 The court of appeals majority and dissent perhaps noted that the Lawyers opposed the motion because the certificate
of conference to this motion stated that counsel for the two sides “have been unable to work out any resolution of this
motion,” and that counsel for Kevin Krist was unavailable and would likely oppose the relief requested.
31 The motion states: “The Lawyer Defendants have made it clear that they intend to inquire of Mr. Gonzalez, or seek
documents from him, regarding the specific amounts paid by BP to settle other similar claims ... as referenced by Mr.
Gonzalez in his affidavit. Plaintiffs are more than willing for such information to be disclosed, but want to do so in a way
that limits disclosure to this lawsuit only and for no other use or purpose. Likewise, Mr. Gonzalez has advised that he is
willing to disclose such information under a fair protective order.”
32 The motion states: “The only apparent confidentiality concern raised by anyone concerns the ‘confidential’ settlement
amounts paid to injured BP claimants, as set out in settlement/release agreements. This concern does not apply to any
settlement demand made by a plaintiff's lawyer to BP's defense counsel. To the extent the concern is legitimate in regard
to any settlement/release agreement, the Court can permit the producing party to redact any actual settlement amounts
and thereby protect confidentiality.”
33 The March 2008 motion to compel similarly states that “Plaintiffs are willing to allow Defendants to redact the actual
dollar amounts contained in any demands and in any settlement/release agreements signed by their other clients, so
Defendants have no basis to object on these purported confidentiality grounds.”
34 See Alexander v. Turtur & Assocs., Inc., 146 S.W.3d 113, 119–20 (Tex.2004) (noting that “the wisdom and consequences”
of “tactical choices made during litigation are generally matters beyond the ken of most jurors” and that “when the causal
link is beyond the jury's common understanding, expert testimony is necessary”).
35 Id. at 119.
36 See Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex.2007) (“An appellate court reviewing a summary
judgment must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all the
evidence presented.”).
1 The Court holds that expert testimony is necessary to establish the existence of damages under the comparison-of-
settlements method that it approves today, because the balancing and evaluation of factors necessary to compare
different claims and their settlement values is “beyond the ken of most jurors.” Ante at 270 (quoting Alexander, 146
S.W.3d at 119–20). Because I would hold that Gonzalez's affidavit was sufficient, under a different method, to create a
fact issue and defeat summary judgment, I need not decide in this case whether expert testimony would be necessary
in all such cases.
2 As the Court notes, Gonzalez did not use the “comparison-of-settlements” method because confidentiality agreements
prevented him from disclosing the amounts for which the other cases settled. I agree with the Court that, to the extent the
Elizondos are now arguing that the attorney defendants thwarted their efforts to compare the values of other settlements,
they waived that argument in the court of appeals and in the trial court. Ante at 263.
3 See also Fed. Land Bank of Hous. v. Brooks, 124 S.W.2d 161, 167 (Tex.Civ.App.–Beaumont 1938) (Combs, J.,
dissenting) (expressing concern that majority's holding would “give to many an unfounded and unjust claim, ‘a nuisance
value’ which may encourage such claims being asserted merely in the hope of a settlement”), rev'd, 135 Tex. 370, 143
S.W.2d 928 (Tex.Com.App.1940); Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 548, 69 S.Ct. 1221, 93 L.Ed.
1528 (1949) (characterizing suits brought to “realize upon their nuisance value” as suits “brought not to address real
wrongs”); Owens Corning v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 257 F.3d 484, 495 n. 6 (6th Cir.2001) (explaining
that suit's “nuisance value” is “based on the prospective litigation costs required to effect a dismissal of the action”);
Travelers Ins. Co. v. Motorists Mut. Ins. Co., 178 N.E.2d 613, 619 (Ohio.Ct.App.1961) (“The fact that insurers agree to
defend groundless claims, otherwise within the coverage of their policies, is a recognition that even groundless claims
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
Elizondo v. Krist, 415 S.W.3d 259 (2013)
56 Tex. Sup. Ct. J. 1074
have a nuisance value subject to defense and settlement.”); Robert A. Sachs, Product Liability Reform and Seller Liability:
A Proposal for Change, 55 BAYLOR L.REV. 1031, 1040 n. 25 (2003) (noting that parties “pay ‘nuisance value’ to avoid
continuing with the defense of a frivolous claim”); Geoffrey P. Miller, Payment of Expenses in Securities Class Actions:
Ethical Dilemmas, Class Counsel, and Congressional Intent, 22 REV. LITIG. 557, 592 (2003) (characterizing strike suits
and “nuisance value” suits as “litigation without substantial merit”); Cym H. Lowell & Jack P. Governale, U.S. INT'L TAX:
PRAC. & PROC. ¶ 6.02 (2012) (noting that, under 26 C.F.R § 601.106(f)(2), the IRS will not settle based on “nuisance
value,” described as “any concession made solely to eliminate the inconvenience or cost of further negotiations or litigation
and is unrelated to the merits of the issues”).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
P
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
Nature and Theory of Right
“Subrogation” is a doctrine of equity and is the
KeyCite Yellow Flag - Negative Treatment
substitution of another person in the place of the
Declined to Follow by Davis v. City of Grapevine, Tex.App.-Fort
Worth, March 9, 2006 creditor, so that the person in whose favor it is
applied succeeds to the rights of the creditor in
49 S.W.3d 891 relation to the debt.
Court of Appeals of Texas,
Austin. Cases that cite this headnote
ESLON THERMOPLASTICS; Tokyo
[2] Insurance
Electron America, Inc. and Tokio Marine
Equitable Subrogation
& Fire Insurance Company, Appellants,
Generally, an insurer paying a claim under a
v.
policy becomes equitably subrogated to any
DYNAMIC SYSTEMS, INC., Appellee.
cause of action the insured may have against a
third party responsible for the injury.
No. 03–00–00501–CV. | June 29,
2001. | Rehearing Overruled Aug. 9, 2001. 3 Cases that cite this headnote
Corporation and its insurer brought action against water
line manufacturer and water line installer for damages [3] Judgment
which occurred when water line broke at corporation's Presumptions and Burden of Proof
building. After manufacturer brought action against installer The party moving for summary judgment has the
for contribution, installer brought motion for summary burden of showing that there is no genuine issue
judgment against corporation, insurer, and manufacturer, of material fact and that it is entitled to judgment
based on a waiver of subrogation clause. The 200th Judicial as a matter of law.
District Court, Travis County, John K. Dietz, J., granted
the motion for summary judgment. Corporation, insurer, and 1 Cases that cite this headnote
manufacturer appealed. The Court of Appeals, Bea Ann
Smith, J., held that: (1) installation of water line was work
[4] Judgment
and thus covered by waiver clause in contract between
Presumptions and Burden of Proof
contractor and corporation; (2) genuine issue of material fact
as to whether installation of water line was performed under Evidence favorable to the nonmovant will be
separate contract between installer and corporation or was taken as true in deciding whether there is a
subcontract of contract between contractor and corporation, disputed material fact issue that would preclude
and thus incorporated waiver clause, precluded summary summary judgment.
judgment; (3) affidavits that may have been filed to create
1 Cases that cite this headnote
a fact issue to defeat summary judgment, and one of which
did not show personal knowledge of contracts between
corporation and installer, were inadmissible; and (4) genuine [5] Judgment
issue of material fact as to whether manufacturer was entitled Presumptions and Burden of Proof
to contribution from installer precluded summary judgment. Every reasonable inference must be indulged in
favor of the nonmovant for summary judgment
Reversed and remanded. and any doubts resolved in its favor.
1 Cases that cite this headnote
West Headnotes (20)
[6] Judgment
Presumptions and Burden of Proof
[1] Subrogation
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
When a defendant moves for summary judgment
on an affirmative defense, it must conclusively [11] Contracts
establish each element of its defense as a matter Merger in Subsequent Contract
of law. A subsequent agreement does not supersede
a prior agreement if it is not inconsistent
1 Cases that cite this headnote with the prior agreement, is made for separate
consideration, or is such an agreement as might
[7] Judgment naturally be made as a separate agreement by
Existence of Defense parties situated as were the parties to the written
agreement
A defendant is not entitled to judgment as a
matter of law on an affirmative defense if the Cases that cite this headnote
plaintiff supplies evidence as to any material
fact issue relevant to the defense upon which
reasonable minds could differ. [12] Contracts
Merger in Subsequent Contract
2 Cases that cite this headnote Whether merger occurs, or whether another
agreement is simply supplemental and does not
[8] Appeal and Error contradict an earlier agreement, is determined
Cases Triable in Appellate Court from the parties' intent.
Because the propriety of a summary judgment is 4 Cases that cite this headnote
a question of law, the Court of Appeals reviews
the trial court's decision de novo.
[13] Judgment
3 Cases that cite this headnote Insurance Cases
Genuine issue of material fact as to whether
[9] Appeal and Error hookup of water line was performed under a
Grounds for Sustaining Decision Not separate contract between corporation and water
Considered line installer, or under a modified subcontract
which incorporated waiver of rights clause
When the trial court has not stated the grounds
contained in main contract between corporation
for granting a summary judgment motion, the
and contractor, precluded summary judgment
Court of Appeals may affirm the judgment if any
in corporation's and insurer's action against
of the grounds advanced in the motion has merit.
installer and manufacturer for damages which
Cases that cite this headnote occurred after water line broke.
Cases that cite this headnote
[10] Insurance
Waiver or Loss of Subrogation Rights
[14] Judgment
Installer's hookup of water lines was “work,” Personal Knowledge or Belief of Affiant
and as such was covered by clause waiving
Judgment
subrogation rights in contract between general
Matters of Fact or Conclusions
contractor and corporation, for purposes of
determining whether corporation and insurer Judgment
could maintain action against installer for Operation and Effect of Affidavit
damages after water line broke. Affidavits were inadmissible in corporation's and
insurer's action against water line installer and
2 Cases that cite this headnote manufacturer for damages from broken water
line; affidavits may have been filed for the
express purpose of creating a fact issue to
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
defeat summary judgment, affidavits did not corporation and insurer against manufacturer and
show personal knowledge of contracts between installer for damages caused when water line
corporation and installer, and affidavits were broke. V.T.C.A., Civil Practice & Remedies
simply legal conclusions. Code § 33.013(b).
Cases that cite this headnote Cases that cite this headnote
[15] Trial [20] Contribution
Admission of Evidence in General Nature and Grounds of Obligation
The exclusion of evidence rests within the sound A claim of contribution is derivative of the
discretion of the trial court. plaintiff's right to recover from a joint defendant
against whom contribution is sought.
Cases that cite this headnote
Cases that cite this headnote
[16] Appeal and Error
Abuse of Discretion
The trial court commits an abuse of discretion
Attorneys and Law Firms
only when it acts in an unreasonable or arbitrary
manner, or acts without reference to any guiding *894 John William Belk, Sheiness, Scott, Grossman &
principles. Cohn, L.L.P., Houston, for Eslon.
Cases that cite this headnote Mark Daniel Hopkins, Black & Connolly, L.L.P., Vic Fields,
Austin, for Tokyo & Tokio.
[17] Judgment
David L. Downs, Law Office of David L. Downs, Wallace B.
Operation and Effect of Affidavit
Jefferson, Jacqueline M. Stroh, Crofts, Callaway & Jefferson,
An individual cannot file an affidavit to P.C., San Antonio, for appellee.
contradict his own deposition testimony without
any explanation for the change in the testimony, Before Justices KIDD, B.A. SMITH and PURYEAR.
for the purpose of creating a fact issue to avoid
summary judgment; such an affidavit presents no Opinion
more than a “sham” fact issue.
BEA ANN SMITH, Justice.
12 Cases that cite this headnote
[1] [2] After a water line broke causing $800,000 in
damages to a semiconductor wafer processor and the new
[18] Affidavits building in which it was installed, owner Tokyo Electron
Form and Contents America, Inc. (Tokyo Electron) and its property insurer Tokio
Affidavits must state facts, not legal conclusions. Marine & Fire Insurance Company (Tokio Marine) 1 sued
Dynamic Systems, Inc., which installed the water line, and
Cases that cite this headnote Eslon Thermoplastics (Eslon), which manufactured the pipe
fitting that broke. Eslon, in turn, sued Dynamic Systems for
[19] Judgment indemnity and contribution. Dynamic Systems was granted
Particular Cases summary judgment against Tokyo Electron and Eslon based
Genuine issue of material fact as to whether on a waiver of subrogation clause in the contract between
water line manufacturer was entitled to right of Tokyo Electron and the general contractor, which was
contribution from water line installer precluded incorporated into its contracts with subcontractors. Tokyo
summary judgment in action by manufacturer Electron and Tokio Marine appeal that judgment, arguing that
against installer, which arose from action by the water line was installed pursuant to a separate contract
between Tokyo Electron and Dynamic Systems, which had no
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
waiver of subrogation clause. In the event this Court reverses covered the loss on the Mark 8. Tokio Marine now seeks to
the summary judgment against Tokio, Eslon urges that we recover from Dynamic Systems and Eslon.
reverse the summary judgment on its contribution claim.
Because we hold that there is a genuine issue of material Tokyo Electron and Tokio Marine (collectively Tokio) sued
fact whether the work occurred under a separate contract, we Dynamic Systems and Eslon 3 for strict liability, negligence,
reverse both summary judgments and remand to the trial court and breach of implied warranties. It was their position that
for further proceedings. Dynamic Systems connected the chilled water lines to the
Mark 8 under a direct contract with Tokyo Electron, which
had no waiver of claims for damages and no waiver of
FACTUAL AND PROCEDURAL BACKGROUND subrogation. Dynamic Systems contends that Tokyo Electron
and Taisei intended to avoid legal disputes such as this
Tokyo Electron manufactures, sells, and services one by allocating all risks of damage growing out of
semiconductor equipment. In April 1995, Taisei Construction the construction project to insurance, without a right of
Corporation agreed to be the design/builder of Tokyo subrogation. Dynamic Systems insists that it was performing
Electron's new corporate facility in Austin. 2 This facility under the subcontract with Taisei when it installed the chilled
included an on-site training lab to familiarize customers with water lines and connected them to the Mark 8. It relies
the operation of Tokyo Electron's Clean Track photoresist on the waiver to defeat Tokio Marine's subrogation claims.
processing systems. Taisei hired subcontractors to provide In the trial court, Dynamic Systems filed a motion for
labor and materials on various parts of the project. Dynamic summary judgment based on this clause. The court granted
Systems contracted to install the building's plumbing the summary judgment in favor of Dynamic Systems but then
infrastructure. Taisei later asked Dynamic Systems to submit granted Tokio's motion for new trial, which asserted newly
a bid on bringing chilled water lines from the ceiling of the discovered evidence. Dynamic Systems subsequently filed its
training facility down the wall to a piece of machinery called second motion for summary judgment against Tokio and a
the Clean Track Mark 8 wafer processor (Mark 8), which motion for summary judgment against Eslon, based on the
is used in the production of semiconductor wafers. Dynamic derivative claims of contribution and indemnity. The trial
*895 Systems submitted a bid to Taisei in April 1996, and court granted both motions in favor of Dynamic Systems.
performed the Mark 8 hookup in July 1996.
Tokio and Eslon appeal. Tokio urges that the trial court
Tokyo Electron began moving into the new facility during the erroneously granted summary judgment because genuine
first weekend of August 1996. On August 3, one of the chilled issues of material fact exist as to whether the hookup was
water lines in the training lab burst, forcefully spraying water performed as part of Dynamic Systems' subcontract with
that destroyed the Mark 8 and severely damaged parts of Taisei or pursuant to a separate contract with Tokyo Electron
the building. Tokyo Electron's investigation concluded that that did not contain or incorporate the waiver. Should this
certain pipe fittings manufactured by Eslon were defective or Court reverse the summary judgment against Tokio, Eslon
were negligently installed and that this was the cause of the seeks reversal of the summary judgment against Eslon on the
accident that resulted in damages exceeding $800,000. issue of contribution.
Taisei's contract with Tokyo Electron included a waiver
of all claims for damage arising out of the construction STANDARD OF REVIEW
project, allocating such risks to insurers without a right
of subrogation. Tokyo Electron was obligated to procure [3] [4] [5] A summary judgment shall be rendered if the
insurance to cover any losses that might occur during evidence properly before the court indicates that “there is no
construction regardless of blame. Taisei's subcontract with genuine issue as to any material fact and the *896 moving
Dynamic Systems expressly incorporated the waiver of party is entitled to judgment as a matter of law.” Tex.R. Civ.
claims. Tokyo Electron carried two types of insurance on P. 166a(c); see also Rodriguez v. Naylor Indus., Inc., 763
the building, builder's risk coverage and property insurance. S.W.2d 411, 413 (Tex.1989). The party moving for summary
Because the project was substantially complete at the time of judgment has the burden of showing that there is no genuine
the loss, the builder's risk coverage was no longer in effect. issue of material fact and that it is entitled to judgment as a
Therefore, Tokyo Electron's property insurer, Tokio Marine, matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
548 (Tex.1985). Evidence favorable to the nonmovant will be property insurance obtained pursuant
taken as true in deciding whether there is a disputed material to this Paragraph 7.3 or other
fact issue that would preclude summary judgment. Id. at 548– property insurance applicable to the
49. Every reasonable inference must be indulged in favor of Work, except such rights as they
the nonmovant and any doubts resolved in its favor. Id. at 549. may have to proceeds of such
insurance held by the Owner as
[6] [7] [8] [9] When a defendant moves for summary trustee. The Owner or Design/Builder,
judgment on an affirmative defense, as Dynamic Systems as appropriate, shall require from
does, it must conclusively establish each element of its contractors and subcontractors by
defense as a matter of law. See Velsicol Chem. Corp. v. appropriate agreements, written where
Winograd, 956 S.W.2d 529, 530 (Tex.1997). A defendant is legally required for validity, similar
not entitled to judgment as a matter of law on an affirmative waivers each in favor of other parties
defense if the plaintiff supplies evidence as to any material enumerated in this Paragraph 7.3. The
fact issue relevant to the defense upon which reasonable policies shall be endorsed to include
minds could differ. Santanna Natural Gas Corp. v. Hamon such waivers of subrogation.
Operating Co., 954 S.W.2d 885, 890 (Tex.App.—Austin
1997, pet. denied) (citing Kassen v. Hatley, 887 S.W.2d 4, 9 Taisei's subcontract with Dynamic Systems incorporated
(Tex.1994)). Because the propriety of a summary judgment is this waiver in article 1, which defines the term “Contract
a question of law, we review the trial court's decision de novo. Documents” as “the ‘Contract’ between [Tokyo Electron] and
Id. When the trial court has not stated the grounds for granting [Taisei] together with all plans, drawings and specifications
the motion, we may affirm the judgment if any of the grounds including the General Conditions and Special *897
advanced in the motion has merit. See State Farm Fire & Cas. Conditions, Addenda, Amendments, and/or instruments of
Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993). Eslon concedes like effect.”
that if we affirm this summary judgment in favor of Dynamic
Systems, then the trial court correctly granted Dynamic Tokio asserts that the waiver does not apply, but even
Systems' summary judgment against Eslon. Therefore, we if it does, it only forecloses claims for damage done to
begin by addressing Dynamic Systems' summary judgment the building, not damage to machinery or equipment such
against Tokio. as the Mark 8. This argument hinges on the following
language in the waiver: “for damages caused by fire or other
perils to the extent covered by ... other property insurance
applicable to the Work.” (Emphasis added.) Tokio posits
DISCUSSION that the Mark 8 was not part of the “work” performed by
Dynamic Systems and cites out-of-state cases that distinguish
Waiver Clause
work and non-work in waiver of subrogation clauses. See
A. Work v. Non–Work Fidelity & Guar. Ins. Co. v. Craig–Wilkinson, Inc., 948
Tokyo Electron and Taisei entered a construction contract that F.Supp. 608, 614 (S.D.Miss.1996) (holding that the waiver
obligated Tokyo Electron, under the part of the agreement did not bar claims for damage to “non-Work property”);
entitled “Terms and Conditions,” to purchase and maintain Town of Silverton v. Phoenix Heat Source Sys., Inc., 948 P.2d
property insurance on the work at the site. This insurance 9, 12 (Colo.Ct.App.1997) (stating that the waiver does not
was required to include the interests of Tokyo Electron, show an intent to exculpate parties for “parts of the building
Taisei, and “their respective contractors and subcontractors.” other than the work”); St. Paul Fire & Marine Ins. Co. v.
The waiver clause appears in the section entitled “Property Freeman–White Assocs., Inc., 322 N.C. 77, 366 S.E.2d 480,
Insurance,” and provides: 484 (1988) (holding that the contract was ambiguous as to
whether the plaintiff had waived its claims); S.S.D.W. Co. v.
The Owner and Design/Builder waive Brisk Waterproofing Co., 76 N.Y.2d 228, 233, 557 N.Y.S.2d
all rights against each other and 290, 556 N.E.2d 1097 (N.Y.1990) (stating that the contract
the contractors, subcontractors, agents required the owner of the construction project to acquire
and employees, each of the other, insurance for the “Work” and the contractor to provide
for damages caused by fire or other insurance for property damage it may cause “other than to
perils to the extent covered by the Work itself”); Travelers Ins. Cos. v. Dickey, 799 P.2d
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
625, 630 (Okla.1990) (concluding that the “agreement clearly for damages and waived its right to recover against Dynamic
is ineffective to exonerate the contractor from liability for Systems, which defeats Tokio Marine's subrogation claim.
negligently inflicted harm to the owner's interior property”).
Specifically, Dynamic Systems maintains that the connection
Dynamic Systems urges that Tokio presents only a minority was performed under the subcontract between Taisei
view that has been rejected by a majority of the states, and Dynamic Systems, which implicates the waiver. The
which originally supported the work/non-work distinction. subcontract includes “any supplemental written agreements
See ASIC II Ltd. v. Stonhard, Inc., 63 F.Supp.2d 85, 92– made and entered into by the parties hereto subsequent to
93 (D.Me.1999) (rejecting Craig–Wilkinson and Dickey ); the date of execution of the Subcontract.” Dynamic Systems
Lloyd's Underwriters v. Craig & Rush, Inc., 26 Cal.App.4th points out that Tokio never produced a separate contract
1194, 32 Cal.Rptr.2d 144, 148 (1994) (rejecting S.S.D.W. between Tokyo Electron and Dynamic Systems for the
and Dickey); Employers Mut. Cas. Co. v. A.C.C.T., Inc., hookup, and insists that the Mark 8 work was performed as a
580 N.W.2d 490, 494 n. 4 (Minn.1998) (rejecting Craig– supplement to its subcontract with Taisei.
Wilkinson, S.S.D.W., and Dickey); Mu Chapter of Sigma
Pi Fraternity of United States Inc. v. Northeast Constr. During the performance of the subcontract, Dynamic Systems
Servs. Inc., 273 A.D.2d 579, 709 N.Y.S.2d 677, 680 n. 2 submitted a bid to Taisei for the work necessary to connect
(N.Y.App.Div.2000) (explaining that the waiver in the form the chilled water lines to the Mark 8. Taisei's project manager
contract discussed in S.S.D.W. was later revised to overcome authorized and initialed the work in a fax to Dynamic Systems
the holding in that case). stating, “Please Provide the Air and Vacuum hook up.”
Dynamic Systems did the work and subsequently billed Taisei
[10] Dynamic Systems, however, asserts that we need not for the hookup.
address this question of first impression in Texas because
connecting the Mark 8 to the water lines was part of Dynamic Systems contends that this evidence proves that
the work as defined in this contract. The construction the work was performed as a supplement to its original
contract states that the “[w]ork comprises the completed subcontract with Taisei, citing Boudreaux Civic Ass'n v. Cox,
construction designed under the Project and includes labor 882 S.W.2d 543, 547–48 (Tex.App.—Houston [1st Dist.]
necessary to produce such construction, and materials and 1994, no writ) (treating amendments to deed restrictions as
equipment incorporated or to be incorporated in such contracts among parties). In Boudreaux, the court held that
construction.” (Emphasis added.) We agree that the Mark 8 “[a] modification to a contract creates a new contract that
became equipment incorporated into the construction when it includes the new, modified provisions and the unchanged old
was installed and connected to the chilled lines in the walls provisions.” Id. (citations omitted).
of the new facility. We hold that under the contract, hookup
of the Mark 8 was work and as such it was covered by the [11] [12] Alternatively, Dynamic Systems urges that its
waiver. We overrule Tokio's second issue. written bid and Taisei's faxed approval merged with their
original subcontract. See Carr v. Weiss, 984 S.W.2d 753,
764 (Tex.App.—Amarillo 1999, pet. denied). In Carr, the
B. Modified Subcontract v. New Contract court of appeals explained that the “merger doctrine” refers
Dynamic Systems argues that the waiver evidenced the to the “absorption of one contract into another subsequent
parties' intent to allocate all construction risks to their contract.” Id. A subsequent agreement does not supersede
insurers, making insurance the exclusive remedy for *898 a prior agreement if it is not inconsistent with the prior
accidents and damages. See Richmond Steel, Inc. v. Legal & agreement, is made for separate consideration, or is such an
Gen. Assurance Soc'y, 821 F.Supp. 793, 800 (D.P.R.1993) agreement as might naturally be made as a separate agreement
(“The purpose of a waiver of subrogation clause in by parties situated as were the parties to the written agreement
construction contracts is to avoid disruptions and disputes Id. Whether merger occurs, or whether another agreement
between the parties working on a project.... The clause is is simply supplemental and does not contradict the earlier
also meant to require a party to the contract to provide agreement, is determined from the parties' intent. Id.
property insurance for all the parties.” (Citations omitted.));
Chadwick v. CSI, Ltd., 137 N.H. 515, 629 A.2d 820, 825– Tokio counters that it offered ample contravening summary-
26 (1993). Dynamic Systems urges that Tokyo Electron judgment evidence indicating that Tokyo Electron contracted
agreed to purchase sufficient insurance as its only remedy
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
directly with Dynamic Systems, 4 thereby creating a fact writing. Second, it contends that even if a change order were
issue as to whether the work was subject to the waiver. See required, it would not yet have been issued because at the
Santanna, 954 S.W.2d at 890. As a result, Tokio urges that time of the accident Dynamic Systems was still calculating
Dynamic Systems failed to establish as a matter of law all the final bill to be submitted to Taisei. Third, Dynamic
the elements of its affirmative defense upon which summary Systems asserts that “a written contract not required by law
judgment rests. See Velsicol, 956 S.W.2d at 530. to be in writing, may be modified by a subsequent oral
agreement even though it provides it can be modified only by
*899 The most persuasive evidence that Dynamic Systems a written agreement.” Robbins v. Warren, 782 S.W.2d 509,
performed the connection services directly for Tokyo 512 (Tex.App.—Houston [1st Dist.] 1989, no writ).
Electron, not as a part of the subcontract with Taisei, is
found in a letter from Taisei's project manager Richard Aman Tokio's assertion is not that a change order was required
on July 16, 1996, informing Tokyo Electron that Dynamic between Dynamic Systems and Taisei, but rather that a
Systems “is proceeding on a cost plus basis and also expect[s] change order was required between Tokyo Electron *900
to be compensated by [Tokyo Electron]. Please let me know and Taisei concerning the overall scope of the work.
if this is not your understanding. Should you want this to be Connection of the Mark 8 was expressly excluded from
handled under the construction portion, [Taisei] will submit a the original construction contract. To add these services, to
be performed by a subcontractor, to the scope of work for
change order for this work.” 5
which Taisei would eventually bill Tokyo Electron, a change
order was required to modify their contract, as Taisei noted.
The construction contract between Tokyo Electron and
According to Aman's letter of July 16, Dynamic Systems
Taisei required written change orders. Article 8 of the
expected to be paid directly by Tokyo Electron for these
contract provided that Tokyo Electron could order additions,
services. Although Dynamic Systems initially billed Taisei
deletions, or other revisions, “and the contract sum and
for the hookup, when it was not paid it did subsequently
contract time shall be adjusted accordingly. Such changes in
bill Tokyo Electron directly. In Robbins, the court held
the Work shall be authorized by Change Order....” A change
that a question of fact existed as to whether there was a
order, according to the contract, is a written order signed by
supplemental agreement entered into between the parties. Id.
Tokyo Electron and Taisei authorizing a change in the work.
On these facts, we cannot say as a matter of law that the
“The contract sum and contract time may be changed only by
construction contract or the subcontract was modified by oral
Change Order.”
agreement to include the hookup services that failed.
Tokio emphasizes that there was no change order adjusting
[13] In light of this evidence, we cannot say that Dynamic
the contract sum, time, or work to cover services for the
Systems has proved as a matter of law that the hookup
hookup of the Mark 8. If the connection was to come within
was performed under a modified subcontract that included
Dynamic Systems' responsibilities under the subcontract,
the allocation of risks to insurance and the waiver of
then Tokio insists that a change order was required to show
subrogation. See Nixon, 690 S.W.2d at 548. Indulging every
this as part of the scope of Taisei's work. Tokio maintains
reasonable inference in favor of Tokio, we conclude that
that Aman's letter supports this interpretation: Taisei offered
there is a material fact issue as to whether the hookup was
to submit a change order if Tokyo Electron wanted the work
performed under a separate contract between Tokyo Electron
covered under the construction contract. Aman testified in
and Dynamic Systems or under a modified subcontract
an oral deposition that Tokyo Electron worked directly with
incorporating the waiver. See id. at 549. We therefore sustain
Dynamic Systems to perform this work. As Taisei's project
Tokio's first issue.
manager, he acknowledged that the connection of the chilled
lines to the Mark 8 was not contemplated by the original
contract: “In my contract with Tokyo Electron, I do not have Alternative Grounds
the tool hook-up .” Indeed, the hookup is expressly excluded Dynamic Systems also presented a no-evidence motion for
under the original construction contract. summary judgment. See Tex.R. Civ. P. 166a(i). The parties
dispute whether Dynamic Systems was in a position to bring
Dynamic Systems first responds that a change order was not
a no-evidence motion for summary judgment. 6 Assuming
necessary because the subcontract between it and Taisei did
this motion was properly raised, we hold that Tokio produced
not require formal change orders but only that changes be in
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
sufficient competent summary-judgment evidence to defeat to contradict his own deposition testimony without any
a no-evidence motion for summary judgment. Sufficient explanation for the change in the testimony, for the purpose
evidence was raised, as previously discussed, in the form of of creating a fact issue to avoid summary judgment.” Farroux
Aman's letter to Tokyo Electron, his deposition testimony, v. Denny's Rests., Inc., 962 S.W.2d 108, 111 (Tex.App.—
and the appendix to the construction contract specifically Houston [1st Dist.] 1997, no pet.). Such an affidavit presents
excluding the hookup. We sustain Tokio's fourth point of no more than a “sham” fact issue. Id.
error.
Dynamic Systems next argues that the stricken part of
Austin's affidavit, which stated he was involved in approving
Affidavits and processing invoices for the hookup, fails to show
[14] Tokio contends that the trial court erred in striking personal knowledge of contracts between Tokyo Electron
parts of two affidavits as conclusory and not based on and Dynamic Systems. We may not consider statements that
personal knowledge. Aman, Taisei's project manager, and offer no basis for purported knowledge about the contracts at
Thomas Austin, a member of Tokyo Electron's project team, issue. See Morin v. Helfrick, 930 S.W.2d 733, 738 (Tex.App.
both provided affidavit testimony that included this common —Houston [1st Dist.] 1996, no writ), overruled on other
statement, which the court struck: grounds by Rizkallah v. Conner, 952 S.W.2d 580 (Tex.App.
—Houston [1st Dist.] 1997, no writ).
The specific fitting, and related
plumbing, for actual hook-up of
[18] Further, Dynamic Systems maintains that these stricken
[the Mark 8], *901 was selected,
statements are simply legal conclusions, which may not
designed, and installed by Dynamic
support summary judgment as a matter of law. See Clement v.
Systems, Inc., ... at the request of
City of Plano, 26 S.W.3d 544, 552 (Tex.App.—Dallas 2000,
Tokyo Electron. I am personally aware
no pet.). Affidavits must state facts, not legal conclusions.
that the hook-up of the fitting at issue
See id. For all the reasons advanced by Dynamic Systems,
was not done as a change order to
we cannot say the trial court abused its discretion in striking
the original construction contract....
this affidavit testimony. We overrule Tokio's third issue. But
The tool hook-up was considered a
as we have held, there is sufficient evidence apart from the
separate contract made directly with
stricken affidavits to create a genuine issue of material fact
TEA and DSI.
that prevents disposition of this case by summary judgment.
The court also struck the following sentence from Austin's
affidavit: “I am aware of this fact because I was involved in
Contribution
the approval and processing of DSI invoices covering tool
[19] [20] Because we reverse Dynamic Systems' summary
hook-up.” Additionally, it struck from Aman's affidavit the
judgment against Tokio, we must consider Eslon's argument
sentence: “I am aware of this fact because I attended some
*902 that the trial court erred in granting Dynamic Systems'
of the meetings between DSI and TEA concerning the ‘hook-
motion for summary judgment against Eslon on the issue
up’ of the tools, including the Mark 8.”
of contribution. A claim of contribution is derivative of the
plaintiff's right to recover from a joint defendant against
[15] [16] The exclusion of evidence rests within the sound
whom contribution is sought. Shoemake v. Fogel, Ltd., 826
discretion of the trial court. Porter v. Nemir, 900 S.W.2d
S.W.2d 933, 935 (Tex.1992). In other words, Eslon's claim
376, 381 (Tex.App.—Austin 1995, no writ). The trial court
of contribution derives from Tokio's right to recover from
commits an abuse of discretion only when it acts in an
Dynamic Systems.
unreasonable or arbitrary manner, or acts without reference
to any guiding principles. Id.
Eslon maintains that on remand Dynamic Systems may be
found jointly and severally liable with Eslon for Tokyo
[17] Dynamic Systems asserts that the sentences from
Electron's damages, and Eslon then might be called upon
Aman's affidavit were stricken because they conflicted
to pay a greater amount of the damages than its percentage
with his earlier deposition testimony that he had no
of responsibility. In such a case, Eslon argues that it would
knowledge of a separate contract between Tokyo Electron and
be entitled to a right of contribution, and that right should
Dynamic Systems. 7 An individual “cannot file an affidavit be determined in the main suit. See Tex. Civ. Prac. &
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
jointly and severally liable.” We, therefore, sustain Eslon's
Rem.Code Ann. § 33.013(b) (West 1997) (when a defendant
issue and reverse the summary judgment against Eslon on its
who is jointly and severally liable pays a percentage of
contribution claim only and remand that issue for disposition
damages that is greater than its percentage of responsibility,
in the trial court.
then that defendant may have a right of contribution for
the overpayment); cf. Casa Ford, Inc. v. Ford Motor Co.,
951 S.W.2d 865, 874–75 (Tex.App.—Texarkana 1997, pet.
denied). Therefore, Eslon asks us to reverse the summary CONCLUSION
judgment against it so that its claim of contribution can be
considered on remand. Eslon concedes that the trial court was Tokio produced competent evidence to raise a fact issue
correct in granting summary judgment against its claim for that Dynamic Systems' hookup work was performed under
indemnity. a separate contract that did not allocate the risks of damage
to insurance and had no waiver of subrogation. The trial
Dynamic Systems urges that it is free from liability as a court, therefore, erred in granting summary judgment in
matter of law, thus it is not a “liable defendant” against favor of Dynamic Systems. Because we reverse the summary
whom judgment can be entered, and against whom a right of judgment against Tokio, we also reverse the summary
contribution can be sought. See Tex. Civ. Prac. & Rem.Code judgment against Eslon on its claim of contribution. We
Ann. §§ 33.003, .013(b) (West 1997). Because we have remand this cause to the trial court for further proceedings
reversed the summary judgment against Tokyo Electron, consistent with this opinion.
Dynamic Systems cannot say it is free from liability as
a matter of law. In this circumstance, Dynamic Systems
All Citations
concedes that “Eslon would be entitled to a remand of its
contribution claims to await a determination that Eslon is 49 S.W.3d 891
Footnotes
1 Tokio Marine urges that it is the real party in interest entitled to subrogation for the insurance payments made to Tokyo
Electron to cover the loss. Subrogation is a doctrine of equity and is the substitution of another person in the place of
the creditor, so that the person in whose favor it is applied succeeds to the rights of the creditor in relation to the debt.
Fleetwood v. Med Ctr. Bank, 786 S.W.2d 550, 553 (Tex.App.—Austin 1990, writ denied). Generally, an insurer paying
a claim under a policy becomes equitably subrogated to any cause of action the insured may have against a third party
responsible for the injury. Medina v. Herrera, 927 S.W.2d 597, 604 (Tex.1996).
2 Taisei Construction Company, in turn, formed a joint venture with Hensel Phelps Construction Company to serve as
design/builder and general contractor (collectively Taisei).
3 Eslon, the manufacturer, sued Dynamic Systems for contribution and indemnity. Tokio also sued Liebert Corporation,
which was subsequently nonsuited.
4 Tokio refers us to the provision of the construction contract that reserved Tokyo Electron's right to award separate
contracts in connection with other work at the site.
5 Tokio also states that it offered additional evidence that raised a fact question that precluded summary judgment, including
a March 1996 letter Dynamic Systems sent to Taisei stating that its scope of work did not include the “Process Systems
in the Parts and Training Facility,” a May 1996 letter from Taisei to Dynamic Systems stating that Dynamic Systems had
substantially finished its work under the construction contract (as evidence that the July 1996 hookup was excluded from
the construction contract), and the fact that Dynamic Systems did not increase its bonding requirements even though the
existing bond only covered the value of the work under the construction contract and subcontract (as evidence that the
hookup was not part of either one of these contracts). Tokio also relies on statements in affidavits by Thomas Austin and
Richard Aman, which we subsequently hold were appropriately stricken.
6 Tokio maintains that a no-evidence motion for summary judgment may only be brought against a party on a claim on
which the nonmovant bears the burden of proof at trial. See Tex.R. Civ. P. 166a(i). Waiver is an affirmative defense on
which Dynamic Systems bore the burden of proof. See id. 94; In re Epic Holdings, Inc., 985 S.W.2d 41, 57 (Tex.1998).
Tokio urges that because Dynamic Systems bore this burden, it could not bring a no-evidence motion for summary
judgment. Dynamic Systems counters that it did not bring the no-evidence motion based on its own waiver claim; rather,
it asserts that it “moved for a no-evidence summary judgment on what is essentially a plea in avoidance offered by [Tokyo
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Eslon Thermoplastics v. Dynamic Systems, Inc., 49 S.W.3d 891 (2001)
Electron].” Dynamic Systems asserts that Tokyo Electron was attempting to avoid the effect of the waiver by claiming
that the work was performed outside of the contracts, and thus, Tokyo Electron “raised a defense to [Dynamic Systems']
defense” to which a no-evidence summary judgment motion was proper. We need not resolve this conflict to hold that
the evidence presented raised a fact issue that defeated summary judgment.
7 Aman's deposition testimony is as follows:
Q. But do you know if there was any other different contract? You're not offering testimony today about their [sic] being
some other different contract between Tokyo Electron and DSI, are you?
A. Not that I'm aware of. I don't know.
Q. You don't know? You have no personal knowledge?
A. I don't.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Q
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
[7] error in striking designation of physician as responsible
third party was reversible error.
467 S.W.3d 36
Court of Appeals of Texas,
Houston (14th Dist.), Reversed and remanded for new trial.
Houston (14th Dist.).
McCally, J., issued dissenting opinion.
ExxonMobil Corporation, Appellant
v.
Delia Pagayon, Michelle Fulton, Alfredo
G. Pagayon, Michael G. Pagayon, and the West Headnotes (28)
Estate of Alfredo M. Pagayon, Appellees
[1] Labor and Employment
NO. 14–13–00456–CV | Opinion and
Scope of Employment
Dissenting Opinion filed April 9, 2015 |
Rehearing En Banc Overruled July 14, 2015 To impute liability to an employer for its
employee's tort, the employee's act usually must
Synopsis fall within the course and scope of the employee's
Background: Decedent's estate brought action against general authority and must have been performed
convenience store, seeking to hold it directly liable for in furtherance of the employer's business.
negligent supervision of store employee who instigated a
violent physical altercation with decedent, who later died Cases that cite this headnote
allegedly from injuries sustained in the fight. The Probate
Court No. 2, Harris County, entered judgment on jury verdict [2] Labor and Employment
awarding estate approximately $1.35 million in damages. Intentional Acts
After its motion for new trial was denied, store appealed. Intentional torts are not ordinarily within the
scope of a worker's employment, as is necessary
to impute liability to an employer for the
Holdings: The Court of Appeals, Tracy Christopher, J., held employee's actions.
that:
Cases that cite this headnote
[1] store had duty to use reasonable care to prevent employee
from intentionally harming others; [3] Labor and Employment
Intentional Acts
[2] store breached its duty; An employer ordinarily is not vicariously liable
for the employee's intentional torts that are
[3] store proximately caused violent altercation between motivated by personal animosity.
employee and coworker's father;
Cases that cite this headnote
[4] emergency medical care standard did not apply for
purposes of ruling on motion to strike designation of
[4] Labor and Employment
physician as responsible third party;
Negligent training and supervision
[5] proportionate responsibility statute applied for purposes Unlike a claim of vicarious liability, a claim
of ruling on motion to strike designation; of negligent supervision does not depend on a
finding that the employee committed the tort
[6] evidence of physician's medical treatment of decedent was while acting in the course and scope of his
sufficient to defeat motion to strike designation; and employment; in particular, an employer can be
held liable under a negligent supervision theory
for its employee's intentional torts.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
employer knows or should know of the necessity
Cases that cite this headnote and opportunity for exercising such control.
Cases that cite this headnote
[5] Labor and Employment
Negligent training and supervision
Under a negligent-supervision theory, an [9] Labor and Employment
employer that breaches the duty to use Negligent training and supervision
reasonable care to control an employee so as Evidence was sufficient to establish that
to prevent him from harming others can be convenience store, the employer, knew or should
held directly liable for harm that is proximately have known of the necessity and opportunity
caused by its employee's intentional conduct that for exercising control over employee, giving
is outside the scope of his employment. rise to duty to use reasonable care to prevent
employee from intentionally harming others, in
Cases that cite this headnote action in which decedent's estate sought to hold
store directly liable for negligent supervision
[6] Appeal and Error of employee who instigated a violent physical
Sufficiency of Evidence in Support altercation with decedent, resulting in injuries or
condition that allegedly caused decedent's death;
Appeal and Error
store manager was made aware of employee's
Total failure of proof
threat to harm decedent prior to the altercation,
The appellate court will conclude that the
and she had the opportunity to prevent the
evidence is legally insufficient to support a
altercation.
finding only if: (1) there is a complete absence
of evidence of a vital fact; (2) the court is barred Cases that cite this headnote
by rules of law or evidence from giving weight
to the only evidence offered to prove a vital fact;
[10] Negligence
(3) the evidence offered to prove a vital fact is
Foreseeability
no more than a mere scintilla; or (4) the evidence
conclusively establishes the opposite of the vital For a result to be foreseeable, all that is required
fact. is that the injury be of such a general character
as might reasonably have been anticipated; and
Cases that cite this headnote that the injured party should be so situated with
relation to the wrongful act that injury to him or
to one similarly situated might reasonably have
[7] Labor and Employment
been foreseen.
Negligent hiring, retention, and supervision
Whether a duty exists, as element of negligent Cases that cite this headnote
employee supervision claim, is generally a legal
question for the court.
[11] Labor and Employment
Cases that cite this headnote Negligent training and supervision
Convenience store manager's request that an
individual relay her message to employee
[8] Labor and Employment
ordering him to avoid the person toward
Negligent training and supervision
whom he had ill feelings, after learning that
The duty for an employer to use reasonable care
employee had threatened physical violence, was
to prevent its employee from harming others can
not sufficient to satisfy the store's duty to
arise if: (1) the employee is on the employer's
use reasonable care to prevent employee from
premises; (2) the employer knows it has the
intentionally harming others, in action in which
ability to control the employee; and (3) the
decedent's estate sought to hold store directly
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
liable for negligent supervision of employee knew or should have known that harm would
who instigated a violent physical altercation eventually befall a victim.
with decedent, the father of the other employee,
resulting in injuries or condition that allegedly Cases that cite this headnote
caused decedent's death; a relayed message
asking the agitated and threatening employee to [16] Labor and Employment
avoid the other employee did little to prevent Negligent training and supervision
employee from harming his coworker's father.
Convenience store proximately caused violent
Cases that cite this headnote altercation between store employee and
coworker's father, in action in which decedent's
estate sought to hold store directly liable
[12] Negligence for negligent supervision of employee who
Necessity of causation instigated a violent physical altercation with
Negligence decedent, resulting in injuries or condition that
Foreseeability allegedly caused decedent's death; ill feelings
Proximate cause consists of the elements of between employee and coworker arose from
cause-in-fact and foreseeability. their working relationship, employee threatened
coworker with physical violence, and although
Cases that cite this headnote store's manager was made aware of the threat,
she did little to prevent the altercation despite the
foreseeability of harm.
[13] Negligence
‘But-for‘ causation; act without which Cases that cite this headnote
event would not have occurred
Negligence
[17] Negligence
Substantial factor
Possibility of multiple causes
Cause in fact, an element of proximate cause,
There can be more than one proximate cause of
is shown by establishing that the negligent act
an event.
or omission was a substantial factor in bringing
about the injury; without the act or omission, Cases that cite this headnote
harm would not have occurred.
Cases that cite this headnote [18] Parties
Effect of striking out parties, and
proceedings in cause thereafter
[14] Negligence
Foreseeability Standard recognized in statute governing health
care liability claims involving alleged deficient
Foreseeability, an element of proximate cause,
emergency medical care, requiring the claimant
means that the actor, as a person of ordinary
to establish that the health care provider
intelligence, should have anticipated the dangers
deviated from the standard of care “with wilful
his negligent act or omission created for others.
and wanton negligence,” did not apply to
Cases that cite this headnote convenience store's response to estate's motion
to strike store's designation of emergency room
physician, rather than itself, as a third party
[15] Negligence
who was responsible for the injuries or condition
Knowledge or notice
resulting in decedent's death, in action in which
Before liability will be imposed, there must be decedent's estate sought to hold store directly
sufficient evidence indicating that the defendant liable for negligent supervision of employee who
instigated the violent physical altercation with
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
decedent that necessitated the emergency room its breach. Tex. Civ. Prac. & Rem. Code Ann. §
visit; statute applied to ultimate determinations 74.153.
of an emergency medical care provider's liability
in health care liability cases, rather than Cases that cite this headnote
questions of third-party responsibility. Tex. Civ.
Prac. & Rem. Code Ann. § 74.153. [22] Parties
Effect of striking out parties, and
Cases that cite this headnote
proceedings in cause thereafter
Proportionate-responsibility statute, which
[19] Health provided the means for comparing the extent
Breach of Duty of fault as between responsible parties and
In determining a physician's standard of care in allowing a defendant to reduce both its own
a health care liability action, the question to be liability and the claimant's recovery, applied to
answered is whether the physician undertook a convenience store response to estate's motion
mode or form of treatment which a reasonable to strike store's designation of emergency room
and prudent member of the medical profession physician, rather than itself, as a third party
would not have undertaken under the same or who was responsible for the injuries or condition
similar circumstances. resulting in decedent's death, in action in which
decedent's estate sought to hold store directly
Cases that cite this headnote liable for negligent supervision of employee
who instigated the violent physical altercation
[20] Health with decedent that necessitated the emergency
Breach of Duty room visit; and thus, store needed to respond
to estate's motion to strike by producing
In determining whether the physician undertook
evidence sufficient to raise a fact question
a mode or form of treatment which a reasonable
about whether the emergency room physician
and prudent member of the medical profession
contributed to causing decedent's death in a
would not have undertaken under the same
manner encompassed by the statute. Tex. Civ.
or similar circumstances, the circumstances to
Prac. & Rem. Code Ann. §§ 33.003(a), 33.012.
be considered include, but are not limited to,
the expertise of and means available to the Cases that cite this headnote
physician-defendant, the health of the patient,
and the state of medical knowledge.
[23] Parties
Cases that cite this headnote Effect of striking out parties, and
proceedings in cause thereafter
[21] Health Convenience store's response to estate's motion
Emergency room care in general to strike store's designation of emergency room
physician as a responsible third party, and
Standard recognized in statute governing health
evidence in support thereof, was sufficient to
care liability claims involving alleged deficient
raise a fact question about whether physician
emergency medical care, requiring the claimant
contributed to causing decedent's death in a
to establish that the health care provider deviated
manner encompassed by the proportionate-
from the standard of care “with wilful and
responsibility statute, as was necessary to
wanton negligence,” does not change the general
defeat the motion to strike, in action in
acceptable standard of medical care standard; it
which decedent's estate sought to hold store
simply allows one providing emergency medical
directly liable for negligent supervision of
care to deviate from that standard by a wider
employee who instigated the violent physical
margin before becoming liable in damages for
altercation with decedent that necessitated the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
emergency room visit; store introduced evidence Error in striking convenience store's designation
questioning physician's treatment of decedent, of emergency room physician as a third
indicating it was possible that the treatment, party who was responsible for decedent's
rather than injuries from the fight, caused death was reversible error, in action in
decedent to develop sepsis, which ultimately led which decedent's estate sought to hold store
to respiratory and renal failure. Tex. Civ. Prac. & directly liable for negligent supervision of
Rem. Code Ann. §§ 33.003(a), 33.004, 33.012. employee who instigated the violent physical
altercation with decedent that necessitated the
Cases that cite this headnote emergency room visit preceding decedent's
death; proper application of proportionate
[24] Evidence responsibility statute would have compelled trial
Due care and proper conduct in general court to deny estate's motion to strike store's
designation, but by striking the designation of a
A physician from one school of practice may
responsible third party, jury never learned of the
testify about the negligence of a physician of a
emergency room care, including a misdiagnosis,
different school of practice so long as the subject
which, according to store and medical expert
of inquiry is common to and equally recognized
testimony, could have led to decedent's sepsis
and developed in both fields.
and respiratory and renal failure. Tex. Civ. Prac.
Cases that cite this headnote & Rem. Code Ann. § 33.002(a)(1).
Cases that cite this headnote
[25] Evidence
Due care and proper conduct in general
In determining whether a doctor is qualified to
testify as a medical expert for determination of *40 On Appeal from the Probate Court No. 2, Harris
standard of care in a health care liability claim, County, Texas, Trial Court Cause Nos. 408,329-401 &
the trial court should not focus on the specialty 408,329. Michael James Wood, Judge.
of the medical expert.
Attorneys and Law Firms
Cases that cite this headnote
Rahfaan (Clive) Markland, Richard P. Hogan, Jr., Houston,
TX, for appellant.
[26] Appeal and Error
Prejudicial Effect Graham Eugene Sutliff, Houston, TX, Matthew Brian
Instructional error is generally considered Ploeger, Austin, TX, for appellee.
harmful if it relates to a contested, critical issue.
*41 Panel consists of Justices Christopher, McCally, and
Cases that cite this headnote Wise
[27] Appeal and Error
OPINION
Prejudice to Rights of Party as Ground of
Review Tracy Christopher, Justice
To determine if an error was harmful, the
appellate court must examine the entire record. Alfredo M. Pagayon (“Alfredo”) died several weeks after
an altercation between himself, his son Alfredo G. Pagayon
Cases that cite this headnote (“J.R.”), and an ExxonMobil Corporation employee at an
ExxonMobil service station/convenience store. ExxonMobil
[28] Appeal and Error challenges the judgment rendered on the jury's verdict in
Parties favor of Alfredo's wife, children, and estate (collectively,
“the Pagayons”) on their claims arising from Alfredo's
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
death. ExxonMobil asserts that the judgment should be treated in the emergency room by Dr. Hung Hoang Dang
reversed because (1) it had no duty to control its employee until after midnight, then admitted to the hospital. Shortly
under the facts of this case, (2) the evidence is legally thereafter, Alfredo was transferred to the intensive-care unit
and factually insufficient to support a finding that its for treatment of his respiratory distress, and Dr. Jaime Clavijo
negligent supervision caused Alfredo's death, (3) issues intubated him. An attempt to wean Alfredo from the respirator
of causation and comparative fault were not fairly tried failed, and he was transferred to a long-term intensive-care
because the trial court refused to allow ExxonMobil to facility. On August 24, 2011, Alfredo died. The stated cause
present certain evidence and defenses, (4) the evidence of death was cardiac arrhythmia, renal failure, and respiratory
is insufficient to support the medical-expenses damages *42 failure. According to Dr. Clavijo, the organ failure
awarded, and (5) a remittitur of Alfredo's widow's non- was caused by sepsis, a blood infection. The source of the
pecuniary damages should be suggested because her pain infection was not definitively identified, and the parties'
and mental anguish were due almost entirely to events that respective medical experts had differing opinions regarding
occurred during Alfredo's hospitalization and not to the fight the most probable source.
at the convenience store. We conclude that ExxonMobil is not
entitled to rendition of a take-nothing judgment on any of the The Pagayons sued ExxonMobil, seeking to hold it directly
asserted grounds, that is, we conclude that ExxonMobil had a or vicariously liable for Alfredo's injury and death. The
duty to control the employee who injured Alfredo, and there is Pagayons attributed Alfredo's death solely to the events at the
legally sufficient evidence that its breach of that duty caused store. ExxonMobil maintained that it was not liable for any
Alfredo's death. However, we agree with ExxonMobil that the harm that Alfredo sustained in the fight, and in any event,
trial court erred in striking its designation of an emergency- his death was caused by negligent medical care. ExxonMobil
room physician as a responsible third party. We further sought to designate Dr. Dang as a responsible third party, but
conclude that the error probably caused the rendition of an the Pagayons successfully moved to strike the designation.
improper judgment; thus, without reaching ExxonMobil's They also successfully moved to exclude the testimony of
remaining issues, we reverse the judgment and remand the ExxonMobil's medical expert, Dr. Jose Gregorio Casar.
case for a new trial.
The jury failed to find that Cabulang's actions were within the
course and scope of his employment; thus, ExxonMobil was
not held vicariously liable for its employee's actions. The jury
I. INTRODUCTION
did find, however, that ExxonMobil was directly liable for its
J.R. Pagayon and Carlos Cabulang were both employed by negligent supervision of Cabulang, and that this negligence,
ExxonMobil as sales associates at a convenience store in the together with the negligence of both J.R. and Alfredo,
Houston area. Cabulang, J.R., and J.R.'s father Alfredo had proximately caused Alfredo's death. The jury was then
known each other prior to the employment. J.R. had conflicts asked to apportion liability for the fight among ExxonMobil,
with Cabulang at work and reported those problems not only J.R., and Alfredo. It attributed seventy-five percent of the
to his ExxonMobil manager, but also to Alfredo. On July 31, responsibility for causing the fight to ExxonMobil, fifteen
2011, Alfredo telephoned Cabulang and the two had heated percent to J.R., and ten percent to Alfredo. Finally, the jury
words about the conflict between J.R. and Cabulang. assessed damages of over $1.8 million for the Pagayons'
claims. In accordance with the proportionate-responsibility
The next day, Cabulang and J.R. worked together. During statute, the trial court signed a judgment awarding the
that time, Cabulang repeatedly cursed J.R. and said things Pagayons seventy-five percent of the damages assessed by
to him that J.R. described as threats against himself and the jury. The trial court denied ExxonMobil's motion for new
Alfredo. A co-worker told store manager Roce Asfaw of trial, and ExxonMobil appealed.
Cabulang's threats against J.R., but Asfaw simply told the co-
worker to tell J.R. to stay away from Cabulang. J.R. did so,
but when Alfredo came into the ExxonMobil store to pick II. VICARIOUS V. DIRECT LIABILITY
up J.R. from work that afternoon, Cabulang left his sales
register and started a fight with Alfredo. Cabulang struck In ExxonMobil's first two issues, it argues that it is entitled
Alfredo several times in the head and back, and Alfredo was to rendition of a take-nothing judgment on the Pagayons'
transported to a hospital for treatment of his injuries. He was two theories of liability: vicarious liability as Cabulang's
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
employer (also called “imputed” liability), and direct liability
for negligent supervision. The distinction between these two (i) is upon the premises in possession of the master or
theories is crucial to our analysis, because although the upon which the servant is privileged to enter only as his
jury failed to find ExxonMobil vicariously liable, many of servant, or
ExxonMobil's appellate arguments pertain only to that theory
(ii) is using a chattel of the master, and
of liability rather than to the negligent-supervision theory of
liability on which the judgment is based. (b) the master
[1] [2] [3] To impute liability to an employer for its (i) knows or has reason to know that he has the ability to
employee's tort, the employee's act usually must fall within control his servant, and
the course and scope of the employee's general authority and
(ii) knows or should know of the necessity and opportunity
must have been performed in furtherance of the employer's
for exercising such control.
business. See Wrenn v. G.A.T.X. Logistics, Inc., 73 S.W.3d
489, 493 (Tex.App.–Fort Worth 2002, no pet.). Intentional RESTATEMENT (SECOND) OF TORTS § 317 (1965)
torts are not ordinarily within the scope of a worker's
(emphasis added), adopted in Kelsey–Seybold Clinic v.
employment. Cowboys Concert Hall–Arlington, Inc. v. Jones, Maclay, 466 S.W.2d 716, 720 (Tex.1971), superseded by
No. 02–12–00518–CV, 2014 WL 1713472, at *9 (Tex.App.– statute on other grounds as stated in Helena Labs. Corp.
Fort Worth May 1, 2014, pet. denied) (per curiam, mem. op.). v. Snyder, 886 S.W.2d 767, 768 (Tex.1994) (per curiam);
And as ExxonMobil points out, an employer ordinarily is not see also Otis Eng'g Corp. v. Clark, 668 S.W.2d 307, 309
vicariously liable for the employee's intentional torts that are (Tex.1983) (including this section among other Restatement
motivated by personal animosity. See Wrenn, 73 S.W.3d at provisions in which, as a matter of law, a relationship imposes
494 (citing Tex. & P. Ry. Co. v. Hagenloh, 151 Tex. 191, 197, certain duties upon the parties); accord, Nabors Drilling,
247 S.W.2d 236, 239 (1952)). U.S.A., Inc. v. Escoto, 288 S.W.3d 401, 404–05 (Tex.2009).
Thus, under a negligent-supervision theory, an employer that
[4] Unlike a claim of vicarious liability, a claim of negligent breaches this duty can be held directly liable for harm that is
supervision does not depend on a finding that the employee proximately caused by its employee's intentional conduct that
committed the tort while acting in the course and scope of is outside the scope of his employment.
his employment. See *43 Soon Phat, L.P. v. Alvarado, 396
S.W.3d 78, 100 (Tex.App.–Houston [14th Dist.] 2013, pet. Because the jury failed to find ExxonMobil liable on a
denied). In particular, an employer can be held liable under theory of vicarious liability, we do not address ExxonMobil's
a negligent-supervision theory for its employee's intentional arguments and authorities that pertain to that theory of
torts. liability rather than to the Pagayons' negligent-supervision
claim. Specifically, we do not address ExxonMobil's
[5] To illustrate this, we need only look to the test for arguments that liability cannot be imputed to it because
determining whether the “duty” element of a negligent- the altercation was (a) based on intentional conduct or
supervision claim is satisfied. Where, as here, a claimant personal animosity, (b) unauthorized, (c) not in the course
seeks to hold an employer liable under a negligent- and scope of Cabulang's employment, or (d) not in the
supervision theory for an employee's actions that were outside furtherance of ExxonMobil's business. We instead analyze
the scope of his employment, the Texas Supreme Court has only ExxonMobil's arguments that could require reversal of
adopted the following test to determine whether the employer the judgment on the Pagayons' negligent-supervision claim.
had a duty to use reasonable care to control the employee so
as to prevent him from harming others:
A master is under a duty to exercise reasonable care so to III. NEGLIGENT SUPERVISION
control his servant while acting outside the scope of his
employment as to prevent him from intentionally harming To prevail on a claim of negligent supervision, the Pagayons
others or from so conducting himself as to create an were required to prove that (a) ExxonMobil owed Alfredo
unreasonable risk of bodily harm to them, if a duty to supervise its employees, (b) ExxonMobil breached
that duty, and (c) the breach proximately caused Alfredo's
(a) the servant injuries. See Knight v. City Streets, L.L.C., 167 S.W.3d
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ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
580, 584 (Tex.App.–Houston [14th Dist.] 2005, no pet.). there is legally sufficient evidence that ExxonMobil knew
In ExxonMobil's first issue, it argues that, as a matter of or should have known “of the necessity and opportunity for
law, it had no duty to control Cabulang, and in its second exercising such control” over Cabulang. See id.
issue, it contends that the evidence is legally insufficient to
support *44 the finding that its actions were a proximate ExxonMobil asserts there is no evidence that it should have
cause of Alfredo's death. ExxonMobil also makes a subsidiary known of Cabulang's violent tendencies, thereby implying
argument that we construe as an assertion that ExxonMobil that it should not have known of the need and opportunity to
fulfilled any duty that it owed to the Pagayons, or in other exercise control over him. But the evidence on this issue is
words, that it did not breach its duty. uncontroverted; indeed, it consists largely of admissions by
Asfaw.
[6] To analyze the legal sufficiency of the evidence,
we review the record in the light most favorable to First, Asfaw's testimony established that ExxonMobil knew
the challenged finding, crediting favorable evidence if or should have known of the need to control Cabulang. Asfaw
a reasonable factfinder could and disregarding contrary acknowledged that if she, as the store manager, were alerted
evidence unless a reasonable factfinder could not. See City to a threat of violence, then she should do something about
of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). it, and that failing to do so could pose a threat to others. It is
Evidence is legally sufficient if it “rises to a level that would undisputed that before the fight occurred, Asfaw was alerted
enable reasonable and fair-minded people to differ in their to a threat of violence. Asfaw admits that she left the store
conclusions.” Ford Motor Co. v. Ridgway, 135 S.W.3d 598, before Cabulang arrived to work at around 3:30 p.m. to work
601 (Tex.2004). We will conclude that the evidence is legally a shift that overlapped with J.R.'s, and while she was away,
insufficient to support the finding only if (a) there is a Cabulang's co-worker Jovita Leslie telephoned her and said
complete absence of evidence of a vital fact, (b) the court is that Cabulang was threatening “to beat J.R. up” and asking
barred by rules of law or evidence from giving weight to the him to go outside to fight. Asfaw agreed that such statements
only evidence offered to prove a vital fact, (c) the evidence are threatening. *45 Nevertheless, she did not tell Cabulang
offered to prove a vital fact is no more than a mere scintilla, to stop, and she did not investigate the complaint.
or (d) the evidence conclusively establishes the opposite of
the vital fact. City of Keller, 168 S.W.3d at 810. Second, Asfaw's testimony established that she had
the opportunity to exercise control over Cabulang. She
acknowledged that J.R. continued working until around 4:30
A. ExxonMobil's Duty p.m., and she admitted that she received the phone call about
[7] [8] [9] In its first issue, ExxonMobil contends that Cabulang's threats “long before” that time. Asfaw agreed that
there is no evidence to support the imposition of a duty. although she was not physically present at the store when she
Whether a duty exists is generally a legal question for the was told of Cabulang's threats, she still could have sent him
court. See Nabors Drilling., 288 S.W.3d at 404; Tex. Home home. Indeed, she conceded that, regardless of whether she
Mgmt., Inc. v. Peavy, 89 S.W.3d 30, 33 (Tex.2002); Otis believed the report of Cabulang's threats, the fight could have
Eng'g Corp., 668 S.W.2d at 312. As previously discussed, been avoided if she had just spoken to him.
the duty for an employer to use reasonable care to prevent its
employee from harming others can arise if (1) the employee This evidence distinguishes the facts of this case from those
is on the employer's premises, (2) the employer knows it of the cases ExxonMobil cites in support of its argument
has the ability to control the employee, and (3) the employer that, as a matter of law, it had no duty to exercise reasonable
“knows or should know of the necessity and opportunity for care to prevent Cabulang from intentionally harming others.
exercising such control.” RESTATEMENT (SECOND) OF Here, the employee's manager had advance warning of his
TORTS § 317. According to the uncontroverted evidence, current violent tendencies, expressed through his verbal
Cabulang was on ExxonMobil's premises when he threatened threats of physical violence while working on the employer's
physical violence and when he fought Alfredo, and store premises. There was no such evidence in the cases on
manager Roce Asfaw knew that she was authorized to which ExxonMobil relies. See, e.g., Garrett v. Great W.
exercise control over him, to reprimand him, send him home, Distrib. Co. of Amarillo, 129 S.W.3d 797, 804 (Tex.App.–
or terminate his employment. Thus, the question of whether Amarillo 2004, pet. denied) (holding that employer has no
ExxonMobil had a duty to use reasonable care to prevent duty to prevent employee from fighting unless it reasonably
Cabulang from intentionally harming others turns on whether
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ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
should have known of that particular employee's propensity ” Motsenbocker v. Wyatt, 369 S.W.2d 319, 323 (Tex.1963)
for violence; thus, beer-distribution company's executive (quoting Carey v. Pure Distrib. Corp., 133 Tex. 31, 35, 124
secretary's knowledge that “fights could occur in a bar” or that S.W.2d 847, 849 (1939)); see also Mindi M. v. Flagship
two other employees had been involved in such a fight did not Hotel, Ltd., 439 S.W.3d 551, 557 (Tex.App.–Houston [14th
make it foreseeable that different employees would do so on Dist.] 2014, pet. pending) (“An employer is negligent if the
a different occasion); Dailey v. Albertson's, Inc., 83 S.W.3d employer hires, retains, or supervises an employee whom the
222, 229 (Tex.App.–El Paso 2002, no pet.) (explaining that a employer knows, or by the exercise of reasonable care should
grocery store should not have foreseen its employee's physical have known, is unfit or incompetent, and whose unfitness or
assault of a customer where the assault was preceded only incompetence creates an unreasonable risk of harm to others
by the employee making loud comments about the customer's because of the employee's job-related duties.” (emphasis
hair and following the customer from one check-out line added)); Watkins v. Basurto, No. 14–10–00299–CV, 2011
to another); Peek v. Equip. Servs., Inc., 906 S.W.2d 529, WL 1414135, at *4 (Tex.App.–Houston [14th Dist.] Apr.
532 (Tex.App.–San Antonio 1995, no writ) (holding that 14, 2011, no pet.) (mem.op.) (“An employer has a general
an employee's shooting of a customer was unforeseeable duty to control its employees ..., and to adequately hire, train,
because although the employee was “nervous and sweating” and supervise employees to prevent injuries to third parties
on the day of the shooting, he had made no threats and acted that are reasonably foreseeable.” (emphasis added) (citations
“without warning”). In contrast to the holdings of these cases, omitted)). As the facts of this case illustrate, relaying a
we conclude that the evidence here establishes, as a matter of message to one potential victim—J.R.—to “stay away” from
law, that ExxonMobil had a duty to exercise reasonable care Cabulang did not prevent Cabulang from harming someone
to control Cabulang so as to prevent him from harming others. else who was similarly situated. 1
B. Breach C. Proximate Cause
[10] [11] Although not listed as a distinct issue, [12] [13] [14] [15] [16] In its second issue,
ExxonMobil also makes an argument that appears to be ExxonMobil asks us to reverse and render a take-nothing
directed to the element of breach of duty. ExxonMobil judgment because the evidence is legally insufficient to
states that although it had no duty, Asfaw nevertheless “did support the jury's finding that ExxonMobil's negligent
take precautions” by relaying instructions to J.R. to stay supervision proximately caused Alfredo's death. Proximate
away from Cabulang. ExxonMobil implies that this was cause consists of the elements of cause-in-fact and
all that was required. But the duty at issue here was the foreseeability. See Doe v. Boys Clubs of Greater Dall.,
duty to exercise reasonable care “to control the servant Inc., 907 S.W.2d 472, 477 (Tex.1995). Cause-in-fact is
while acting outside the scope of his employment as to shown by establishing that the negligent act or omission
prevent him from intentionally harming others or from so was a substantial factor in bringing about the injury; without
conducting himself as to create an unreasonable risk of bodily the act or omission, harm would not have occurred. See
harm to them.” RESTATEMENT (SECOND) OF TORTS § Transcontinental Ins. Co. v. Crump, 330 S.W.3d 211, 221–
317 (emphasis added). The only person who expressed an 23 (Tex.2010); Travis v. City of Mesquite, 830 S.W.2d 94, 98
intention to harm “others” or who is claimed to have posed an (Tex.1992). Foreseeability means that the actor, as a person
unreasonable risk of bodily harm to “others” was Cabulang; of ordinary intelligence, should have anticipated the dangers
thus, ExxonMobil's duty was to exercise reasonable care to his negligent act or omission created for others. See D. Hous.,
control Cabulang. Moreover, the duty was owed not just to Inc. v. Love, 92 S.W.3d 450, 454 (Tex.2002). Thus, “before
J.R., but to “others” who were similarly situated—including liability will be imposed, there must be sufficient evidence
Alfredo. *46 ExxonMobil asserts in its reply brief that it indicating that the defendant knew or should have known
could not have foreseen that Cabulang would assault Alfredo that harm would eventually befall a victim.” Greater Hous.
because Asfaw was told only that Cabulang had threatened Transp. Co. v. Phillips, 801 S.W.2d 523, 526 (Tex.1990).
J.R. This, however, was sufficient, because for a result to
be foreseeable, “[a]ll that is required is ‘that the injury be [17] As the jury here was instructed, there can be more than
of such a general character as might reasonably have been one proximate cause of an event. Del Lago Partners, Inc. v.
anticipated; and that the injured party should be so situated Smith, 307 S.W.3d 762, 774 (Tex.2010). ExxonMobil does
with relation to the wrongful act that injury to him or to not contend otherwise. It instead implies that, as a matter
one similarly situated might reasonably have been foreseen.’
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
of law, other events proximately caused the fight, and that assertions. First, there is no evidence that the altercation
the existence of these other causes negates the jury's finding was inevitable. Asfaw instead testified that if she had sent
that ExxonMobil's negligence was “a proximate cause” of the Cabulang home or simply spoken to him, then the altercation
fight or of Alfredo's death. Specifically, ExxonMobil urges would not have occurred. Cabulang additionally testified that
that its negligence cannot be a proximate cause of either event if he had just let J.R. and Alfredo walk out of the store,
because, as a matter of law, (1) intentional conduct caused the then there would have been no fight. Second, it was not a
*47 fight rather than any act or omission by ExxonMobil; coincidence that the participants in the altercation were all
and (2) the store “merely provided the location for this assault inside the store; it instead was foreseeable to ExxonMobil,
to occur,” so that Exxon Mobil was not the legal cause of this because it scheduled Cabulang and J.R. to work overlapping
“personal-animus incident.” Stated in terms of the standard of shifts, and it did not send Cabulang home after being informed
review, ExxonMobil contends that “the evidence establishes that Cabulang was threatening J.R. It was foreseeable to
conclusively the opposite of the vital fact.” See City of Keller, ExxonMobil that a person “similarly situated” to J.R.—his
168 S.W.3d at 810. father—would come to the store that afternoon, because
Asfaw knew that Alfredo provided J.R.'s transportation. And
These arguments are variations of ExxonMobil's assertion it was foreseeable that J.R. and Alfredo would be in the
that it cannot be liable under a negligent-supervision theory store with Cabulang because Asfaw knew both that J.R.
if its employee acted intentionally and from personal animus. customarily waited inside the store for his father—a practice
As previously explained, however, this is incorrect as a that *48 she permitted—and that Alfredo customarily came
matter of law. The question of whether Cabulang's behavior inside the store when he arrived to drive J.R. home. The day
was an intentional tort motivated by personal animus is of the altercation was no exception to this pattern: J.R. called
relevant to the determination of whether he acted in the his father when he finished working, and twelve minutes after
course and scope of his employment or in the furtherance he changed out of his uniform, Alfredo entered the store to
of ExxonMobil's business. Those are elements necessary to pick him up. 3
establish vicarious liability, but not to establish ExxonMobil's
direct liability under a negligent-supervision theory. As In sum, the store was the location where ExxonMobil's duty to
previously discussed, it is precisely because Asfaw was supervise its employees arose, and the evidence supports the
told that Cabulang made threats of violence while he was jury's finding that ExxonMobil's negligence in supervising
on the premises working that ExxonMobil had a duty to Cabulang was a proximate cause of the altercation, as
exercise reasonable care “to prevent him from intentionally described in more detail above. We thus reject ExxonMobil's
harming others or from so conducting himself as to create an argument that the store was “merely the location” of the
unreasonable risk of bodily harm to them.” RESTATEMENT fight and that its conduct was too attenuated to have been a
(SECOND) OF TORTS § 317 (emphasis added). Thus, even
proximate cause of Alfredo's death. We overrule this issue. 4
if Cabulang's conduct were intentional and motivated by
personal animus, these would not be grounds on which to
reverse the judgment on the Pagayons' negligent-supervision
claim. Cf. CoTemp, Inc. v. Hous. W. Corp., 222 S.W.3d 487, IV. DESIGNATION OF
492 (Tex.App.–Houston [14th Dist.] 2007, no pet.) (plurality RESPONSIBLE THIRD PARTIES
op.) (“Under the tort of negligent hiring, supervision, or
retention, an employer who negligently hires an incompetent In its third issue, ExxonMobil argues that the trial court erred
or unfit individual may be directly liable to a third party whose by striking its designation of emergency-room physician
injury was proximately caused by the employee's negligent or Dr. Dang as a responsible third party. 5 The resolution of
intentional act.” (emphasis added)). 2 this issue turns on the interpretation and application of the
proportionate-responsibility statute found in Chapter 33 of
ExxonMobil also contends that its conduct was “too the Texas Civil Practice and Remedies Code and the health-
attenuated” from the fight to have proximately caused it, care-liability statute found in Chapter 74 of the same code.
because the store was “just the location for an inevitable We review the trial court's ruling de novo. See Flack v.
wrestling match,” which occurred there “only because events Hanke, 334 S.W.3d 251, 261 (Tex.App.–San Antonio 2010,
and people coincided by chance inside the store.” But the pet. denied) (sub.op.).
only evidence on these subjects is at odds with ExxonMobil's
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ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
care-liability claims in which damages are sought directly
A. Chapter 74's “Standard of Proof” v. Chapter 33's from the physician or health-care provider. See id. §
“Responsibility” 74.001(2), (13) (West Supp. 2014) (defining “claimant”
The parties principally join issue on the legal question of as “a person, including a decedent's estate, seeking or
whether, to survive a motion to strike the designation of who has sought recovery of damages in a health care
an emergency-room physician as a responsible third party, liability claim,” and defining a “health care liability claim”
the designating defendant is required to produce evidence as “a cause of action against a health care provider or
of simple negligence, or instead must produce evidence of physician for ... claimed departure from accepted standards
“wilful and wanton” negligence. Under Chapter 74 of the of medical care, or health care, or safety or professional
Texas Civil Practice and Remedies Code governing health- or administrative services directly related to health care,
care-liability claims, “the claimant bringing the suit” for which proximately results in injury or death of a claimant”).
damages arising from allegedly deficient emergency medical In contrast, the proportionate-responsibility statute concerns
care cannot establish liability absent proof that the physician “responsibility,” not “liability,” so that a person can be
or health-care provider deviated from the standard of care wholly or partially “responsible” for the harm at issue without
“with wilful and wanton negligence.” See TEX. CIV. PRAC. being “liable” for the damages assessed as compensation for
& REM. CODE § 74.153 (West 2011). The parties dispute that harm. Compare id. § 33.011(3) (West 2015) (“ ‘Liable
whether this is the correct standard to apply when measuring defendant’ means a defendant against whom a judgment can
the sufficiency of ExxonMobil's response to a motion to be entered for at least a portion of the damages awarded
strike its designation of an emergency-room physician as a to the claimant.” (emphasis added)) with id. § 33.011(6) (“
responsible third party. ‘Responsible third party’ means any person who is alleged to
have caused or contributed to causing in any way the harm for
The Pagayons argue that the following provision from which recovery of damages is sought ....” (emphasis added)).
Chapter 74 applies: To determine that a person is “responsible,” the factfinder
need find only that the person “caus[ed] or contribut[ed]
Standard of Proof in Cases Involving Emergency
to cause in any way the harm for which recovery of
Medical Care
damages is sought, whether by negligent act or omission, by
*49 In a suit involving a health care liability claim against any defective or unreasonably dangerous product, by other
a physician or health care provider for injury to or death conduct or activity that violates an applicable legal standard,
of a patient arising out of the provision of emergency or by any combination of these.” Id. § 33.003 (emphasis
medical care in a hospital emergency department ..., the added).
claimant bringing the suit may prove that the treatment or
lack of treatment by the physician or health care provider
B. Chapter 74's “Standard of Proof” of Liability is
departed from accepted standards of medical care or health
Inapplicable
care only if the claimant shows by a preponderance of the
[18] [19] [20] We agree with ExxonMobil that section
evidence that the physician or health care provider, with
74.153 does not apply to the designation of Dr. Dang as a
wilful and wanton negligence, deviated from the degree of
responsible third party. Since Hood v. Phillips, the Texas
care and skill that is reasonably expected of an ordinarily
Supreme Court's seminal case defining a physician's standard
prudent physician or health care provider in the same or
of care, a single standard of care has applied to physicians: the
similar circumstances.
question to be answered is whether the physician undertook
Id.(emphasis added). Citing this provision, the Pagayons “a mode or form of treatment which a reasonable and
moved to strike ExxonMobil's designation of Dr. Dang as a prudent member of the medical profession would not have
responsible third party solely on the ground that there was undertaken under the same or similar circumstances.” 554
no evidence that Dr. Dang deviated from the standard of care S.W.2d 160, 165 (Tex.1977). In answering that question,
“with wilful and wanton negligence.” “[t]he circumstances to be considered include, but are not
limited to, the expertise of and means available to the
ExxonMobil responded that the provisions of Chapter 74 physician-defendant, *50 the health of the patient, and the
should not affect the application of responsible-third-party state of medical knowledge.” Id.
practice because Chapter 74 is designed to apply to health-
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ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
[21] Section 74.153 of the Civil Practice & Remedies orig. proceeding) (mem.op.) (agreeing that a motion to
Code does not purport to change this standard of care ; strike the designation of a responsible third party may be
it instead provides the standard of proof that is required defeated without evidence of an “actionable act or omission”
to establish liability for harm to a patient arising from the to “establish liability”; the designating party need only
provision of emergency medical care, because with limited produce more than a scintilla of evidence that the third
exceptions, one “who in good faith administers emergency party is “responsible” for the claimant's injury or damage, as
care is not liable in civil damages for an act performed that term is used in the proportionate-responsibility statute
during the emergency unless the act is wilfully or wantonly (internal quotation marks omitted)). We may not ignore such
negligent.” See TEX. CIV. PRAC. & REM. CODE ANN. specific statutory language even where its application may
§ 74.151(a) (West Supp. 2014); see also Benish v. Grottie, render a plaintiff less than whole. See, e.g., Galbraith Eng'g
281 S.W.3d 184, 191 (Tex.App.–Fort Worth 2009, pet. Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 868–69
denied) (“Section 74.153's statutorily created standard of (Tex.2009) (noting that the proportionate-liability statute is
proof and the applicable medical standards of care are “apparently unconcerned with the substantive defenses of
not the same thing.”); Baylor Med. Ctr. at Waxahachie v. responsible third parties” that place them beyond the reach of
Wallace, 278 S.W.3d 552, 556 (Tex.App.–Dallas 2009, no the plaintiff).
pet.) (same); Bosch v. Wilbarger Gen. Hosp., 223 S.W.3d
460, 464 (Tex.App.–Amarillo 2006, pet. denied) (same). *51 Accordingly, we agree with ExxonMobil that for
Thus, when a claimant seeks to recover damages for harm purposes of its response to the Pagayons' motion to strike,
caused by allegedly deficient emergency medical care, the it was not required to raise a fact issue regarding whether
legislature has heightened the standard of proof required to Dr. Dang, “with wilful and wanton negligence,” violated
establish the health-care provider's liability. See Bosch, 223 the standard of care. On the other hand, we disagree with
S.W.3d at 464 (citing TEX. CIV. PRAC. & REM. CODE ExxonMobil that it needed only to raise a fact issue on
ANN. § 74.153). Stated differently, Chapter 74 does not whether Dr. Dang “caused or contributed to cause” Alfredo's
change the “acceptable standard of medical care”; it simply death; that is, we disagree that causation is the sole question
allows one providing emergency medical care to deviate under Chapter 33. As the discussion above demonstrates,
from that standard by a wider margin before becoming ExxonMobil needed to respond to the Pagayons' motion to
liable in damages for its breach. But as discussed further strike by producing evidence sufficient to raise a fact question
below, even if an emergency-room physician has not deviated about whether Dr. Dang contributed to causing Alfredo's
from the standard of care sufficiently to make him “liable” death in a manner encompassed by the proportionate-
for damages, he nevertheless may have deviated from it responsibility statute, such as by (1) negligent act or omission,
sufficiently to make him “responsible.” (2) any defective or unreasonably dangerous product, (3)
other conduct or activity that violates an applicable legal
standard, or (4) any combination of these. See TEX. CIV.
C. Chapter 33's Definition of “Responsibility” Applies PRAC. & REM. CODE ANN. § 33.003(a).
[22] In contrast to section 74.153, the proportionate-
responsibility statute does not address the standard of proof
for a claimant to hold a defendant liable for damages. It D. Sufficiency of the Evidence
instead provides a means for comparing the extent of fault, [23] Under the proportionate-responsibility statute, a motion
providing the means for a defendant to reduce both its own to strike the designation of a responsible third party is
liability and the claimant's recovery. See TEX. CIV. PRAC. warranted only if “there is no evidence that the designated
& REM. CODE ANN. § 33.012 (West 2015) (reducing the person is responsible for any portion of the claimant's alleged
amount of a claimant's recovery); id. § 33.013 (reducing the injury or damage.” See id. § 33.004(l ). When measured by the
amount of a liable defendant's liability). Because the statute correct standard, ExxonMobil produced sufficient evidence
evidences the legislature's intent that the factfinder determine to defeat the Pagayons' motion to strike.
the “percentage of responsibility,” its plain language requires
the factfinder to compare the conduct of those who allegedly In its response, ExxonMobil asserted that in the opinion of its
violated a legal standard—even if the plaintiff could not expert Dr. Casar, Dr. Dang breached the standard of care in
hold all of them liable for the resulting harm. See In re three interconnected ways.
Transit Mix Concrete & Materials Co., No. 12–13–00364–
CV, 2014 WL 1922724, at *2–3 (Tex.App.–Tyler 2014,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
First, Dr. Casar contends that Dr. Dang misread a chest x-ray This evidence is sufficient to raise a question of fact as to
that was taken shortly after Alfredo arrived in the emergency whether Dr. Dang is responsible for at least a portion of the
room. Alfredo was born without a left lung, but according to Pagayons' “alleged injury or damage,” which is all that the
Dr. Casar, Dr. Dang misinterpreted the chest x-ray showing statute requires. See id.
this defect and instead diagnosed Alfredo with a hemothorax
on that side, meaning that Dr. Dang believed that blood Although our dissenting colleague would conclude that the
was collecting in the space between Alfredo's chest wall and trial court did not err in granting the motion to strike because
his left lung. Dr. Casar stated in his report that the x-ray Dr. Casar was not familiar with the standard of care for an
revealed three signs that could be “clearly viewed on the emergency-room physician, that is a conclusion concerning
chest x-ray” and that were “inconsistent with the diagnosis of Dr. Casar's qualifications. See Roberts v. Williamson, 111
hemothorax.” Dr. Casar additionally stated that if Alfredo had S.W.3d 113, 121–22 (Tex.2003). But on appeal, no one
been bleeding into his chest cavity, his blood pressure would has challenged Dr. Casar's qualifications to offer an expert
have dropped, but instead, his blood pressure was elevated. opinion on the applicable standard of care—nor, so far as
we can tell, did anyone do so in the trial court. Thus, any
Second, Dr. Dang failed to order a CT scan of Alfredo's objection to his qualifications to render an expert opinion
chest before attempting to insert a chest tube to drain the on the subject has been neither preserved nor presented. See
hemothorax that he believed existed. Regarding the failure Croft v. State, 148 S.W.3d 533, 544 (Tex.App.–Houston [14th
to timely secure a CT scan of Alfredo's chest, Dr. Casar Dist.] 2004, no pet.).
stated in his report only that “any prudent physician would
have ordered a CT scan in order to acquire more information [24] [25] Moreover, the dissent applies the wrong test.
in regards to the chest x-ray,” and that when the scan was Whether Dr. Casar is qualified to testify on the causes
actually performed, it revealed that Alfredo was born without and effects of a person's injuries would be measured by
a left lung and had a large hematoma from the unsuccessful Texas Rule of Evidence 702. See Roberts, 111 S.W.3d at
attempt to place a chest tube. 121–22. The question to be answered is whether the party
offering the expert's testimony has established that the witness
Third, Dr. Casar opined that Dr. Dang breached the standard “has ‘knowledge, skill, experience, training, or education’
of care by attempting to insert a chest tube to drain the regarding the specific issue before the court which would
hemothorax. Dr. Casar stated that after the failed attempts qualify the expert to give an opinion on that particular
to insert a chest tube, Alfredo was given ten milligrams subject.” Broders v. Heise, 924 S.W.2d 148, 153 (Tex.1996)
of morphine for his resulting complaints of pain. Dr. (quoting TEX. R. EVID. 702). A physician from one school
Casar explained that a patient who is missing a lung and of practice may testify about the negligence of a physician
has pulmonary hypertension is “extremely sensitive to the of a different school of practice “so long as the ‘subject of
depressing effects of narcotics and it comes as no surprise inquiry is common to and equally recognized and developed’
that the patient developed progressive respiratory failure that in both fields.” Id. at 152 (quoting Hart v. Van Zandt, 399
required intubation and mechanical ventilation.” According S.W.2d 791, 797 (Tex.1965)). Thus, in determining whether
to Dr. Casar, “This was a direct result of giving the patient a doctor is qualified to testify on the specific issue before
narcotics to control the chest wall pain caused by *52 the it, the trial court “should not focus on the specialty of the
attempted insertion of a chest tube that should ha[ve] not medical expert.” Tenet Hosps. Ltd. v. Love, 347 S.W.3d 743,
been placed to begin with.” He further stated that Alfredo 750 (Tex.App.–El Paso 2011, no pet.) (citing Roberts, 111
developed multiple organ failures, most likely as a result of S.W.3d at 122). And here, Dr. Casar testified repeatedly—and
uncontrolled sepsis. He opined that although the source of without contradiction—that the standard of care for reading
the sepsis was not clear from the cultures obtained, the most a chest x-ray is the same regardless of the physician's school
likely source was an infected chest-wall hematoma that was of practice.
directly caused by the attempted chest-tube placement. In Dr.
Casar's opinion, Dr. Dang's acts and omissions began a chain *53 In rejecting Dr. Casar's opinion on the ground that he
of medical complications that ultimately led to Alfredo's was not familiar with the standard of care for an emergency-
death. 6 room physician, the dissent follows the approach that we
rejected in Blan v. Ali. In that health-care-liability case, the
defendant physicians did not dispute that the opposing expert
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
was “qualified by training and experience to offer expert probably caused the rendition of an improper judgment or
testimony regarding the diagnosis, care and treatment of a probably prevented the appellant from properly presenting the
neurological condition”; they simply argued that the opposing case on appeal. See TEX. R. APP. P. 44.1 (a). By striking
expert “does not know the standard of care as applied to the designation of Dr. Dang as a responsible third party, the
emergency room physicians.” 7 S.W.3d 741, 746 (Tex.App.– trial court removed Dr. Dang from the list of persons whose
Houston [14th Dist.] 1999, no pet.). But as we explained percentage of responsibility could be submitted to the jury.
in Blan, that argument “ignores the plain language of the See TEX. CIV. PRAC. & REM. CODE ANN. § 33.003(a). 9
statute, which focuses not on the defendant doctor's area of Thus, the result is analogous to charge error, which “is
expertise, but on the condition involved in the claim.” Id. generally considered harmful if it relates to a contested,
(emphasis in original) (quoting the predecessor to TEX. CIV. critical issue.” See Thota v. Young, 366 S.W.3d 678, 687
PRAC. & REM. CODE ANN. § 74.401(a) (West 2011)). 7 (Tex.2012). To determine if the error was harmful, we
The expert in Blan attested “that the standard of care he must examine the entire record. See Timberwalk Apartments,
describes applies to any physician treating a patient suffering Partners, Inc. v. Cain, 972 S.W.2d 749, 756 & n. 25
from a stroke and lupus, regardless of the physician's area (Tex.1998) (citing Lorusso v. Members Mut. Ins. Co., 603
of expertise.” Id. (emphasis in original). Although in Blan S.W.2d 818, 821–22 (Tex.1980) and Patterson Dental Co.
we discussed the application of provisions in the health-care- v. Dunn, 592 S.W.2d 914, 921 (Tex.1979)); Heritage Gulf
liability statute concerning expert qualifications to testify Coast Props., Ltd. v. Sandalwood Apartments, Inc., 416
regarding “the standards applicable to the ‘illness, injury, or S.W.3d 642, 655 (Tex.App.–Houston [14th Dist.] 2013, no
condition involved in the claim,’ ” 8 the inquiry is the same pet.).
under Texas Rule of Evidence 702, that is, whether the expert
is qualified to testify “regarding the specific issue before Here, the extent to which Dr. Dang was responsible for
the court.” See Broders, 924 S.W.2d at 153 (concluding that “causing or contributing to cause in any way the harm
the trial court properly excluded expert testimony where the for which recovery of damages is sought” 10 was such a
proponent failed to establish that the physician was qualified “contested, critical issue.” Medical records reflect that the
to opine “on cause in fact”); see also Roberts, 111 S.W.3d Houston Fire Department evaluated Alfredo at the scene
at 122 (concluding that the proponent established that a at 5:06 p.m. Responders were told that Alfredo had been
physician from a different school of practice “had experience punched in the face and the back. He was alert, and
and expertise regarding the specific causes and effects” of complained of swelling in his cheek and pain in his neck. He
the decedent's injuries). And here, there is no issue before also had difficulty breathing. Alfredo was transported to the
us regarding Dr. Casar's qualifications to opine that Dr. hospital's emergency room, arriving at 5:34 p.m. In medical
Dang breached the standard of care and proximately caused records prepared at that time, the only complaints listed were
Alfredo's death through his misreading of the chest x-ray and “assault—punched on the left side of head and on the back.”
his resultant attempts to treat Alfredo for a hemothorax he did Alfredo also continued to be described as alert and oriented.
not have. He complained of pain in his face and lower back, but when
CT scans of his brain and lumbar spine were performed later
In sum, we conclude the evidence is sufficient to raise a that evening, neither showed any injuries. No one contends
question of fact as to whether Dr. Dang caused or contributed that Cabulang struck Alfredo in the chest; that Alfredo fell on
to causing “in any way the harm for which recovery of his chest; or that Alfredo's chest was injured in the fight.
damages is sought, whether by negligent act or omission ...,
by other conduct or activity that violates an applicable legal But as Dr. Casar would have testified, something else
standard, or by any combination of these.” See TEX. CIV. happened in the emergency room. When Alfredo's vital signs
PRAC. & REM. CODE ANN. § 33.003(a). We accordingly were checked upon his arrival, it was discovered that he
sustain this issue. had no breath sounds from the lower left side of his chest,
and he had an oxygen saturation of just 75%. 11 Dr. Dang
ordered a chest x-ray, which was performed at 6:08 p.m.
*54 E. Harm Analysis
The radiologist, Dr. *55 Luis DeSantos, read the x-ray and
[26] [27] [28] Although we conclude that the trial court
commented that the “left hemithorax is completely opaque
erred in striking ExxonMobil's designation of Dr. Dang as
and there is displacement of the mediastinum toward the right
a responsible third party, the error is not reversible unless it
side suggesting the presence of a large amount of fluid in
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
the left hemithorax with displacement of the mediastinum.” admit observation for pain controll [sic].” But here, too, the
Dr. Dang reviewed the x-ray and concluded that Alfredo had testimony of the Pagayons' expert Dr. Clavijo is consistent
a hemothorax. Although this conclusion was consistent with with Dr. Casar's proffered testimony rather than with Dr.
Dr. DeSantos's observations, it was Dr. Dang who actually Dang's notes. Dr. Clavijo testified that Alfredo was admitted
diagnosed Alfredo as having a hemothorax. to the hospital from the emergency room for observation
and for somnolence, because Alfredo “was just entirely ...
It is undisputed, however, that this diagnosis was wrong. lethargic.”
Alfredo did not have a hemothorax; he was born without a left
lung. Dr. Casar would have testified that Dr. Dang breached Alfredo was admitted “to the floor” of the hospital, but
the standard of care by misreading the x-ray in that he failed shortly after his arrival, he suffered acute respiratory failure
to note the signs that Alfredo did not have a hemothorax and and was transferred to the intensive-care unit where Dr.
had only one lung. Even Dr. Clavijo, the Pagayons' testifying Clavijo intubated him at 8:20 a.m. Dr. Clavijo testified
medical expert, wrote in his own consultation notes, “Chest that Alfredo was intubated because he was hypoventilating,
x-ray showed absence of left lung.” meaning that his body could not get rid of carbon dioxide.
Dr. Clavijo testified that hypoventilating “causes somnolence
According to Dr. Casar, Alfredo's medical complications and lethargy and, subsequently, complete respiratory failure,”
and eventual death arose from Dr. Dang's misreading of the but he identified no injuries that Alfredo received in the fight
chest x-ray and his resultant efforts to treat a condition that that could have caused hypoventilation. He further testified
Alfredo did not have (a hemothorax), while failing to take that Alfredo was never able to be weaned off of intubation,
into consideration the condition that Alfredo did have (a and that continuing intubation was a problem because this
missing lung). 12 The evidence of Dr. Dang's actions and their leaves tubes in the patient's body that can cause infection
consequences is as follows: and further complications—including, in Alfredo's case, “a
sepsis-type of infection.” According to Dr. Clavijo, Alfredo's
Dr. Dang stated in his notes that Alfredo was given morphine respiratory failure also caused his other systems to shut down.
for the attempted insertion of a chest tube to drain the excess Dr. Casar, Dr. Clavijo, and Alfredo's death certificate all
fluid that Dr. Dang believed was collecting in Alfredo's identify respiratory failure as one of the causes of Alfredo's
chest. Alfredo was given the first dose of four milligrams death.
of morphine at 6:42 p.m., four minutes before Dr. Dang's
first attempt to insert a chest tube. He attempted to insert a Finally, Dr. Clavijo agreed that “the trauma ... that occurred
chest tube at 6:46 p.m. and again at around 6:52 p.m. After on August 1, at Exxon, it kind of set off a chain of
these attempts, Alfredo's primary complaint of pain no longer events that caused this respiratory failure that then caused
concerned his face or back, and he instead complained of [Alfredo's] renal failure and that eventually resulted in his
pain at the site where Dr. Dang had attempted to insert the death.” (emphasis added). The “trauma” sustained “at Exxon”
chest tube. Dr. Dang responded with more morphine. Sixteen was not identified, and the jury did not hear the evidence
minutes after Dr. Dang's second attempt to insert a chest tube, that the events in this chain included Dr. Dang's alleged
Alfredo was given four more milligrams of morphine, and negligence in misreading Alfredo's chest x-ray, failing to
twenty minutes after that, Alfredo was given a further six observe that Alfredo had only one lung, attempting to insert
milligrams of morphine. Thus, in connection with his attempt a chest tube, and administering morphine in doses high
to insert a chest tube, Dr. Dang caused Alfredo to be given a enough to cause respiratory failure. Jurors also did not hear
total of fourteen milligrams of morphine in the space of forty- Dr. Casar's testimony that the injuries Alfredo received in
six minutes. Dr. Casar would have testified that when a dose the fight did not cause his death, and that Alfredo's death
of about eight milligrams is given to someone with only one instead was caused by Dr. Dang's negligence. And because
lung, it can be expected that the patient will stop breathing. He the question of Dr. Dang's responsibility was removed from
stated that although Alfredo was given a medication to reverse the case by the trial court's striking of the designation, the jury
the effects of morphine and “for a little bit he *56 became was unable to consider this hotly contested issue.
more responsive,” 13 his condition continued to deteriorate,
The Pagayons contend that even if Dr. Dang made errors
and he had to be placed on a respirator. At 12:20 a.m. on
that increased the harm to Alfredo or led to his death, Exxon
August 2, 2011, Dr. Dang wrote in Alfredo's progress notes,
would still bear the liability for the doctor's negligence under
“Discuss [with] Dr. Fisher about events in E.R. Agrees to
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
the “original tortfeasor rule.” See, e.g., Cannon v. Pearson,
383 S.W.2d 565, 567 (Tex.1964) (“It has long been an
Sharon McCally Justice, dissenting.
accepted and established in this State that one who wrongfully
I agree with the Majority's determination that for purposes of
injures another is liable in damages for the consequences of
its response to the Pagayons' motion to strike, ExxonMobil
negligent treatment by a doctor or surgeon selected by the
was not required to raise a fact issue regarding whether
injured person in good faith and with ordinary care.”); Galvan
Dr. Dang, with willful and wanton negligence, violated the
v. Fedder, 678 S.W.2d 596, 598 (Tex.App.–Houston [14th
standard of care. I disagree, however, with the Majority's
Dist.] 1984, no writ) (same). But as the Texas Supreme Court
conclusion that ExxonMobil raised a fact issue concerning
*57 recently pointed out, the legislature “has overhauled
Dr. Dang's alleged negligence in providing emergency care to
Texas's system for apportioning fault in negligence cases”
Alfredo. Because I would instead conclude that the trial court
over the past four decades, enacting a comparative-negligence
did not err in striking Dr. Dang's designation, I respectfully
statute, which was replaced by a comparative-responsibility
dissent.
statute, and which has since been modified to become our
current proportionate-responsibility statute. See Nabors Well
Though the trial court did not articulate its basis for striking
Servs., Ltd. v. Romero, 456 S.W.3d 553, 555, 559(Tex.2015).
the designation of Dr. Dang in its order, there are two
By its terms, the proportionate-responsibility statute applies
independent reasons that the decision is not error. The trial
to “any cause of action based on tort in which a defendant,
court would not have erred in concluding that the medical
settling person, or responsible third party is found responsible
opinion ExxonMobil offered to raise a fact issue on Dr.
for a percentage of the harm for which relief is sought.”
Dang's alleged departure from the standard of care was
TEX. CIV. PRAC. & REM. CODE ANN. § 33.002(a)(1)
not probative opinion testimony in that (1) the “expert”
(West 2015). The Pagayons asserted causes of action based
disclaimed knowledge of the applicable standard of care and
on tort, and the jury determined ExxonMobil's percentage of
(2) the physician's “expert opinion” was based upon assumed
responsibility; thus, the proportionate-responsibility statute
facts that varied from the actual, underlying facts.
governs the determination of responsibility in this case. 14
For the reasons we have described, we conclude that
ExxonMobil was harmed by the trial court's erroneous 1. The basis for the “expert opinion” that Dr. Dang fell
application of the statute in striking the designation of Dr. below the standard of care
Dang as a responsible third party.
*58 The medical record relied upon by Dr. Casar reflects
We sustain this portion of ExxonMobil's third issue. Because that Alfredo arrived at the hospital's emergency room via
we conclude that this error requires us to reverse the judgment EMS at 17:58. 1 The record also shows injury to the left
and remand the case for a new trial, we do not reach back and decreased breath sounds on the lower left side. The
ExxonMobil's remaining issues. radiology report also relied upon by Dr. Casar confirms that
Dr. Dang immediately ordered a chest x-ray due to chest
pain, and the x-ray was performed at 18:08. The radiologist,
Dr. Luis DeSantos, read the x-ray at 18:10 and provided a
V. CONCLUSION
diagnosis of “[c]omplete opacification of the left hemithorax”
Although the evidence is legally sufficient to support the and commented that the “left hemithorax is completely
jury's liability finding against ExxonMobil under a negligent- opaque and there is displacement of the mediastinum toward
supervision theory, we conclude that the trial court erred the right side suggesting the presence of a large amount
in striking the designation of Dr. Dang as a responsible of fluid in the left hemithorax with displacement of the
third party, and that this error harmed ExxonMobil. Thus, mediatinum.” At 18:46 the emergency room records show
without reaching ExxonMobil's remaining issues, we reverse “chest tube insertion because of hemothorax.” 2 In fact,
the judgment and remand the case for a new trial consistent Alfredo had no left lung and the x-ray was misread. According
with this opinion. to Dr. Casar, Dr. Dang fell below “the standard of care” when,
faced with what, in Dr. Casar's opinion was, an unusual x-
ray, Dr. Dang failed to wait for a CT scan before deciding to
attempt insertion of a chest tube. Dr. Casar stated that “[a]fter
(McCally, J., dissenting).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
the CT Scan was obtained, it became clear that the patient had same or similar circumstances—to support the designation of
a congenital absence of the left lung.” Dr. Dang as a responsible third party.
In short, Dr. Casar admitted he has neither the expertise nor
2. The “expert” disclaims knowledge of the standard of the knowledge of reading x-rays or making critical decisions
care in an emergency room setting. Thus, I would conclude that the
trial court did not err in determining that Dr. Casar lacked the
Problematic to the above evidence is Dr. Casar's testimony
requisite knowledge, skill, experience, training, or education
that he is not familiar with the standard protocol for
to opine on the emergency care provided to Alfredo. See
emergency room physicians when they believe they are
Tex.R. Evid. 702; cf. Ehrlich v. Miles, 144 S.W.3d 620,
confronted with a hemothorax and his assumption about the
625 (Tex.App.–Fort Worth 2004, pet. denied) (“A medical
timely availability of diagnostic tools in the emergency room.
expert who is not of the same school of medicine, however,
First, Dr. Casar's field of expertise is critical care medicine,
is competent to testify if he has practical knowledge of what
which he concedes has a different standard of care than
is usually and customarily done by a practitioner under
emergency room medicine. Standing alone, the fact that Dr.
circumstances similar to those confronting the [allegedly
Casar's expertise is in a different area is not fatal if Dr. Casar
negligent physician].” (emphasis added)).
demonstrates knowledge of the area at issue. See Tex. R. Evid.
702 (“If scientific, technical, or other specialized knowledge
The majority urges that, notwithstanding Dr. Casar's
will assist the trier of fact to understand the evidence or to
admission that he is not familiar with the applicable standard,
determine a fact in issue, a witness qualified as an expert
we may not affirm on this basis because the Pagayon's did
by knowledge, skill, experience, training, or education may
not object to Dr. Casar's qualifications. I disagree factually
testify thereto in the form of an opinion or otherwise.”); cf.
and legally. Counsel for the Pagayons consistently and
Blan v. Ali, 7 S.W.3d 741, 745–46 (Tex.App.–Houston [14th
persistently pointed out Dr. Casar's lack of qualification
Dist.] 1999, no pet.). But Dr. Casar repeatedly testified that
before the trial court:
he does not know the standard of care for an emergency room
physician. Although Dr. Casar testified that, in his opinion, Q. Certainly, an emergency room physician's practice is
the standard of care for reading an x-ray is the same despite very different from your practice as a critical care doctor,
the diagnostic setting, he also stated that he was not familiar correct?
with the standard of care for an emergency room physician.
When Dr. Casar admitted that he does not know the standard ...
for an emergency room physician, he caused his own opinion
that the standards are the same to be completely without A. It is different, yes.
foundation. In other words, if he does not know what the
...
emergency standard is, he cannot know that the emergency
standard is the same as the non-emergency standard. Q. You don't practice in the ER, correct?
Where the treatment criticized is provided as part of A. I practice in ICU.
emergency care, the expert should demonstrate familiarity
Q. Okay.
with that standard of care, not simply guess that the setting
for care does not matter. *59 Cf. Ly v. Austin, No. A. Not in the ER.
03–05–00516–CV, 2007 WL 2010757, at *5 (Tex.App.–
Austin July 13, 2007, no pet.) (mem. op) (holding that Q. So you don't know what the standard protocol is for
when the specific issue before the court is “the standard emergency room physicians when they believe they have
of care applicable to neurologists providing emergency care a hemothorax is, do you?
immediately following a stroke,” testimony from an expert
in caring for stroke patients in rehabilitative setting is A. I don't know what their standard is.
insufficient). Thus, in my view, Dr. Casar must know the
...
applicable standard of care—in this case, what a reasonably
prudent emergency room physician would have done in the Q. But—but for the emergency room. You don't know
the emergency room standard—you're—you're basing your
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 17
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
understanding of the ICU standard with the ER standard,
fair? Further, the nature of the opinion Dr. Casar proffers is, in the
words of our opinion in Blan v. Ali, “peculiar to the field”
A. Fair. of emergency medicine about which he knows nothing. 7
S.W.3d 741, 746 (Tex.App.–Houston [14th Dist.] 1999, no
Q. That's not necessarily fair to the doctors is it? Because
pet.). As noted above, Alfredo was admitted to the emergency
you agree with me that an ICU setting is different from
room at 5:58 p.m. Dr. Dang testified that he “was very
emergency room setting, fair?
concerned about [Alfredo]'s medical condition and believed
... that if [he] did not take immediate medical action, [Alfredo]'s
health could have been placed in serious jeopardy.” Dr.
A. It is different, yes. Dang performed a physical examination and obtained a chest
x-ray at approximately 6:08 p.m., which, as noted above,
Q. And so, sitting here today, you don't know what the revealed complete opacification of the left hemithorax. Dr.
standard protocol is for an emergency room physician? Dang's interpretation of the chest x-ray was confirmed by Dr.
DeSantos. Further, as Dr. Dang testified,
A. I don't—I don't know what the standard of care is for an
emergency room physician. Based on, among other things, the x-
ray, Mr. Pagayon's medical condition,
...
and his need for emergency care, I
Q. Again, you're not familiar with the standard of care in made the decision to place a chest
the emergency room? tube to drain what I believed to be a
hemothorax in his left lung.... Based on
... the circumstances and the emergency
situation, I made the determination
A. I'm not sure if—what the standard of care for the
that there was not time to perform a
emergency room, but I would be surprised if it's any
CAT scan prior to placing the chest
different.
tube. In my training and experience
*60 Q. But I just want to make sure. when dealing with what one believes
to be a hemothorax, the same must be
You're not qualified to testify on the standard of care in an addressed as soon as possible.
emergency room?
(emphasis added). Thus, according to Dr. Dang—and
... acknowledged by Dr. Casar—Dr. Dang was providing
emergency medical care when he attempted the chest tube
A. I don't know what the standard of care in the emergency insertion. Dr. Casar's admission that he does not know
room is. the standard of care for emergency room physicians is
“determinative.” See id.
Thus, in my view, the Pagayons placed Dr. Casar's
qualification at issue. Here, we are not faced with an alleged
error on the admissibility of Dr. Casar's opinion. The trial 3. The “expert opinion” ' rests on misperceived facts
court did not exclude the evidence. Instead, as the Texas
Supreme Court has recently pointed out, the question is Second, Dr. Casar repeatedly displayed his unfamiliarity with
whether the expert's opinion is any evidence at all. Cf. the facts of Alfredo's care in his deposition testimony. Cf.
Houston Unlimited, Inc. Metal Processing v. Mel Acres Houston Unlimited, Inc. Metal Processing, 443 S.W.3d at 822
Ranch, 443 S.W.3d 820, 832–33 (Tex.2014) (“[I]f no basis (“If an expert's opinion is unreliable because it is ‘based on
for the opinion is offered, or the basis offered provides no assumed facts that vary from the actual facts,’ the opinion ‘is
support, the [expert] opinion is merely a conclusory statement not probative evidence.’ ” (quoting Burroughs Wellcome Co.
and cannot be considered probative evidence, regardless of v. Crye, 907 S.W.2d 497, 499–500 (Tex.1995)). If the factual
whether there is no objection.” (internal quotation and citation assertions or assumptions underlying an expert's opinion are
omitted)). contrary to the facts, opinion testimony founded on those
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 18
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
assumptions is not competent evidence. Cf. id. at 833. Here,
Dr. Casar's opinion was based on assumptions contrary to A. Yeah. So, you see—uh-huh.
proven facts in several respects. 3 Q. You can't wait three hours for a CAT scan, can you doc?
*61 For example, Dr. Casar was mistaken about the time and A. Well, they waited and nothing happened.
dosages of morphine provided to Alfredo: Dr. Casar initially
stated that the morphine was still in Alfredo's system when he Q. If you can get a CAT scan at the snap of a finger, as you
was intubated, but when confronted with Alfredo's medical claim you can—
records that established the contrary, Dr. Casar acknowledged
A. Yeah. You should be able to here.
that morphine was “probably not” still in Alfredo's system
when he was later intubated in the ICU. Dr. Casar also Q. Took two hours here?
testified that Alfredo's respiratory rate was 32 breaths per
minute, an elevated rate, when he was admitted to the ICU. A. Right.
But when confronted with Alfredo's records, Dr. Casar stated
Q. And they ordered one immediately, and it took two
that the record showed Alfredo's breath rate was 24 breaths
hours?
per minute. Further, he testified that there was a note in
Alfredo's medical records that Afredo could be released that A. That's not good. That's not good. That's not what it [sic]
“afternoon” from the emergency room. 4 Yet, the doctor was should happen in an emergency room.
unable to find this note when given an opportunity to search
through the records. Finally, Dr. Casar's criticism of Dr.
Dang's failure to wait for a CT scan to confirm his hemothorax
***
diagnosis emanated from his belief that “in the emergency
room, you can get a CAT scan in 15 minutes.” But the Q. Would you like to correct your testimony wherein you
following exchange occurred during Dr. Casar's deposition: stated he received a *62 CAT scan 30 minutes after his
chest tube?
Q. You also testified he had a CT scan less than an hour
after ... after the chest tube. A. Yes.
In summary, Dr. Casar did not indicate that he was familiar
Remember that?
with the facts of Alfredo's care. Instead, the record before the
A. Yes. trial court indicates that he based his conclusions on either
improper recollections of the facts or assumptions. See id.; cf.
Q. That's not the case, is it, Doctor? Jelinek v. Casas, 328 S.W.3d 526, 539 (Tex.2010) (holding
that the basis for an expert's opinion must be linked to the
A. I said I don't remember exactly the time line. facts).
Q. In fact, let me show you what's ... previously been
marked as Exhibit No. 37. 4. Conclusion
A. Okay. I would conclude, after considering Dr. Casar's testimony
as a whole, that Dr. Casar's opinions do not raise a fact
Q. And he didn't have a CT scan until 8:53 that night, more
question regarding whether Dr. Dang failed to act as a
than two hours—
reasonably prudent physician under the same or similar
A. Two hours. Well, that's terrible. circumstances. Although Exxon Mobil offered Dr. Casar's
opinion on emergency room treatment in an emergency
Q. More than two hours, correct? situation, Dr. Casar did not undertake to analyze Dr. Dang's
conduct in the context of the circumstances of emergency
A. That's terrible.
care. As such, Dr. Casar's statements that he does not know
Q. And more than three hours after his initial ... consult, the emergency room standard of care is determinative. Cf.
right? Ehrlich, 144 S.W.3d at 625; Blan, 7 S.W.3d at 746 (noting
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 19
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
that expert's admission that he was unfamiliar with the
In sum, I agree with the Majority that ExxonMobil
emergency room and cardiology standards of care would be
did not need to bring forth evidence that Dr. Dang
“persuasive, if not determinative if [he] were purporting to
willfully and wantonly departed from the standard of
offer expert medical opinions in matters peculiar to the fields
care. But ExxonMobil nonetheless needed to bring forth
of cardiology or emergency medicine”). Dr. Casar's testimony
some probative evidence that Dr. Dang departed from the
completely misses the mark regarding whether Dr. Dang's
applicable standard of care. Because ExxonMobil failed to do
care of Alfredo fell below the standard of care for a reasonably
so, I would conclude that the trial court did not err in striking
prudent physician in an emergency room setting. Indeed, Dr.
the designation of Dr. Dang. Because the Majority concludes
Casar's testimony demonstrated he was unfamiliar with the
otherwise, I respectfully dissent.
actual facts surrounding Alfredo's medical care. Cf. Houston
Unlimited, Inc. Metal Processing, 443 S.W.3d at 832–33;
Jelinek, 328 S.W.3d at 539. Thus, I would conclude that Dr.
All Citations
Casar's opinion is no evidence of Dr. Dang's responsibility for
Alfredo's death. 467 S.W.3d 36
Footnotes
1 ExxonMobil does not argue that J.R. and his father were not “similarly situated.”
2 This is not the only problem with ExxonMobil's argument. In addition, it appears to be contrary to the position it maintained
at trial, where it argued that Cabulang did not cause the fight, but instead acted only in self-defense. Whether Cabulang
caused the fight was a disputed question of fact. Moreover, the jury found that ExxonMobil, J.R., and Alfredo acted
negligently, but it was not asked to find that anyone acted intentionally.
3 Although ExxonMobil points out that its written “policies prohibit loitering inside the store,” there is no evidence that J.R.
did so.
4 Having rejected ExxonMobil's arguments that it cannot be the proximate cause of Alfredo's death because (a) “intentional
conduct” caused the fight, and (b) the store was merely the location of the fight, we do not reach its remaining argument
under this heading, i.e., that “[a]ny reliance on the foreseeability of medical negligence cannot overcome these problems
with causation.”
5 The parties sometimes refer to the trial court's ruling as a denial of ExxonMobil's motion to designate Dr. Dang as a
responsible third party, and sometimes refer to it as a grant of the Pagayons' motion to strike the designation. Our record
contains only an order granting the Pagayons' motion to strike the designation of Dr. Dang as a responsible third party.
6 We acknowledge that “if evidence presents ‘other plausible causes of the injury or condition that could be negated, the
[proponent of the testimony] must offer evidence excluding those causes with reasonable certainty.’ ” See Crump, 330
S.W.3d at 218 (quoting Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 720 (Tex.1997) (alterations in original)).
But, in determining whether the trial court erred in striking the designation of Dr. Dang as a responsible third party, we
must consider the evidence before it at the time of that ruling. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.004(l ).
At this point in the proceedings, the trial court was not presented with evidence about other possible sources of sepsis;
it was simply presented with Dr. Casar's opinion that even though cultures did not clarify the source of the sepsis, the
chest-wall hematoma from the failed chest-tube insertion was the most likely cause.
7 Tellingly, this statute is entitled, “Qualifications of Expert Witness in Suit Against Physician,” and provides as follows:
(a) In a suit involving a health care liability claim against a physician for injury to or death of a patient, a person may
qualify as an expert witness on the issue of whether the physician departed from accepted standards of medical
care only if the person is a physician who:
(1) is practicing medicine at the time such testimony is given or was practicing medicine at the time the claim arose;
(2) has knowledge of accepted standards of medical care for the diagnosis, care, or treatment of the illness, injury,
or condition involved in the claim; and
(3) is qualified on the basis of training or experience to offer an expert opinion regarding those accepted standards
of medical care.
(emphasis added).
8 Id. at 746 (quoting Act of May 5, 1995, 74th Leg., R.S., ch. 140, § 2, sec. 14.01(a)(2), 1995 TEX. GEN. LAWS 985, 988,
repealed by Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 10.09, 2003 TEX. GEN. LAWS 847, 884).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 20
ExxonMobil Corporation v. Pagayon, 467 S.W.3d 36 (2015)
9 Having removed that issue from the jury's consideration, the trial court also excluded evidence relevant to that
determination.
10 See TEX. CIV. PRAC. & REM. CODE ANN. § 33.003(a).
11 There are many inconsistencies in the medical records. To cite a few examples, Dr. Dang's handwritten notes identify
Alfredo himself as the person from whom Dr. Dang obtained Alfredo's medical history; other records identify the family
as the historian. Dr. DeSantos stated on the radiology report that Alfredo was referred for a chest x-ray due to chest
pain, but this was not listed among Alfredo's complaints. Although Dr. Clavijo was not present when Alfredo arrived at
the hospital, he wrote that Alfredo was confused and disoriented at that time; however, before Dr. Dang administered
fourteen milligrams of morphine as discussed infra, Alfredo was consistently described as alert and oriented by those
who evaluated him at ExxonMobil and by the emergency-room personnel. Our description of the evidence is intended
only to show our reasons for concluding that the extent of Dr. Dang's responsibility, if any, for causing or contributing to
Alfredo's death was a contested, critical issue.
12 Even if a chest CT scan were needed to properly diagnose Alfredo's true condition and rule out a hemothorax, evidence
supports Dr. Casar's opinion that Dr. Dang had time to have the scan performed. Dr. DeSantos made his comments on
the chest x-ray at approximately 6:10 p.m., and Dr. Dang did not administer the first dose of morphine in preparation for
the chest tube until 6:42 p.m.—a time lapse of thirty-two minutes. Medical records also show that Dr. Dang finally ordered
a chest CT scan at 8:31 p.m., and that it was completed at 8:53 p.m.—a time lapse of just twenty-two minutes. Thus, the
record supports the conclusion that if Dr. Dang had ordered a chest CT scan after seeing the unusual chest x-ray, the
extra procedure would not have delayed the insertion of the chest tube if the CT scan had confirmed his diagnosis of a
hemothorax. We note, however, that it is unclear what role the chest CT scan played in Dr. Dang's treatment of Alfredo.
Although other doctors state in their notes that the CT scan “confirmed” that Alfredo had only one lung, the CT scan is
not mentioned in Dr. Dang's narrative. He instead wrote, “Wife arrive to ER many hours later and I was informed that
patient was born w/o one lung, but they are not sure which side.”
13 At 11:30 p.m., Dr. Dang wrote that Alfredo was asleep and was given Narcan, a drug which, as Dr. Casar explained
in his deposition, was intended to reverse the effects of morphine. After writing that Narcan was given, Dr. Dang wrote
“patient continues to be drowsy → more alert now.” The time of this entry was also stated to be 11:30 p.m. (or as written
in the records, 2330 pm).
14 Although the statute contains a few exceptions to its broad application, the Pagayons do not contend that any of the
enumerated exceptions applies. See id. § 33.002(c) (providing that Chapter 33 does not apply to actions for workers'
compensation benefits, claims for exemplary damages, or claims arising from the manufacture of methamphetamine).
1 The entirety of Alfredo's medical records were not included as part of the motion-to-strike record. Only a two page
“Emergency Provider Record” and the “Diagnostic Radiography” report are provided as the basis for Dr. Casar's opinion.
2 According to Dr. Casar, the thorax is the space between the waist and the neck; a hemothorax is a thorax full of blood,
which means that something is bleeding inside, and it is a condition that may be life-threatening if not treated promptly.
3 The “facts” as proven at the time of the motion to strike did not include Alfredo's entire medical records. Instead, these
“facts” included Dr. Casar's deposition testimony and a few pages from Alfredo's records. Thus, although the Majority
notes several facts from Alfredo's medical records in its harm analysis, those facts were not part of the record when
the trial court implicitly determined that Dr. Casar's opinion testimony failed to raise a fact issue regarding Dr. Dang's
purported responsibility. In other words, the Majority has reviewed the trial court's alleged error based upon a record that
was not before the trial court at the time it made the challenged ruling. Moreover, the facts the Majority draws from the
expanded record are facts neither articulated, nor apparently known, by Dr. Casar at the time he supplied the deposition
testimony ExxonMobil presented to the trial court.
4 As noted above, Alfredo was admitted to the emergency room at 17:58, which is 5:58 p.m. Thus, it does not appear that
Alfredo was in the emergency room in the “afternoon.”
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 21
R
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
Cases Triable in Appellate Court
Statutes
KeyCite Yellow Flag - Negative Treatment
Plain Language; Plain, Ordinary, or
Distinguished by Williams v. McCollister, S.D.Tex., September 22,
2009 Common Meaning
Statutory construction is a legal question that
237 S.W.3d 680
Supreme Court reviews de novo, ascertaining
Supreme Court of Texas.
and giving effect to the legislature's intent as
expressed by the plain and common meaning of
F.F.P. OPERATING PARTNERS, L.P.,
the statute's words.
d/b/a Mr. Cut Rate # 602, Petitioner,
v. 61 Cases that cite this headnote
Xavier DUENEZ and Wife Irene Duenez,
As Next Friends of Carlos Duenez and
[2] Intoxicating Liquors
Pablo Duenez, Minors, Respondents. Proximate cause of injury
No. 02–0381. | Argued Nov. Intoxicating Liquors
30, 2005. | Decided May 11, 2007. Presumptions and burden of proof
If a plaintiff meets the onerous burden of
Synopsis proof imposed by the Dram Shop Act, then
Background: Motorists injured in collision with intoxicated the provider of alcoholic beverages is liable for
driver brought action under the Dram Shop Act against damages proximately caused by its employees or
owner of a convenience store which had provided alcoholic patrons. V.T.C.A., Alcoholic Beverage Code §
beverages to driver. The County Court at Law No. 1, Calhoun 2.02.
County, Alex R. Hernandez, J., severed store owner's cross-
action against driver, and rendered judgment on jury verdict 4 Cases that cite this headnote
awarding motorists $35 million. Store owner appealed. The
Corpus Christi-Edinburg Court of Appeals, 69 S.W.3d 800,
[3] Intoxicating Liquors
affirmed. Review was granted.
Statutory provisions
In the Dram Shop Act, the Legislature created a
duty, not recognized at common law, on alcohol
Holdings: On denial of rehearing, the Supreme Court, providers and increased the potential liability
Wainwright, J., held that: of providers as a means of deterring providers
from serving obviously intoxicated individuals.
[1] Proportionate Responsibility Act applies to all claims V.T.C.A., Alcoholic Beverage Code §§ 2.02,
under Dram Shop Act, including third-party claims, and 2.03.
[2] store owner's cross-action against driver was not 3 Cases that cite this headnote
severable.
[4] Intoxicating Liquors
Nature of remedy
Reversed and remanded.
Intoxicating Liquors
Jefferson, C.J., and O'Neill, J., dissented and filed opinions. Contributory act or negligence
Section of Dram Shop Act setting forth the
exclusivity of statutory remedy against an
alcohol provider for damages caused by an
West Headnotes (16)
intoxicated patron does not make an alcohol
provider responsible, without regard to fault, for
[1] Appeal and Error 100% of the damages caused by an intoxicated
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
patron. V.T.C.A., Alcoholic Beverage Code § V.T.C.A., Alcoholic Beverage Code §§ 2.02,
2.03. 2.03; V.T.C.A., Civil Practice & Remedies Code
§§ 33.002, 33.003(a), 33.013; § 33.001(a)(2003).
1 Cases that cite this headnote
15 Cases that cite this headnote
[5] Labor and Employment
Nature of liability in general [9] Constitutional Law
Principal and Agent Inquiry Into Legislative Judgment
Rights and liabilities of principal Constitutional Law
Generally, the doctrine of “vicarious liability,” or Policy
respondeat superior, makes a principal liable for Statutes
the conduct of his employee or agent. Intent
Supreme Court's role is not to second-guess the
12 Cases that cite this headnote
policy choices that inform statutes or to weigh
the effectiveness of their results; rather, Court's
[6] Principal and Agent task is to interpret those statutes in a manner that
Rights and liabilities of principal effectuates the legislature's intent.
Vicarious liability is based on the principal's
4 Cases that cite this headnote
control or right to control the agent's actions
undertaken to further the principal's objectives.
[10] Statutes
6 Cases that cite this headnote Prior construction
Legislature must be regarded as intending
[7] Negligence statutes, when repeatedly reenacted, to be given
Control over object that interpretation which has been settled by the
Basis for imposing liability on the owner of courts.
the thing entrusted to another, under theory of
Cases that cite this headnote
negligent entrustment, is that ownership of the
thing gives the right of control over its use.
[11] Action
1 Cases that cite this headnote Severance of actions
Contribution
[8] Intoxicating Liquors Automobile cases
Contributory act or negligence Indemnity
Intoxicating Liquors Nature of obligation
Persons Liable Convenience store owner's claim against
Apportionment of responsibility, under intoxicated driver who purchased beer and
Proportionate Responsibility Act, applies to then had automobile accident was not an
all claims under Dram Shop Act, including indemnification claim that could be properly
third-party claims; neither the purpose nor severed from injured motorist's and passenger's
the language of Dram Shop Act makes a action against store owner under Dram Shop Act;
dram shop automatically responsible for all of store owner's claim was one of contribution for
the damages caused by an intoxicated patron, proportionate share of damages for which driver
regardless of a jury's determination of the dram was responsible. V.T.C.A., Alcoholic Beverage
shop's proportion of responsibility, and imposing Code §§ 2.02, 2.03; V.T.C.A., Civil Practice
vicarious liability in dram-shop cases would & Remedies Code §§ 33.002, 33.003; Vernon's
conflict with Proportionate Responsibility Act. Ann.Texas Rules Civ.Proc., Rule 41.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
4 Cases that cite this headnote [16] Appeal and Error
Abuse of discretion
[12] Appeal and Error A trial court's failure to correctly apply the law
Allowance of remedy and matters of is an abuse of discretion.
procedure in general
3 Cases that cite this headnote
Supreme Court will not reverse a trial court's
order severing a claim unless the trial court
abused its discretion. Vernon's Ann.Texas Rules
Civ.Proc., Rule 41.
Attorneys and Law Firms
2 Cases that cite this headnote
*681 Oscar H. Villarreal, Villarreal Moreno & Ruiz, San
Antonio, Gregory J. Lensing, Cowles Thompson, Dallas,
[13] Action Arthur C. Reyna Jr., San Antonio, Glen Garey, Austin, James
Severance of actions E. Rensimer, Markle & Ramos, *682 Houston, TX, Victor
A claim is properly severable if (1) the E. Schwartz, Emily J. Laird, Manuel Lopez, Shook, Hardy &
controversy involves more than one cause of Bacon L.L.P., Washington, DC, Edward J. Murphy, Beirne,
action, (2) the severed claim is one that would be Maynard & Parsons, L.L.P., Houston, E. Lee Parsley, E. Lee
the proper subject of a lawsuit if independently Parsley, P.C., Austin, Grant E. Adami III, Adami Goldman &
asserted, and (3) the severed claim is not so Shuffield, San Antonio, TX, for Amicus Curiae.
interwoven with the remaining action that they
Russell H. McMains, Law Offices of Russell H. McMains,
involve the same facts and issues. Vernon's
Corpus Christi, Reagan W. Simpson, King & Spalding LLP,
Ann.Texas Rules Civ.Proc., Rule 41.
Houston, Mike A. Hatchell, Locke Liddell & Sapp, LLP,
22 Cases that cite this headnote Austin, TX, for Petitioner.
David Roberts, Wanda Roberts, Garner, Roberts & Roberts,
[14] Action L.L.P., Port Lavaca, Christa Brown, Austin, Cynthia T.
Severance of actions Sheppard, Attorney At Law, Cuero, David C. Griffin, John
Avoiding prejudice, doing justice, and increasing W. Griffin Jr., Houston, Marek & Griffin, L.L.P., Victoria,
convenience are the controlling reasons to allow TX, for Respondent.
severance of a claim. Vernon's Ann.Texas Rules
Opinion
Civ.Proc., Rule 41.
Justice WAINWRIGHT delivered the opinion of the Court, in
23 Cases that cite this headnote
which Justice HECHT, Justice BRISTER, Justice MEDINA,
Justice GREEN, Justice JOHNSON and Justice WILLETT
[15] Intoxicating Liquors joined.
Persons Liable
On December 12, 2002, we granted this petition for review,
Dram Shop Act does not make a provider of
and on September 3, 2004, the Court issued an opinion.
alcoholic beverages vicariously liable to a third
On April 8, 2005, we granted the petitioner's motion for
party for the conduct of an intoxicated patron;
rehearing, reargued the case, and issued an opinion on
provider's liability arises from the actions of
November 3, 2006. Today we deny the respondents' motion
its employees and agents, and not through the
for rehearing. We withdraw our opinion of November 3, 2006
actions of patron. V.T.C.A., Alcoholic Beverage
and substitute the following in its place.
Code §§ 2.02, 2.03.
7 Cases that cite this headnote We are asked to revisit our holding in Smith v. Sewell
that the proportionate responsibility scheme of chapter 33
of the Texas Civil Practice and Remedies Code requires
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
an apportionment of responsibility under chapter 2 of the for trial. F.F.P.'s severed action against Ruiz remains pending
Alcoholic Beverage Code. 858 S.W.2d 350 (Tex.1993). We in the trial court.
decline the invitation to reverse Sewell and instead affirm its
holding that the language of the proportionate responsibility The Duenezes' claim against F.F.P. proceeded to trial. At the
statute includes claims under the Dram Shop Act. Neither charge conference, the trial court refused to submit questions
the purpose nor the language of the Act makes a dram shop for determination of Ruiz's negligence. The court also failed
automatically responsible for all of the damages caused by an to submit questions on the proportionate responsibility of
intoxicated patron, regardless of a jury's determination of the Ruiz and F.F.P.
dram shop's proportion of responsibility. Instead, pursuant to
Chapter 33, a dram shop is responsible for its proportionate The jury found that when the alcohol was sold to Ruiz, it
share of the damages as determined by a jury. Accordingly, was “apparent to the seller that he was obviously intoxicated
we reverse the court of appeals' judgment and remand the case to the extent that he presented a clear danger to himself and
for a new trial. others,” and that Ruiz's intoxication was a proximate cause of
the collision. The jury returned a $35 million verdict against
F.F.P., upon which the trial court rendered judgment.
I. Factual and Procedural Background
The court of appeals affirmed the trial court's judgment,
After spending the day cutting firewood while consuming a holding:
case and a half of beer, Roberto Ruiz drove his truck to a
[I]n third-party actions under the Dram
Mr. Cut Rate convenience store owned by F.F.P. Operating
Shop Act in which there are no
Partners, L.P. and purchased a twelve-pack of beer. The
allegations of negligence on the part of
store's assistant manager, Carol Solis, sold the beer to Ruiz.
the plaintiffs, a provider is vicariously
Ruiz then climbed into his truck, opened a can of beer, and
liable for the damages caused by
put the open beer can between his legs. There was conflicting
an intoxicated person, and such a
testimony about whether Ruiz actually drank any of the beer
provider is not entitled to offset its
that he purchased at Mr. Cut Rate.
liability by that of the intoxicated
person.
Ruiz then drove onto a nearby highway and swerved into
oncoming traffic several times. Two cars dodged his truck 69 S.W.3d 800, 805. In reaching that conclusion, the court
to avoid a collision. As he crossed a bridge approximately a distinguished our decision in Sewell, in which we held that
mile and a half from the Mr. Cut Rate convenience store, Ruiz the comparative responsibility statute applied to dram-shop
swerved across the center line, hitting the Duenezes' car head- causes of action. Id. The court of appeals concluded that
on. All five members of the Duenez family suffered injuries. Sewell's holding was limited to first-party actions in which
the intoxicated patron is suing for his own injuries and is
Ruiz was arrested at the accident scene for drunk driving. inapplicable when the plaintiff is an innocent third party
He pled guilty to intoxication assault and was sentenced to injured by an intoxicated patron. Id. at 805–06. The court
prison. The Duenezes brought a civil suit against F.F.P., Ruiz, also held that the trial court did not abuse its discretion in
Solis, Nu–Way Beverage Company, and the owner of the severing F.F.P.'s contribution claim against Ruiz, concluding
land where Ruiz had spent the afternoon cutting firewood that because F.F.P.'s statutory liability was vicarious and
and drinking. F.F.P. filed a cross-action against Ruiz, naming not direct, F.F.P. had an indemnity claim rather than a
him as a *683 responsible third-party and a contribution contribution claim against Ruiz. Id. at 807–08.
defendant. The Duenezes thereafter nonsuited all defendants
except F.F.P. We granted F.F.P.'s petition for review. While the petition
was pending, Xavier, Irene, and Ashley Duenez settled their
At the pretrial conference, the Duenezes obtained a partial claims against F.F.P. Only the claims of Pablo and Carlos
summary judgment that chapter 33 of the Texas Civil Practice Duenez against F.F.P. remain before the Court.
and Remedies Code, the proportionate responsibility statute,
did not apply to this case. The trial court then severed F.F.P.'s
cross-action against Ruiz, leaving F.F.P. as the only defendant
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
obviously intoxicated individuals. Historically, the “rule of
non-liability” held that an alcohol provider owed no duty
II. Statutory Interpretation
to third persons for injuries caused by the provision of
[1] Statutory construction is a legal question that we review alcohol. Sewell, 858 S.W.2d at 352; Poole, 732 S.W.2d at
de novo, ascertaining and giving effect to the Legislature's 310; see also Joel Smith, Annotation, Common–Law Right of
intent as expressed by the plain and common meaning of the Action for Damages Sustained by Plaintiff in Consequence of
statute's words. Tex. Dep't of Transp. v. City of Sunset Valley, Sale of Gift of Intoxicating Liquor or Habit–Forming Drug
146 S.W.3d 637, 642 (Tex.2004). to Another, 97 A.L.R.3d 528 (1980). Providers also were
generally able to avoid liability because the consumption of
alcohol, rather than its provision, was considered the sole
proximate cause of injury to the patron and third persons.
A. The Dram Shop Act Poole, 732 S.W.2d at 309. Finally, even if the sale was a
[2] [3] The Legislature enacted the Dram Shop Act proximate cause of intoxication, injury was considered to be
an unforeseeable result of the patron's intoxication. Id. The
to “deter providers of alcoholic beverages from serving
common law effectively precluded dram shops from incurring
alcoholic beverages to obviously intoxicated individuals who
liability when their intoxicated patrons caused injury to third
may potentially inflict serious injury on themselves and on
parties. Id.; see also Mata v. Schoch, 337 B.R. 135, 136
innocent members of the general public.” Sewell, 858 S.W.2d
(Bankr.S.D.Tex.2005).
at 356. Section 2.02 of the Alcoholic Beverage Code sets forth
the scope and elements of this action:
Relying on “modern analysis,” in 1987 the Court in Poole
(a) This chapter does not affect the right of any person to discarded the “absolute rule of no liability” and imposed a
bring a common law cause of action against any individual duty on a dram shop not to serve alcoholic beverages to a
whose consumption of an alcoholic beverage allegedly person it knows or should know is intoxicated. Poole, 732
resulted in causing the person bringing the suit to suffer S.W.2d at 310. For the first time, the Court held that a provider
personal injury or property damage. of alcohol is negligent as a matter of law when he knowingly
sells an alcoholic beverage to an intoxicated person, and the
(b) Providing, selling, or serving an alcoholic beverage Court relaxed the standards for proving proximate cause and
may be made the basis *684 of a statutory cause of foreseeability. Id. at 313–14. The claimant was still required
action under this chapter and may be made the basis of a to prove that the dram shop's conduct was the proximate cause
revocation proceeding under section 6.01(b) of this code of his or her injury to recover. Id. at 313.
upon proof that:
The Legislature acted to address the problem of providers'
(1) at the time the provision occurred it was apparent
excessive provision of alcohol to patrons. A week after this
to the provider that the individual being sold, served,
Court issued Poole, the Dram Shop Act became effective
or provided with an alcoholic beverage was obviously
and narrowed potential liability from Poole in several ways.
intoxicated to the extent that he presented a clear danger
See id. First, it made the Act the exclusive *685 means of
to himself and others; and
pursuing a dram shop for damages for intoxication. TEX.
(2) the intoxication of the recipient of the alcoholic ALCO. BEV.CODEE § 2.03. 3 Second, as an element of
beverage was a proximate cause of the damages suffered. liability, the patron must be “obviously intoxicated,” not just
intoxicated, when the dram shop serves him alcohol. Id. § 2.02
TEX. ALCO. BEV.CODEE § 2.02 (emphasis added). 1 If (emphasis added). 4 Third, under Chapter 2, “the intoxication
a plaintiff meets the “onerous burden of proof” imposed by of the recipient must be a proximate cause of the damages.”
the Dram Shop Act, then the provider is liable for damages Sewell, 858 S.W.2d at 355 (citing TEX. ALCO. BEV.CODEE
proximately caused by its employees or patrons. El Chico § 2.02(b)).
Corp. v. Poole, 732 S.W.2d 306, 314 (Tex.1987); see also
TEX. ALCO. BEV.CODEE § 2.03. 2 In the Dram Shop Act, The common foundation of both CHIEF JUSTICE
the Legislature created a duty, not recognized at common JEFFERSON'S and JUSTICE O'NEILL'S dissents is the
law, on alcohol providers and increased the potential liability contention that the Legislature abolished the element of
of providers as a means of deterring providers from serving proximate cause for a third party to recover from a dram shop
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50 Tex. Sup. Ct. J. 764
and replaced it with “a form of vicarious liability,” as CHIEF APPORTIONMENT OF LIABILITY § 7 cmt. j (2000)
JUSTICE JEFFERSON labels it, or “imputed liability,” as (stating that “[t]he employer is responsible for the share of
JUSTICE O'NEILL terms it. The dissenters contend that once the verdict assigned to the employee and is also responsible
the dram shop provides alcohol to an obviously intoxicated for the share of the verdict assigned to its own negligence”).
patron, it becomes responsible for all subsequent injuries The common law has been supplanted by statute and Section
caused by the patron's intoxication. This assumption forms 7 is not the law on this issue in Texas. The Proportionate
the basis of their conclusions that submitting a proportionate Responsibility Act and the Dram Shop Act govern this issue.
liability question to the jury does not change the dram
shop's joint and several liability for all of the damages. For [4] JUSTICE O'NEILL insists that the Legislature intended
example, even if the patron consumed none of the alcohol the phrase “the liability of providers under this chapter for
purchased from the dram shop, the dissenters would hold the the actions of their customers,” to mean that providers under
provider liable for all the injuries caused by the patron to this chapter are liable for the actions of their customers. 237
third parties. The statutes do not support their approaches, S.W.3d at 710; TEX. ALCO. BEV.CODEE § 2.03. 7 The
which would nullify the effect of the expansive language in statute can mean this only if words not in the text are inserted.
the proportionate responsibility statute. Read as written, in context, Section 2.03 simply means that
the Dram Shop Act provides the exclusive remedy against an
The dissenters contend that the failure to read vicarious alcohol provider for damages caused by an intoxicated patron
or imputed liability into the Act undermines the legislative at least 18 years of age—i.e., common law remedies are no
purpose. On the contrary, the Act accomplishes the objective longer available. See Borneman v. Steak & Ale of Tex., Inc.,
of deterring the sale of alcohol to obviously intoxicated 22 S.W.3d 411, 412 (Tex.2000). We do not read Section 2.03
persons in several ways. The Act provides a previously to say that a provider of alcohol is responsible, without regard
foreclosed remedy against sellers of alcohol. And unlike the to fault, for one hundred percent of the damages caused by an
prior common law, dram shops now owe a duty to patrons and intoxicated patron.
injured third parties under specified circumstances and can
be subject to civil liability for the damages they proximately [5] [6] [7] CHIEF JUSTICE JEFFERSON seeks to
cause. Compare Poole, 732 S.W.2d at 309 with Sewell, 858 support his position with an analogy to reasoning in vicarious
S.W.2d at 355. The Legislature also deterred irresponsible liability theory for negligent entrustment cases. 237 S.W.3d at
conduct by providing that a dram shop's alcohol license is 697. Generally in Texas, the doctrine of vicarious liability, or
subject to revocation for violating the Act. TEX. ALCO. respondeat superior, makes a principal liable for the conduct
BEV.CODEE § 2.02(b). 5 of his employee or agent. See Baptist Mem. Hosp. Sys. v.
Sampson, 969 S.W.2d 945, 947 (Tex.1998). This liability is
JUSTICE O'NEILL finds the imposition of imputed liability based on the principal's control or right to control the agent's
on providers in a single phrase in Section 2.03 of the Act, set actions undertaken to further the principal's objectives. See
out in italics: “The liability of providers under this chapter Wingfoot v. Alvarado, 111 S.W.3d 134, 136 (Tex.2003);
for the actions of their customers, members, or guests who PROSSER & KEETON ON THE LAW OF TORTS, § 69–
are or become intoxicated is in lieu of common law or other 70 (W. Page Keeton et al. eds., 5th ed.1984). Should an
statutory law warranties and duties of providers of alcoholic innocent third party suffer injury at the hands of the agent or
beverages.” 237 S.W.3d at 704; TEX. ALCO. BEV.CODEE employee, the theory is that the enterprise itself, not only the
§ 2.03. 6 Although JUSTICE O'NEILL states that Chapter agent, should be held accountable. See Wingfoot, 111 S.W.3d
33 applies, she nevertheless concludes that “the dram shop at 146; KEETON ET AL., § 69; see also RESTATEMENT
is liable to injured third parties for both its own actions (THIRD) OF TORTS: APPORTIONMENT OF LIABILITY
and for its patron's share of responsibility.” 237 S.W.3d at § 13 (2000). Here, the patron is not the agent or employee of
709. She borrows support for this position from section 7 the dram shop, the provider has no control or right to control
of the Restatement of Torts: a party to whom liability is the patron, and the patron's actions causing the accident are
imputed and who is also independently liable “is responsible not in furtherance of the provider's business. The analogy to
for the share of the verdict assigned to [the party whose negligent entrustment, a form of vicarious liability, suffers
liability is imputed] and is also responsible for the share from similar deficiencies. As the late Dean Prosser explained,
of the verdict assigned *686 to its own negligence.” Id. the basis for imposing liability on the owner of the thing
at 710; see also RESTATEMENT (THIRD) OF TORTS: entrusted to another is that ownership of the thing gives the
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50 Tex. Sup. Ct. J. 764
right of control over its use. KEETON ET AL., § 73; see Chapter 33 applied to a broad range of cases, including “any
Schneider v. Esperanza Transmission Co., 744 S.W.2d 595, cause of action based on tort in which a defendant, settling
596 (Tex.1987) (proving negligence by a theory of negligent person, or responsible third party is found responsible for
entrustment requires establishment of ownership). Hence, a percentage of the harm for which relief is sought” and
an owner may have to answer in damages for negligently actions brought under the Texas Deceptive Trade Practices–
exercising her control by entrusting an item to a person Consumer Protection Act. Id. §§ 33.002(a), 10 (h). 11 Section
who the owner knew or should have known would act in a 33.002(c) expressly excluded from its coverage actions to
reckless or incompetent manner. Schneider, 744 S.W.2d at collect workers' compensation benefits, actions against an
596. Because there is no ownership by the dram shop of the employer for exemplary damages arising out of the death of
object used by a patron to cause the accident, the vicarious an employee, and claims for exemplary damages included in
liability doctrine does not support—and the Dram Shop Act
an action to which this chapter otherwise applies. 12 *688
does not create—the indemnification scheme proposed by
Section 33.002(b) excluded application of Chapter 33 to
JUSTICE O'NEILL or the vicarious liability scheme that
actions for damages caused by a list of intentional criminal
CHIEF *687 JUSTICE JEFFERSON would create. Their
acts committed in concert with another person by imposing
positions expand the theory of vicarious liability beyond its
traditional boundaries. joint and several liability. 13 Chapter 33 does not specifically
exclude the Dram Shop Act.
B. Chapter 33
C. Smith v. Sewell
Chapter 33 of the Texas Civil Practice and Remedies Code
governs the apportionment of responsibility in cases within This Court addressed the applicability of Chapter 33 to
its scope. The 1995 version of the proportionate responsibility the Dram Shop Act in Smith v. Sewell, 858 S.W.2d 350
scheme applies to this case because the collision that injured (Tex.1993). When Sewell was decided, Chapter 33 provided
the Duenezes occurred in July 1997. At that time, section that it applied “[i]n an action to recover damages for
33.013 of the Civil Practice and Remedies Code provided, negligence ... or an action for products liability grounded
with certain exceptions, that a defendant was liable only in negligence.” TEX. CIV. PRAC. & REM.CODE §
for the percentage of responsibility found by the trier of 33.001(a). 14 The Court held that the essential elements of
fact, unless the percentage of responsibility exceeded fifty a dram-shop action replicated those of a negligence claim,
percent. TEX. CIV. PRAC. & REM.CODE § 33.013. 8 If hence Chapter 33 applied to the Act. Sewell, 858 S.W.2d at
a defendant's percentage of responsibility exceeded fifty 355–56.
percent, that defendant was jointly and severally liable for all
of the claimant's recoverable damages. Id. In Sewell, the plaintiff became intoxicated at a bar. Id. at
351. On his way home, he lost control of his car and was
Section 33.003 provided that the factfinder was to compare severely injured in a one-car accident. He sued the bar. This
a defendant's responsibility with the responsibility of the Court explicitly recognized that a cause of action against a
claimant, other defendants, and any responsible third party provider of alcohol is a direct action for the wrongful conduct
joined by a defendant. TEX. CIV. PRAC. & REM.CODE § of the provider: “[L]iability under [the Dram Shop Act] is
premised on the conduct of the provider of the alcoholic
33.003. 9 The statute required the trier of fact to apportion
beverages—not the conduct of the recipient or a third party.”
responsibility
Id. at 355. The Court reasoned this is true “regardless
of whether the intoxicated individual injures himself or a
with respect to each person's causing or contributing third party.” Id. The Court then examined the comparative
to cause in any way the harm for which recovery of responsibility scheme and its exclusions and concluded that a
damages is sought, whether by negligent act or omission, cause of action against a provider of alcohol was not excluded
by any defective or unreasonably dangerous product, by from the Comparative Responsibility Act, and therefore, the
other conduct or activity that violates an applicable legal comparative responsibility scheme applied. Id. at 356. The
standard, or by any combination of these.... Court identified the Legislature's intent, expressed under
Id. § 33.003(a). Chapter 33, as “requir[ing] the trier of fact to determine the
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50 Tex. Sup. Ct. J. 764
percentage of responsibility attributable to each of the parties the problem of Sewell differently. CHIEF JUSTICE
involved in causing the injury.” Id. (emphasis added). Under JEFFERSON argues that Sewell was wrongly decided but
the combined effect of both statutes, an intoxicated person nevertheless would keep the holding intact as to first-party
“will be entitled to recover damages only if his percentage claims and create a different rule for third-party claims. 237
of responsibility is found to be less than or equal to 50 S.W.3d at 701. Similarly, JUSTICE O'NEILL would limit
percent,” and any recovery must be reduced by the percentage Sewell's holding to first-party claims thereby distinguishing
of the intoxicated individual's responsibility. Id. The Court it from the instant case. 237 S.W.3d at 706. Nothing in
recognized that this interpretation of the statutes ensured the statute supports a different rule in this regard for first
a consistent and equitable approach to dram-shop liability, versus thirdparty claims. In fact, the statute anticipates the
whether the case involved first or third person liability. Id. existence of both types of claims by describing the “person
bringing the suit” broadly and referring to the danger created
In this case, the court of appeals held that Sewell did not by the intoxicated person as impacting “himself and others.”
apply to third-party Dram Shop claims like this one. 69 TEX. ALCO. BEV.CODEE § 2.02. 15 Contrary to CHIEF
S.W.3d at 805. The court interpreted Sewell as limiting an JUSTICE JEFFERSON'S dissent, nothing in the Dram Shop
intoxicated patron's recovery against a provider according Act prevents a provider from “lessen[ing] or escap[ing]
to the intoxicated person's percentage of responsibility but liability altogether” if a jury determined that the intoxicated
not imposing similar limitations when a third party seeks patron was completely responsible for the damages and
recovery against a provider for damages caused by an injuries suffered by a third-party. See 237 S.W.3d at 701–
intoxicated patron's actions. Id. Instead, the court of appeals 02. Refusing to apply Sewell's rule of law to cases in which
concluded that a provider is vicariously liable for the damages a third party is injured as a result of an intoxicated person's
caused by an intoxicated employee or patron in third party actions is contrary to the language of the Dram Shop Act, to
actions in which there are no allegations of negligence of the premise of Sewell, and to the purpose of the Dram Shop
the third party. *689 Id. The court reasoned that this Act: the provider's liability stems from its own conduct. See
interpretation is consistent with the Dram Shop Act because Borneman, 22 S.W.3d at 413 (correctly holding that a jury
the Act imposes liability on the provider for the actions of question that was inconsistent with the language of the Dram
the intoxicated person, “just as an employer is liable for the Shop Act for establishing liability was erroneous).
damages caused by an employee in the course and scope of the
employment.” Id. at 806 (citations omitted). Thus, the court
concluded, “a division of liability would be meaningless: the
vicariously liable party is liable for the other party's actions, D. Legislative Intent
as though those actions were its own.” Id.
[8] Our review is confined to identifying the expressed
legislative intent and applying it. Even if this Court were
This is contrary to our opinion in Sewell, and rebutted by
to agree with the court of appeals that holding a provider
the deterrent effects of the Act, discussed above. This Court
vicariously liable for a patron's intoxication may be a
has interpreted the Dram Shop Act to create liability based
legitimate public policy, we would still be constrained
“on the conduct of the provider of the alcoholic beverages
to faithfully apply the Legislature's statutory proportionate
—not the conduct of the recipient or a third party.” Sewell,
responsibility scheme. Imposing vicarious liability in dram-
858 S.W.2d at 355. The conduct for which the provider may
shop cases conflicts with the Proportionate Responsibility
be held liable is the same conduct “whether the intoxicated
Act. The court of appeals suggested that the Legislature
individual injures himself or a third party.” Id. Thus, the
did not intend for an innocent third party to bear the risk
premise of the court of appeals' vicarious liability holding
*690 of an intoxicated patron's insolvency. But, by enacting
—that the provider's liability stems from the conduct of
Chapter 33, the Legislature made the policy decision that an
the intoxicated individual instead of the provider's own
innocent third party, suing the intoxicated patron and the dram
conduct—runs contrary to both the Dram Shop Act and our
shop, could be burdened with the risk of a joint tortfeasor's
interpretation of the Act in Sewell. Compare Sewell, 858
insolvency. A tortfeasor who was found less than fifty-one
S.W.2d at 355, with 69 S.W.3d at 806.
percent responsible does not have to pay the entire amount
of damages, only his or her proportionate share. TEX. CIV.
The dissents likewise recognize significant problems with
their approaches in light of this precedent. They approach PRAC. & REM.CODE §§ 33.013(a), (b)(1). 16
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50 Tex. Sup. Ct. J. 764
[9] We recognize that there may be a greater incentive damages included in an action to which this chapter otherwise
to avoid conduct that leads to responsibility for higher applies. 21 When the Legislature has chosen to impose joint
damages than to avoid conduct that leads to responsibility for and several liability rather than proportionate liability, it has
lower damages. Accordingly, a statute that makes providers clearly said so.
liable for all the damages caused by an intoxicated patron
could be a greater deterrent to serving that patron. That The Legislature created a strict liability cause of action
may influence the drafting of a statute, but it says little against a person who manufactures methamphetamine for
about how to interpret the words of the Dram Shop and injuries, damages, or death arising from the manufacture or
Proportionate Responsibility Acts. The statutes only hold exposure to the manufacturing process of that drug. TEX.
providers responsible for their own conduct causing injury. CIV. PRAC. & REM.CODE §§ 99.002–.003. The Legislature
This is consistent with a fundamental tenet of tort law declared that a person who manufactures methamphetamine
that an entity's liability arises from its own injury-causing and is found liable for any amount of damages arising from
conduct. Under the dissenters' positions, the provider would the manufacture is jointly liable with any other defendant for
be responsible for all the damages caused by an inebriated the entire amount of damages arising from the manufacture.
patron even if he never drank any of the product purchased Id. § 99.004. In both the statute that created the cause of
from the provider. The same would occur if an inebriated action against such manufacturers and in amendments to the
patron drank a bit of the dram shop's alcohol but evidence Proportionate Responsibility Act, the Legislature specifically
established that it did not contribute any further to the said that the proportionate responsibility scheme “does not
deterioration of the patron's ability to drive safely. We apply in an action for damages arising from the manufacture
recognize some of the alternatives the Legislature considered of methamphetamine.” Id. § 99.005; see also id. § 33.002(c)
as it drafted the statutes; however, we do not pick and choose (3). The Legislature did not carve out an exclusion for alcohol
among policy options on which the Legislature has spoken. providers in either the Proportionate Responsibility Act or the
“Our role ... is not to second-guess the policy choices that Dram Shop Act.
inform our statutes or to weigh the effectiveness of their
results; rather, our task is to interpret those statutes in a Both dissents struggle to conclude that an injured third party
manner that effectuates the Legislature's intent.” McIntyre v. may recover his damages entirely from the alcohol provider
Ramirez, 109 S.W.3d 741, 748 (Tex.2003). Upon a finding under the Dram Shop Act. CHIEF JUSTICE JEFFERSON
of liability, the statutes make dram shops responsible for the argues that the Act creates “a form of vicarious liability,”
proportionate share of the injuries their conduct caused. while JUSTICE O'NEILL allows a jury to apportion liability
but ultimately holds the provider liable for the full amount
The broad coverage of the proportionate responsibility statute of damages, regardless of the jury's determination. The stated
to tort claims is persuasive. The Chapter 33 proportionate public policy behind the Alcoholic Beverage Code, including
responsibility scheme includes exceptions for certain torts, the Dram Shop Act, is “the protection of the welfare, health,
but claims against providers of alcohol are not among those peace, temperance, and safety of the people of the state.”
exceptions. See, e.g., TEX. CIV. PRAC. & REM.CODE §§ TEX. ALCO. BEV.CODEE § 1.03. More specifically, the
33.002(b), 17 (c). 18 For example, the Legislature carved out Dram Shop Act codifies the exclusive action against an
exceptions for a host of criminal acts, declaring that there alcohol provider for injuries or damages resulting from the
should be joint and several liability instead of proportionate intoxication of a patron. Id. § 2.02. The legislative intent
responsibility, but only if there was specific intent to do to protect the public and provide a potential remedy against
harm to others and the defendant acted in concert with an alcohol provider does not equate to a guarantee of
another. Id. § 33.002. 19 The list of crimes is numerous and recovery against a provider by an injured party. The Act
broad in scope, ranging from capital murder to fraudulent simply supplants in a single codified action all prior common
destruction of a writing, and also includes theft when “the law theories that previously could have been employed by
punishment level ... is a felony of the third degree or the injured party (either a third party or the intoxicated
higher.” TEX. CIV. PRAC. & REM. CODE § 33.002(b) patron himself) against a provider. See id. § 2.03. While the
dissents' positions might express sound public policy, we
(13). 20 Section 33.002(c) expressly *691 excluded from its
are constrained to conclude that neither correctly applies the
coverage actions to collect workers' compensation benefits,
Legislature's statutory proportionate responsibility scheme.
actions against an employer for exemplary damages arising
out of the death of an employee, and claims for exemplary
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
Both read more into the Dram Shop Act than the words chosen vicarious liability and joint and several liability in lieu of
by the Legislature can bear. proportionate liability for alcohol providers.
At the time of the Duenezes' injuries, the proportionate The dissenters suggest that the Court's opinion exonerates
responsibility scheme imposed joint and several liability dram shops from liability. They draw a stark distinction
on those who caused toxic tort injuries and those who between excusing a dram shop from liability for its conduct
released hazardous substances into the environment if their that violates the Act, which they assert to be the Court's
responsibility was equal to or greater than fifty percent. TEX. opinion, and making the provider liable for all the injuries
CIV. PRAC. & REM.CODE § 33.013(c). 22 In such cases, caused by an inebriated patron, which is the dissenters'
liability was not limited by proportionate responsibility. In position. For several reasons, our interpretation does not
2003, the Legislature revisited that exclusion and repealed excuse dram shops from liability for their conduct. First, it is
simply inaccurate to describe the Court's holding as allowing
it in its entirety. 23 Now, defendants *692 found liable for
dram shops to escape liability. The central issue in this
these tortious acts are subject to the general proportionate
case is the apportionment of damages among liable parties.
responsibility scheme. The Legislature seemed intent on
Dram shops are liable if they provide alcoholic beverages
creating a general scheme of proportionate responsibility for
to an individual that is obviously intoxicated to the extent
tort claims, subject to specific statutory exclusions.
that he presents a clear danger to himself and others, and
the intoxication of the patron was a proximate cause of
[10] Finally, our controlling interpretation of that statutory
the injuries. TEX. ALCO. BEV.CODEE § 2.02(b). These
scheme has remained in place since our 1993 decision
requirements were promulgated by the passage of the Act in
in Smith v. Sewell. 858 S.W.2d at 356 (holding that
1987. In this case, we hold that dram shops are responsible
“[a]pplication of the principles of comparative responsibility
for the proportion of damages they cause or contribute to
to causes of action brought under [the Dram Shop Act]
cause, as set forth in the Proportionate Responsibility Act.
establishes a consistent and equitable approach to the issue
of ‘dramshop liability’ generally, and first party ‘dramshop TEX. CIV. PRAC. & REM.CODE § 33.003. 24 Second,
liability’ specifically”). In the thirteen years since Sewell was we follow the Legislature's guidance in the language of
decided, the Legislature has amended the Dram Shop Act the statute, *693 as explained above. Third, it is not true
and has extensively amended the proportionate responsibility that juries will always assign most of the responsibility for
statutes, but it has never excluded a cause of action against injury, as between a provider and an inebriated patron, to
a provider of alcohol from comparative or proportionate the patron. Juries have found the dram shop equally or more
responsibility. We presume that the Legislature knew of our responsible than the patron for injuries proximately caused
holding in Sewell and that by subsequently re-enacting the by the intoxication of the patron. See, e.g., I–Gotcha, Inc. v.
Proportionate Responsibility Act and the Dram Shop Act, it McInnis, 903 S.W.2d 829, 837 (Tex.App.Fort Worth 1995,
accepted this Court's construction of those statutes. “ ‘The writ denied) (jury found that the dram shop proximately
Legislature must be regarded as intending statutes, when caused fifty-one percent of the injuries); Venetoulias v.
repeatedly reenacted, as in the case here, to be given that O'Brien, 909 S.W.2d 236, 239 (Tex.App.-Houston [14th
interpretation which has been settled by the courts.’ ” Wich v. Dist.] 1995, writ dism'd by agr.) (trial court found that the
Fleming, 652 S.W.2d 353, 355 (Tex.1983) (quoting Marmon patron proximately caused thirty-three percent of the injuries
v. Mustang Aviation, Inc., 430 S.W.2d 182, 187 (Tex.1968)); and the dram shop thirty-three percent). Unlike CHIEF
Coastal Indus. Water Auth. v. Trinity Portland Cement Div., JUSTICE JEFFERSON's position, which would take the
Gen. Portland Cement Co., 563 S.W.2d 916, 918 (Tex.1978). question of apportioning responsibility away from the jury,
we leave this determination to the fact-finder imbued with
Given the many instances in which the Legislature has (1) “constitutional authority to weigh conflicting evidence.” See
expressly said that certain causes of action are excluded Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 913–
from the Proportionate Responsibility Act, which would 14 (Tex.2004) (Jefferson, C.J., dissenting).
otherwise limit liability commensurate with proportionate
responsibility, and (2) has expressly tailored special joint and
several liability provisions for some causes of action, the III. Severance
phrase in Section 2.03 cannot reasonably be read to require
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50 Tex. Sup. Ct. J. 764
[11] The trial court severed F.F.P.'s cross-claim against Ruiz Duenezes' action against F.F.P. In fact, to succeed in a
and then tried the case with F.F.P. as the only defendant. claim against F.F.P., the Duenezes had to prove that Ruiz
The court of appeals affirmed the trial court's severance was obviously intoxicated and that his conduct proximately
order, concluding that because F.F.P. was vicariously liable caused damages—the same facts and issues that *694 would
for Ruiz's conduct, F.F.P.'s right of recovery, if any, was be litigated in a separate suit by F.F.P. against Ruiz. The trial
through an indemnification action only. 69 S.W.3d at 807. court abused its discretion in severing F.F.P.'s claim against
The court of appeals held that any indemnity claim F.F.P. Ruiz.
might have against Ruiz would not accrue until F.F.P.'s
liability to the Duenezes' was “fixed and certain.” Id. at [16] Chapter 33 requires “[t]he trier of fact, as to each
807–08. By this reasoning, F.F.P.'s claim for indemnification cause of action asserted, [to] determine the percentage
against Ruiz would not become actionable until an adverse of responsibility ... for [each claimant, defendant, settling
judgment was taken. Id. The court rejected F.F.P.'s request to person, and responsible third party who has been joined under
include Ruiz as a responsible third party under Chapter 33, Section 33.004] with respect to each person's causing or
reasoning that F.F.P.'s vicarious liability puts F.F.P. in the contributing cause in any way the harm for which recovery
same position as Ruiz would have been. Id. at 808. Because of damages is sought....” TEX. CIV. PRAC. & REM.CODE
Ruiz's actions are imputed to F.F.P., the court continued, Ruiz § 33.003. This statutory mandate is not discretionary; failing
is not a responsible third party who may be included in a to correctly apply the law is an abuse of discretion. In re
proportionate responsibility question. Id. Kuntz, 124 S.W.3d 179, 181 (Tex.2003). Therefore, F.F.P.
was entitled to a charge that included a question to allow the
[12] [13] [14] Rule 41 of the Texas Rules of Civil trier of fact in a single trial to determine Ruiz's proportionate
Procedure provides that “[a]ny claim against a party may be share of responsibility. The trial court's severance constituted
severed and proceeded with separately.” We will not reverse a reversible error.
trial court's order severing a claim unless the trial court abused
its discretion. Guar. Fed. Sav. Bank v. Horseshoe Op. Co.,
793 S.W.2d 652, 658 (Tex.1990).
IV. Conclusion
A claim is properly severable if (1) the
The trial court abused its discretion by severing F.F.P.'s
controversy involves more than one
claim against Ruiz, proceeding to trial with F.F.P. as
cause of action, (2) the severed claim
the only defendant, and refusing to submit jury questions
is one that would be the proper subject
for determination of Ruiz's negligence and proportion of
of a lawsuit if independently asserted,
responsibility. We reverse the court of appeals judgment and
and (3) the severed claim is not so
remand the case to the trial court for a new trial.
interwoven with the remaining action
that they involve the same facts and
issues.
Chief Justice JEFFERSON filed a dissenting opinion.
Id. We have explained that avoiding prejudice, doing justice,
and increasing convenience are the controlling reasons to Justice O'NEILL filed a dissenting opinion.
allow a severance. See id.
Chief Justice JEFFERSON, dissenting.
[15] As already explained, the Dram Shop Act does not If a bar sells liquor to a person so “obviously intoxicated”
make a provider vicariously liable for the conduct of an that he is “a clear danger to himself and others,” to what
intoxicated patron. F.F.P.'s liability arises from the actions of extent does the sale “proximately cause” the harm that person
its employees and agents—not through the actions of Ruiz. inflicts when he gets behind the wheel? The Legislature
See Sewell, 858 S.W.2d at 355. Thus, F.F.P.'s claim against has answered that it does not matter. If the bar sells to a
Ruiz is not one for indemnification that could be properly drunk, it must pay damages when the drunk's intoxication
severed; it is one of contribution for Ruiz's proportionate (not the provider's sale) causes the sort of trauma at the heart
share of the damages for which he is responsible. F.F.P.'s of this case. The Legislature plainly believes that deterring
claim against Ruiz is “interwoven with the remaining action”: such a sale is sound public policy. By imposing potentially
it involves the same facts and issues to be litigated in the
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
crippling financial penalties on those who ignore its dictates, its underlying purpose”). Nor have we been the only court to
the statute has the salutary effect of enlisting providers in recognize exceptions to the statute's apportionment scheme.
the state's campaign against drunk driving. Under the Court's See, e.g., Fid. & Guar. Ins. Underwriters, 2006 U.S. Dist.
construction, however, the bar may avoid liability precisely LEXIS 23545, at *18, 2006 WL 870683, at *5 (“Although
because its patron was so “obviously intoxicated” and such a the language of the statute itself indicates a clear legislative
“clear danger” that the sale could not have proximately caused preference for apportionment of responsibility in all tort
carnage on a Texas road. The dram shop thus has a perverse actions, it is equally clear that an apportionment scheme is not
incentive to establish at trial that its customer was in such a proper in certain cases.”); Rosell v. Cent. W. Motor Stages,
drunken state that selling him “one for the road” could not Inc., 89 S.W.3d 643, 656–57 (Tex.App.-Dallas 2002, pet.
have contributed to the harm his intoxication later caused. denied).
I cannot agree that the Legislature intended as a defense to
liability proof that the dram shop completed a sale that the The Court and JUSTICE O'NEILL would submit both the
statute quite sensibly forbids. provider and the intoxicated person in the apportionment
question, the Court employing it to reduce the dram shop's
The Court relies heavily on our opinion in Sewell, but as liability and JUSTICE O'NEILL to facilitate the shop's
I demonstrate below, the Court's reliance on that case only contribution action against the intoxicated tortfeasor. While
perpetuates our prior error in interpreting the Dram Shop I concede that Sewell supports a comparative submission of
Act. See Smith v. Sewell, 858 S.W.2d 350, 356 (Tex.1993). the provider and the intoxicated person, such a submission
I would hold, contrary to Sewell, that the Legislature has is inconsistent both with the provider's essentially vicarious
imposed a form of vicarious liability on a dram shop for the liability and chapter 33's mandate to apportion liability only
acts of its intoxicated customer. Because the shop's conduct is among those causing the harm at issue. The Court holds
statutorily irrelevant in relation to the plaintiff's injury, there that dram shop liability cannot be vicarious, reiterating our
is no legitimate basis for comparing its responsibility with that holding in Sewell that such liability is based on the provider's
of the intoxicated person. own conduct. JUSTICE O'NEILL writes that liability is both
direct and vicarious, as it includes the provider's wrongful sale
and imputes to the provider the harm caused by the drunk's
intoxication. I disagree with those interpretations. To give
I
effect to each statute, we must acknowledge that the Dram
Shop Act imposes a form of vicarious liability.
Vicarious Liability and the Dram Shop Act
Both the Dram Shop Act and chapter 33 support such an
The question here is whether and, if so, how chapter interpretation. While liability under the Dram Shop Act
33's proportionate responsibility scheme applies to claims is premised on the provider's sale, the requisite causal
based on the *695 Dram Shop Act. Our separate writings
link focuses solely on the drunk's actions. Once alcohol is
in this case demonstrate that the statutes are not easily provided to a person so “obviously intoxicated to the extent
harmonized. See also Fid. & Guar. Ins. Underwriters Inc. that he presented a clear danger to himself and others,” the
v. Wells Fargo Bank, No. H–04–2833, 2006 U.S. Dist. provider's role is complete. See TEX. ALCO. BEV.CODEE
LEXIS 23545, at *17, 2006 WL 870683, at *5 (S.D.Tex. § 2.02(b)(1). From that point forward, any harm caused by
Mar. 31, 2006) (noting that “courts and commentators alike the intoxicated person is imputed to the provider; indeed,
have recognized the difficulty in reconciling the language of for purposes of the Dram Shop Act, the provider virtually
the Proportionate Responsibility Statute with certain causes becomes the drunk. Hence, the only causation required
of actions, including vicarious and/or derivative liability under the statute focuses on the intoxicated person's, not the
actions”). This is not the first time we have struggled to dram shop's, actions. Id. § (b)(2) (requiring proof that “the
reconcile chapter 33 with another statute's terms. See, e.g., intoxication of the recipient of the alcoholic beverage was a
Southwest Bank v. Info. Support Concepts, Inc., 149 S.W.3d proximate cause of the damages suffered”) (emphasis added).
104, 111 (Tex.2004) (concluding that, even assuming a UCC
conversion claim is a tort, “the Legislature did not intend F.F.P. concedes that, under the Dram Shop Act, the provider's
to upset the UCC's carefully balanced liability provisions by
actions need not be a cause-infact of the harm. 1 Earlier
applying Chapter 33 to a UCC-based conversion claim” and
*696 versions of the act included such an element, but
“[t]o hold otherwise would ignore the UCC itself and thwart
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
the Legislature deleted it before the statute was enacted. tortfeasor who was directly responsible and assumed that
Compare Tex.C.S.H.B. 1652, 70th Leg., R.S. (1987) (Dram person's responsibility to the claimant.
Shop Act claim requires proof that “the provider was the last Id. at 628–29 (footnote omitted). Because the inquiry
known contributor to the intoxication of the recipient; and involves the harm for which recovery of damages is sought,
that the recipient consumed no alcoholic beverage subsequent “it is obvious that it concerns only the primary conduct of
to that served by the last contributor”) with TEX. ALCO. the active participants in the event, accident, or physical
BEV.CODEE § 2.02(b) (containing no such requirement). episode giving rise to the injuries complained of by the
Instead, unlike other states, 2 the Texas statute imposes claimant, and the causational role of that primary conduct
liability even absent causation relating to the provision of in the episode.” Carl David Adams, The “Tort” of Civil
Conspiracy in Texas, 54 BAYLOR L.REV. 305, 315
alcohol. 3 If the dram shop's conduct need not be a substantial
(2002); Gregory J. Lensing, Proportionate Responsibility
factor in bringing about the injury, then it cannot be said to
and Contribution Before and After the Tort Reform of 2003,
have caused or contributed to the accident. See Union Pump
35 TEX. TECH L.REV. 1125, 1184–86 (2004) (noting
Co. v. Allbritton, 898 S.W.2d 773, 775 (Tex.1995).
that “[i]t is problematic to assign the jury the task of
apportioning responsibility between the intoxicated person
That Texas omitted such a requirement is significant. Chapter
and the dram shop when the dram shop's statutory liability
33 requires apportionment among claimants, defendants,
is not necessarily based on true responsibility for the
settling persons, and responsible third parties, but not all
accident, in the sense of causing the accident, at all”).
such persons are submitted in the apportionment question.
Courts applying chapter 33's apportionment scheme in
See TEX. CIV. PRAC. & REM.CODE § 33.003. Instead,
negligent entrustment cases—a variant of vicarious liability
chapter 33 imposes an important limitation on the allocation
—have used similar reasoning to conclude that an entrustor
of responsibility: Only those persons who “caus[ed] or
should not be included in the apportionment question. In
contribut[ed] to cause in any way the harm for which
Rosell v. Central West Motor Stages, Inc., the Rosells,
recovery of damages is sought ” must be included in
plaintiffs in a wrongful death and survival action, contended
apportioning responsibility for that harm. 4 Id. §§ 33.003, that the trial court erred by refusing to submit Central West,
*697 33.011(4) (emphasis added); William D. Underwood employer of the allegedly negligent bus-driver and owner
& Michael D. Morrison, Apportioning Responsibility of the vehicle that struck and killed their son, in the jury's
in Cases Involving Claims of Vicarious, Derivative, apportionment question. The court of appeals disagreed:
or Statutory Liability for Harm Directly Caused by
Another, 55 BAYLOR L.REV. 617, 638 (2003) (hereinafter The Rosells contend that Central West should be included
“Apportioning Responsibility ”) (“[U]nder section 33.003, because it was a producing or contributing cause of
the jury apportions responsibility among only those persons the injuries to Chad. Although negligent entrustment
whose conduct caused or contributed to cause the plaintiff's and negligent hiring are considered independent acts of
injury.”) (footnote omitted). This restriction is “especially negligence, these causes are not actionable unless a third
significant” in cases involving claims against persons whose party commits a tort. In that respect, these causes are
liability is vicarious: similar to the respondeat superior theory of recovery
where, unless the employee commits a tort in the scope
of employment, the employer has no responsibility. In
A person whose liability was purely vicarious had not reviewing the application of section 33.003 *698 to
personally engaged in “conduct or activity” that had responsibility, we observe that, while the statute on its face
“caused or contributed to cause” the harm. Liability was requires all defendants to be included in the apportionment
based instead entirely on the relationship between the question, it would not be proper for an employer to be
person whose tortious conduct proximately caused the included along with the driver if its only responsibility was
harm and the person who was vicariously responsible. that of respondeat superior. Section 33.003 has not been
Thus, rather than allocating responsibility among persons used to require both a driver and employer to be submitted
directly liable and persons vicariously liable, whatever in the apportionment question in that situation.
responsibility existed for persons directly liable was simply
passed on to persons vicariously liable. The vicariously Similarly, the causes of action for negligent entrustment
liable defendant essentially stepped into the shoes of the and hiring are a means to make a defendant liable
for the negligence of another. Once negligent hiring or
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
entrustment is established, the owner/employer is liable 2005, no pet.). Based in part on this Court's now-withdrawn
for the acts of the driver, and the degree of negligence of opinion in this case, the court concluded that the entrustor
the owner/employer is of no consequence. Thus, because should be submitted in the apportionment question. The court
Rieve's negligence would be passed on, it was proper then held, however, that failure to submit the entrustor was
to apportion fault among those directly involved in the not reversible error:
accident.
There were only two people involved
Rosell, 89 S.W.3d at 656–57 (citations and footnote omitted). in the accident. Therefore, the
submission of the acts of “other
Even before chapter 33's 1995 amendments, courts engaged parties” whose actions preceded the
in similar analysis to conclude that the entrustor should not be actions of [the driver] at the time of the
included in an apportionment question. In Loom Craft Carpet accident could only have contributed
Mills, Inc. v. Gorrell, the court of appeals noted that: to her actions at the accident scene,
that is, to her forty percent negligence.
Negligent entrustment liability is In other words, because there were
derivative in nature. While entrusting only two parties involved in the
is a separate act of negligence, and incident, the jury has decided how
in that sense not imputed, it is those actions at the time of the
still derivative in that one may be accident should be apportioned as far
extremely negligent in entrusting and as responsibility is concerned. What
yet have no liability until the driver led up to those actions at the time
causes an injury. If the owner is of the accident does not change those
negligent, his liability for the acts actions at the accident scene but can
of the driver is established, and the only be subparts of those respective
degree of negligence of the owner responsibilities. [The entrustors] did
would be of no consequence. When not cause [the plaintiff] to cross the
the driver's wrong is established, then highway *699 or [the driver] to strike
by negligent entrustment, liability for that truck. Therefore ... we conclude
such wrong is passed on to the that it was harmless error to omit them
owner. We believe the better rule is from those questions.
to apportion fault only among those
directly involved in the accident, and Bedford, 166 S.W.3d at 464. 5 This passage captures the
to hold the entrustor liable for the proper submission in a vicarious liability case: If, in fact, the
percentage of fault apportioned to the entrustor's share of responsibility is merely a “subpart” of the
driver. entrustee's share, then the entrustor should not be submitted
separately. Only the entrustee should be submitted, and his
Loom Craft, 823 S.W.2d 431, 432 & n. 7 (Tex.App.-
or her negligence would then be imputed to the entrustor as
Texarkana 1992, no pet.) (declining to follow cases from
a matter of law.
other jurisdictions in which fault was apportioned to the
entrustor); see also Wyndham Hotel Co. v. Self, 893 S.W.2d
Under similar reasoning, even after chapter 33's 1995
630, 640 (Tex.App.-Corpus Christi 1994, writ denied);
amendments, the provider should not be included in the
Rodgers v. McFarland, 402 S.W.2d 208, 210 (Tex.App.-
apportionment question. The Dram Shop Act is “intended
El Paso 1966, writ ref'd n.r.e.) (noting that, in a negligent
to deter providers of alcoholic beverages from serving
entrustment case, “[t]he proximate cause of the accident or
alcoholic beverages to obviously intoxicated individuals who
the occurrence is the negligence of the driver and not that of
may potentially inflict serious injury on themselves and on
the owner”).
innocent members of the general public.” Sewell, 858 S.W.2d
at 356. The Court's holding runs counter to that policy. As
More recently, the Fort Worth Court of Appeals grappled
commentators recognize:
with the proper submission of a negligent entrustment claim.
Bedford v. Moore, 166 S.W.3d 454 (Tex.App.-Fort Worth
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
the governing rule for independent tortfeasors who cause an
If a person whose conduct creates indivisible injury.” RESTATEMENT (THIRD) OF TORTS:
a foreseeable risk of misconduct by APPORTIONMENT OF LIABILITYYY § 13 (2000).
another (in other words, a person
whose liability is derivative) can The Court concludes that it is improper to analogize dram
largely escape responsibility simply shop claims to other vicarious liability situations, because
because the very event which made his those situations typically rely on a right of control *700 or
own conduct wrongful in the first place an employer/employee relationship, which may be absent in
actually occurs, then the incentive to a dram shop situation. In this case, however, the Legislature
take precautions against the risk is chose to impose vicarious liability for Dram Shop Act claims
substantially reduced. This concern is and consciously opted to omit control as a prerequisite. That
especially great when the foreseeable the justification for doing so may not comport with the
event is a crime of violence given rationale for common-law vicarious liability is beside the
the likelihood that a jury, when asked point.
to apportion responsibility between
a person who commits a crime of The Court reasons that, because the Dram Shop Act was
violence and a person whose conduct not among the explicit exceptions to proportionate liability
simply involved facilitating that crime set forth in chapter 33, it must be included. This is not
through negligence, might be expected necessarily so. As we recognized in Southwest Bank, if
to apportion most of the responsibility another statute enacts a comparative responsibility scheme,
to the person who actually committed chapter 33 will not govern a claim brought under the other
the crime. Allocating responsibility statute, notwithstanding that the other statute is not among
in cases of vicarious or derivative chapter 33's enumerated exceptions. See Southwest Bank, 149
liability would not only be bad policy, S.W.3d at 111. Nor did the Legislature exclude negligent
but has not traditionally been how entrustment or respondeat superior claims from the reach of
Texas courts have interpreted and chapter 33. Applying the Court's logic, by omitting those
applied the allocation of responsibility actions the Legislature intended that employers or entrustors
provisions in Chapter 33. Moreover, be submitted in an apportionment question even though their
nothing in the language or the liability is purely vicarious. More likely, the Legislature never
legislative history of the 1995 tort envisioned that a court would include in the apportionment
reform revisions to the allocation of question persons whose only liability was vicarious.
responsibility provisions of Chapter 33
either requires or justifies departure The Court's decision to include the provider in the
from the traditional rule that juries apportionment question would first necessitate an inquiry
are not asked to allocate responsibility otherwise unnecessary under the Dram Shop Act: whether
between persons who are directly the provider's conduct caused or contributed to cause the
liable and persons whose liability is plaintiff's injuries. Apportioning Responsibility, 55 BAYLOR
either derivative or vicarious. L.REV. at 638.
Apportioning Responsibility, 55 BAYLOR L.REV. at 624–25 If the jury's answer was no, then
(footnotes omitted). Thus, “given that causation is imputed to under the express language of
the provider in an action under the [Dram Shop] Act, section section 33.003, the jury could not
33.003 neither contemplates or permits the apportionment consider the provider in apportioning
of responsibility between the intoxicated patron and the responsibility. Since no responsibility
provider in an action brought by an injured third party.” Id. could be apportioned to the provider,
at 642. This approach is supported by the Restatement, which one possible result would be that the
provides that “[a] person whose liability is imputed based on provider would not be liable for any
the tortious acts of another is liable for the entire share of of the plaintiff's damages. This result
comparative responsibility assigned to the other, regardless would have the effect of rewriting the
of whether joint and several liability or several liability is Dram Shop Act to read into the Act
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
a causation requirement that simply seek indemnity from the intoxicated person. Cf. Bonniwell v.
is not there. The provider would Beech Aircraft Corp., 663 S.W.2d 816, 819–20 (Tex.1984).
always escape all responsibility unless
the jury found a causal connection
between the provider's conduct and the
II
plaintiff's injury. That result obviously
would be wrong.
Sewell and Third–Party Actions
Id. (footnote omitted) (emphasis added). The Legislature
meant to make providers liable whether or not their conduct If I were writing on a clean slate, my analysis could end here.
played a causative role in subsequent harm. The Court's But in Smith v. Sewell, we determined that “[chapter 33] is
holding eviscerates that policy choice and requires that the applicable to Chapter 2 causes of action” and held that “an
Duenezes prove not only that Ruiz consumed F.F.P.'s alcohol, intoxicated person suing a provider of alcoholic beverages for
but also that his consumption so aggravated the danger he his own injuries under Chapter 2 will be entitled to recover
posed pre-sale that the sale (and not just his prior intoxicated damages only if his percentage of responsibility is found to be
condition) “caused” the ultimate harm. But the statute does less than or equal to 50 percent.” Sewell, 858 S.W.2d at 356.
not require that the patron consume the alcohol, that the sale Although our holding was not limited to first-party claims (i.e.
aggravate the patron's prior intoxication, or that the provider a drunk suing a dram shop), our reasoning arguably supports
play any role in causing or contributing to the accident. such a limitation:
Ironically, under the Court's interpretation, the provider now
has an incentive to establish that its patron was so drunk at Chapter 2 is intended to deter
the time of sale that its conduct could not, as a matter of law, providers of alcoholic beverages
have contributed to the harm the patron ultimately caused. As from serving alcoholic beverages
a result, the very instrument that the Legislature employed to to obviously intoxicated individuals
deter drunk driving (liability for serving a drunk) becomes a who may potentially inflict serious
means to escape responsibility entirely. injury on themselves and on innocent
members of the general public.
Joining the intoxicated person as a responsible third party But when it is the intoxicated
does not change this result. See TEX. CIV. PRAC. & individual who is injured due to his
REM.CODE § 33.011. As commentators have noted: own intoxication, it is particularly
appropriate that his conduct in
By adding the [responsible third contributing to his injury should
party language] to section 33.003, be considered in assessing the
the Texas legislature clearly intended amount of recovery, if any, to
to change existing law regarding the which he is entitled. Application
apportionment *701 of responsibility of the principles of comparative
among tortfeasors with direct liability. responsibility to causes of action
But there is absolutely no indication brought under Chapter 2 establishes
in either the legislative history or the a consistent and equitable approach
text of the amended apportionment of to the issue of “dramshop liability”
responsibility provisions of Chapter 33 generally, and first party “dramshop
that the legislature intended to now liability” specifically. This approach
permit apportionment of responsibility provides an effective solution to a
among directly liable tortfeasors difficult and controversial issue.
and those whose liability was only
derivative or vicarious. Id.
Apportioning Responsibility, 55 BAYLOR L.REV. at 631. Even if limited to first-party claims, however, Sewell
Whatever percentage of responsibility is attributed to the presents another, more difficult, problem. In Sewell, we
drunk should be imputed to the provider, who may then held—incorrectly, in my opinion—that a provider should
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
be included in the apportionment question because its its holding that the provider is properly included within those
conduct violated an applicable legal standard. Sewell, 858 persons who caused the harm.
S.W.2d at 356 (quoting “percentage of responsibility”
definition and holding that “[b]ecause Chapter 2 clearly
establishes a legal standard and creates a cause of action
III
for conduct violative of that legal standard, the definition
of ‘percentage of responsibility’ provides additional support
for our determination that the Comparative Responsibility Conclusion
Act is applicable to Chapter 2 causes of action”). Implicitly,
The Legislature, confronting a serious question of public
therefore, we held that the provider in a dram shop case must
health, enacted a strong deterrent to curb the plague of drunk
have “caused or contributed to cause” the harm for which
driving in Texas. If a provider sells to a drunk, it must answer
recovery of damages was sought. For the reasons set forth
in damages for the injury its patron's intoxication visits upon
above, that simply need not be the case. While Sewell remains
an innocent person, even if the sale is not itself the proximate
workable for first-party claims, as apportionment between the
cause. The policy reflects a concern not only for the victim.
drunk and the provider approximates what would occur in
It is a comprehensive approach designed to discourage the
an indemnity action, 6 Sewell's reasoning breaks down when
sale of liquor to a person whose intoxication poses an obvious
applied to third-party dram shop actions. Submitting both
danger to the public. Faced with the specter of catastrophic
the drunk and the provider as parties who *702 “caused
financial loss, a provider is more likely to intervene (for
or contributed to cause” the harm, rather than imputing the
selfish interests, and to the public good) by closely monitoring
drunk's actions to the provider, would allow the provider to
a customer's alcohol intake, by refusing to serve more liquor
lessen or escape liability altogether.
to an obviously drunk person and, where appropriate, by
offering to arrange alternative transportation or by alerting
Thus, for example, a jury could determine that a provider's
law enforcement. At a minimum, the provider has a direct
“percentage of responsibility” is zero—a not unlikely
incentive to enroll its employees in training that emphasizes
scenario given that the provider's actions are compared with a
how to recognize the debilitating effects of excessive alcohol
person so obviously intoxicated he posed a danger to himself
consumption and offers methods to avoid its devastating
and others—notwithstanding that the drunk's intoxication
consequences. See TEX. AL CO. BEV.CODE § 106.14(a).
proximately caused the harm. This contravenes the purpose
Considerations like these justify the Legislature's intentional
as well as the text of the Dram Shop Act, which imposes
omission of a proximate cause element with respect to the
liability even absent causation relating to the provision of
provider's sale. The Court's insertion of that defense, contrary
alcohol, and is unnecessary to a proper application of chapter
to the statute's terms, seriously undermines an important
33. See TEX. ALCO. BEV.CODEE § 1.03 (requiring that
deterrent.
the Dram Shop Act be liberally construed to accomplish its
purpose of protecting the welfare, health, and safety of the
In an appeal to cozening hope, the Court offers that a jury will
people). “To paraphrase Dean Prosser, it simply cannot be
not always assign most of the responsibility to a provider's
the law that a defendant can be relieved of the consequences
patron. 237 S.W.3d at 705. The Duenezes will take cold
of his wrongful conduct by the occurrence of the very risk
comfort in that pronouncement. The record shows that Ruiz
which made his conduct negligent in the first instance.”
—already so intoxicated that he was a clear danger to others
Apportioning Responsibility, 55 BAYLOR L.REV. at 650.
before F.F.P. completed the sale—drank, at most, one more
beer in 1.5 miles of highway driving *703 afterwards.
In Sewell, we were faced with a person suing a dram shop
Under the legal sufficiency standards announced in City of
for damages he suffered in a one-car accident due to his
Keller v. Wilson, 168 S.W.3d 802 (Tex.2005), that evidence
own intoxication. Although Sewell correctly held that chapter
will never support a finding that F.F.P. caused the accident.
33 applies to first-party Dram Shop Act claims, its holding
The Court's remand for a new trial is, in reality, a decree of
regarding the submission of the provider in the apportionment
rendition.
question cannot apply to third-party claims, and its reasoning
for that submission does not comport with the statute's terms.
I would affirm the court of appeals' judgment. 7 See
Thus, I would limit Sewell to first-party claims and overrule
TEX.R.APP. P. 60.2(a).
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
what the Legislature intended if a provider serves alcohol in
violation of the Dram Shop Act. To avoid this potential result,
Justice O'NEILL, dissenting. the Court simply ignores the Dram Shop Act's derivative-
The proportionate-responsibility statute directs its application liability component, i.e., the provider's liability “for the
to all tort-based causes of action. TEX. CIV. PRAC. & actions of [its] customers.” TEX. ALCO. BEV.CODEE §
REM.CODE § 33.002. At the same time, the Dram Shop 2.03. By ignoring the very language that imbues the Dram
Act directs that alcohol providers who serve customers so Shop Act with deterrent effect, the Court undermines the
obviously intoxicated that they present a clear danger to legislative policy underlying the entire Alcoholic Beverage
themselves and others are liable “for the actions of their Code, which is to “protect[ ] the welfare, health, peace,
[intoxicated] customers....” TEX. ALCO. BEV.CODEE § temperance, and safety of the people of the state,” and to
2.03. 1 Over two years ago, this Court issued an opinion “liberally construe [the Code] to accomplish this purpose.”
giving effect to both statutes; when a customer who has TEX. ALCO. BEV.CODEE § 1.03. The Dram Shop Act's
been served in violation of the Dram Shop Act injures an derivative-liability component, designed to deter providers
innocent third party, the intoxicated customer's percentage from selling alcohol to obviously intoxicated and clearly
of responsibility must be apportioned so that the provider dangerous persons, can and should be reconciled with the
may seek reimbursement from the customer, but the innocent proportionate-responsibility statute rather than selectively
third party may recover from the provider “for the actions ignored.
of [its] customer[ ].” TEX. ALCO. BEV.CODEE § 2.03.
Unlike today's decision, our holding honored both the To support its selective view, the Court today finds arguments
statutory-apportionment directive and the Dram Shop Act's convincing that the prior Court did not. Specifically, the
derivative-liability component. Rather than reiterate the Court interprets section 2.03 of the Dram Shop Act to signal
original opinion's exhaustive analysis here, I attach the nothing more than the exclusivity of the statutory remedy,
Court's decision as an appendix to this dissent. A few marginalizing the specific language used. But as the prior
additional points, though, are worthy of note. Court noted:
First, between the time the Court issued its original decision in [i]f that had been the statutory purpose, [the statute] would
this case and the date rehearing was granted, more than seven have simply said:
months passed and three members of the former majority
The liability of providers under this chapter is in lieu of
left the Court. F.F.P.'s motion for rehearing raised no new
common law or other statutory law warranties and duties
issues; every point was thoroughly considered by the Court
of providers of alcoholic beverages.
in its prior decision. While F.F.P.'s motion for rehearing was
pending, the Legislature convened without taking any action Instead, section 2.03 clearly says:
to alter this Court's original interpretation. Nevertheless,
the Court withdrew the prior opinion, reached the opposite [t]he liability of providers under this chapter for the
result, and accomplished judicially what the Legislature itself actions of their customers, members, or guests who are
declined to do. or become intoxicated is in lieu of common law or
other statutory law warranties and duties of providers of
More substantively, while the Court parrots the statutory alcoholic beverages.
construction rule favoring interpretations that harmonize
different statutes, it makes no effort whatsoever to reconcile TEX. ALCO. BEV.CODEE § 2.03 (emphasis added).
the Dram Shop Act's specific language with the more general
237 S.W.3d at 690. The Court today also picks up the
proportionate-responsibility statute, giving effect only to
prior dissents' refrain that the Legislature specifically carved
the latter. The Court reasons that *704 holding the dram
out exceptions to the proportionate-responsibility scheme
shop liable for the actions of its intoxicated customer
for a number of criminal acts, like the manufacture of
could, in some cases, impose joint and several liability
methamphetamine, yet did not make exceptions for alcohol
on the dram shop if the jury found it less than fifty-one
providers. But the Dram Shop Act, with its express derivative-
percent responsible, which would be contrary to Chapter 33's
liability component, came out of the same legislative session
provisions. See 237 S.W.3d at 690 (citing TEX. CIV. PRAC.
that enacted comparative responsibility; being by its own
& REM.CODE § 33.013(a), (b)(1)). I believe this is precisely
terms a limited exception to comparative responsibility, there
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
was no need to create a separate one. Act of June 1, 1987, had purchased alcohol from a convenience store that the
70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws 1673, defendant owned. The trial court refused to submit the
1674 (amended 2003) (current version at TEX. ALCO. intoxicated driver's percentage of responsibility to the jury
BEV.CODEE § 2.03); Act of June 3, 1987, 70th Leg., 1st for apportionment, as we required in Smith v. Sewell, 858
C.S., ch. 2, § 2.06, 1987 Tex. Gen. Laws 37, 41 (amended S.W.2d 350, 356 (Tex.1993) when the intoxicated driver
2003) (current version at TEX. CIV. PRAC. & REM.CODE sued his provider for his own injuries. Instead, the trial
§ 33.003). court severed the provider's cross-action against the driver
and rendered judgment on the jury's verdict against the
In sum, the disagreement in this case is, and has always been, provider. The court of appeals affirmed, holding that the
over what the Legislature meant in the Dram Shop Act when proportionate responsibility statute does not apply when the
it referred to “the liability of providers under this chapter injured plaintiff is an innocent third party. 69 S.W.3d 800.
for the actions of their customers ... who are or become We hold that the proportionate responsibility statute applies
intoxicated.” TEX. ALCO. BEV.CODEE § 2.03. Over two to all Dram Shop Act claims, including the type at issue
years ago, the Court considered this language significant and here. We conclude, however, that the judgment was correct
straightforward, and afforded the Legislature deference in because the provider is responsible to the innocent third-party
choosing it. F.F.P. raised no new arguments on rehearing, and plaintiffs for its own liability and that of its intoxicated patron,
the Legislature proposed no new legislation in light of our from whom it seeks recovery in the cross-action. We also
prior interpretation. Today the Court usurps the legislative conclude that, although the trial court should have submitted
function and dilutes the deterrent protections the Dram Shop the intoxicated patron's percentage of responsibility to the
*705 Act was designed to afford. For the reasons expressed jury for apportionment, its order severing the provider's
in the original Court's opinion, I would affirm the court of cross-action against the intoxicated driver did not amount to
appeals' judgment. reversible error. Finally, we hold that the trial court did not
err in refusing to submit an instruction on sole proximate
cause to the jury. Accordingly, we affirm the court of appeals'
APPENDIX judgment, although on different grounds.
IN THE SUPREME COURT OF TEXAS
F.F.P. OPERATING PARTNERS, L.P., D/B/A MR. CUT I
RATE # 602, PETITIONER,
After consuming a case-and-a-half of beer, Roberto Ruiz
v. drove his truck to a Mr. Cut Rate convenience store owned
by F.F.P. Operating Partners, L.P., and purchased a twelve-
XAVIER DUENEZ AND WIFE, IRENE DUENEZ, AS
pack of beer. The store's assistant manager, Carol Solis, sold
NEXT FRIENDS OF CARLOS DUENEZ AND PABLO
the beer to Ruiz. Ruiz then got into his truck, opened a can of
DUENEZ, MINORS, RESPONDENTS
beer, and put the open beer can between his legs. 2
ON PETITION FOR REVIEW FROM THE COURT
OF APPEALS FOR THE THIRTEENTH DISTRICT OF Ruiz then drove onto a nearby highway, and several times
TEXAS swerved into oncoming traffic. Two cars had to dodge his
truck to avoid a collision. As he crossed a bridge less than
Argued on March 5, 2003 a mile from the convenience store, Ruiz swerved across the
center line and hit the Dueñezes' car head-on. At the time
JUSTICE O'NEILL delivered the opinion of the Court, in
of the collision, Ruiz had lowered his head below his truck's
which CHIEF JUSTICE PHILLIPS, JUSTICE JEFFERSON,
dashboard as he tried to reach beneath his seat to retrieve a
JUSTICE SCHNEIDER, and JUSTICE SMITH joined.
compact disc.
JUSTICE OWEN filed a dissenting opinion, in which
JUSTICE HECHT, JUSTICE WAINWRIGHT, and *706 All five members of the Dueñez family suffered some
JUSTICE BRISTER joined. injury. Nine-year-old Ashley was the most seriously hurt.
The plaintiffs in this dram-shop case were injured when She suffered a traumatic brain injury, and will require round-
their car was struck head-on by an intoxicated driver who the-clock care for the rest of her life. Xavier Dueñez, a
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 19
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
corrections officer, also suffered some degree of permanent an intoxicated person, and such a
brain damage. provider is not entitled to offset its
liability by that of the intoxicated
Ruiz was arrested at the accident scene for drunk driving. He person.
pleaded guilty to intoxication assault and was sentenced to
prison. The Dueñezes initially sued F.F.P., Ruiz, Solis, Nu– 69 S.W.3d at 805. In reaching that conclusion, the court
Way Beverage Company, and the owner of the land where distinguished our decision in Sewell, 858 S.W.2d at 356,
Ruiz had spent the afternoon cutting firewood and drinking. in which we held that the comparative responsibility statute
F.F.P. named Ruiz a responsible third party and filed a cross- applied to dram-shop causes of action. 69 S.W.3d at 805. The
action against him. F.F.P. named no other persons or entities court of appeals concluded that Sewell's holding was limited
as responsible for the accident. The Dueñezes thereafter to first-party actions, in which the intoxicated patron is suing
nonsuited all defendants except F.F.P. for his own injuries, and did not apply when the plaintiff is an
innocent third party injured by an intoxicated patron. Id. The
At the pretrial conference, the Dueñezes obtained a partial court also held that the trial court did not abuse its discretion
summary judgment that Texas Civil Practice and Remedies in severing F.F.P.'s cross-action against Ruiz, concluding that
Code Chapter 33's proportionate responsibility provisions did F.F.P.'s statutory liability was vicarious and not direct so that
not apply to this type of case. The trial court then severed any rights F.F.P. had against Ruiz did not accrue until its own
F.F.P.'s cross-action against Ruiz, leaving F.F.P. as the only liability became fixed. Id. at 807.
defendant for trial. The severed action remains pending in the
trial court. Finally, the court rejected F.F.P.'s argument that the trial court
should have submitted an instruction on sole proximate cause.
At trial, F.F.P. requested a jury instruction that “if an act or Id. at 808–09. We granted *707 F.F.P.'s petition for review
omission of any person not a party to the suit was the ‘sole to consider Chapter 33's application and related issues. 3
proximate cause’ of an occurrence, then no act or omission
of any other person could have been a proximate cause.” The
trial court refused to give the instruction. The trial court also
II
overruled F.F.P.'s objections that the jury charge omitted: (1)
any question submitting Ruiz's negligence as a responsible In enacting the Dram Shop Act, the Legislature sought
third party; and (2) any comparative responsibility question to “deter providers of alcoholic beverages from serving
asking the jury to determine what percentage of negligence alcoholic beverages to obviously intoxicated individuals who
causing the occurrence in question was attributable to Ruiz may potentially inflict serious injury on themselves and
and what percentage was attributable to F.F.P. on innocent members of the general public.” Sewell, 858
S.W.2d at 356. A plaintiff seeking to impose liability on a
The jury found, as required to impose dram-shop liability, provider under the Act must shoulder what we have called
that when the alcohol was sold to Ruiz, it was “apparent to “an onerous burden of proof,” El Chico Corp. v. Poole, 732
the seller that he was obviously intoxicated to the extent that S.W.2d 306, 314 (Tex.1987), approaching the common-law
he presented a clear danger to himself and others,” and that gross negligence standard. See Steak & Ale of Tex., Inc.
Ruiz's intoxication was a proximate cause of the collision. See v. Borneman, 62 S.W.3d 898, 909 (Tex.App.-Fort Worth
TEX. ALCO. BEV.CODEE § 2.02(b). The jury returned a 2001, no pet.). The Act requires a plaintiff to prove that,
$35 million verdict against F.F.P., upon which the trial court when the alcohol was provided, the recipient “was obviously
rendered judgment. intoxicated to the extent that he presented a clear danger
to himself and others,” and the recipient's intoxication was
The court of appeals affirmed the trial court's judgment, a proximate cause of the damages suffered. TEX. ALCO.
holding: BEV.CODEE § 2.02(b) (emphasis added). If the plaintiff
can meet this burden, the Act nevertheless affords providers
[I]n third-party actions under the Dram
Shop Act in which there are no a relatively simple safe-harbor. Section 106.14(a) 4 shields
allegations of negligence on the part of a provider from liability for its employee's actions if the
the plaintiffs, a provider is vicariously provider establishes that it required the employee to attend
liable for the damages caused by a training course approved by the Texas Alcoholic Beverage
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
Commission, the employee actually attended the course, and If anything, that change indicates the Legislature intended
the provider did not encourage the employee to violate the a broader application, since the term would include non-
Alcoholic Beverage Code. Act of May 21, 1987, 70th Leg., negligent tortious conduct.
R.S., ch. 582, § 3, 1987 Tex. Gen. Laws 2298, 2299 (amended
2003) (current version at TEX. ALCO. BEV.CODEE § The court of appeals held that Sewell did not apply in cases
106.16(a)); see D. Houston, Inc. v. Love, 92 S.W.3d 450, like this one because the Dram Shop Act imposes vicarious
453 (Tex.2002). If the plaintiff meets the burden of proof liability on F.F.P. for Ruiz's actions; thus, as between F.F.P.
that the Dram Shop Act imposes, and the provider is unable and the Dueñezes, there is nothing to apportion. 69 S.W.3d at
to establish a server-training defense, then the provider is 806. The court noted that vicarious liability is “problematic”
liable “for the actions of [its] customer[ ].” Act of June 1, in first-party suits because allowing an intoxicated patron to
1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws impose vicarious liability on a provider without regard to the
1673, 1674 (amended 2003) (current version at TEX. ALCO. patron's own conduct would be “unpalatable.” Id. It was a
BEV.CODEE § 2.03). desire to avoid this result, the court of appeals reasoned, that
fueled our Sewell analysis, as evidenced by our statement that
Chapter 33 of the Texas Civil Practice and Remedies Code the decision was based on “the limited circumstances present
governs the apportionment of responsibility and applies to in this cause....” Sewell, 858 S.W.2d at 356.
“any cause of action based on tort in which a defendant,
settling person, or responsible third party is found responsible It is true, though hardly remarkable, that we based our holding
for a percentage of the harm for which relief is sought.” Act in Sewell on the facts presented, and those facts presented a
of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.05, 1987 first-party claim. But our holding was more broadly stated:
Tex. Gen. Laws 37, 41 (amended 2003) (current version at “[T]he Comparative Responsibility Act—Chapter 33 of the
TEX. CIV. PRAC. & REM.CODE § 33.002). Section 33.003 Texas Civil Practice and Remedies Code—is applicable
provides that the trier of fact shall apportion responsibility to Chapter 2 [dram shop] causes of action.” Id. at 351
“with respect to each person's causing or contributing to (emphasis added). Nowhere did we create an exception for
cause in any way the harm for which recovery of damages is third-party claims. The statute's plain language leaves no
sought.” Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.06, doubt that Chapter 33 applies to all claims brought under the
1987 Tex. Gen. Laws 37, 41 (amended 2003) (current version Dram Shop Act. Moreover, the nature of the liability that
at TEX.ALCO.BEV.CODE § 33.003). Chapter 33 expressly the Dram Shop Act imposes on a provider does not render
excludes certain types of cases from its coverage, such as the proportionate responsibility statute meaningless, nor does
workers' compensation cases, id. § 33.002(c)(1), but it *708 Chapter 33's application undermine the Dram Shop Act's
does not exclude actions brought under the Dram Shop Act. effect.
It is clear from Chapter 33's language that the Legislature Causation under the Dram Shop Act is tied to the patron's
intended all causes of action based on tort, unless expressly intoxication rather than the provider's conduct. See Borneman
excluded, to be subject to apportionment. The statute was v. Steak & Ale of Tex., Inc., 22 S.W.3d 411, 413 (Tex.2000).
similarly plain when we decided in Sewell, 858 S.W.2d at Because the Act imposes liability on providers “for the
356, that Chapter 33 applied to claims brought under the actions of their customers” regardless of whether the
Dram Shop Act. When Sewell was decided, Chapter 33 provider's conduct actually caused the injuries suffered, the
provided that it applied “[i]n an action to recover damages court of appeals in this case concluded that the provider's
for negligence ... or an action for products liability grounded liability is purely vicarious. 69 S.W.3d at 805–06. Under the
in negligence.” Act of June 3, 1987, 70th Leg., 1st C.S., court's analysis, the provider and the intoxicated patron are
ch. 2, § 2.04, 1987 Tex. Gen. Laws 37, 40 (amended 1995) one and the same, like the employer and employee in a case
(current version at TEX. CIV. PRAC. & REM.CODE § founded upon the doctrine of respondeat superior. Id.
33.001(a)). We concluded that the statute applied because
the essential elements of a dram-shop action replicated It is true that, if a provider's liability under the Dram Shop
those of a negligence claim. Sewell, 858 S.W.2d at 355– Act were purely vicarious, as the court of appeals held, there
56. Since Sewell, the Legislature has amended Chapter 33's would be nothing for the jury to apportion between F.F.P.
applicability provision to encompass “any cause of action and the Dueñezes in this case. But the Act has a direct
based on tort.” TEX. CIV. PRAC. & REM.CODE § 33.002. liability component that the court of appeals wholly ignored.
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
Unlike true vicarious *709 liability, in which one party's the presence of vicarious liability, the
actionable conduct is imputed to another, a dram shop's master bears the burden of his servant's
liability stems in part from its own wrongful conduct. See negligence. If the master has been
Sewell, 858 S.W.2d at 355; KEETON ET AL., PROSSER & partially at fault, the percentage of
KEETON ON TORTS § 69, at 499 (5th ed.1984). In order to negligence attributed to the servant is
impose liability under the Act, the factfinder must conclude added to the percentage attributed to
that the provider made alcohol available to an obviously the master.
intoxicated patron whose intoxication caused the plaintiff
harm. TEX. ALCO.BEV.CODE § 2.02(b). As we said in SCHWARTZ, COMPARATIVE NEGLIGENCE § 16.1 (2d
Sewell, “liability under [the Dram Shop Act] is premised on ed.1986) (emphasis added) (citations omitted). Thus, while
the conduct of the provider of the alcoholic beverages—not the dram shop is entitled to seek recovery from an intoxicated
the conduct of the recipient or a third party.” 858 S.W.2d at patron to the extent causation is imputed, rather than direct,
355. Accordingly, the dram shop's liability is based on its own the dram shop is liable to injured third parties for both its own
wrongful or dangerous conduct even though the statutorily actions and for its patron's share of responsibility.
required causal link focuses on the patron's intoxication. TEX.
ALCO.BEV.CODE § 2.02(b). This construct comports with the rule stated in section 13
of the Restatement of Apportionment of Liability that “[a]
That a provider's liability under the Dram Shop Act has person whose liability is imputed based on the tortious
a derivative component does not make it antithetical to acts of another is liable for the entire share of comparative
proportionate responsibility. Under Chapter 33, the trier responsibility assigned to the other....” RESTATEMENT
of fact must apportion the percentage of responsibility (THIRD) OF TORTS: APPORTIONMENT OF LIABILITY
attributable to each of the persons who “caus[ed] or § 13 (2000). While section 13 refers to the situation in which a
contribut[ed] to cause in any way” the harm suffered. TEX. party is held vicariously liable solely on the basis of another's
CIV. PRAC. & REM.CODE § 33.003. Although the Act ties conduct, the Restatement makes clear that a party to whom
causation to the intoxicated patron's actions, certainly dram- liability is imputed and who is also independently liable “is
shop liability was fashioned on the notion that providing responsible *710 for the share of the verdict assigned to [the
alcohol to one who is obviously intoxicated to the extent party whose liability is imputed] and is also responsible for
that the public is clearly endangered “contributes [in some] the share of the verdict assigned to its own negligence.” Id.
way” to harm that the intoxication causes. Id.; see Sewell, 858 § 7 cmt. j (2000).
S.W.2d at 356.
We conclude that, when the factfinder determines that a
The Dueñezes contend that allowing F.F.P. to avoid provider has violated the Dram Shop Act and its patron's
its statutory liability by shifting responsibility onto its intoxication has caused a third party harm, responsibility must
intoxicated customer will undermine the legislative policy be apportioned between the dram shop and the intoxicated
choice to deter the sale of alcohol to obviously intoxicated patron, as well as the injured third party if there is evidence
persons and the Legislature's “recogni[tion] that providers of contributory negligence. The resulting judgment should
of alcoholic beverages owe a duty to those who may be aggregate the dram shop's and driver's liability so that the
injured due to the consumption of those alcoholic beverages.” plaintiff fully recovers from the provider without assuming
Sewell, 858 S.W.2d at 354. We agree that the Legislature the risk of the driver's insolvency. The dram shop may
did not intend for an innocent third party to bear the risk then recover from the driver based upon the percentages of
of an intoxicated patron's insolvency when a provider has responsibility that the jury assessed between them.
breached the duty that the Act imposes. But applying Chapter
33 to a dram-shop liability scheme that partially imputes In reaching this conclusion, we pay heed to the principle that
causation does not thwart the Legislature's purpose. As one courts should, if possible, construe statutes to harmonize with
commentator has noted: each other. La Sara Grain Co. v. First Nat'l Bank of Mercedes,
673 S.W.2d 558, 565 (Tex.1984) (citing State v. Standard
Comparative negligence, in and of Oil Co., 130 Tex. 313, 107 S.W.2d 550 (Tex.1937)). In
itself, has not changed these basic enacting the Dram Shop Act, the Legislature sought to protect
principles [of imputed negligence]. innocent members of the public from the dangers intoxicated
When negligence is apportioned in individuals pose by placing some responsibility for injury on
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F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
those who sell alcoholic beverages. Sewell, 858 S.W.2d at statutory law warranties *711 and
356. That is why the Act speaks in terms of “[t]he liability of duties of providers of alcoholic
providers under this chapter for the actions of their customers, beverages.
members, or guests who are or become intoxicated....” TEX.
ALCO. BEV.CODEE § 2.03. As the Iowa Supreme Court TEX. ALCO. BEV.CODEE § 2.03(a) (emphasis added). The
has postulated, juries in dram shop cases are likely to assign dissent's construction of the statute violates the fundamental
most, if not all, of the responsibility for third parties' injuries rule that we are to give effect to “every sentence, clause, and
to the intoxicated patron. See Slager v. HWA Corp., 435 word of a statute so that no part thereof [will] be rendered
N.W.2d 349, 357 (Iowa 1989). If the provider who serves superfluous.” City of San Antonio v. City of Boerne, 111
a clearly intoxicated patron does not bear responsibility S.W.3d 22, 29 (Tex.2003) (quoting Spence v. Fenchler, 107
for injuries caused by the patron's intoxication, the remedy Tex. 443, 180 S.W. 597, 601 (1915)).
the Legislature provided in the Dram Shop Act would be
meaningless, at least to the extent the intoxicated patron Finally, the dissent's discussion of the Legislature's
proves to be insolvent, hardly a result that the Legislature imposition of strict liability on illegal methamphetamine
likely contemplated in substituting dram-shop liability for manufacturers and other criminal actors improperly presumes
otherwise available common-law remedies. that we are similarly exempting alcohol providers from the
proportionate responsibility scheme. Clearly we are not.
Moreover, the Legislature has directed that, in construing Instead, we apply that scheme consistent with the Dram
statutes, we must consider the object sought to be Shop Act's language and purpose. Our interpretation gives
obtained and the consequences of a particular construction. effect to both the Dram Shop Act's express language and
CODE CONSTRUCTION ACT, TEX. GOV'T CODE §§ the statutory proportionate responsibility scheme. Even the
311.023(1), (5); see TEX. ALCO. BEV.CODE § 1.02 dissent acknowledges that our decision “may express sound
(expressly incorporating the Code Construction Act). The public policy.” (OWEN, J., dissenting). That is exactly the
Legislature has further instructed courts to liberally construe public policy we believe the Legislature chose when it crafted
the Alcoholic Beverage Code so that the safety and welfare section 2.03(a).
of our citizens are protected. TEX. ALCO. BEV.CODE §
1.03. Rather than undermine the Legislature's purpose in We conclude that the court of appeals erred in holding that the
enacting the Dram Shop Act, we give effect to both it and the proportionate responsibility statute does not apply to third-
Proportionate Responsibility Act. party actions under the Dram Shop Act. The judgment is
correct, though, because F.F.P. is responsible to the Dueñezes
In contrast, the dissent gives no weight to section 2.03(a) of for its own liability and that of Ruiz, from whom F.F.P. may
the Dram Shop Act, concluding it “means only that a cause recover to the extent of his imputed liability. We must now
of action for damages caused by an intoxicated patron is the decide whether the trial court erred in severing F.F.P.'s claim
exclusive remedy against an alcohol provider.” (OWEN, J., against Ruiz.
dissenting). But if that had been the statutory purpose, section
2.03(a) would have simply said:
III
The liability of providers under this
chapter is in lieu of common law The trial court severed F.F.P.'s claim against Ruiz and
or other statutory law warranties proceeded to trial with F.F.P. as the only defendant. The
and duties of providers of alcoholic court of appeals affirmed the trial court's severance order,
beverages. concluding that a vicariously liable party's right of recovery
against a tortfeasor is through indemnity, which does not
Instead, subsection (a) clearly says:
become actionable until an adverse judgment is taken. 69
[t]he liability of providers under S.W.3d at 807–08. Because the court considered F.F.P.'s
this chapter for the actions of their liability vicarious in nature, it also held that Ruiz did not
employees, customers, members, or meet Chapter 33's definition of a responsible third party for
guests who are or become intoxicated apportionment purposes. Id.
is in lieu of common law or other
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 23
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
cause’ of an occurrence, then no act or omission of any other
As already explained, F.F.P.'s dram-shop liability is not
person could have been a proximate cause.” The proposed
purely vicarious; therefore the trial court should have
submission merely instructs that if a non-party's action was
submitted Ruiz's percentage of responsibility to the jury
the sole proximate cause of the Dueñezes' injury, then no
for apportionment under Chapter 33. But because F.F.P.
other *712 person's action could be a proximate cause.
is responsible to the Dueñezes for its own percentage of
The instruction thus asks the jury to compare the actions
liability and that of Ruiz, and because there is nothing that
of two different people rather than distinguish between the
would prevent a jury from fairly apportioning responsibility
same person's intoxication and inattention. The requested
between F.F.P. and Ruiz in the severed action, the trial court's
instruction would not have focused the jury's attention on the
severance order did not constitute reversible error.
act that F.F.P. contends was the sole proximate cause of the
Dueñezes' injuries; thus, the trial court did not err in refusing
to submit it. See Hyundai Motor Co. v. Rodriguez, 995 S.W.2d
IV 661, 665–66 (Tex.2002).
Finally, F.F.P. contends the trial court erred in refusing to
instruct the jury on sole proximate cause. F.F.P. bases its
claimed entitlement to that instruction on evidence that Ruiz V
was reaching under the seat for a compact disc when the
For the foregoing reasons, the court of appeals' judgment is
accident occurred, and it was this inattention rather than
affirmed.
Ruiz's intoxication that caused the accident. The Dueñezes
respond that the instruction F.F.P. requested did not preserve
this argument. We agree.
All Citations
F.F.P.'s requested instruction stated: “if an act or omission 237 S.W.3d 680, 50 Tex. Sup. Ct. J. 764
of any person not a party to the suit was the ‘sole proximate
Footnotes
1 The Legislature has amended much of the code applicable to this case. For clarity, the text references the codified version
of the statutes applicable to the case as current law with the full citation appearing in footnotes. Citations without clarifying
footnotes refer to the version in effect on the date of this opinion.
Act of June 1, 1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws 1673, 1674, amended by Act of June 17, 2005,
79th Leg., R.S., ch. 643, § 1, 2005 Tex. Gen. Laws 1617, 1617 (current version at TEX. ALCO. BEV.CODEE § 2.02).
2 Act of June 1, 1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws 1673, 1674, amended by Act of June 20, 2003,
78th Leg., R.S., ch. 456, § 1, 2003 Tex. Gen. Laws 1698, 1698–99 (current version at TEX. ALCO. BEV.CODE E §
2.03(a)).
3 Act of June 1, 1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws 1673, 1674 (amended 2003).
4 Act of June 1, 1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws 1673, 1674 (amended 2005).
5 Act of June 1, 1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws 1673, 1674 (amended 2005).
6 Act of June 1, 1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws 1673, 1674 (amended 2003).
7 Act of June 1, 1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws 1673, 1674 (amended 2003).
8 Act of May 17, 1985, 69th Leg., R.S., ch. 959, § 1, 1985 Tex. Gen. Laws 3242, 3271, amended by Act of June 3, 1987,
70th Leg., 1st C.S., ch. 2, § 2.09, 1987 Tex. Gen. Laws 37, 42, amended by Act of May 8, 1995, 74th Leg., R.S., ch. 136,
§ 1, 1995 Tex. Gen. Laws 971, 974, amended by Act of June 2, 2003, 78th Leg., R.S., ch. 204, §§ 4.07, 4.10(5), 2003
Tex. Gen. Laws 847, 858–59 (current version at TEX. CIV. PRAC. & REM.CODE § 33.013).
9 Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.06, 1987 Tex. Gen. Laws 37, 41, amended by Act of May 8, 1995,
74th Leg., R.S., ch. 136, § 1, 1995 Tex. Gen. Laws 971, 972, amended by Act of June 2, 2003, 78th Leg., R.S., ch. 204,
§ 4.02, 2003 Tex. Gen. Laws 847, 855 (current version at TEX. CIV. PRAC. & REM.CODE § 33.003).
10 Act of June 3, 1987, 70th Leg., 1st C. S., ch. 2, § 2.05, 1987 Tex. Gen. Laws 37, 41, amended by Act of May 29, 1989,
71st Leg., R.S., ch. 380, § 4, 1989 Tex. Gen. Laws 1490,1492, amended by Act of May 8, 1995, 74th Leg., R.S., ch. 136,
§ 1, 1995 Tex. Gen. Laws 971,971–72, amended by Act of May 21, 2001, 77th Leg., R.S., ch. 643, § 2, 2001 Tex. Gen.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 24
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
Laws 1208, 1208–09, amended by Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 4, 2003 Tex. Gen. Laws 847, 858–
59 (current version at TEX. CIV. PRAC. & REM.CODE § 33.002).
11 Act of June 3, 1987, 70th Leg., 1st C. S., ch. 2, § 2.05, 1987 Tex. Gen. Laws 37, 41 (amended 1989, 1995, 2001,
repealed 2003).
12 Act of June 3, 1987, 70th Leg., 1st C. S., ch. 2, § 2.05, 1987 Tex. Gen. Laws 37, 41 (amended 1989, 1995, 2001, 2003).
13 Act of June 3, 1987, 70th Leg., 1st C. S., ch. 2, § 2.05, 1987 Tex. Gen. Laws 37, 41 (amended 1989, 1995, 2001,
repealed 2003).
14 Act of May 17, 1985, 69th Leg., R.S., ch. 959, § 1, 1985 Tex. Gen. Laws 3242, 3271, amended by Act of June 3, 1987,
70th Leg. 1st C.S., ch. 2, § 2.04, 1987 Tex. Gen. Laws 37, 40, amended by Act of May 8, 1995, 74th Leg., R.S., ch.
136, § 1, 1995 Tex. Gen. Laws 971, 971 (current version at TEX. CIV. PRAC. & REM.CODE § 33.002). Section 33.001
grounded the applicability of the statute in negligence. However, Section 33.002, added to the code in 1987, is specifically
devoted to the applicability of the chapter and is rooted in torts, giving the current law a broader application than that
at the time of Sewell.
15 Act of June 1, 1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen. Laws 1673, 1674 (amended 2005).
16 Act of May 17, 1985, 69th Leg., R.S., ch. 959, § 1, 1985 Tex. Gen. Laws 3242, 3271 (amended 1987, 1995, 2003).
17 Act of June 3, 1987, 70th Leg., 1st C. S., ch. 2, § 2.05, 1987 Tex. Gen. Laws 37, 41 (amended 1989, 1995, 2001,
repealed 2003).
18 Act of June 3, 1987, 70th Leg., 1st C. S., ch. 2, § 2.05, 1987 Tex. Gen. Laws 37, 41 (amended 1989, 1995, 2001, 2003).
19 Act of June 3, 1987, 70th Leg., 1st C. S., ch. 2, § 2.05, 1987 Tex. Gen. Laws 37, 41 (amended 1989, 1995, 2001, 2003).
20 Act of June 3, 1987, 70th Leg., 1st C. S., ch. 2, § 2.05, 1987 Tex. Gen. Laws 37, 41 (amended 1989, 1995, 2001,
repealed 2003).
21 Act of June 3, 1987, 70th Leg., 1st C. S., ch. 2, § 2.05, 1987 Tex. Gen. Laws 37, 41 (amended 1989, 1995, 2001, 2003).
22 Act of May 17, 1985, 69th Leg., R.S., ch. 959, § 1, 1985 Tex. Gen. Laws 3242, 3271 (amended 1987, 1995, 2003).
23 Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 4.10(5), 2003 Tex. Gen. Laws 847, 859.
24 Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.06, 1987 Tex. Gen. Laws 37, 41, amended by Act of May 8, 1995,
74th Leg., R.S., ch. 136, § 1, 1995 Tex. Gen. Laws 971, 972, amended by Act of June 2, 2003, 78th Leg., R.S., ch. 204,
§ 4.02, 2003 Tex. Gen. Laws 847, 855 (current version at TEX. CIV. PRAC. & REM.CODE § 33.003).
1 F.F.P.'s reply brief asserts, correctly, that “[u]nder [the statutory] elements, the dram shop plaintiffs need not prove that
‘but for’ the alcohol seller's conduct, the harm would not have occurred—presumably because it will always be hard to
prove that any injury occurred because of any particular sale of alcoholic beverage.”
2 Some states require that the dram shop's provision of alcohol cause the harm. See, e.g., ARK.CODE § 16–126–104
(2006) (requiring jury in dram shop case to determine “whether or not the sale constitutes a proximate cause of any
subsequent injury to other persons”) (emphasis added); GA.CODE § 51–1–40 (2000) (“[A] person who ... knowingly sells,
furnishes, or serves alcoholic beverages to a person who is in a state of noticeable intoxication, knowing that such person
will soon be driving a motor vehicle, may become liable for injury or damage caused by or resulting from the intoxication of
such minor or person when the sale, furnishing, or serving is the proximate cause of such injury or damage.”) (emphasis
added); MICH. COMP. LAWS § 436.1801 (2001) (“[A]n individual who suffers damage or who is personally injured by a
minor or visibly intoxicated person by reason of the unlawful selling, giving, or furnishing of alcoholic liquor to the minor
or visibly intoxicated person, if the unlawful sale is proven to be a proximate cause of the damage, injury, or death, or the
spouse, child, parent, or guardian of that individual, shall have a right of action in his or her name against the person who
by selling, giving, or furnishing the alcoholic liquor has caused or contributed to the intoxication of the person or who has
caused or contributed to the damage, injury, or death ”) (emphasis added); TENN.CODE § 57–10–102 (2002)(imposing
liability if a jury finds, “beyond a reasonable doubt that the sale by such person of the alcoholic beverage or beer was
the proximate cause of the personal injury or death sustained and that such person ... [s]old the alcoholic beverage or
beer to an obviously intoxicated person and such person caused the personal injury or death as the direct result of the
consumption of the alcoholic beverage or beer so sold ”) (emphasis added).
3 This may seem punitive, as it risks imposing liability without fault, but the Legislature also provides a relatively cost-free
safe harbor: the trained server defense. As the Court's original opinion noted, section 106.14(a) provides that “the actions
of an employee shall not be attributable to the employer if” the provider establishes that it required the employee to attend
a training course approved by the Texas Alcoholic Beverage Commission, the employee actually attended the course,
and the provider did not encourage the employee to violate the Alcoholic Beverage Code. Act of May 21, 1987, 70th
Leg., R.S., ch. 582, § 3, 1987 Tex. Gen. Laws 2298, 2299 (amended 2003) (current version at TEX. ALCO. BEV.CODE
E § 106.14(a)).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 25
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (2007)
50 Tex. Sup. Ct. J. 764
4 This is consistent with Borneman v. Steak & Ale of Texas, Inc., 22 S.W.3d 411, 412–13 (Tex.2000), a dram shop case
in which we held that it was error to submit a jury question asking whether the conduct of an alcohol provider was a
proximate cause of the occurrence in question. After the Court issued its November 3, 2006 opinion, the Duenezes moved
for rehearing, asserting that the Court's latest interpretation of the statute directly conflicts with Borneman. A comparative
submission, which the Court now requires in this case, presupposes that the provider's conduct is in issue. In this respect,
the Court's current holding certainly undermines, if not overrules, Borneman.
5 On the failure-to-submit issue, Chief Justice Cayce concurred in the result only, as he felt that the sixty-percent
responsibility the jury placed on the plaintiff barred her recovery as a matter of law, rendering harmless any error in failing
to submit the employer's negligence. Bedford, 166 S.W.3d at 456 (Cayce, C.J., concurring).
6 See B & B Auto Supply, Sand Pit, & Trucking Co. v. Cent. Freight Lines, Inc., 603 S.W.2d 814, 817 (Tex.1980) (recognizing
common law right to indemnity when a party's liability is vicarious).
7 F.F.P. also contends the trial court erred in refusing to instruct the jury on sole proximate cause. F.F.P. bases its claimed
entitlement to that instruction on evidence that Ruiz was reaching under the seat for a compact disc when the accident
occurred, and it was this inattention, rather than Ruiz's intoxication, that caused the accident. The court of appeals
held that Ruiz's carelessness was indistinguishable from his intoxication and, therefore, the trial court did not abuse
its discretion in refusing to give the requested instruction. 69 S.W.3d at 809. In this Court's original opinion, the Court
concluded that, as “[t]he instruction ... ask[ed] the jury to compare the actions of two different people rather than distinguish
between the same person's intoxication and inattention[,][t]he requested instruction would not have focused the jury's
attention on the act that F.F.P. contends was the sole proximate cause of the Duenezes' injuries; thus, the trial court did
not err in refusing to submit it.” I agree with both the court of appeals and the Court's original opinion on this point.
1 The Dram Shop Act has since been amended in a manner that does not affect my analysis. All citations in this dissent
refer to the version applicable to the present case. Act of June 1, 1987, 70th Leg., R.S., ch. 303, § 3, 1987 Tex. Gen.
Laws 1673, 1674 (amended 2003) (current version at TEX. ALCO. BEV.CODEE § 2.03).
2 There was conflicting testimony about whether Ruiz actually drank any of the beer that he purchased at Mr. Cut Rate.
3 In addition to briefing from the parties, we received briefs from several amici, including the Saltgrass Steakhouse Private
Club, Inc., Waco Texas Management, Inc., on behalf of Cactus Canyon, Texas Restaurant Association, Texas Petroleum
Marketers and Convenience Store Association, and Mothers Against Drunk Driving.
4 Although this provision has since been amended, in this opinion, we refer to the version of the statute that governs these
proceedings. We treat other code provisions that have been amended similarly.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 26
S
Flack v. Hanke, 334 S.W.3d 251 (2010)
[4] trial court had no discretion to deny on “public policy”
KeyCite Yellow Flag - Negative Treatment grounds the designation of law firms and attorneys as RTPs;
Distinguished by Hernandez v. Bumbo (Pty.) Ltd., N.D.Tex., March
and
10, 2014
334 S.W.3d 251 [5] as a matter of first impression, law firm could not use
Court of Appeals of Texas, status as defendant to strike former designation as RTP.
San Antonio.
Lawrence T. FLACK, Appellant, Reversed and remanded; motions denied.
v.
Dan H. HANKE and the Hanke Group, P.C.,
f/k/a Hanke, Green and Stein, Cox Smith West Headnotes (12)
Matthews Incorporated, f/k/a Cox & Smith
and f/k/a Matthews & Branscomb; John
[1] Attorney and Client
D. Fisch; Mary Potter; Langley & Banack
In general; limitations
Incorporated a/k/a Langley & Banack, Inc.;
The statute of limitations on professional
Steven R. Brook; and David S. Gragg, Appellees.
negligence claims against lawyers is two years.
No. 04–08–00177–CV. | Oct. 13, 2010. V.T.C.A., Civil Practice & Remedies Code §
16.003(a).
Synopsis
Background: Client brought action against financial advisor Cases that cite this headnote
to recover for negligent advice regarding creation of
employee stock ownership plan (ESOP) which borrowed [2] Limitation of Actions
money and purchased client's stock in corporation that later Intervention or bringing in new parties
went into bankruptcy. In a settlement agreement, advisor
Settling party was also a “defendant” authorized
designated law firms and attorneys in connection with ESOP,
by statute to designate responsible third parties
loans to ESOP, and bankruptcy as responsible third parties
(RTP), for purposes of avoiding limitations
(RTP), even though statute of limitations had run against
defense of law firms and attorneys in client's
them. Advisor was then dropped from the suit, and the RTPs
suit arising from advice and a bankruptcy
were joined as defendants. The 166th Judicial District Court,
which related to an unsuccessful employee stock
Bexar County, Lori Massey, J., granted summary judgment
ownership plan (ESOP); nothing in RTP statute
in favor of firms and attorneys based on limitations. Client
precluded a party from being both a defendant
appealed.
and a settling person, client had neither filed, nor
taken, a nonsuit against settling party, and he was
thus still a defendant at the time he designated
Holdings: On motions for rehearing, the Court of Appeals, the RTPs. V.T.C.A., Civil Practice & Remedies
Rebecca Simmons, J., held that: Code §§ 33.004(a), 33.011(2, 5, 6).
[1] advisor as settling party was also a “defendant” authorized 2 Cases that cite this headnote
by statute to designate responsible third parties (RTP);
[3] Parties
[2] firms and attorneys designated as RTPs waived any Necessity, Mode, and Time of Objection
objection; Law firm and attorneys designated as responsible
third parties (RTPs) waived any objection that
[3] joining firms and attorneys as defendants after expiration the motion to designate them as RTPs did
of statute of limitations did not involve retroactive application not meet the pleading requirements implicit in
of RTP statute;
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Flack v. Hanke, 334 S.W.3d 251 (2010)
the statute, by failing to object as provided thus, joining firms and attorneys as defendants
in RTP statute, in client's suit arising from after expiration of statute of limitations did not
advice in a bankruptcy which related to an involve retroactive application of RTP statute.
unsuccessful employee stock ownership plan V.T.C.A., Civil Practice & Remedies Code §
(ESOP). V.T.C.A., Civil Practice & Remedies 33.004(e).
Code § 33.004(f).
1 Cases that cite this headnote
1 Cases that cite this headnote
[7] Limitation of Actions
[4] Appeal and Error Intervention or bringing in new parties
Nature of error or defect in general Trial court had no discretion to deny, on “public
Plaintiff preserved challenge to summary policy” grounds, the designation of law firms
judgment for defendants on ground that joinder and attorneys as responsible third parties (RTPs)
as defendants after expiration of statute of under the RTP statute, although it appeared
limitations was unconstitutional application of they were designated as RTPs solely to defeat
statute permitting joinder of person designated their limitations defense; the settling party who
as responsible third party (RTP), even though designated them as such was also a defendant,
statute of limitations had run; plaintiff's brief such that his designations were proper under
stated the two issues raised in the summary the statute. V.T.C.A., Civil Practice & Remedies
judgment motions as (1) the case was filed after Code § 33.004(e).
limitations ran and (2) application of the RTP
statute would violate constitutional prohibition 3 Cases that cite this headnote
against retroactive laws, and Court of Appeals
was required to broadly construe the issues to [8] Appeal and Error
encompass core question of constitutionality of Parties
retroactive application. V.T.C.A., Civil Practice
Defendants failed to preserve argument that the
& Remedies Code § 33.004(e).
trial court properly granted motion to strike
2 Cases that cite this headnote designation as responsible third parties, where
co-defendants filed only motion to strike the
designation. Rules App.Proc., Rule 33.1(a);
[5] Appeal and Error V.T.C.A., Civil Practice & Remedies Code §
Form and requisites in general 33.004(e).
An appellate court is required to construe a
party's brief liberally. Rules App.Proc., Rule 5 Cases that cite this headnote
38.9.
[9] Appeal and Error
1 Cases that cite this headnote
Cases Triable in Appellate Court
Whether the proof establishes as a matter of law
[6] Limitation of Actions that there is no genuine issue of fact regarding
Retroactive Operation the responsible third parties' (RTP) responsibility
Client's claims against law firms and attorneys for the claimant's injury is a question of law
for negligence in connection with sale of reviewed de novo. V.T.C.A., Civil Practice &
client's stock to employee stock ownership plan Remedies Code § 33.004(l ).
(ESOP), his purchase of loans to ESOP, and
corporation's bankruptcy arose after effective 1 Cases that cite this headnote
date of statute permitting joinder of person
designated as responsible third party (RTP), [10] Statutes
even though statute of limitations had run, and, Superfluousness
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Flack v. Hanke, 334 S.W.3d 251 (2010)
Statutes
Absent terms; silence; omissions Casey L. Dobson, Jane M.N. Webre, Paige Arnette Amstutz,
Scott, Douglass & McConnico, L.L.P., Austin, TX, Laura A.
Courts read every word, phrase, and expression
Cavaretta, Bridget A. Douglass, Lewin Plunkett, Plunkett &
in a statute as if it were deliberately chosen, and
Gibson, Inc., George H. Spencer, Jr., Kathryn A. Stephens,
presume the words excluded from the statute are
Clemens & Spencer, P.C., San Antonio, TX, for Appellee.
done so purposefully.
Sitting: KAREN ANGELINI, Justice, REBECCA
Cases that cite this headnote
SIMMONS, Justice, STEVEN C. HILBIG, Justice.
[11] Parties
Bringing in New Parties OPINION
An entity cannot be both a defendant and a
responsible third party (RTP) designated under Opinion by: REBECCA SIMMONS, Justice.
the RTP statute at the same time. V.T.C.A., Civil
The following motions are denied: (1) Appellees John D.
Practice & Remedies Code § 33.004(l ).
Fisch and Mary M. Potter's Motion for Rehearing; (2)
9 Cases that cite this headnote Appellees John D. Fisch and Mary M. Potter's Motion for En
Banc Reconsideration; (3) Langley & Banack, Incorporated
a/k/a Langley & Banack, Inc., Steven R. Brook and David
[12] Judgment S. Gragg's Motion for Rehearing; (4) Langley & Banack,
Existence of defense Incorporated a/k/a Langley & Banack, Inc., Steven R. Brook
Parties and David S. Gragg's Motion for Rehearing En Banc; and (5)
Necessity, mode, and time of objection Motion for Rehearing of Cox Smith Matthews Incorporated.
Law firm's claim, that there was no evidence of This court's opinion and judgment dated May 27, 2009, are
its responsibility for a client's claimed monetary withdrawn, and this opinion and judgment are substituted. We
loss as a lender due to failure to maximize substitute this opinion to clarify our analysis and to address
collateral in his former company's bankruptcy, the argument relating to the alleged retroactive application of
was not properly asserted by contesting its the 2003 amendments to section 33.004(e).
designation as a responsible third party (RTP)
by the client's financial advisor, who was then This appeal stems from a summary judgment in favor of, and
dismissed from the suit, but could be asserted by an order striking the designation of, Steven R. Brook, David
law firm and attorneys in their status as joined S. Gragg, and Langley & Banack, Incorporated a/k/a Langley
defendants, who then lost their RTP status, by & Banack, Inc. and Cox Smith Matthews Incorporated f/
a no-evidence motion for summary judgment, k/a Cox & Smith and f/k/a Matthews & Branscomb, John
thereby requiring client to present some evidence D. Fisch and Mary M. Potter as responsible third parties.
of law firm's responsibility; firm could not use Appellant Lawrence T. Flack asserts the trial court erred in
status as party to strike former designation as granting: (1) summary judgment in favor of the appellees,
RTP. V.T.C.A., Civil Practice & Remedies Code and (2) Langley & Banack's motion to strike its designation
§§ 33.004(a, l ), 33.011; Vernon's Ann.Texas as a responsible third party. We reverse the judgment of the
Rules Civ.Proc., Rule 166a(i). trial court and remand this matter for further proceedings
consistent with this opinion.
Cases that cite this headnote
FACTUAL BACKGROUND
Attorneys and Law Firms Appellant Flack hired Dan H. Hanke and the Hanke Group,
P.C., f/k/a Hanke, Green, and Stein (collectively Hanke) to
*254 Charles H. Portz, III, Portz & Portz, Houston, TX, for
create an employee stock ownership plan (ESOP) in Flack
Appellant.
Interiors and to sell Flack's stock in the business to the ESOP.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Flack v. Hanke, 334 S.W.3d 251 (2010)
The stock plan subsequently purchased Flack's stock with settlement documents. Attached to the agreement were the
loans from Frost National Bank, but Flack Interior's poor necessary pleadings to effectuate the settlement, signed by the
financial performance quickly caused Frost to demand that parties, and ready to be filed in keeping with the timetable.
the loans be restructured. In April of 2000, Flack purchased
the restructured loans from Frost and became the business's In accordance with the settlement agreement, on July 27,
primary lender. 2007, Hanke filed Defendants' Motion for Leave to Designate
Responsible Third Parties pursuant to Texas Civil Practice
Upon the advice of Hanke, Flack then hired Langley & and Remedies Code section 33.004. See TEX. CIV. PRAC.
Banack, Incorporated, along with attorneys Steven R. Brook & REM.CODE ANN. § 33.004 (West 2008). The trial
and David S. Gragg, (collectively Langley & Banack) to court granted the motion and approved the designation
represent Flack in connection with Flack Interior's 2004–2005 pursuant to an agreed order. Shortly thereafter, Flack and
bankruptcy proceeding. On February 7, 2005, the bankruptcy Hanke filed an Agreed Motion to Add Third Parties, also
court approved a settlement agreement resolving Flack's signed by the trial court, joining each of the Appellees
claims regarding his financial dealings with the ESOP. A as defendants. On August 1, 2007, the trial court signed
few months later, Flack sued Hanke for negligent advice an agreed order dismissing Flack's claims against Hanke
regarding the creation of the ESOP and the restructuring of pursuant to a previously executed compromise and settlement
the loans. More than two years later, Flack joined Langley & agreement between the parties. The following day, Flack
Banack in the suit. Flack asserted that he suffered a monetary filed Plaintiff's Second Amended Original Petition asserting
loss due to Langley & Banack's failure to maximize collateral claims of negligence and breaches of fiduciary duty against
in the bankruptcy. the Appellees.
*255 In June 2004, on Hanke's advice, Flack hired Cox Each of the Appellees subsequently filed a general denial
Smith Matthews Incorporated f/k/a Cox & Smith and f/k/a and affirmative defenses including a limitations defense.
Matthews & Branscomb, including attorneys John D. Fisch Additionally, all of the Appellees filed traditional motions
and Mary M. Potter, (collectively Cox Smith) for advice for partial summary judgment based on limitations, and
regarding Flack's sale of the business, the ESOP, and the Langley & Banack filed a motion to strike its designation
loans. More than two years following the initial suit against as a responsible third party. On February 21, 2008, the
Hanke, Flack also joined Cox Smith in the lawsuit. trial court considered and granted summary judgment in
favor of Appellees based on limitations and granted Langley
& Banack's motion to strike. The trial court entered final
judgment on February 22, 2008. To understand Flack's
PROCEDURAL HISTORY
objections to the trial court's judgment, a brief review of
Flack filed suit against Hanke on July 26, 2005, alleging section 33.004 of the Civil Practice and Remedies Code is
breach of fiduciary duties, negligence, and violation of the necessary.
Texas Deceptive Trade Practices Act in connection with
the sale of his stock in Flack Interiors, Inc. and certain
real property. In July 2007, Flack reached a settlement TEXAS CIVIL AND PRACTICE
agreement with Hanke which required Hanke to agree to a REMEDIES CODE CHAPTER 33
new trial setting and to designate both Langley & Banack
and Cox Smith (jointly Appellees) as responsible third parties In 2003, the Texas Legislature revised the Texas Civil
(RTPs). In short, through the settlement agreement, Flack and Practice and Remedies Code to change from a joinder
Hanke agreed: (1) to amend the scheduling order because the procedure to a designation procedure for inclusion
deadline to add new parties had passed; (2) Hanke would file of responsible third parties in the apportionment of
a designation of RTPs and secure an agreed order granting responsibility. See Act of June 2, 2003, 78th Leg., R.S.,
the designation; (3) Flack would file a motion to join the ch. 204, §§ 4.02–.04, secs. 33.003–.004, 2003 Tex. Gen.
RTPs as defendants and secure an order granting the joinder; Laws *256 847, 855–56 (codified at TEX. CIV. PRAC.
and (4) the parties would file a motion to dismiss Hanke & REM.CODE ANN. §§ 33.003–.004) (West 2008). The
and secure an order of dismissal. Moreover, each step was to 2003 amendments to section 33.004 significantly changed the
be completed in accordance with a timeline provided in the procedures for apportioning responsibility to third parties. See
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Flack v. Hanke, 334 S.W.3d 251 (2010)
TEX. CIV. PRAC. & REM.CODE ANN. § 33.004(a), (h)
(West 2008).
MOTIONS FOR SUMMARY JUDGMENT
After the 2003 amendments became effective, the defendant
need only file a motion for leave to designate an RTP sixty All of the Appellees filed traditional motions for summary
days prior to trial and, absent objection by another party, judgment urging the two-year statute of limitations barred
the trial court must grant leave to designate the RTP. TEX. Flack's recovery. In response to Flack's assertion that section
CIV. PRAC. & REM.CODE ANN. § 33.004(a), (f) (West 33.004(e) defeated their limitations defense, Appellees urged
2008). The granting of leave to designate an RTP does not, they were improperly joined.
absent joinder as a defendant, impose liability on the RTP
and may not be used in other proceedings on the basis of res
judicata or collateral estoppel. Id. § 33.004(i). Additionally, A. Standard of Review
the statute allows parties who could never have been sued, The standard of review for a traditional summary judgment
as well as unknown parties, to be designated as RTPs. Id. § is well established: (1) the movant must show “that there is
33.004(i), (j), (k). The statute further provides that joinder is no genuine issue of material fact and that it is entitled to
not prohibited “even though such joinder would otherwise be judgment as a matter of law; (2)[i]n deciding whether there is
barred by limitations, if the claimant seeks to join that person a disputed material fact issue precluding summary judgment,”
not later than 60 days after that person is designated as a the court must take “evidence favorable to the non-movant ...
responsible third party.” Id. § 33.004(e). as true”; and (3) the court must indulge every reasonable
inference in favor of the non-movant and resolve any doubts
Although generally regarded as a defense-oriented statute, in the non- *257 movant's favor. Nixon v. Mr. Prop. Mgmt.
plaintiffs benefit from Section 33.004's erosion of the Co., 690 S.W.2d 546, 548–49 (Tex.1985). If the defendant
limitations defense. See id. § 33.004(e). Section 33.004(e) meets this burden, the plaintiff must then raise a genuine
creates the potential to revive otherwise barred claims against issue of material fact on each challenged element. Centeq
a designated RTP. This procedure may result in the plaintiff Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995).
collaborating with a defendant to join additional tortfeasors. Additionally, a “defendant moving for summary judgment
For example, section 33.004(e) allows a plaintiff to sue on an affirmative defense has the burden to conclusively
a defendant with little or no liability, and that defendant establish that defense.” Long Distance Int'l, Inc. v. Telefonos
may then designate the true tortfeasor as an RTP. Id. The de Mex., S.A. de C.V., 49 S.W.3d 347, 350–51 (Tex.2001).
plaintiff subsequently may join the true tortfeasor, avoid a
limitations defense, and nonsuit the original defendant. Id.;
see also Gregory J. Lensing, Proportionate Responsibility B. Grounds for Summary Judgment
[1] The motions for summary judgment were all based,
and Contribution Before and After the Tort Reform of 2003,
in part, on the affirmative defense of limitations. Appellees
35 TEX. TECH L.REV. 1125, 1182 (2004) (“A plaintiff
assert that Flack's claims of negligence are barred by the
who misses limitations as to one joint tortfeasor can easily
two-year statute of limitations because the claims were
suggest to another joint tortfeasor that it should invoke
filed approximately three years after the day the cause of
the responsible-third-party device—perhaps even offer that
tortfeasor some inducement to do so—and then enjoy a new action accrued. 1 “The statute of limitations on professional
sixty-day window of opportunity to sue the responsible third negligence claims against lawyers is two years.” Murphy v.
party.”). Gruber, 241 S.W.3d 689, 693 (Tex.App.-Dallas 2007, pet.
denied); accord TEX. CIV. PRAC. & REM.CODE ANN.
Finally, although Chapter 33 provides for the liberal § 16.003(a) (West 2002); Parsons v. Turley, 109 S.W.3d
designation of RTPs, the chapter allows a party to challenge 804, 807 (Tex.App.-Dallas 2003, pet. denied). Therefore,
the sufficiency of the evidence supporting the designation of Appellees argue that Flack, as the non-movant, was required
an RTP. The trial court must grant a party's motion to strike to bring forth evidence raising a fact issue as to whether the
the designation of an RTP unless the defendant produces statute of limitations should apply. See TEX. CIV. PRAC.
sufficient evidence to raise a genuine issue of fact as to & REM.CODE ANN. § 16.003(a) (West 2002); Gonzalez
the RTP's responsibility. TEX. CIV. PRAC. & REM.CODE v. City of Harlingen, 814 S.W.2d 109, 112 (Tex.App.-
ANN. § 33.004(l ) (West 2008). Corpus Christi 1991, writ denied). Flack responds that section
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Flack v. Hanke, 334 S.W.3d 251 (2010)
33.004(e) of the Civil Practice and Remedies Code defeats whether by negligent act or omission, by any defective
Appellees' limitations claim. We agree. or unreasonably dangerous product, by other conduct or
activity that violates an applicable legal standard, or by any
combination of these.
1. Timeliness
The claims against Appellees were timely filed in accordance Id. § 33.011(2), (5), (6); see also In re Unitec Elevator Servs.
with section 33.004(e) of the Civil Practice and Remedies Co., 178 S.W.3d 53, 58 (Tex.App.-Houston [1st Dist.] 2005,
Code. See TEX. CIV. PRAC. & REM.CODE ANN. § no pet.). Flack contends the foregoing definitions are not
33.004(e) (West 2008). Section 33.004(e) provides: mutually exclusive.
If a person is designated under this
section as a responsible third party, a
claimant is not barred by limitations a. Agreement to Designate RTPs
from seeking to join that person,
There is no question that Hanke's designation of Appellees
even though such joinder would
as RTPs, and ultimately their joinder by Flack, was clearly
otherwise be barred by limitations, if
part of the settlement agreement between Flack and Hanke.
the claimant seeks to join that person
The case was set for trial on November 5, 2007, and the
not later than 60 days after that person
trial court granted the Agreed Motion for Leave to Designate
is designated as a responsible third
Responsible Third Party pursuant to an Agreed Order on July
party.
27, 2007, well before the sixty-day requirement of section
Id. Here, the claims were timely because Appellees were 33.004(a). See TEX. CIV. PRAC. & REM.CODE ANN. §
joined as defendants within sixty days of Hanke's designation 33.004(a) (West 2008). Absent an objection by any party to
of Appellees as responsible third parties. the suit, the trial court was required to grant the request. Id. By
granting a motion for leave to designate a person as an RTP,
the person is designated as a responsible third party without
2. Settling Persons further action by the trial court or any party. Id. § 33.004(h);
[2] Appellees argue that their limitations defense is not Tex. Dep't of Pub. Safety v. Boswell, No. 13–06–327–CV,
defeated by section 33.004(e) because Hanke was a settling 2007 WL 2471447, at *3 n. 3 (Tex.App.-Corpus Christi Aug.
party and not a defendant; therefore, his designation of RTPs 31, 2007, no pet.) (mem. op.).
was improper. See TEX. CIV. PRAC. & REM.CODE ANN. §
33.004(a) (West 2008). Flack counters that a plain reading of Hanke designated Appellees as RTPs after Flack's claims
the statute does not preclude such a designation and joinder. against each of the Appellees would have been barred by
Section 33.011 provides: limitations. After a defendant designates an RTP, section
33.004(e) allows the plaintiff to join the RTPs, regardless
(2) “Defendant” includes any person from whom, at the of limitations. See TEX. CIV. PRAC. & REM.CODE ANN.
time of the submission of the case to the trier of fact, a § 33.004(e) (West 2008); id. § 16.003(a) (West 2002)
claimant seeks recovery of damages. (establishing a two-year limitations period for various causes
of action). We must, therefore, determine whether Hanke was
....
a defendant when the RTP designation was made.
(5) “Settling person” means a person who has, at any time,
paid or promised to pay money or anything of monetary
value to a claimant in consideration of potential liability b. Effect of Settlement on Hanke's Status in the Suit
with respect to the personal injury, property damage, death,
*258 or other harm for which recovery of damages is Flack and Hanke signed the settlement agreement on July
sought. 23, 2007, four days before the trial court's order designating
RTPs. Based on the signed settlement agreement, at the time
(6) “Responsible third party” means any person who is of the designation, Hanke was clearly a settling person under
alleged to have caused or contributed to causing in any section 33.011. See TEX. CIV. PRAC. & REM.CODE ANN.
way the harm for which recovery of damages is sought, § 33.011 (West 2008). Nothing in Chapter 33, however,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Flack v. Hanke, 334 S.W.3d 251 (2010)
precludes a party from being both a defendant and a settling [5] An appellate court is required to construe a party's brief
person, and Appellees have not provided any authority to liberally. TEX.R.APP. P. 38.9; see also Perry v. Cohen, 272
the contrary. See TEX. CIV. PRAC. & REM.CODE ANN. S.W.3d 585, 587 (Tex.2008); Ditta v. Conte, 298 S.W.3d 187,
ch. 33 (West 2008); Kimbrell v. Molinet, 288 S.W.3d 464, 189–90 (Tex.2009) (construing petitioner's brief liberally to
467–68 (Tex.App.-San Antonio 2008, pet. granted) (mem. contain argument that it did not expressly contain because
op.) (Simmons, J., concurring). As such, because Flack had it contained similar and related arguments). Instead of using
neither filed, nor taken, a nonsuit against Hanke, Hanke the term “retroactive constitutionality” as the Appellees do,
was both a settling person and a defendant under section Flack couches the argument in terms of “applicability.” Flack
33.011. Hanke was still a defendant at the time Appellees argues the Appellees were properly joined as defendants
were designated as RTPs, and summary judgment cannot be under section 33.004(e). Moreover, at the beginning of
sustained based on limitations. See TEX. CIV. PRAC. & Flack's brief, he sets out the two issues raised in the summary
REM.CODE ANN. § 33.004 (West 2008). judgment motions as (1) the case was filed after limitations
ran; and (2) “application of Texas Civil Practice & Remedies
Code § 33.004(e) to this case would violate the Texas
3. Pleading Requirements within Section 33.004 Constitutional prohibition against retroactive laws.” Flack
[3] Appellees Fisch and Potter next argue that Hanke's further argues “the Court should have in all things denied
motion to designate RTPs did not meet the pleading Defendant's Motion for Summary Judgment.” “In order to
requirements implicit in the statute. See TEX. CIV. PRAC. see that ‘a just, fair[,] and equitable adjudication of the
& REM.CODE ANN. § 33.004(f) (West *259 2008). 2 No rights of the litigants' is obtained,” this court is mandated
party, however, filed an objection in accordance with section to broadly construe Flack's issues to “encompass the core
33.004(f). See id. (“A court shall grant leave to designate question” of whether a retroactive constitutional violation
the named person as a responsible third party unless another occurred. See Ditta, 298 S.W.3d at 190 (internal citations
party files an objection to the motion for leave on or before omitted). Accordingly, we conclude, after reviewing Flack's
the 15th day after the date the motion is served.”). Absent entire brief, the argument is preserved for appellate review.
a timely objection, Fisch and Potter waived any objection
to Hanke's motion for leave to designate RTPs. Thus, the [6] Substantively, Appellees contend that section 33.004(e)
trial court's grant of summary judgment in favor of Fisch and is an unconstitutional application of an extended limitations
Potter cannot be sustained based on insufficient pleading. period in this case because their dealings with Flack were
concluded before the statute was implemented and, thus,
extending the statute of limitation in this case would be
4. Unconstitutional Retroactive Application of Section an impermissible retroactive application. *260 See Baker
33.004(e) Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1, 4 (Tex.1999),
[4] As Appellees point out, it well-settled law that the (reaffirming “settled law” that, “after a cause has become
non-movant is required to negate on appeal any grounds barred by the statute of limitation, the defendant has a vested
upon which the trial court could have rendered judgment. right to rely on such statute as a defense.”) (citing Wilson v.
See Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 Work, 122 Tex. 545, 62 S.W.2d 490, 490 (1933)). On appeal,
(Tex.1970); Villanueva v. Gonzalez, 123 S.W.3d 461, 464 Appellees suggest that all of their dealings with Flack were
(Tex.App.-San Antonio 2003, no pet.). Absent such action by concluded in the 1990s, and any limitations period would
the non-movant, an appellate court will affirm the summary have run prior to the enactment of the 2003 amendments to
judgment if any one of the theories advanced is meritorious. Chapter 33. See also Mann v. Jack Roach Bissonnet, Inc., 623
Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989). We S.W.2d 716, 718–19 (Tex.Civ.App.-Houston [1st Dist.] 1981,
therefore must address whether in his original briefing Flack no writ) (holding that legislature cannot extend limitations
failed to address the summary judgment ground relating period for claims that are already time-barred). Yet, in their
to the unconstitutionality of the retroactive application of motions for summary judgment, the Appellees concede that
section 33.004(e). More specifically, the summary judgment their dealings with Flack continued until as late as June of
argument that any claims that Flack may have had against 2004, when the bankruptcy was filed. There is no other date
Fisch and Potter were already barred by the statute of relied upon in their motion for summary judgment. See In re
limitations before the 2003 amendments took effect. A.D., 73 S.W.3d 244, 247–49 (Tex.2002) (holding that statute
would be an unconstitutional, retroactive law if it destroyed
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Flack v. Hanke, 334 S.W.3d 251 (2010)
a vested right by eliminating a matured statute-of-limitations [to] produce[ ] sufficient evidence to raise a genuine issue of
defense, but concluding that statute in question did not do so). fact regarding the designated person's responsibility,” Id., and
Accordingly, because Appellees' pleadings before the trial Hanke was no longer in the case to present evidence. Thus,
court support that Flack's claims arose after the enactment of Langley & Banack contend that under section 33.004(l ), the
the 2003 amendments to Chapter 33, we conclude that the motion to strike was properly granted because there was no
trial court erred in granting the motion for summary judgment evidence produced that Langley & Banack was responsible
based on retroactive application. See TEX. CIV. PRAC. & for a portion of Flack's alleged injury or damage.
REM.CODE ANN. § 33.004 (West 2008).
Flack responds that Langley & Banack's motion to strike
became moot when Langley & Banack was joined as a
5. Public Policy defendant and lost its status as an RTP. Once Langley &
[7] Appellees additionally argue that they were designated Banack was joined in the suit, it could only contest its status
as RTPs solely to “try and wash out their limitations as a defendant—not its prior designation as an RTP.
defense.” 3 Although this appears to be true, the statute does
not specifically preclude such designations based on the intent
of the designator. See id. § 33.004. Appellees further assert A. Standard of Review
their designations as RTPs were unrelated to the purpose of [9] According to section 33.004(l ), the movant has the
section 33.004 and were nothing more than an attempt to burden to show there is no genuine issue of material
manipulate the process and circumvent statutory limitations. fact regarding the designated person's responsibility for the
More specifically, Cox Smith points out that Flack's and claimant's injury. Whether the proof establishes as a matter
Hanke's settlement did not resolve the litigation, but actually of law that there is no genuine issue of fact is a question
promoted a brand new suit against the lawyers. See Elbaor of law reviewed de novo. See Valence Operating Co. v.
v. Smith, 845 S.W.2d 240, 250 (Tex.1992) (“[W]e do not Dorsett, 164 S.W.3d 656, 661 (Tex.2005) (citing Provident
favor settlement arrangements that skew the trial process, Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215
mislead the jury, promote unethical collusion among nominal (Tex.2003)) (reviewing a summary judgment de novo); see
adversaries, and create the likelihood that a less culpable also Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d
defendant will be hit with the full judgment.”). However, 217, 226 (Tex.2004) ( “[W]hether undisputed evidence of
because Hanke was both a settling party and a defendant in jurisdictional facts establishes ... jurisdiction is ... a question
Flack's lawsuit, the designations were proper under Chapter of law.”).
33. Thus, the trial court had no discretion to deny the
designation of Appellees as responsible third parties under the
B. Analysis
statute.
[10] This is a case of first impression. The parties have cited
no authority for their arguments, and our search has likewise
Accordingly, because section 33.004 provides that a properly
yielded no results. We, therefore, turn to the plain meaning
designated responsible third party may be joined regardless
of the statute. Fireman's Fund County Mut. Ins. Co. v. Hidi,
of limitations, the trial court erred in granting the motions
13 S.W.3d 767, 768–69 (Tex.2000). In construing the statute,
for partial summary judgment based on limitations. See TEX.
we look to the plain meaning of the words used in the statute
CIV. PRAC. & REM.CODE ANN. § 33.004 (West 2008).
in our “attempt to give effect to the Legislature's intent.” Id.
Moreover, “[w]e read every word, phrase, and expression in
a statute as if it were deliberately chosen, and presume the
MOTION TO STRIKE DESIGNATION words excluded from the statute are done so purposefully.”
OF RESPONSIBLE THIRD PARTIES USA Waste Servs. of Houston, Inc. v. Strayhorn, 150 S.W.3d
491, 494 (Tex.App.-Austin 2004, pet. denied); see also Cities
[8] In addition to its motion for summary judgment, the of Austin, Dallas, Fort Worth, & Hereford v. Sw. Bell Tel. Co.,
trial court also granted Langley & Banack's Motion to Strike 92 S.W.3d 434, 442 (Tex.2002) (reiterating that an appellate
Responsible Third Parties. 4 Langley & *261 Banack claim court begins with the words used by the Legislature).
that it was not a proper RTP because it was not responsible
for a portion of the injury or damage resulting from Hanke's Section 33.004(l ) provides:
poor advice. Furthermore, the statute requires “a defendant
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Flack v. Hanke, 334 S.W.3d 251 (2010)
§ 33.004(l ). Certainly, the defendant in this case would not
After adequate time for discovery, be Hanke because he no longer was a defendant when the
a party may move to strike the motion to strike was filed. It would be illogical to assume
designation of a responsible third Langley & Banack, as a defendant, would raise an issue
party on the ground that there against the motion it filed. Such an interpretation would
is no evidence that the designated permit defendants to re-litigate their designation of RTPs—
person is responsible for any portion which the statute does not permit.
of the claimant's alleged injury or
damage. The court shall grant the [12] There are other procedures available for a defendant
motion to strike unless a defendant such as Langley & Banack to assert that there is no evidence
produces sufficient evidence to raise that it “is responsible for any portion of the claimant's alleged
a genuine issue of fact regarding the injury or damage” and thereby obtain a dismissal from the
designated person's responsibility for suit. See id. The trial court may grant a no-evidence summary
the claimant's injury or damage. judgment under Rule 166a(i) when there is no evidence of
one or more essential elements of a claim or defense on which
TEX. CIV. PRAC. & REM.CODE ANN. § 33.004(l ).
an adverse party would have the burden of proof at trial.
The statute anticipates that a party may move to strike the
TEX.R. CIV. P. 166a(i). The similarity in language between
designation of an RTP. Generally, the party moving *262 to
section 33.004(l ) and a no-evidence summary judgment is not
strike would be the plaintiff seeking to remove an RTP from
coincidental. See Elaine A. Carlson, Tort Reform: Redefining
before the jury when there is no evidence the particular RTP
the Role of the Court and the Jury, 47 S. TEX. L.REV. 245,
bore any responsibility for the plaintiff's injury. 5 In response, 263 (2005); Gregory J. Lensing, Proportionate Responsibility
the defendant typically would be the party seeking to retain and Contribution Before and After the Tort Reform of 2003,
the RTP in the jury charge to diminish his potential liability 35 TEX. TECH. L.REV. 1125, 1182 (2004). As a defendant,
and perhaps eliminate any joint and several liability. Thus, Langley & Banack's claim that *263 there is no evidence
to retain the RTP, the statute provides the “defendant” must of its responsibility is not properly asserted by contesting its
produce sufficient evidence to raise a fact issue regarding designation as an RTP, but may be asserted by a no-evidence
the RTP's responsibility to the claimant. Notably absent from motion for summary judgment thereby requiring Flack to
section 33.004 is any method for the RTP to object to its own present some evidence of Langley & Banack's responsibility.
designation. According to the statute, only a party may object See TEX.R. CIV. P. 166a(i).
to the designation and move to strike the designation. See
TEX. CIV. PRAC. & REM.CODE ANN. § 33.004(f), (g), (l ) Accordingly, because Langley & Banack was no longer a
6
(West 2008). With this general construct in mind, we review designated RTP, but was instead a party to the lawsuit, the
the parties' differing interpretations of the statute. trial court had no discretion but to deny Langley & Banack's
motion to strike its designation as a responsible third party.
[11] At the time Langley & Banack filed its motion to
strike itself as an RTP, it was a defendant in the lawsuit
and therefore a party. But Langley & Banack was no longer
CONCLUSION
an RTP, and thus, no longer subject to being stricken under
section 33.004(l ). See TEX. CIV. PRAC. & REM.CODE The motion to designate responsible third parties was timely
ANN. § 33.004(l ). Langley & Banack cannot use its status filed by Hanke without objection. Nothing in Chapter 33
as a defendant to strike its former designation as an RTP. of the Texas Civil Practice and Remedies Code prevents a
Such a theory would require Langley & Banack to define party from being both a defendant and a settling person.
itself as both a defendant and an RTP at the same time. This Thus, Hanke's designation of Appellees as responsible third
interpretation of the statute conflicts with its plain wording parties was in accordance with section 33.004. See TEX. CIV.
and renders the statute unworkable. See Cities of Austin, PRAC. & REM.CODE ANN. §§ 33.004(a); 33.011 (West
Dallas, 92 S.W.3d at 442. As Langley & Banack points 2008). Because Appellees were properly designated RTPs,
out, in response to a motion to strike, the statute requires a Flack was not barred by limitations from joining Appellees
defendant to produce sufficient evidence to raise a genuine as defendants and the trial court erred in granting Appellees'
issue of fact. See TEX. CIV. PRAC. & REM.CODE ANN. motions for partial summary judgment based on limitations.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Flack v. Hanke, 334 S.W.3d 251 (2010)
We, therefore, reverse the judgment of the trial court and
Additionally, because Langley & Banack was no longer an
remand this matter for proceedings consistent with this
RTP under section 33.004, but was a defendant, the trial
opinion.
court erred in granting Langley & Banack's Motion to Strike
Responsible Third Parties.
All Citations
334 S.W.3d 251
Footnotes
1 Appellees further argued that Flack and Hanke were perpetrating a fraud upon the court.
2 Fisch and Potter contend that sections 33.004(g)(1) and (2) imply a pleading requirement because the trial court may
refuse to grant leave to designate an RTP if the “defendant failed to plead sufficient facts concerning the alleged
responsibility of the person.” However, we note section 33.004(g) is predicated on “an objection to the motion for leave
[being] timely filed.” TEX. CIV. PRAC. & REM.CODE ANN. § 33.004 (West 2008).
3 This argument is contained in Langley & Banack's motion for summary judgment that was adopted by the other appellees.
4 Although Appellees Cox Smith and Appellees Fisch and Potter argue the trial court properly granted the motion to strike,
only Langley & Banack filed a motion to strike in the trial court. Therefore, any issue raised or briefed by Cox Smith
or Fisch and Potter relating to the motion to strike their designation as responsible third parties was not preserved for
appeal. See TEX.R.APP. P. 33.1(a) (“[T]he record must show that ... the complaint was made to the trial court by a timely
request, objection, or motion....”).
5 This is the only means available to a plaintiff to remove an objectionable RTP. Procedures such as summary judgment are
unavailable because the RTP is not a party to the suit. Notably, the plaintiff would seek to dismiss an RTP because asking
the jury to determine the RTP's percentage of responsibility potentially diminishes the named defendant's percentage
of fault.
6 The RTP has limited rights regarding its designation presumably because the designation or finding of fault against the
RTP does not, absent joinder as a defendant, impose liability or responsibility on the RTP and may not be used in other
proceedings. TEX. CIV. PRAC. & REM.CODE ANN. § 33.004(i).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
T
French v. Gill, 252 S.W.3d 748 (2008)
record establishes intentional disregard and that
jurisdiction did not lie in the tribunal in which
KeyCite Yellow Flag - Negative Treatment the proceeding was originally filed, the original
Distinguished by In re NETtel Corp., Inc., Bankr.D.Dist.Col.,
lawsuit did not, as a matter of law, serve to toll
September 21, 2011
limitations. V.T.C.A., Civil Practice & Remedies
252 S.W.3d 748 Code § 16.064.
Court of Appeals of Texas,
Texarkana. 2 Cases that cite this headnote
Michael A. FRENCH and Wife, [2] Judgment
Misti Michelle French, Appellants Particular defenses
v.
When the movant seeks summary judgment
Brian James GILL and Giuseppe V. Riccio based on the expiration of limitations, the
d/b/a Tigers Trucking Company, Appellees. movant must conclusively prove the bar
of limitations. Vernon's Ann.Texas Rules
No. 06–07–00076–CV. | Submitted
Civ.Proc., Rule 166a(c).
April 2, 2008. | Decided April 16, 2008.
Cases that cite this headnote
Synopsis
Background: After plaintiffs' second amended complaint in
federal suit arising from automobile accident was stricken, [3] Appeal and Error
plaintiffs sued defendants in state court for negligence arising Extent of Review Dependent on Nature of
from automobile accident. The 402nd Judicial District Court, Decision Appealed from
Wood County, G. Timothy Boswell, J., granted defendants' When a movant seeks summary judgment based
motion for summary judgment on limitations grounds, and on the expiration of limitations, the question on
plaintiffs appealed. The Court of Appeals, 206 S.W.3d 737, appeal is not whether the summary judgment
reversed and remanded. On remand, the 402nd Judicial proof raises a fact issue with reference to the
District Court, Wood County, entered summary judgment in essential elements of the plaintiff's cause of
favor of defendants, and plaintiffs again appealed. action, but whether the summary judgment proof
establishes the movant is entitled to judgment as
a matter of law.
[Holding:] The Court of Appeals, Moseley, J., held that the 12 Cases that cite this headnote
amended complaint in the federal diversity action did not
invoke statutory tolling provision.
[4] Judgment
Particular defenses
Affirmed. On a motion for summary judgment based on the
statute of limitations, if the nonmovant asserts
that the statute has been tolled, it becomes
West Headnotes (10) the movant's burden to conclusively negate the
tolling provision's application before summary
judgment may be awarded. V.T.C.A., Civil
[1] Limitation of Actions Practice & Remedies Code § 16.064.
Failure of action for want of jurisdiction
2 Cases that cite this headnote
The statute tolling the limitations period if
plaintiff filed a previous suit in a different court
that is dismissed for lack of jurisdiction does [5] Evidence
not apply if the initial filing was done with Pleadings
intentional disregard of proper jurisdiction; if the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
French v. Gill, 252 S.W.3d 748 (2008)
Assertions of fact not plead in the alternative the pleadings filed in the first lawsuit. V.T.C.A.,
in the live pleadings of a party are regarded as Civil Practice & Remedies Code § 16.064.
formal judicial admissions.
Cases that cite this headnote
Cases that cite this headnote
[10] Limitation of Actions
[6] Evidence Failure of action for want of jurisdiction
Judicial admissions in general Plaintiffs' filing of an amended complaint
A judicial admission that is clear and seeking to add nondiverse parties as defendants
unequivocal has conclusive effect and bars the in a federal diversity action, indicated intentional
admitting party from later disputing the admitted disregard of proper jurisdiction which prevented
fact. tolling of the statute of limitations in state
negligence action based on the same underlying
Cases that cite this headnote automobile accident; amended complaint on
its face established federal court's lack of
[7] Evidence jurisdiction, and counsel's belief that the federal
Pleadings court might retain jurisdiction had it chosen to
did not show he had a mistaken understanding of
The statement in an amended pleading in a
the facts. V.T.C.A., Civil Practice & Remedies
federal diversity action seeking to add additional
Code § 16.064.
defendants, that diversity would be destroyed
by doing so, was not a judicial admission, Cases that cite this headnote
in determining whether later state action was
barred by limitations; statement was not a
factual statement, but was a legal statement or
conclusion based on stated facts.
Attorneys and Law Firms
Cases that cite this headnote
*749 John R. Mercy, Mercy*Carter*Tidwell, LLP,
Texarkana, Richard G. Danner, Jr., Dallas, John W.
[8] Judgment Alexander, Winnsboro, for Appellants.
Sufficiency of pleading
Gregory S. Porter, Charles H. Clark, Clark, Lea & Porter,
Judgment
Tyler, for Appellees.
Documentary evidence or official record
Although pleadings generally do not constitute Before MORRISS, C.J., CARTER and MOSELEY, JJ.
summary judgment proof, if a plaintiff's
pleadings contain judicial admissions negating
a cause of action, summary judgment may OPINION
properly be granted on the basis of the pleadings.
Opinion by Justice MOSELEY.
1 Cases that cite this headnote
This appeal involves a summary judgment granted against
Michael A. and Misti Michelle French in a suit brought
[9] Limitation of Actions
by them against Brian James Gill and Guiseppe V. Riccio,
Failure of action for want of jurisdiction
doing business as Tigers Trucking Company. The same
One way to prove the intentional disregard suit and very closely-related questions were previously
of proper jurisdiction in the initial filing of a appealed by the Frenches to this Court; a summary judgment
lawsuit, which will prevent the tolling of the rendered against them was reversed and remanded for further
statute of limitations, is by looking at the face of
proceedings. 1
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
French v. Gill, 252 S.W.3d 748 (2008)
The controlling issue in both of these appeals is the impact in the wrong court. TEX. CIV. PRAC. & REM.CODE ANN.
of limitations on the claim of the Frenches against Gill and § 16.064; Clary Corp., 949 S.W.2d at 461. The Frenches
Riccio. maintain that because they had filed their claim in federal
court within two years of the collision, this tolling of the
statute of limitations occurred.
I. Factual and Procedural Background
The claims of the Frenches arose as the result of a motor-
vehicle collision which occurred January 29, 2002. Initially, B. The Exception to the Exception
the Frenches filed suit in March 2003 in federal court against [1] However, Gill and Riccio contest the application of that
several defendants (not including Gill or Riccio), all of whom tolling statute by pointing out an exception to that exception.
were citizens of states other than Texas. See 28 U.S.C.A. § The tolling provision of Section 16.064 of the Texas Civil
1332(a) (West 2006) (granting *750 federal jurisdiction in Practice and Remedies Code does not apply if the initial filing
cases where complete diversity of citizenship exists). was done with intentional disregard of proper jurisdiction.
Parker v. Cumming, 216 S.W.3d 905, 909–10 (Tex.App.-
On January 14, 2004, the Frenches filed an amended pleading Eastland 2007, pet. denied). Under that exception, if the
in the pending federal court action, seeking permission to record establishes intentional disregard and that jurisdiction
join Gill and Riccio (Texas residents); an order was then did not lie in the tribunal in which the proceeding was
entered on January 28, 2004, which permitted the filing of originally filed, the original lawsuit did not, as a matter of law,
that amendment to the pleadings. However, the federal court serve to toll limitations. Therefore, Gill and Riccio maintain,
reconsidered that order and withdrew its consent for the if those conditions exist, and under these facts, the Frenches
joinder of Gill and Riccio by order entered on March 4, 2004. would be time-barred from maintaining their action in state
Suit was then filed by the Frenches against Gill and Riccio in court. See TEX.R. CIV. P. 166a; see also Parker, 216 S.W.3d
the district court of Wood County, Texas, on April 29, 2004. at 908.
II. The Rule on Limitations III. What is the Difference Between This Case and the
On January 29, 2004 (between the date the Frenches had First One?
been granted leave to include Gill and Riccio in the federal In the first judgment and appeal, appellees/defendants argued
lawsuit and the date of the entry of the order which before the trial court and here that collateral estoppel or
withdrew that permission), the two-year anniversary of the the full faith and credit clause ended the action. Gill and
collision occurred. The two-year anniversary of the collision Riccio had convinced the trial court at the first summary
is significant; after then, this kind of tort claim would be judgment hearing to find that rulings by the federal court
barred under Texas's two-year statute of limitations. See TEX. (which included a statement that “The additional Defendants
CIV. PRAC. & REM.CODE ANN. § 16.003(a) (Vernon that the Plaintiffs wish to add are not indispensable and were
Supp.2007). clearly added solely for the purposes of defeating diversity
jurisdiction”) conclusively proved that the savings clause
of *751 Section 16.064 of the Texas Civil Practice and
A. Tolling Exception to the Rule Remedies Code did not toll limitations. We found to the
Although recovery on most tort actions would be barred after contrary and reversed the summary judgment granted Gill and
the expiration of two years, an exception to that rule provides Riccio.
that a tolling of the statute of limitations takes place if a
party has filed a previous suit in a different court and that In the present appeal, the sole issue is one that we mentioned
action was dismissed because of lack of jurisdiction, provided in our previous opinion in this case but could not then address:
that the party refiled the suit in a court of proper jurisdiction Whether the Frenches' statements in their federal pleading
within sixty days after such dismissal. TEX. CIV. PRAC. & seeking to add Gill and Riccio preclude the Frenches from
REM.CODE ANN. § 16.064 (Vernon 1997); Clary Corp. v. seeking to apply the exception to the limitations statute in the
Smith, 949 S.W.2d 452, 461 (Tex.App.-Fort Worth 1997, writ state lawsuit. In other words, when they filed their pleadings
denied). The cases also note that the statute is to be liberally in federal court, did they plead themselves right out of court?
construed to effectuate its objective—relief from penalty of
limitation bar to one who has mistakenly brought his action
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
French v. Gill, 252 S.W.3d 748 (2008)
Another motion for summary judgment was filed by Gill
and Riccio and this motion was granted. The validity of that B. Summary Judgment Evidence
summary judgment is now before us. Gill and Riccio attached a number of documents as summary
judgment evidence, but rely largely on the federal pleading:
“Plaintiffs' Second Amended Original Complaint.”
IV. Standard of Review
Summary judgment is proper when the movant establishes That document was filed by the Frenches in federal court
that there is no genuine issue of material fact and that January 28, 2004. In relevant part, it reads as follows:
he is entitled to judgment as a matter of law. TEX.R.
CIV. P. 166a(c); City of Houston v. Clear Creek Basin 6. There will no longer be diversity
Auth., 589 S.W.2d 671 (Tex.1979); Baubles & Beads v. of citizenship between the parties
Louis Vuitton, S.A., 766 S.W.2d 377 (Tex.App.-Texarkana to this [federal] civil action with
1989, no writ). When reviewing a summary judgment, we the joinder of Defendants, Brian
take as true all evidence favorable to the nonmovant and James Gill and Giuseppe V. Riccio,
indulge in every reasonable inference and resolve any doubts d/b/a Tigers Trucking Co. The
in the nonmovant's favor. Limestone Prods. Distrib., Inc. amount in controversy, exclusive
v. McNamara, 71 S.W.3d 308, 311 (Tex.2002); Rhone– *752 of interest and costs, exceeds
Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999). SEVENTY–FIVE THOUSAND AND
NO/100 DOLLARS ($75,000.00).
[2] [3] [4] When the movant seeks summary judgment Jurisdiction will no longer exist
based on the expiration of limitations, the movant must pursuant to 28 U.S.C. § 1392 and the
conclusively prove the bar of limitations. Jennings v. Burgess, Plaintiffs request that this proceeding
917 S.W.2d 790, 793 (Tex.1996). The question on appeal be transferred to the State District
is not whether the summary judgment proof raises a fact Court in Wood County, Texas.
issue with reference to the essential elements of the plaintiff's
cause of action, but whether the summary judgment proof Another piece of Gill and Riccio's summary judgment
establishes the movant is entitled to judgment as a matter evidence is the federal district court's “Order Striking
of law. Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d Plaintiffs' Second Amended Complaint.” In relevant part, that
734, 736 (Tex.1990). Because the movant bears the burden document includes the following language:
of proof, all conflicts in the evidence are disregarded,
On January 14, 2004, the Plaintiffs filed a motion for
evidence favorable to the nonmovant is taken as true, and
leave to file their second amended complaint. The Court
all doubts as to the genuine issues of material fact are
inadvertently granted said motion before the Defendants
resolved in favor of the nonmovant. Nixon v. Mr. Prop.
in the case had adequate time to file their response. The
Mgmt. Co., 690 S.W.2d 546 (Tex.1985). If the nonmovant
Court's Order (Docket No. 24) allowed the Plaintiffs leave
asserts that the statute of limitations has been tolled, it
to add Brian James Gill and Giuseppe V. Riccio d/b/a
becomes the movant's burden to “conclusively negate the
Tigers Trucking Co. as Defendants in this matter.
tolling provision's application” before summary judgment
may be awarded. Allen v. Intercapital Lodge Ltd. P'ship, 66 On January 30, 2004, the Defendants filed the instant
S.W.3d 351, 353 (Tex.App.-Houston [14th Dist.] 2001, pet. motion to strike the Plaintiffs' second amended complaint,
denied). noting that they [Defendants] were not afforded an
opportunity to respond. Because the Court ruled on the
Plaintiffs' motion before the expiration of the Defendants'
A. Basis Upon Which This Summary Judgment Rests
deadline to respond, the Court will reconsider the
Gill and Riccio's motion for summary judgment specifically
Defendants' motion to strike as if it were their original
states that they are entitled to summary judgment based on
response to the Plaintiff's motion for leave to amend.
limitations because the time had run on the Frenches' lawsuit
and that due to the statements contained in the Frenches' After reconsidering the Plaintiffs' motion for leave to
pleadings in the federal suit, the statutory tolling provision amend and the Defendants['] motion to strike, it is clear
did not apply. to the Court that the former should be denied. The
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
French v. Gill, 252 S.W.3d 748 (2008)
additional Defendants that the Plaintiffs wish to add their involvement and needed to file suit against them to
are not indispensable and were clearly added solely for toll the statute of limitations and preserve Plaintiffs' rights.”
the purposes of defeating diversity jurisdiction. Further,
there has already been extensive discovery in this case: 13. “Further, the case against Gill and Riccio was based
the Plaintiffs and Defendant Omang have served and on the same nucleus of operative facts as the one against
responded to interrogatories and requests for production; Henderson and Omang and I sought to avoid piecemeal
Defendant Omang has served depositions on written litigation of this matter. Filing it in federal court, whether
questions to 17 of the Plaintiffs' healthcare providers, all of it defeated jurisdiction or not, was to keep the case as one.”
which have been answered; Defendant Omang has served
14. “Moreover, I did not add Gill and Riccio to defeat
a deposition on written questions to the Plaintiffs' former
federal jurisdiction. I chose to file this case initially in
employer and has filed discovery pleadings regarding same
federal court as there was diversity of the initial parties.
with the Court; the Plaintiffs and Omang have made
I would not seek to intentionally disregard the proper
not only their Initial Disclosures, but also their Expert
jurisdiction in a case I filed in federal court.”
Disclosures, including production of all expert reports and
other materials. 15. “Initially, I thought that if jurisdiction was defeated,
that the entire case would be transferred to Wood County.
As an equitable matter, the Plaintiffs chose to seek damages
I was relying upon the Freeport–McMoRan, Inc. v. KN
from Omang and Mr. Henderson. They also chose to pursue
Energy case and thought that the federal court might have
their claims in this Federal Court. To justify their 10–
been able to retain jurisdiction had it wanted to, but that
month–long delay in adding these nondiverse, dispensable
the decision would be up to the federal court. In the event
parties to their lawsuit, the Plaintiffs claim they just now
the federal trial court decided it did not want to retain
discovered that they need to join Mr. Gill and his employer,
jurisdiction, I requested a transfer to state court.”
Giuseppe V. Riccio d/b/a Tigers Trucking Co. However,
the Plaintiffs and their counsel have known of Mr. Gill, and 16. “Indeed, in Plaintiffs' Rejoinder to Defendants' Reply
all other witnesses to the accident, since January 30, 2002. to Plaintiffs' Response to Defendants' Motion for Summary
In the subsequent two-year period, the Plaintiffs and their Judgment, Plaintiffs argued that diversity was not defeated
counsel made no effort to contact Mr. Gill or his employer, as it was determined at the time of filing a lawsuit, based
much less join them in this case. Meanwhile, Defendant on the same interpretation of Freeport–McMoran, Inc.
Omang has expended a significant amount of time and v. K N Energy, Inc., 498 U.S. 426, 111 S.Ct. 858, 860
resources in discovery for this case and in preparing its [112 L.Ed.2d 951] (1991). My interpretation was not an
defense to this case. unreasonable one. Even the treatise O'Connor's Federal
Rules * Civil Trials (2003) states, relying upon Freeport–
Finally, the Plaintiffs have not shown that they will
McMoran that ‘Diversity is determined as of the date the
be prejudiced or how they will be denied an adequate
action is commenced.’ See page 83, a copy of which is
judgment or an adequate remedy of their claims if Mr.
attached hereto as Exhibit A–5.[”]
Gill and his employer are not joined as Defendants.
Accordingly, the Court will now vacate its previous order 17. “I did not, in any event, purposely ignore jurisdiction
granting the Plaintiffs leave to amend. by filing in federal court. That is where the case was
pending originally and since the second set of Defendants
to be added were involved in the same accident, it only
C. The Frenches' Response to the Motion for Summary
made sense to add them to the lawsuit existing at the time,
Judgment
whether that meant the case would remain in federal court
*753 As its primary summary judgment evidence, counsel
or be transferred to state court.”
for the Frenches filed his own affidavit in which he stated in
relevant part as follows: 18. “I requested a transfer to state court in the event the
federal court determined that jurisdiction was no longer
12. “As I stated during the oral argument on the MSJ prior
appropriate in federal court. This was to conserve judicial
to the appeal in this case, I did not add Gill and Riccio to
resources and keep the case, which had already been on
defeat jurisdiction. In fact, I had only recently learned of
file for 10 months and for which most of the discovery was
completed.”
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
French v. Gill, 252 S.W.3d 748 (2008)
19. “Defendants make the following statement in their 1. Was There a Judicial Admission?
Motion for Summary Judgment at page 2 which is patently [5] [6] [7] Initially, we will look at whether the document
false and without basis in fact: ‘Clearly, Plaintiffs added itself constitutes a judicial admission. The general language
Mr. Gill and Mr. Riccio to destroy diversity jurisdiction.’ involving judicial admissions states that:
Defendants do not cite to any evidence to support this
statement. Further, as explained above, this is illogical Assertions of fact, not plead in the
since Plaintiffs were the ones who chose to file in the alternative, in the live pleadings of a
federal court to begin with. It does not make sense that party are regarded as formal judicial
some 10 months later, well into the lawsuit, that Plaintiffs admissions. A judicial admission
would then seek to destroy the jurisdiction they chose.” that is clear and unequivocal has
conclusive effect and bars the
.... admitting party from later disputing
the admitted fact.
21. “Judge Steger's comment, which was dicta, that
Plaintiff's addition of Mr. Gill and Mr. Riccio was ‘for the Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562,
purposes *754 of defeating diversity jurisdiction,’ was 568 (Tex.2001) (citations omitted).
not based on any findings of fact. No testimony was taken
and there was no basis upon which to make this comment. [8] In a more typical scenario, courts acknowledge that
As demonstrated above, this is illogical.” although pleadings generally do not constitute summary
judgment proof, if a plaintiff's pleadings contain judicial
admissions negating a cause of action, summary judgment
D. The Frenches' Argument may properly be granted on the basis of the pleadings.
The Frenches argue that the language that they chose to use in Commercial Structures & Interiors, Inc. v. Liberty Educ.
their motions to the federal court did not conclusively show Ministries, Inc., 192 S.W.3d 827, 835 (Tex.App.-Fort Worth
that they intentionally disregarded proper jurisdiction when 2006, no pet.); see Brooks v. Ctr. for Healthcare Servs., 981
they filed the first lawsuit. As previously discussed, under S.W.2d 279, 283 (Tex.App.-San Antonio 1998, no pet.).
that exception to the application of the tolling statute, if the
record affirmatively establishes that jurisdiction did not lie All of those situations, however, explain the use of pleadings
in the tribunal in which the proceeding was originally filed, by a party in the suit in which they were filed. This situation
the original lawsuit did not, as a matter of law, serve to toll is, however, different. The pleading is not from this case. It
limitations. Therefore, the Frenches were time-barred from is not being used to prove or disprove the cause of action
recovering from Gill and Riccio in state court. based on the Frenches' allegations or statements of fact about
the cause of action. It is used by the Frenches to prove that
There are three separate aspects to the Frenches' argument: there was a prior case in which the new defendants had been
sued; thus, when those defendants were dropped, the tolling
1) The pleadings in the federal case cannot be classified as provision allowed the Frenches to bring suit in state court.
“judicial admissions”; thus, the pleadings are not conclusive It is then used by Gill and Riccio as proof that the Frenches
proof that the Frenches were aware of the impact of what they knew that their addition of Gill and Riccio as new defendants
were doing. As a result, summary judgment was therefore would destroy diversity and nevertheless added them in;
improper. therefore, the exception to the tolling provision applies, and
the Frenches' state lawsuit is untimely brought.
2) There is “reliable authority” to support the Frenches'
counsel's belief that diversity would not be destroyed by As Gill and Riccio point out, a number of facts were pled
adding the two nondiverse parties. by the Frenches in the *755 federal complaint, including
the names and citizenship of the defendants. Based on those
3) The Frenches provided summary judgment evidence in factual statements, the Frenches then stated that no diversity
which their counsel stated that they did not intentionally file of citizenship would continue to exist between the parties
the case in the wrong court in an effort to destroy jurisdiction. and asked the federal court to transfer the proceeding to state
district court.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
French v. Gill, 252 S.W.3d 748 (2008)
provides summary judgment evidence of much more than
The statement that diversity would be destroyed is not a simply the date of its filing. The question before us is whether
factual statement. Rather, it is a legal statement or conclusion the Frenches' counsel's unequivocal and clear statement that
based on stated facts. As such, it does not fit within the adding the new players would defeat jurisdiction conclusively
definition of a judicial admission. shows that he made the filing with intentional disregard of the
proper jurisdiction.
The Frenches' counsel goes further to maintain that the
statement in federal court pleadings could not possibly be a On its face, it does. The filing of the petition which included
judicial admission because it is not a live pleading (in this nondiverse parties clearly sets out the facts defeating diversity
lawsuit). That aspect of his argument is not persuasive. The and then correctly states the legal impact of those facts.
facts stated in the pleading are not contested and were not part It then goes on to, based on the termination of the court's
of alternative pleadings. The fact that the federal lawsuit is no *756 jurisdiction, request the federal court to transfer the
longer being pursued is not a reason to conclude that the facts proceeding to state court.
stated have no further usefulness to prove the Frenches' intent
and knowledge when causing them to be filed. The Frenches argue that because they have provided summary
judgment evidence by their counsel's affidavit, they have
[9] In applying this particular statute, as pointed out by Gill sufficiently explained the motive for filing in federal court
and Riccio, one primary way to prove intentional disregard is to enable them to avoid summary judgment. Looking at
by looking at the face of the pleadings filed in the first lawsuit. counsel's affidavit critically, it states that he did not intend to
See Gordon v. Staudt, No. 03–02–00768–CV, 2004 WL add the additional parties in an effort to defeat jurisdiction;
314965, at *3, 2004 Tex.App. LEXIS 1685, at *9 (Tex.App.- rather, that he did so to toll limitations and that he had thought
Austin Feb. 20, 2004, pet. denied); Parker, 216 S.W.3d at that if jurisdiction was defeated, the federal court could
910; Williamson v. John Deere Co., 708 S.W.2d 38, 39– nonetheless either transfer the case to state court or retain
40 (Tex.App.-Tyler 1986, no writ) (all using the pleadings jurisdiction. He states repeatedly in multiple paragraphs that
from the prior lawsuits to determine limitations—and the he did not ignore jurisdiction.
application of the exceptions—under this section).
The Frenches' counsel's affidavit does not directly address the
Accordingly, although it does appear that the pleading did dispositive issue. It answers another and different question:
make certain formal judicial admissions of fact, the part upon whether he had the intention to defeat jurisdiction. Counsel's
which Gill and Riccio rely is not an admission of fact; it is, affidavit states that he did not intend to defeat jurisdiction.
rather, a statement of the application of the law to those facts.
The question here is not whether he intended to defeat
It is very clear, however, that the pleading is a statement by the jurisdiction but whether he filed in conscious disregard
Frenches' counsel reflecting his understanding that his action of proper jurisdiction. Those are different propositions.
in including Gill and Riccio as defendants would destroy Although these arguments bear some real similarity, they do
diversity; the case thereafter lacking diversity of parties, the not intersect.
jurisdiction of the federal court to hear the suit would be
destroyed. 2 The Frenches' counsel's affidavit also stated that he had
believed that the federal court might have been able to retain
Although the statement is not a “fact” as to actual jurisdiction over the entirety had it chosen to do so. That
jurisdictional authority, it may well be a “fact” as to whether was a mistake in an understanding of the law, not a mistake
the Frenches filed their action against Gill and Riccio in of fact. As pointed out by the Eastland court in Parker, the
federal court with intentional disregard of its jurisdiction to issue focused on the question of whether the record showed
hear the case. that claimant had made “a good faith mistake” by initially
filing in a (federal) court without jurisdiction over the claim. 3
The court found that the claimant had not acted in good faith
E. Determining Intent (recognizing that the party's factual complaint, if taken as
[10] Even though the pleading filed by the Frenches in true, affirmatively established that the other tribunal had no
federal court is not a judicial admission, it nonetheless jurisdiction) and that it was not necessary for the defendants
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
French v. Gill, 252 S.W.3d 748 (2008)
of fact exists as to whether he simply made a mistake or
to prove that Parker “consciously appreciated this because her
intended to defeat the jurisdiction of the *757 federal court.
knowledge of the law is imputed.” Parker, 216 S.W.3d at 910.
We conclude that this is a distinction without a difference.
The court concluded that absent some evidence of accident
He is charged with knowledge of the law, and there is no
or mistake of fact, the filing of a suit with a pleading which,
suggestion that there were any mistaken understandings of
on its face, establishes the court's lack of jurisdiction does not
fact (such as the residence of the parties or the situs in
invoke the tolling provision.
which an event occurred) that could support any suggestion of
mistaken application of that law. The only evidence on point
In its analysis, the Parker court recognized that Parker's
thus shows that his filing was made in intentional disregard
construction of the section that he claimed provided
of the jurisdiction of the federal court. Because there was
jurisdiction was incorrect, and that whether Parker was
intentional disregard of the jurisdiction, the tolling does not
conscious of this was immaterial, due to the fact that all
occur and limitations barred the prosecution of the lawsuit.
persons are presumed to know the law and are charged
with knowledge of statutory provisions. 4 Id. at 911; Virtual
We affirm the judgment of the trial court.
Healthcare Servs., Ltd. v. Laborde, 193 S.W.3d 636, 644
(Tex.App.-Eastland 2006, no pet.). All are presumed to know
the law. Redmon v. Griffith, 202 S.W.3d 225, 238 (Tex.App.- All Citations
5
Tyler 2006, pet. denied).
252 S.W.3d 748
In this case, the Frenches' counsel argues that he
misunderstood the import of the law, and that a question
Footnotes
1 French v. Gill, 206 S.W.3d 737 (Tex.App.-Texarkana 2006, no pet.).
2 Gill and Riccio point out that the Frenches never argued to the trial court that the pleading could not be considered
as summary judgment proof and also points to our opinion in the earlier appeal, in which we also pointed out that the
Frenches had offered the documents for the summary judgment proceedings, and declining to “reward the Frenches
for complaining the trial court erred by considering the very evidence they originally offered and certified as authentic.”
French, 206 S.W.3d at 741.
3 Parker, 216 S.W.3d at 910.
4 N. Laramie Land Co. v. Hoffman, 268 U.S. 276, 283, 45 S.Ct. 491, 69 L.Ed. 953 (1925); Greater Houston Transp. Co.
v. Phillips, 801 S.W.2d 523, 525 n. 3 (Tex.1990).
5 It is a maxim that all persons are presumed to know the law. Greater Houston Transp. Co., 801 S.W.2d at 528 n. 3
(citing E.H. Stafford Mfg. Co. v. Wichita Sch. Supply Co., 118 Tex. 650, 23 S.W.2d 695, 697 (1930)). A parallel maxim is
that ignorance of the law is no excuse. Cherokee Water Co. v. Forderhause, 727 S.W.2d 605, 615 (Tex.App.-Texarkana
1987), rev'd on other grounds, 741 S.W.2d 377 (Tex.1987); Goss v. Bobby D. Assocs., 94 S.W.3d 65, 69 (Tex.App.-
Tyler 2002, no pet.).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
U
GAB Business Services, Inc. v. Moore, 829 S.W.2d 345 (1992)
Cases that cite this headnote
KeyCite Yellow Flag - Negative Treatment
Declined to Follow by Foster v. Teacher Retirement System, Tex.App.-
Austin, December 23, 2008
[2] Workers' Compensation
Unfair Practices; Bad Faith; Penalties
829 S.W.2d 345 Workers' compensation carriers have duty to deal
Court of Appeals of Texas, fairly and in good faith with injured employees.
Texarkana.
1 Cases that cite this headnote
GAB BUSINESS SERVICES, INC., Appellant,
v.
[3] Workers' Compensation
Sherry MOORE, Appellee.
Reasonable cause to dispute or deny
No. 6–91–103–CV. | April 14, 1992. Workers' Compensation
Delay
Workers' compensation claimant brought action against city
Workers' compensation claimant who asserts
employer, risk pool through which city insured itself, and
that carrier has breached duty of good faith and
workers' compensation insurer, alleging insurance bad faith
fair dealing must establish absence of reasonable
and deceptive trade practices in connection with denial of
basis for denying or delaying payment of claim
her claim. The 71st Judicial District Court, Harrison County,
and that carrier knew or should have known that
Bonnie Leggat, J., granted judgment non obstante veredicto
there was no reasonable basis for denying or
in favor of city and risk pool, but entered judgment against
delaying payment of claim.
insurer. Insurer appealed. The Court of Appeals, Grant, J.,
held that: (1) evidence was sufficient to support jury's finding 4 Cases that cite this headnote
that insurer failed to act fairly and in good faith by failing
to provide claimant weekly workers' compensation benefits;
(2) evidence was sufficient to support jury's finding that [4] Workers' Compensation
insurer engaged in unfair or deceptive act or practice; (3) Rights as Between Employers, Insurers, and
evidence was sufficient to support award of $25,000 for Employees
mental anguish; (4) insurer was not entitled to governmental Evidence was sufficient to support finding that
immunity from liability; and (5) trial court properly excluded there was no reasonable basis for workers'
defendant's former employee's deposition testimony. compensation carrier to deny claim and that
carrier knew or should have known that there
Affirmed. was no reasonable basis to deny claim, even
though claimant's back injury upon which claim
was based occurred while claimant was at home
putting on her pants six months after work
West Headnotes (22) injury, where carrier had several medical reports
indicating that claimant's back problems resulted
[1] Appeal and Error from the initial on-the-job injury.
Extent of Review
Cases that cite this headnote
Appeal and Error
Clear or palpable weight or preponderance
[5] Antitrust and Trade Regulation
When considering insufficiency of evidence
Insurance
point, Court of Appeals must consider and weigh
all evidence and should set aside verdict only Workers' compensation insurer's lack of good
if it is so contrary to overwhelming weight of faith in processing claim is unfair or deceptive
evidence as to be clearly wrong. act and can be basis of cause of action under
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
GAB Business Services, Inc. v. Moore, 829 S.W.2d 345 (1992)
Deceptive Trade Practices Act. V.T.C.A., Bus. & Humiliation, insults, and indignities in
C. § 17.41 et seq. general
In order to establish “mental anguish,” plaintiff
2 Cases that cite this headnote
must show more than mere worry, anxiety,
vexation, embarrassment, or anger; mental
[6] Antitrust and Trade Regulation anguish includes mental sensation of pain
Weight and sufficiency resulting from such painful emotions as grief,
Evidence was sufficient to support finding that severe disappointment, wounded pride, shame,
workers' compensation insurer engaged in unfair despair, and public humiliation.
or deceptive act or practice, where even after
4 Cases that cite this headnote
insurer received medical reports indicating that
claimant's back injury was caused by her on-the-
job fall, insurer refused to reconsider its position [10] Damages
denying benefits, offer reasonable settlement Workers' compensation
amount, or begin weekly benefit payments. Damages
V.T.C.A., Bus. & C. § 17.41 et seq. Particular cases
Cases that cite this headnote Evidence that, as result of workers'
compensation insurer's improper refusal to pay
benefits, claimant changed residences two or
[7] Trial three times, accepted charity from church food
Noting disposition of requests bank on two occasions, sold personal property
When requested jury instruction is submitted in and was planning to pawn her wedding ring,
writing and trial judge refuses it, trial judge shall accepted $600 loan from neighbor, and was
write “refused” on requested instruction and sign on verge of nervous breakdown, was sufficient
or initial it; such endorsed, refused instruction to support jury's award of $25,000 for mental
serves as bill of exceptions. Vernon's Ann.Texas anguish damages against insurer.
Rules Civ.Proc., Rule 276.
Cases that cite this headnote
1 Cases that cite this headnote
[11] Damages
[8] Appeal and Error Mental suffering and emotional distress
Instructions Evidence of what has taken place in plaintiff's
Appeal and Error life as result of defendant's actions is important
Decisions Not Otherwise Reviewable in showing mental anguish.
Contention that trial court erred in refusing
1 Cases that cite this headnote
to submit requested jury instruction was
not preserved for review, where record did
not include requested instruction marked and [12] Damages
endorsed as “refused” by trial judge and there Mental suffering and emotional distress
was no formal bill of exceptions. Vernon's Jurors are best suited to determine, by referring
Ann.Texas Rules Civ.Proc., Rule 276. to their own experiences, whether and to what
extent defendant's conduct caused compensable
1 Cases that cite this headnote
mental anguish.
[9] Damages 7 Cases that cite this headnote
Nature of Injury or Threat in General
Damages [13] Municipal Corporations
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
GAB Business Services, Inc. v. Moore, 829 S.W.2d 345 (1992)
Application of principle of agency to Governmental powers in general
municipalities Workers' compensation insurer, which handled
Workers' compensation insurer which handled workers' compensation claims against city,
workers' compensation claims against city was was not performing uniquely governmental
independent contractor acting on its own duties, as might give rise to official immunity,
authority when it denied claimant's claim, and but rather was acting as would adjuster for
was not agent of city as might entitle insurer private insurance company in denying claim for
to governmental immunity, where insurer paid benefits.
all claims of less than certain amount without
notifying city and claim was within that amount 5 Cases that cite this headnote
which was not beyond insurer's authority to pay
without notifying city. [18] Witnesses
Leading questions
5 Cases that cite this headnote
Ordinarily, leading questions should be
permitted on cross-examination; however, use
[14] Judges of leading questions may be denied when
Liabilities for official acts cross-examination is of friendly witness, as in
Under official immunity doctrine, state cross-examination of party by his own counsel
employee who gathers facts and acts on them after party was called by opponent. Rules of
is clothed with quasi-judicial status and enjoys Civ.Evid., Rule 611(c).
immunity from personal liability as long as
employee acts in good faith within scope of his Cases that cite this headnote
or her authority.
[19] Pretrial Procedure
Cases that cite this headnote
Admissibility in general
Trial court properly excluded defendant's
[15] States former employee's deposition testimony, which
Appointment or employment and tenure of consisted of responses to leading questions asked
agents and employees in general on cross-examination by defendant's counsel;
Workers' compensation insurer, which handled although witness was no longer working for
workers' compensation claims against city, was defendant, she could still be characterized as
not protected by official immunity doctrine, friendly witness to defense. Rules of Civ.Evid.,
where insurer was not state employee but was Rule 611(c).
private company which contracted to provide
specific services to city and insurer did not act in Cases that cite this headnote
good faith in denying claim for benefits.
[20] Witnesses
3 Cases that cite this headnote
In general; right to use
“Leading questions” are questions that suggest
[16] Judges desired answer, framed so that “yes” or “no”
Liabilities for official acts answer will enable witness to merely echo words
In some cases, state employee with quasi-judicial of counsel.
status is not entitled to official immunity.
4 Cases that cite this headnote
Cases that cite this headnote
[21] Witnesses
[17] Municipal Corporations In general; right to use
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
GAB Business Services, Inc. v. Moore, 829 S.W.2d 345 (1992)
“Leading question” is one which instructs in denying GAB's motion for instructed verdict based on
witness how to answer or puts words into sovereign immunity and the Texas Tort Claims Act, and in
witness' mouth to be echoed back. refusing to allow a deposition excerpt into evidence.
4 Cases that cite this headnote GAB is an insurance adjuster specializing in workers'
compensation claims. GAB contracted to handle all workers'
[22] Appeal and Error compensation claims brought against any of the 850 cities
Discovery and depositions that insure themselves through the Texas Municipal League
Intergovernmental *348 Risk Pool (the “Risk Pool”).
Any error in trial court's exclusion of deposition
Marshall, Texas, is one of those cities.
testimony which had been elicited by leading
questions on cross-examination of friendly
On January 20, 1987, Sherry Moore, an employee of the
witness, was harmless, where questions inquired
City of Marshall, slipped and fell at work while carrying a
whether witness, who was claims adjuster for
bulky container of mail. Moore's injuries required medical
workers' compensation insurer, had access to
treatment and physical therapy. GAB authorized payment of
certain medical records in handling claimant's
the medical expenses for this treatment and therapy.
claim, which records claimant had already
established were in insurer's files when insurer
Moore continued to work full time, taking an hour every few
denied claim; excluded testimony was merely
days for physical therapy. Then, on July 26, 1987, while she
cumulative of what already had been presented
was at home putting on a pair of pants, Moore experienced
to jury.
severe lower back pain and had to be taken to Marshall
Cases that cite this headnote Memorial Hospital. The hospital stay lasted two weeks. By
October 6, 1987, Moore had missed over 190 hours of work,
and the City of Marshall ceased to pay her.
Attorneys and Law Firms Moore requested weekly workers' compensation benefits.
GAB denied weekly benefits on the theory that Moore's lower
*347 W. David Carter, Barry Bryant, Smith, Stroud, back injury was not connected to her on-the-job fall but was
McClerkin, Dunn, Nutter, Texarkana, Ark., for appellant. caused solely by the strain she incurred while putting on
her pants at home. Moore's numerous requests for weekly
Jim Ammerman, II, Marshall, for appellee. benefits were unavailing.
Before CORNELIUS, C.J., and BLEIL and GRANT, JJ.
The Industrial Accident Board awarded Moore $5,484.63 for
her on-the-job injury. Moore appealed, and in July of 1988,
a bench trial was held. The judge found that Moore's back
OPINION problem was a result of her on-the-job injury and that Moore
was totally and permanently incapacitated.
GRANT, Justice.
GAB Business Services appeals from a judgment in favor In November of 1988, Moore filed this suit, alleging that the
of Sherry Moore for insurance bad faith and deceptive trade City of Marshall, the Risk Pool, and GAB failed to act in
practices. good faith and violated portions of the Insurance Code and
the Deceptive Trade Practices Act in handling her claim. A
GAB contends there was insufficient evidence to support the jury trial was held, and the jury found in favor of Moore.
jury's findings that GAB failed to act fairly and in good faith The trial court granted the City's and the Risk Pool's motion
in handling Sherry Moore's workers' compensation claim, for judgment non obstante veredicto, finding no evidence that
that GAB engaged in an unfair or deceptive act or practice, those defendants violated their duty of good faith, and entered
and that Moore suffered out-of-pocket expenses or mental judgment only against GAB for $25,000 in actual damages,
anguish damages. GAB also contends the trial court erred $75,000 in exemplary damages, and forty percent attorney's
in refusing to submit GAB's requested jury instructions, fees. GAB appeals from that judgment.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
GAB Business Services, Inc. v. Moore, 829 S.W.2d 345 (1992)
GAB filed a statement of controversion on October 30, 1987,
[1] GAB first contends that there was insufficient evidence listing its reasons for denying the claim. According to the
to support the jury's finding that GAB failed to act fairly and in statement, GAB's investigation did not indicate that Moore's
good faith in providing Moore weekly workers' compensation disability was due to her January injury.
benefits. When considering an insufficiency of the evidence
point, this Court must consider and weigh all of the evidence On November 12, Dr. Bob Herrin, who had been treating
and should set aside the verdict only if it is so contrary to theMoore's back, wrote GAB stating, “It is my opinion that Mrs.
overwhelming weight of the evidence as to be clearly wrong. Moore's problems with her back originated on January 20,
Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). 1987, as a result of her fall.” A few days later, GAB was
forwarded a report from the physical therapy department of
[2] [3] Workers' compensation carriers have a duty to deal Marshall Memorial Hospital indicating that the therapy Dr.
fairly and in good faith with injured employees. Aranda v. Duncan had prescribed in March included therapy to the left
Insurance Co. of North America, 748 S.W.2d 210, 212–13 arm, shoulder, neck, and lower back. GAB also received an
(Tex.1988). A claimant who asserts that a carrier has breached employer's supplemental injury report indicating that, as of
its duty of good faith and fair dealing must establish (1) October 6, 1987, Moore was off the job as a result of her
the absence of a reasonable basis for denying or delaying January injury.
payment of the claim, and (2) that the carrier knew or should
have known that there was no reasonable basis for denying or Despite this additional documentation, GAB refused to
delaying payment of the claim. Aranda, 748 S.W.2d at 213. reconsider its statement of controversion and would not begin
weekly benefits. Ken Hargrove, who had worked as a claims
[4] Patricia Strobel, the GAB employee who handled the adjuster for twenty years, testified that he would have started
case, testified that the medical reports in GAB's file indicated benefits in this situation and that GAB unreasonably delayed
that Moore's on-the-job accident had injured her shoulder, payment.
elbow, and wrist. Strobel and her supervisor, Mike Bratcher,
both testified that GAB was willing to pay any expenses Two witnesses testified that Sherry Moore's husband,
related to Moore's shoulder, elbow, and wrist. But they took William Moore, told them that Moore's back pain was due
the position that Moore's back problem was caused by a to her putting on her pants at home. There was testimony,
separate, intervening accident which happened at home and however, that it is not uncommon for a person to incur an
therefore was not compensable. injury and then later, while performing some ordinary task,
feel the effects of that injury.
The initial report of injury filed by the City, however,
indicated that Moore suffered injury to her left shoulder, left There was sufficient evidence for the jury to find that there
leg, and the left side of her back. Moreover, GAB had medical was no reasonable basis to deny Moore's claim and that GAB
reports indicating that Moore was having back problems in knew or should have known that there was no reasonable basis
the Spring of 1987, after her on-the-job injury but before to deny the claim. The point of error is overruled.
the alleged intervening incident on July 26, 1987. GAB had
a hospital report dated March 26, 1987 indicating that Dr. [5] GAB next contends there was insufficient evidence to
Douglas Duncan had ordered a CT-scan of Moore's lumbar support the jury's finding that GAB engaged in any unfair
spine. GAB also had a *349 report from Dr. David Adams or deceptive act or practice. An insurer's lack of good faith
dated March 26, 1987, stating, “This 38–year–old lady gives in processing a claim is an unfair or deceptive act and can
a history of falling at work two months ago injuring her left be the basis of a cause of action under the Deceptive Trade
upper extremity and low back. She complains of paresthesia Practices Act, TEX.BUS. & COM.CODE ANN. § 17.41,
of her left hand with frequent nocturnal hand pain. She also et seq. (Vernon 1987 & Supp.1992). Vail v. Texas Farm
complains of severe low back pain radiating into the left lower Bureau Mut. Ins. Co., 754 S.W.2d 129, 135 (Tex.1988);
extremity.” (Emphasis added.) GAB had a medical history Allied General Agency, Inc. v. Moody, 788 S.W.2d 601, 604
from Dr. Jorge Martinez indicating that Moore's back had (Tex.App.—Dallas 1990, writ denied).
been injured by the January fall.
[6] The evidence shows that even after GAB received
medical reports indicating that Moore's back injury was
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
GAB Business Services, Inc. v. Moore, 829 S.W.2d 345 (1992)
caused by her on-the-job fall, GAB refused to reconsider an effect on her health because she couldn't provide for her
its position, offer a reasonable settlement amount, or begin family.” Ken Hargrove testified that Moore came into his
weekly benefit payments. There was sufficient evidence for office on more than one occasion and cried because of the
the jury to find that GAB engaged in an unfair or deceptive family's financial difficulties.
act or practice. The point is overruled.
[11] [12] Evidence of what has taken place in a plaintiff's
[7] [8] GAB next urges that the trial court erred in life as a result of a defendant's actions is important in showing
refusing to submit GAB's requested jury instructions. When mental anguish. National Union Fire Ins. v. Dominguez,
a requested instruction is submitted in writing and the trial 793 S.W.2d 66, 73 (Tex.App.—El Paso 1990, writ denied).
judge refuses it, the judge shall write “refused” on it and sign Jurors are best suited to determine, by referring to their
or initial it. Such an endorsed, refused instruction serves as a own experiences, whether and to what extent the defendant's
bill of exceptions. TEX.R.CIV.P. 276. Nowhere in the record conduct caused compensable mental anguish. St. Elizabeth
is there a sheet so marked and endorsed, nor is there a formal Hosp. v. Garrard, 730 S.W.2d 649, 654 (Tex.1987). There
bill of exceptions. We therefore conclude that GAB did not was sufficient evidence to support the jury's award of $25,000
comply with Rule 276 and did not preserve error. Templeton for mental anguish damages. The point is overruled.
v. Unigard Sec. Ins. Co., 550 S.W.2d 267, 269 (Tex.1976);
Moffett v. Goodyear Tire & Rubber Co., 652 S.W.2d 609, GAB next contends that it should have been granted a directed
612 (Tex.App.—Austin 1983, writ ref'd n.r.e.); Breithaupt verdict because it was the agent of a governmental entity and
v. Navarro County, 675 S.W.2d 335, 339 (Tex.App.—Waco therefore entitled to governmental immunity.
1984, writ ref'd n.r.e.).
[13] First, the evidence does not clearly establish that
[9] GAB next contends that there was insufficient evidence GAB was an agent of the Texas Municipal League
to support the jury's finding that Moore suffered any out- Intergovernmental Risk Pool. Leigh Goodwin, an employee
of- *350 pocket expenses or mental damages. In order to of the Risk Pool, testified that GAB paid all claims of less
establish mental anguish, a plaintiff must show more than than a certain amount without notifying the Risk Pool. If
mere worry, anxiety, vexation, embarrassment, or anger. GAB estimated that liability on a claim would be more than
Town East Ford Sales, Inc. v. Gray, 730 S.W.2d 796 $15,000, GAB would notify the Risk Pool, which would
(Tex.App.—Dallas 1987, no writ). Mental anguish includes a then determine whether to extend a settlement offer to the
mental sensation of pain resulting from such painful emotions injured worker. Goodwin testified, however, that, based on
as grief, severe disappointment, wounded pride, shame, the information she was provided, the instant claim was
despair, and public humiliation. Trevino v. Southwestern Bell not beyond GAB's $15,000 authority. The evidence shows
Telephone Co., 582 S.W.2d 582, 584 (Tex.Civ.App.—Corpus that GAB was an independent contractor acting on its own
Christi 1979, no writ). authority.
[10] Ireba Hartsell, Moore's Sunday school teacher and [14] [15] Second, GAB does not come within the
personal friend, visited with Moore during the time she was protective ambit of the official immunity doctrine. Under that
unable to work. Hartsell testified that the Moores had to doctrine, a state employee who gathers facts and acts on them
change residences two or three times during this period; that is clothed with quasi-judicial status and enjoys immunity
the Moores had to accept charity from the church food bank from personal liability as long as he or she acts in good faith
on at least two occasions; that Moore told her that Moore had within the scope of his or her authority. Austin v. Hale, 711
sold personal property and was going to pawn her wedding S.W.2d 64, 66 (Tex.App.—Waco 1986, no writ); Augustine
ring; and that Moore had had to accept a $600 loan from a By Augustine v. Nusom, 671 S.W.2d 112, 115 (Tex.App.—
neighbor. Houston [14th Dist.] 1984, writ ref'd n.r.e.). GAB was not
a state employee but a private company that contracted to
Hartsell testified that during the time that Sherry Moore was provide specific services to the Risk Pool. More importantly,
unable to work, William Moore was also disabled by a back the jury found that GAB did not act in good faith.
injury. Hartsell testified that Sherry Moore was on the verge
of a nervous breakdown: very upset, worried, and scared. [16] [17] In some cases, even a state employee with quasi-
“She was disturbed to the extent that it was, I believe, having judicial status is not entitled to official immunity. Armendarez
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
GAB Business Services, Inc. v. Moore, 829 S.W.2d 345 (1992)
deposition was taken, Strobel was no longer working for
v. Tarrant County Hospital Dist., 781 S.W.2d 301, 306
GAB, but she could still be characterized as a friendly
(Tex.App.—Fort Worth 1989, writ denied). The Armendarez
witness. Rule 611(c) gives the trial judge discretion to limit
court held that a medical doctor is not entitled to immunity
the use of leading questions in cross-examining a friendly
if the doctor's duties are neither uniquely governmental in
witness.
purpose or different from the duties of a doctor in private
*351 practice. In the present case, GAB was not performing
[20] [21] Leading questions are questions that suggest
uniquely governmental duties; it was acting just as an adjuster
the desired answer. Implement Dealers Mutual Ins. Co.
for a private insurance company would. We are not persuaded
v. Castleberry, 368 S.W.2d 249, 253 (Tex.Civ.App.—
that GAB is entitled to official or governmental immunity.
Beaumont 1963, writ ref'd n.r.e.). The questions Moore
The trial court committed no error in refusing to grant a
directed verdict on the basis of governmental immunity. objected to as leading called for yes or no answers. 1 A
question framed so that a yes or no answer will enable the
GAB also contended that the Texas Tort Claims Act, witness to merely echo the words of counsel is leading.
TEX.CIV.PRAC. & REM.CODE § 101.001, et seq. (Vernon Texas Employers' Ins. Ass'n v. Hughey, 266 S.W.2d 456, 458
1986 & Supp.1991), does not allow recovery of the type (Tex.Civ.App.—Fort Worth 1954, writ ref'd n.r.e.). A leading
Moore sought. GAB was not entitled to immunity, however, question is one which instructs the witness how to answer or
so the extent to which the Tort Claims Act allows recovery is puts words into the witness' mouth to be echoed back. Myers
irrelevant. These points are overruled. v. State, 781 S.W.2d 730, 733 (Tex.App.—Fort Worth 1989,
pet. ref'd).
GAB next contends that the trial court erred in refusing to
allow an excerpt from Patricia Strobel's deposition to be read [22] The trial judge did not err by keeping out these
to the jury. The excerpt contains questions that were objected questions and answers. Moreover, even if it had been error, it
to as leading. The court sustained this objection. would not have been harmful. The questions inquired whether
Strobel had access to certain medical records in handling
[18] The portion of the deposition in which these questions Moore's claim. Moore had already shown, as part of her
appear is clearly marked “cross-examination.” Ordinarily, prima facie case, that GAB had these records in its files
leading questions should be permitted on cross-examination. when it denied her claim. The excluded testimony was merely
TEX.R.CIV.EVID. 611(c). The purpose of the qualification cumulative of what had already been presented to the jury.
“ordinarily” is to furnish a basis for denying the use of The point is overruled.
leading questions when the cross-examination is of a friendly
witness, for example, the cross-examination of a party by The judgment of the trial court is affirmed.
his own counsel after the party was called by the opponent.
TEX.R.CIV.EVID. 611(c) (Notes and comments).
All Citations
[19] The deponent, Patricia Strobel, was an employee of 829 S.W.2d 345
GAB, whose counsel was asking the questions. When this
Footnotes
1 Q. Did you have the benefit of Dr. Duncan's report of March 26, 1987, where he indicated he wanted to run a CAT scan
of Ms. Moore's low back, and if it was negative, he was going to proceed as though her injury was a mild ligamentous
type strain?
A. Yes, sir.
....
Q. Did you also have the benefit of Dr. Duncan's report of April the 14th, 1987, where he reported that Ms. Moore's
CAT scan was negative and the EMG or the nerve conduction study performed by Dr. Adams was also negative?
....
A. Yes, sir.
Q. Did you have, in considering Ms. Moore's claim, the report of Dr. Duncan dated 6–3–87 where he makes no mention
of any back problem?
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
GAB Business Services, Inc. v. Moore, 829 S.W.2d 345 (1992)
A. Yes, sir.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
V
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
standard in conducting a factual sufficiency
review.
116 S.W.3d 757
Supreme Court of Texas. 11 Cases that cite this headnote
GOLDEN EAGLE ARCHERY, INC.
v. [2] Appeal and Error
Ronald JACKSON. Conclusiveness in General
In conducting a factual sufficiency review, a
No. 01–0007. | Argued Oct. 16, court must not merely substitute its judgment for
2002. | Decided Sept. 11, 2003. that of the jury.
In a products liability action against the manufacturer of 65 Cases that cite this headnote
compound bow, the user moved for a new trial alleging
juror misconduct. The 136th Judicial District Court, Jefferson
County, entered judgment and denied motion for new trial. [3] Appeal and Error
User appealed. The Court of Appeals, Stover, J., 974 S.W.2d Province of Jury
952, reversed and remanded. Review was granted. The The jury is the sole judge of the credibility of
Supreme Court, Gonzales, J., 24 S.W.3d 362, reversed and witnesses and the weight to be given to their
remanded. On remand, the Court of Appeals, 29 S.W.3d testimony.
925, reversed and remanded. Manufacturer filed a petition
244 Cases that cite this headnote
for review. The Supreme Court, Owen, J., held, as an issue
of first impression, that: (1) a jury may consider “physical
impairment” as a factor loss of enjoyment of life; (2) when [4] Appeal and Error
only one category of damages is challenged on the basis that Sufficiency of Evidence in Support
the award in that category was zero or was too low, a court Before a court can properly conduct a factual
should consider only whether the evidence unique to that sufficiency review, it must first have a clear
category is so against the great weight and preponderance understanding of the evidence that is pertinent to
of the evidence; and (3) when the jury's failure to find its inquiry.
greater damages in more than one overlapping category is
challenged, the court of appeals should first determine if the 9 Cases that cite this headnote
evidence unique to each category is factually sufficient and,
if it is not, the court of appeals should then consider all the
[5] Appeal and Error
overlapping evidence.
Sufficiency of Evidence in Support
Reversed and remanded. The starting point of factual sufficiency review
generally is the charge and instructions to the
O'Neill, J., filed a concurring opinion, in which Schneider, J., jury.
joined.
14 Cases that cite this headnote
[6] Damages
West Headnotes (20) Elements of Compensation in General
When someone suffers personal injuries, the
[1] Appeal and Error damages fall within two broad categories-
Review of Questions of Fact economic and non-economic damages:
Although the Supreme Court does not have traditionally, “economic damages” are those
jurisdiction to conduct a factual sufficiency that compensate an injured party for lost
review, it does have jurisdiction to determine wages, lost earning capacity, and medical
whether a court of appeals has applied the correct expenses, whereas “non-economic damages”
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
include compensation for pain, suffering, mental Whether to award damages and how much is
anguish, and disfigurement. uniquely within the factfinder's discretion.
28 Cases that cite this headnote 2 Cases that cite this headnote
[7] Damages [12] Damages
Mental Suffering and Emotional Distress Mental Suffering and Emotional Distress
“Hedonic damages” are a type of non-economic Damages
damages and compensate for loss of enjoyment Instructions Authorizing Double Recovery
of life. Damages
Physical Suffering and Inconvenience
15 Cases that cite this headnote
Resulting from Injuries
If “physical impairment” is defined for a jury, the
[8] Appeal and Error jury may consider as a factor loss of enjoyment
Instructions Understood or Followed of life, although the jury should be instructed
Unless the record demonstrates otherwise, an that the effect of any physical impairment
appellate court must presume that the jury must be substantial and extend beyond any
followed its instructions on damages. pain, suffering, mental anguish, lost wages or
diminished earning capacity and that a claimant
23 Cases that cite this headnote should not be compensated more than once for
the same elements of loss or injury.
[9] Appeal and Error
40 Cases that cite this headnote
Amount of Recovery
In conducting its factual sufficiency review, the
court of appeals should presume that the jury did [13] Appeal and Error
not award damages for any element more than Mistake, Passion or Prejudice; Shocking
once, unless the record demonstrates otherwise. Conscience or Sense of Justice
When only one category of damages is
8 Cases that cite this headnote challenged on the basis that the award in that
category was zero or was too low, a court should
[10] Damages consider only whether the evidence unique to
Nature of Injury or Threat in General that category is so against the great weight
The pangs of separation from family during and preponderance of the evidence as to be
hospitalization may be taken into account as a manifestly unjust, shock the conscience, or
clearly demonstrate bias even if the evidence also
part of the injured person's mental suffering.
relates to another category of damages.
Cases that cite this headnote
74 Cases that cite this headnote
[11] Damages
[14] Appeal and Error
Discretion as to Amount of Damages
Inadequate Verdict
Damages
When the jury's failure to find greater damages
Discretion as to Amount of Damages
in more than one overlapping category is
Damages
challenged, the court of appeals should first
Discretion as to Amount of Damages
determine if the evidence unique to each
Damages category is factually sufficient; if it is not, the
Questions for Jury court of appeals should then consider all the
overlapping evidence, together with the evidence
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
unique to each category, to determine if the total Court of appeals was required to detail the
amount awarded in the overlapping categories is evidence that supported the jury's failure to
factually sufficient. award to bow user any damages in products
liability action for physical impairment other
23 Cases that cite this headnote than loss of vision or state in what regard
the contrary evidence greatly outweighed the
[15] Appeal and Error evidence in support of the verdict.
Amount of Recovery
7 Cases that cite this headnote
A court of appeals should confine its review to
evidence, if any, that is unique to the challenged
category of damages. [20] Appeal and Error
Submission of Issues or Questions to Jury
4 Cases that cite this headnote Trial court's error, if any, in submitting
both “physical impairment of loss of vision”
[16] New Trial and “physical impairment other than loss of
Inadequate Damages vision” as separate items of damage was not
reversible error, absent any explanation by bow
New Trial
manufacturer of how it was harmed by the
Inadequate Damages
submission, particularly in light of the jury's
If the jury's failure to award damages or the
award of “$0” for physical impairment other than
amount of damages awarded is so against the
loss of vision in the products liability action.
great weight and preponderance of the evidence
as to be manifestly unjust, shock the conscience, 9 Cases that cite this headnote
or clearly demonstrate bias, then a new trial
would be required.
59 Cases that cite this headnote
Attorneys and Law Firms
[17] Appeal and Error *759 Jacqueline M. Stroh, Crofts & Callaway, P.C., San
Inadequate Verdict Antonio, Lipscomb Norvell, Jr., Benckenstein Norvell &
Nathan, Beaumont, for petitioner.
Courts should not conclude that a jury's failure
to award any damages for physical impairment John Cash Smith, Bush, Lewis & Roebuck, George Barron,
is against the great weight and preponderance of Orange, David W. Holman, Holman & keeling, P.C.,
the evidence simply because there is objective Houston, for respondent.
evidence of an injury.
Opinion
13 Cases that cite this headnote
Justice OWEN delivered the opinion of the Court, in which
Chief Justice PHILLIPS, Justice HECHT, Justice ENOCH,
[18] Damages
Justice SMITH, and Justice WAINWRIGHT joined.
Nature and Theory of Compensation
A tort victim should be fully and fairly In this case, we resolve how courts of appeals are to conduct
compensated, but double recovery should be a factual sufficiency review when 1) a jury is permitted to
avoided. award damages for elements that somewhat overlap, 2) the
jury is instructed not to duplicate an award for any particular
1 Cases that cite this headnote
loss, and 3) the jury awards no damages or *760 damages
that are allegedly inadequate for an element that could overlap
[19] Appeal and Error with another.
Form and Requisites
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
Because the court of appeals in this case did not properly a design defect, but found that Golden Eagle did not give
apply the standard of review set forth in Pool v. Ford Motor adequate warnings of the product's danger. A single damage
Co., 1 and because this Court has never before articulated question was submitted in which the jury was permitted to
the standard for factual sufficiency review when evidence award damages in six separate categories. They awarded
pertains to more than one category of damages, we reverse $25,393.10 for medical care, $2,500 for physical pain and
mental anguish, $2,500 for “physical impairment of loss of
the court of appeals' judgment 2 and remand this case to that
vision,” $0 for “physical impairment other than the loss of
court for another factual sufficiency review.
vision,” $1,500 for disfigurement, and $4,600 for loss of
earnings in the past.
I The trial court rendered judgment on the verdict in favor
of Jackson, and Jackson appealed. As we have already
This is the second time that this case has been before our described *761 above, the court of appeals reversed the
Court. In our prior decision, 3 we considered alleged juror trial court's judgment after concluding that two of our rules
misconduct and whether Texas Rule of Civil Procedure of procedure were unconstitutional. We reversed the court
327(b) and Texas Rule of Evidence 606(b), limiting proof of appeals and remanded other, unresolved issues to that
of juror misconduct, are constitutional. We held that there court. Following that remand, the court of appeals considered
was no competent evidence of juror misconduct and that Jackson's contention that he was entitled to a new trial
Rules 327(b) and 606(b) neither deprive litigants of a fair trial because the jury's failure to award any damages for “physical
under the Texas Constitution nor fail to afford litigants due impairment other than loss of vision” was against the great
process. 4 We remanded the case to the court of appeals to weight and preponderance of the evidence. Jackson also
contended that the jury's awards for physical pain and mental
consider issues it had not reached. 5 On remand, the court
anguish, physical impairment because of loss of vision, and
of appeals held that the jury's failure to award any damages
disfigurement were inadequate and required a new trial. The
for a category of physical impairment was so against the
court of appeals agreed with Jackson regarding the award of
great weight and preponderance of the evidence that the zero
no damages for physical impairment other than loss of vision.
damages award was manifestly unjust and required a new
It remanded the case for a new trial and therefore did not reach
trial. 6 Our focus is on that issue. Jackson's other issues on appeal.
Ronald Jackson received a compound hunting bow Golden Eagle filed a petition for review in our Court. We
manufactured by Golden Eagle Archery as a gift from granted that petition to consider the proper standard to be
his wife. When she presented it to him, he attempted to applied in conducting a factual sufficiency review of a jury's
demonstrate how it is used. The bow went out of control, failure to award any damages for physical impairment.
and the metal rod that separated the bow string from the
cables struck Jackson in the eye. He bled profusely, required
emergency treatment at one hospital, was transferred to
another hospital for additional treatment, and spent ten days II
there. He suffered broken bones around the orbit of his eye,
[1] [2] [3] Although this Court does not have jurisdiction
some loss of vision, a ruptured sinus, and a broken nose.
to conduct a factual sufficiency review, we do have
Upon discharge he was instructed to limit activities to avoid
jurisdiction to determine whether a court of appeals
straining or lifting. About a month later, he underwent surgery
has applied the correct standard in conducting a factual
to repair the orbital fractures and other reconstructive surgery
and was hospitalized an additional three days. Jackson was sufficiency review. 7 It is a familiar principle that in
unable to work for about two months after the date of the conducting a factual sufficiency review, a court must not
accident with the bow. He returned to work thereafter, but has merely substitute its judgment for that of the jury. 8 It is an
some permanent impairment to his eye and vision, and some equally familiar principle that the jury is the sole judge of the
disfigurement. credibility of witnesses and the weight to be given to their
testimony. 9
Jackson sued Golden Eagle, alleging that the bow was
defectively designed and marketed. The jury failed to find
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
weighed along with the *762 other evidence in the case,
We held in Pool v. Ford Motor Co. that in order for this Court
to conduct a meaningful review of whether a court of appeals including that which is contrary to the verdict. 12
has correctly applied the factual sufficiency standard, courts [4] [5] Before a court can properly conduct a factual
of appeals “should, in their opinions, detail the evidence sufficiency review, it must first have a clear understanding of
relevant to the issue in consideration and clearly state why the evidence that is pertinent to its inquiry. The starting point
the jury's finding is factually insufficient or is so against generally is the charge and instructions to the jury. In this case
the great weight and preponderance as to be manifestly the jury was instructed and answered as follows:
unjust; why it shocks the conscience; or clearly demonstrates
What sum of money, if paid now in cash, would fairly and
bias.” 10 Pointedly, we added, “[f]urther, those courts, in their reasonably compensate Ronald Jackson for his damages, if
opinions, should state in what regard the contrary evidence any, that resulted from the injury in question?
greatly outweighs the evidence in support of the verdict. It
is only in this way that we will be able to determine if the Consider the elements of damages listed below and none
requirements of In re King's Estate have been satisfied.” 11 other. Consider each element separately. Do not include
We held in In re King's Estate that a court of appeals must damages for one element in any other element. Do not
include interest on any amount of damages you find.
consider and weigh all of the evidence in the case and Do not reduce the amounts, if any, in your answers because
to set aside the verdict and remand the cause for a new of the negligence, if any, of Ronald Jackson.
trial, if it thus concludes that the verdict is so against the
Answer in dollars and cents for damages, if any, that were
great weight and preponderance of the evidence as to be
sustained in the past and that in reasonable probability will
manifestly unjust—this, regardless of whether the record
be sustained in the future, unless otherwise instructed.
contains some “evidence of probative force” in support of
the verdict.... The evidence supporting the verdict is to be Answer:
a. Medical care $25,393.10
b. Physical pain and mental anguish $
2,500.00
c. Physical impairment of loss of $
vision 2,500.00
d. Physical impairment other than loss of vision $0
e. Disfigurement $
1,500.00
f. Loss of earnings in the past $
4,600.00
Jackson does not challenge the jury's findings regarding
The only definition that was given regarding this question
medical care and loss of past earnings. The jury awarded
was a definition of “injury” that said: “ ‘Injury’ means
the full amounts he requested in those categories. It is
damage or harm to the physical structure of the body and
the non-economic damages that are at issue. The court of
such diseases or infection as naturally result therefrom, or
appeals addressed only the jury's failure to award damages for
the incitement, acceleration, or aggravation of any disease,
“Physical impairment other than loss of vision.” The court of
infirmity, or condition, previously or subsequently existing,
appeals concluded that the failure to award damages in this
by reason of such damage or harm.” “Physical impairment”
category was against the great weight and preponderance of
was not defined, nor were any of the other listed categories
the evidence because “Jackson sustained multiple fractures
of damages.
to his face; four of the seven bones that make up the orbit
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
of the eye were fractured.... [H]e sustained a ruptured sinus In reviewing the record evidence, the court of appeals
and a broken nose.... [H]e remained [in the hospital] for generally focused on physical injuries while Jackson focuses
ten days.... Thirty-seven days elapsed from the date of the on what are sometimes called “hedonic damages.” 15 Our
accident ... until the injuries to his face were repaired,” and first inquiry is to determine whether the evidence recounted
he had headaches up until the time of trial. 13 by the court of appeals and relied upon by Jackson pertains
to “physical impairment other than loss of vision,” to some
Jackson's arguments in this Court focus more directly on the other category of damage that was submitted to the jury, or
“loss of enjoyment of life” he suffered while hospitalized and both. For the reasons we consider below, we conclude that
recuperating. Specifically, Jackson's brief says: this evidence pertains to more than one of the categories that
were submitted, particularly in light of the fact that neither
The injury to [Jackson's] orbital “physical impairment” nor any of the other damage elements
area, nose and sinuses resulted in were defined. Our second inquiry is how a factual sufficiency
his hospitalization for ten days review should be conducted given that overlapping elements
immediately following the accident of damages were submitted and the jury was instructed not to
and then for another three days award damages for the same loss more than once.
for surgery to repair the broken
orbital bones, nose and ruptured sinus.
These objective injuries did not allow
[Jackson] to enjoy any of his normal III
life activities during the time of
[6] [7] When someone suffers personal injuries, the
his *763 hospitalizations. Moreover,
damages fall within two broad categories—economic and
the pain medication prescribed for
non-economic damages. Traditionally, economic damages
Jackson kept him “zombied out” most
are those that compensate an injured party for lost wages,
of the time between the first and
lost earning capacity, and medical expenses. Non-economic
second hospitalizations. The normal
damages include compensation for pain, suffering, mental
life activities impaired by these
anguish, and disfigurement. “Hedonic” damages are another
injuries include enjoyment of home
type of non-economic damages and compensate for loss of
life activity with family, socializing
with friends such as he was doing enjoyment of life. 16
when he was injured, enjoying the bow
which he had looked forward to having This Court has never considered the historical origins
and the bow hunting season which he of the term “physical impairment” or its parameters in
was wanting to do and had brought any detail. *764 But Texas courts, including this one,
on the desire for the bow in the first have long recognized that “physical impairment” or similar
place.... The disability of [Jackson] concepts could encompass both economic and non-economic
was obvious form [sic] the injuries damages. 17 Early Texas decisions seemed to recognize
themselves and did not require Jackson that while an injured party was entitled to a full recovery,
to produce evidence to show the tasks care should be taken to prevent a double recovery when
that he could not do during the periods instructions are given to a jury. Courts of appeals have been
of his hospitalizations and the time in conscious of these concerns. In Robinson v. Minick, the court
between the hospital stays.... A person observed, “[t]he intermediate appellate courts have shown
that is hospitalized with traumatic extreme caution in reviewing claims for physical impairment
injuries cannot engage (at least for because of justified concern to prevent a double recovery.” 18
the time of hospitalization) in his or That same court lamented, “[o]ur review of this difficult area
her normal life activities outside of of the law is hampered by the absence of supreme court
work and consequently suffers loss of
authority.” 19
14
physical impairment [sic].
The only guidance our Court has given since our early
decisions was in Estrada v. Dillon. 20 There we considered
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
whether a court of appeals had properly conducted a factual The genesis of this definition of “physical impairment”
sufficiency review of evidence of damages due to physical is not entirely clear. And the courts of appeals have not
impairment. 21 The jury had awarded damages for past been entirely congruent in applying that term to particular
physical pain and mental anguish, past loss of earnings, and facts. Most of the Texas cases that have addressed physical
past medical care. The jury did not award any damages impairment have concluded either explicitly or implicitly that
for future physical pain and mental anguish, future medical the injury must be permanent and affect physical activities. 31
care, future loss of earning capacity, past or future physical There are *766 some decisions, though, that seem to have
impairment, or past or future disfigurement. 22 The court of concluded that temporary injuries can give rise to physical
appeals reversed the trial court's judgment and remanded the impairment. 32 In Estrada v. Dillon, this Court seems to have
case, concluding that the failure to award any damages for agreed with a court of appeals that evidence of temporary
past physical impairment required a new trial. 23 The court injuries could amount to evidence against the great weight and
of appeals did not reach the plaintiffs' contention that the preponderance when a jury failed to award any damages for
failure to award damages for other elements also required past physical impairment. 33
reversal. 24 We found no error in the factual sufficiency
review, but we did hold that the court of appeals erred in The courts of appeals are in far greater disagreement,
however, on whether “physical impairment” encompasses
remanding for a new trial solely on damages. 25 We did not
hedonic damages, that is, the “loss of enjoyment of life.”
analyze in any detail the history of physical impairment, but
There are three possibilities. Loss of enjoyment of life
instead focused on whether a jury must award damages for
could be encompassed entirely by “physical impairment,”
past physical impairment if there was objective evidence of
not encompassed in that term at all, or spill across physical
an injury. 26 We “assumed” that the defendants' definition impairment as well as other categories of damage. Other than
of physical impairment was correct. We said: “Assuming this Court's early, tangential ruminations in International &
that [the defendants] are correct that evidence of physical
G.N. Railway Co. v. Butcher, 34 mentioned above, we have
impairment must focus on restriction of activities caused by
never decided whether loss of enjoyment of life can be an
the injury, the court of appeals' analysis in this case is not
element of recovery.
inconsistent with that focus. The court of appeals did not
hold that proof of objective injury alone establishes physical
A very early court of appeals' decision, Locke v. International
impairment.” 27 Today, we examine more carefully what & G.N. R. Co., indicated there could be no recovery for
evidence relates to physical impairment, the potential for
loss of enjoyment of life. 35 It held that there was no error
double recovery, *765 and how a factual sufficiency review
in excluding testimony about “loss of capacity for ‘the
should be conducted.
enjoyment of pleasures of life’ ” because the concept was “too
vague to furnish any information upon a definite subject upon
The courts of appeals have recognized that physical
impairment can encompass economic as well as non- which damages would arise or be allowed.” 36 We have found
no other court of appeals decision in Texas that ascribes to
economic damages. 28 A number of those courts have
this view.
attempted to separate physical impairment from economic
damages by defining physical impairment to exclude any
Subsequently, a court of appeals recognized that the inability
impediment to earning capacity and also to separate physical
to have a normal life is compensable. In Dr. Pepper Bottling
impairment from the non-economic damages of pain and
suffering. Over the last thirty years, a number of courts of *767 Co. v. Rainboldt, 37 a delivery truck struck a young
girl. The defendant argued on appeal that the trial court
appeals have said, 29 as the court of appeals in the case
allowed a double recovery because “physical pain and
before us today said, that “[t]o recover damages for physical
impairment, a plaintiff must prove ‘that the effect of his anguish are involved in bodily impairment.” 38 The court of
physical impairment extends beyond any impediment to his appeals rejected that argument, pointing out that the trial court
earning capacity and beyond any pain and suffering to the had defined bodily impairment as “the loss or injury of a
extent that it produces a separate and distinct loss that is member.” 39 The court explained that there was, of course,
substantial and for which he should be compensated.’ ” 30 pain incident to such a loss, but that it was separate. 40 The
court continued:
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Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
Houston seems to have agreed with the latter view of the Tyler
court, holding that “[p]hysical impairment, sometimes called
To illustrate, a man might lose his leg; that would be a loss of enjoyment of life, encompasses the loss of the injured
bodily impairment. In connection with the loss of the leg,
party's former lifestyle.” 49 A dissenting opinion in the San
he might suffer at the same time pain and anguish. The
Antonio court of appeals contended that loss of enjoyment
wound might heal and the pain and anguish disappear, but
of life should be categorized as part of mental anguish
the bodily impairment, to wit, the loss of the leg, would
remain. The evidence [in Dr. Pepper ] supports the element damages. 50 Thus, loss of enjoyment of life has variously
of bodily impairment. Her bladder is permanently injured. been categorized as an element of pain and suffering, mental
She will not be able to bear children. Her injuries are anguish, or physical impairment.
permanent. 41
The divergence of views is understandable. Courts across the
Under this reasoning, recovery for loss of a member could
country have struggled with whether loss of enjoyment of
include the mental anguish for the loss of bodily functions,
life is compensable at all, and if so, whether it is part of
separate and apart from the pain and anguish experienced
pain and suffering, mental anguish, or physical impairment,
during recuperation, and could also include the loss of the
ability to have, nurture, and enjoy children. or is a separate, independent category of damages. 51 And,
as indicated above, there *769 is a logical nexus between
Other Texas courts of appeals' opinions that have considered loss of enjoyment of life and each of the categories of non-
loss of enjoyment of life have agreed on at least two things. economic damages recognized in Texas—pain, suffering,
First, a factfinder should be free to compensate an injured mental anguish, disfigurement, and physical impairment.
party who is physically impaired to the extent that party may
no longer engage in or enjoy activities that he or she was able The widely disparate views of courts in Texas and across the
to do before the injury. Second, Texas courts of appeals have country lead us to conclude that in the case before us today,
uniformly held that loss of enjoyment of life is not a separate the court of appeals should not have applied the definition
of “physical impairment” so frequently quoted by Texas
category of damage, 42 which is in accord with a number
courts of appeals in considering the factual sufficiency of the
of other jurisdictions. 43 Beyond this, the courts of appeals'
evidence. 52 The court of appeals said, “[t]o recover damages
decisions diverge.
for physical impairment, a plaintiff must prove ‘that the effect
of his physical impairment extends beyond any impediment
*768 The Texarkana court of appeals said in Missouri
to his earning capacity and beyond any pain and suffering to
Pacific Railroad Co. v. Lane that “[l]oss of enjoyment of
the extent that it produces a separate and distinct loss that is
life may not be claimed as a separate element of damages,
but may be treated as a factor in determining the damages substantial and for which he should be compensated.’ ” 53
in general or those for pain and suffering.” 44 It reiterated
*770 First, that definition does not fully eliminate the
this view in Fibreboard Corp. v. Pool. 45 The Corpus Christi overlap among physical impairment, pain, suffering, mental
court of appeals in Spohn Hospital v. Mayer seemed to agree anguish, and disfigurement. Nor does it give adequate
with Lane and Fibreboard, concluding that “[e]vidence of a guidance about whether the impairment must be the result
loss of enjoyment of life may be considered in determining of a permanent injury. Second, and more importantly, that
damages in general or for pain and suffering.” 46 However, definition was not given to the jury in this case. If courts
the Tyler court of appeals' analyses do not agree entirely across the country can rationally conclude that loss of
with the Texarkana and Corpus Christi courts. In Brookshire enjoyment of life can be part of pain and suffering or mental
Brothers, Inc. v. Wagnon, the Tyler court suggested that anguish or disfigurement or physical impairment, then so can
“certainly the loss of enjoyment of life, which encompasses a jury. The jury in this case could have compensated Jackson
the loss of the injured party's former lifestyle, may be for loss of enjoyment of life as part of physical pain and
considered when determining mental anguish damages.” 47 mental anguish, or disfigurement, or divided compensation
In Wal–Mart Stores, Inc. v. Holland, that court said that in some manner between the two categories. The jury charge
“physical impairment, sometimes termed loss of enjoyment permitted the jury to make its own determination of how to
of life, encompasses the loss of the injured party's former categorize and compensate the losses suffered by Jackson.
lifestyle.” 48 The Fourteenth District court of appeals in
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Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
The jury submission in this case comports with a practice element that is supported by the evidence, the damages award
suggested by some courts of appeals. Instead of defining will be affirmed if it is supported by the evidence.” 60
damage categories for juries in such a way that they do not
overlap, which we recognize may not be feasible for some [8] [9] In the case before us, the jury had six blanks to fill
damage elements, some courts of appeals have concluded and was instructed not to award damages for the same element
that to avoid double awards of damages, particularly when more than once. Unless the record demonstrates otherwise,
physical impairment is submitted, juries should be directly an appellate court must presume that the jury followed these
instructed not to award overlapping damages. 54 The decision instructions. 61 In conducting its factual sufficiency review,
55
in French v. Grigsby approved such an instruction in the court of appeals should presume that the jury did not
affirming the trial court's judgment awarding damages for award damages to Jackson for any element more than once,
physical impairment: unless the record demonstrates otherwise. Accordingly, in
reviewing the evidence, the court of appeals should consider
whether the jury could reasonably have compensated Jackson
In answering this special issue you shall not award any for a particular loss that might be “physical impairment other
sum of money on any element if you have otherwise, under than loss of vision” under another category of damages. If the
some other element, awarded a sum of money for the same jury could have done so, then the failure to award damages
loss, that is, do not compensate twice for the same loss, if for that particular loss would not be against the great weight
any. 56 and preponderance of the evidence.
This type of instruction informs the jury that it is not to make a
duplicative award of damages. In this regard, we note that the The court of appeals should first consider what evidence is
trial court in the case before us today followed the State Bar unique to “physical impairment other than loss of vision.”
of Texas Pattern Jury Charge to some extent, 57 which uses In this regard, the bone fractures, ruptured sinus, and broken
language different from the instruction in French. The trial nose sustained by Jackson are the typical type of physical
court's charge said: “Consider the elements of damages listed injury for which a jury could reasonably compensate an
below and none other. Consider each element separately. Do injured party through an award for physical pain and mental
not include damages for one element in any other element.” anguish. Evidence of Jackson's headaches could also logically
The instruction in French is clearer. fall either within “physical impairment other than loss of
vision,” for which the jury awarded no damages, or within
Given that some of the categories of damages submitted to past and future physical pain and mental anguish, for which
the jury in this case were not defined and therefore were not the jury did award damages.
cleanly and clearly segregated from one another, the question,
then, is how should the court of appeals review the factual [10] [11] The evidence regarding Jackson's hospital
sufficiency of the evidence supporting the jury's award for confinements and his alleged loss of enjoyment of life for
physical impairment. It is to that question that we now turn. the two months he was recuperating present a more complex
question. A number of decisions in other jurisdictions indicate
that loss of enjoyment of life results from permanent rather
than temporary injuries, 62 *772 although a few decisions
IV
indicate otherwise. 63 Particularly in light of the availability
The charge in this case permitted the jury to award separate of damages in other categories, such as pain, suffering, and
amounts of damages *771 in six different categories. The mental anguish to compensate for a temporary inability to
standard of review to determine factual sufficiency of the enjoy life's activities, a jury could reasonably conclude that
evidence that we set forth today differs from the standard hedonic damages should be awarded only for permanent
of review that is applied when the jury is asked to award a injuries. To the extent that our decision in Estrada v. Dillon 64
single amount of damages, but is told that it may consider could be read to hold otherwise, we did not focus on that
various elements in arriving at that amount. 58 In the latter specific issue, as we now have done. As the Supreme Court of
circumstance, we have held that a challenge must address all Michigan has observed, “the pangs of separation from family
the elements that could have been considered by the jury in during hospitalization may be taken into account as a part
making its total, single-amount award. 59 “If there is just one of the injured person's mental suffering.” 65 The Supreme
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Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
Court of Alaska has also categorized “a substantial amount If only one category of the jury's award is challenged, and
of time convalescing in the hospital” as evidence of pain and the award in that category is not against the great weight
suffering. 66 But whether to award damages and how much and preponderance of the evidence unique to it, the court's
is uniquely within the factfinder's discretion. inquiry should end there. A court should not consider losses
or injuries for which the jury could have compensated the
[12] We are persuaded that in the proper case, when the injured party under a different category unless a factual
evidence supports such a submission, loss of enjoyment of sufficiency challenge is made to all overlapping categories
life fits best among the factors a factfinder may consider of damages. Otherwise, an injured party could receive an
in assessing damages for physical impairment. Indeed, if adequate award for all injuries and losses sustained when
other elements such as pain, suffering, mental anguish, and a jury chooses to compensate for injuries or losses in the
disfigurement are submitted, there is little left for which to categories of pain, suffering or mental anguish, rather than
compensate under the category of physical impairment other physical impairment, and the injured party would still get a
than loss of enjoyment of life. Accordingly, if “physical new trial by challenging only the jury's award under physical
impairment” is defined for a jury, it would be appropriate impairment.
to advise the jury that it may consider as a factor loss of
enjoyment of life. But the jury should be instructed that the In this case, Jackson has challenged the factual sufficiency of
effect of any physical impairment must be substantial and the jury's failure to award larger damages in the categories
extend beyond any pain, suffering, mental anguish, lost wages of physical pain and mental anguish, physical impairment of
or diminished earning capacity and that a claimant should not loss of vision, and disfigurement, as well as the award of no
be compensated more than once for the same elements of loss damages for “physical impairment other than loss of vision.”
or injury. The court of appeals should conduct a review of each of these
categories, considering the evidence unique to each category.
*773 [13] [14] [15] [16] In the case before usIf, after considering evidence unique to a category, the court
today, no definition of “physical impairment” was given or concludes that the jury's failure to award larger damages for
requested. Without any definition to guide it, the jury could that category is against the great weight and preponderance
have concluded that Jackson's temporary injuries resulted in of the evidence, it should then consider all the overlapping
compensable loss of enjoyment of life. However, the jury evidence, together with the evidence unique to each other
could reasonably have decided to compensate Jackson for the category to determine if the total amount awarded in the
time he spent hospitalized and recuperating, during which he overlapping categories is factually sufficient. This takes into
was unable to enjoy recreational activities, under the category account all the evidence regarding damages in categories that
of physical pain and mental anguish. Or, the jury could overlap, but does not credit that evidence more than once in
have decided that Jackson should not recover any hedonic evaluating the amount awarded by the jury.
damages for his temporary injuries. If a court of appeals were
to base its decision on the sufficiency of the evidence to The necessary corollary to these principles is that in reviewing
support the jury's failure to award damages for one category of a challenge that an award for a category is excessive because
damages (or its failure to award larger damages) on evidence there is factually insufficient evidence to support it, a court
that the jury could have credited in making an award for of appeals should consider all the evidence that bears on that
other damage elements, then the court of appeals would be category of damages, even if the evidence also relates to
substituting its judgment for that of the jury in evaluating in another category of damages. To do otherwise would mean
which category, if any, the injured party should have been that evidence that reasonably could have supported the jury's
compensated. A court of appeals should therefore confine its award would not be considered, which would be improper. If
review to evidence, if any, that is unique to the challenged more than one award in overlapping categories is challenged
category. If the jury's failure to award damages or the amount as excessive, the court *774 of appeals should consider
of damages awarded is so against the great weight and all the evidence that relates to the total amount awarded in
preponderance of the evidence as to be manifestly unjust, all overlapping categories to determine if the total amount
shock the conscience, or clearly demonstrate bias, then a new awarded was excessive. This likewise gives full effect to all
trial would be required. the evidence without crediting any of the evidence more than
once.
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Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
Golden Eagle contends that the court of appeals concluded jury's failure to award any damages for pain and suffering. 75
that the jury was required to award damages for “physical This does not mean, however, that a verdict awarding no
impairment other than loss of vision” solely on the basis damages for pain and suffering should be upheld on appeal if
that there was objective evidence of physical injury. In this there is objective, undisputed evidence of a significant injury
regard the court of appeals said that it found the decision and the jury could not have compensated the injured party in
in Robinson v. Minick 67 “instructive.” 68 The injured party some other category of damages.
in Robinson had facial fractures, surgery, and spent a month
in the hospital. The court in Robinson held that “when we In Monroe v. Grider, 76 the court of appeals properly drew
apply settled law that requires a jury to award something for a distinction between a jury's failure to award damages for
every element of damage proven, to the undisputed, objective pain and suffering when there was objective, undisputed
evidence of severe physical impairment in the past, we cannot evidence of injury and the jury's failure to award damages
escape the conclusion that the jury's finding of $0 is against for mental anguish. In that case, the trial court had submitted
the great weight and preponderance of the evidence.” 69 physical pain and mental anguish in one issue. The jury
Similarly, the court of appeals in this case held that “[t]here failed to award any damages in that category, although the
is nothing subjective or conflicting about the evidence of plaintiff had a fractured wrist and a sprained muscle in her
the broken bones around [Jackson's] eye, the broken nose, groin that “temporarily prevented her from working and fully
or ruptured sinus” and that these “injuries are demonstrative enjoying recreational activities.” 77 The court of appeals held,
of impairment beyond pain and suffering, loss of earning “[u]ncontroverted evidence of an objective injury does not
capacity, and loss of vision.” 70 always require mental anguish damages,” but the jury could
not ignore uncontroverted evidence of injury in denying any
[17] In keeping with the principles that a court may not recovery for past physical pain. 78
substitute its judgment for that of the jury and that the jury
is the sole judge of the weight and credibility of testimony, To summarize the factual sufficiency standard of review
courts should not conclude that a jury's failure to award any that we adopt today, when only one category of damages is
damages for physical impairment is against the great weight challenged on the basis that the award in that category was
and preponderance of the evidence simply because there is zero or was too low, a court should consider only whether the
objective evidence of an injury. The courts of appeals in evidence unique to that category is so against the great weight
Landacre v. Armstrong Building Maintenance Co. 71 and and preponderance of the evidence as to be manifestly unjust,
Platt v. Fregia 72 both concluded that a jury's failure to award shock the conscience, or clearly demonstrate bias. When, as
damages for physical impairment was not against the great in this case, the jury's failure to find greater damages in more
weight and preponderance of the evidence even though the than one overlapping category is challenged, the court of
plaintiffs in those cases had some permanent functional loss appeals should first determine if the evidence unique to each
of a part of their body. In Landacre, the plaintiff had a frozen category is factually sufficient. If it is not, the court of appeals
shoulder and her normal range of motion decreased to 50%. should then consider all the overlapping evidence, together
In Platt, the plaintiff lost 30% function in his knee. The jury with the evidence unique to each category, to determine if
in each case had awarded amounts in other categories of the total amount awarded in the overlapping categories is
non-economic damages. The court in Landacre concluded factually sufficient.
that “[t]he determination that the appellant has not and
will not suffer physical impairment apart from that already [18] This standard of review gives due regard to a jury's
choice of whether and how to categorize and compensate for
compensated for is uniquely within the jury's province.” 73
specific losses or injuries that could reasonably fall into more
than one category of damages. It also advances the principles
Similarly, in Pilkington v. Kornell, the court of appeals
that a tort victim should be fully and fairly compensated, but
concluded that when a jury is presented with conflicting
that a double recovery should be avoided.
evidence about the existence and severity of a physical injury
and associated pain, the jury “could believe all or any part of
[19] Additionally, in reviewing a jury's failure to award
the testimony *775 of any witness and disregard all or any
any damages, courts of appeals should apply the principles
part of the testimony of any witness.” 74 The court upheld a
articulated in Pool v. Ford Motor Co. 79 In this case, the
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Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
court of appeals did not detail the evidence that supported the appeals' judgment and remand the case for consideration
jury's failure to award any damages for physical impairment of the evidence under the well-established Pool standard.
other than loss of vision or state in what regard the contrary Because the Court fashions a confusing and unnecessary
evidence greatly *776 outweighed the evidence in support review standard that will be difficult, if not impossible, to
of the verdict, as our decision in Pool requires. apply, I concur in the judgment only.
In Pool v. Ford Motor Company, we said that courts of
appeals should, when reversing on insufficiency grounds,
V
detail the evidence relevant to the
[20] Finally, we consider Golden Eagle's contention that the
issue in consideration and clearly state
trial court erred in submitting both “physical impairment of
why the jury's finding is factually
loss of vision” and “physical impairment other than loss of
insufficient or is so against the
vision” as separate items of damage. Golden Eagle argues
great weight and preponderance as
that submitting these elements violated Texas Rule of Civil
to be manifestly unjust; why it
Procedure 277. We need not decide whether Golden Eagle
shocks the conscience; or clearly
preserved this complaint for appeal because we conclude that
demonstrates bias. Further, those
there was no reversible error in the submission.
courts, in their opinions, should state
in what regard the contrary evidence
Rule 277 provides that “[i]n all jury cases the court
greatly outweighs the evidence in
shall, whenever feasible, submit the cause upon broad-form
support of the verdict.
questions.” 80 Although the trial court granulated physical
impairment into two separate categories, Golden Eagle 715 S.W.2d at 635. Courts of appeals may not reverse on the
did not explain how it was harmed by this submission, mere conclusion that the evidence preponderates toward an
particularly in light of the jury's award of “$0” for physical affirmative answer but may reverse only after a detailing of
impairment other than loss of vision. evidence under Pool indicates that the great weight of that
evidence supports an affirmative answer. Herbert v. Herbert,
We reverse the judgment of the court of appeals and remand 754 S.W.2d 141, 144 (Tex.1988).
this case to that court for further proceedings.
Some courts of appeals, though, have applied a different rule
when a jury finds *777 liability but fails to award damages.
Although the so-called “zero damages” rule has various
Justice O'NEILL filed a concurring opinion, in which Justice
iterations, it generally provides that, once a jury has found an
SCHNEIDER joined.
injury and some resulting damage, the failure to compensate
Justice JEFFERSON did not participate in the decision. for intangible damage elements such as pain and suffering
is necessarily against the great weight and preponderance
of the evidence. See W. Wendall Hall, Standards of Review
Justice O'NEILL filed a concurring opinion, in which Justice
in Texas, 29 St. Mary's L.J. 351, 465–66 (1998); Raul A.
SCHNEIDER joined.
Gonzalez & Rob Gilbreath, Appellate Review of a Jury's
If I were directed to conduct a factual sufficiency review
Finding of “Zero Damages,” 54 Tex. B.J. 418 (1991). When
of the evidence in this case under the standard the Court
strictly applying the “zero damages” rule, a reviewing court
articulates today, I wouldn't have a clue. The question this
does not consider and weigh all of the evidence in the case
case presents is simple and straightforward: did the court of
(both that which tends to support the jury's finding and that
appeals follow the review standard we articulated in Pool
which does not), state in what regard the contrary evidence
v. Ford Motor Company, 715 S.W.2d 629 (Tex.1986), in
greatly outweighs the evidence that supports the verdict,
reviewing the jury's award of zero damages for Jackson's
or explain why the jury's finding shocks the conscience or
physical impairment other than loss of vision? Clearly it
clearly demonstrates bias, as Pool requires. Because the “zero
did not, applying instead the so-called “zero damages” rule.
damages” rule is inconsistent with the Pool review standard,
That rule is inconsistent with Pool, and we should take this
we should take this opportunity to expressly disavow it.
opportunity to clearly say so. I would reverse the court of
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Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
allowed the jury to award separate damages for medical
In this case, although the court of appeals recited the
care, physical pain and mental anguish, physical impairment
Pool standard, it actually conducted an evidentiary review
of loss of vision, physical impairment other than loss of
that more closely resembles the “zero damages” rule.
vision, disfigurement, and loss of earnings in the past.
From the existence of the injury itself, which necessitated
The jury was instructed to consider each damage element
hospitalization and surgery, the court of appeals concluded
separately and not to include damages for one element in any
that Jackson suffered compensable physical impairment other
other. We must presume that the jury followed the court's
than loss of vision and that the jury's finding to the contrary
instruction. See In re J.F.C., 96 S.W.3d 256, 298 (Tex.2002)
was so against the great weight and preponderance of the
(Hankinson, J., dissenting). Accordingly, to reverse based
evidence as to be manifestly unjust. There are several
on the jury's finding of zero damages for Jackson's alleged
problems with the court of appeals' approach. First, the court
physical impairment other than loss of vision, the court
began its analysis by examining the record for evidence
of appeals was required to detail the evidence that would
against the jury's finding, citing Jackson's facial fractures,
show Jackson suffered a distinct physical impairment loss
hospitalization and frequent headaches as some evidence of
that did not overlap the other damage elements the jury
impairment other than loss of vision. It then failed to recite
found. Further, that evidence must demonstrate a distinct
all of the evidence that supports the jury's finding. Jackson
loss so substantial and compelling that, when weighed
himself testified that he recovered well from his eye injury,
against the contrary evidence, the jury's failure to compensate
and that he received an excellent result from his surgery.
it is manifestly unjust, shocks the conscience, or clearly
There was evidence that Jackson's headaches had lessened
demonstrates bias. The court of appeals summarily concluded
over time. At Jackson's request, his doctor released him to
that Jackson's facial fractures, hospitalization, and headaches
return to work approximately two months after the injury,
“are demonstrative of impairment beyond pain and suffering,
and he continued to work five days a week as he had before.
loss of earning capacity, and loss of vision,” but it does not
Jackson was able to perform tasks around the home after
explain how they resulted in any impairment beyond the
his injury, and he continued to go hunting, although not
damages elements for which Jackson was compensated or
as frequently. The court of appeals recounted some of this
why the jury's contrary finding was manifestly unjust. I would
evidence, but failed to articulate in what regard the contrary
reverse and remand the case to the court of appeals with
evidence so greatly outweighed the evidence supporting the
instructions to conduct a proper factual sufficiency review
jury's verdict as to shock the conscience or be manifestly
under the standard we articulated in Pool.
unjust. See Pool, 715 S.W.2d at 635.
Rather than applying the relatively straightforward Pool
More importantly, though, in order to recover, Jackson had
standard, the Court wanders through the origins of physical
to demonstrate that his physical impairment other than loss
impairment as a distinct damage element (something neither
of vision produced a distinct loss that was substantial and
party felt compelled to discuss), ruminates on whether
should be compensated. See Estrada v. Dillon, 44 S.W.3d
impairment damages should be awarded for other than
558, 562 (Tex.2001) (citing Landacre v. Armstrong Bldg.
permanent injuries (again, neither party raised the issue), and
Maint. Co., 725 S.W.2d 323, 325 (Tex.App.-Corpus Christi
contemplates which damage element best encompasses the
1986, writ ref'd n.r.e.)) (applying rule that to recover for
concept of hedonic damages (nary a word from the parties).
physical impairment a plaintiff must prove that the effect
Because the Court's writing consists primarily of dicta, and
of the physical impairment extends beyond any impediment
the factual sufficiency review standard it “adopt[s] today” is
to earning capacity or pain and suffering to the extent
confusing at best and completely unnecessary, I concur in the
that it produces a substantial separate and distinct loss);
judgment only.
Platt v. Fregia, 597 S.W.2d 495, 495–96 (Tex.Civ.App.-
Beaumont 1980, writ ref'd n.r.e.) (concluding that the jury
was not required to award physical impairment damages
All Citations
where plaintiff suffered severe knee injury, but surgery
produced good results, plaintiff was soon able to resume 116 S.W.3d 757, Prod.Liab.Rep. (CCH) P 16,745, 46 Tex.
almost everything he could do before the injury, and he Sup. Ct. J. 1133
had a 30% functional loss). The *778 charge in this case
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Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
Footnotes
1 715 S.W.2d 629, 635 (Tex.1986).
2 29 S.W.3d 925.
3 Golden Eagle Archery, Inc. v. Jackson, 24 S.W.3d 362, 364 (Tex.2000).
4 Id. at 375.
5 Id.
6 29 S.W.3d at 929.
7 Pool v. Ford Motor Co., 715 S.W.2d 629, 634–35 (Tex.1986); see also Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex.1988)
(plurality opinion); Id. at 145 (Phillips, C.J., concurring); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951).
8 Pool, 715 S.W.2d at 635.
9 Jones v. Tarrant Util. Co., 638 S.W.2d 862, 866 (Tex.1982).
10 Pool, 715 S.W.2d at 635.
11 Id.
12 244 S.W.2d at 661.
13 29 S.W.3d at 929.
14 Ronald Jackson's Brief on the Merits at 11–12, 13, 18 (record citations omitted).
15 The purported origin of the term “Hedonic damages” is discussed in Loth v. Truck–A–Way Corp., 60 Cal.App.4th 757,
70 Cal.Rptr.2d 571, 573 n. 1 (1998).
16 See Peek v. Equip. Serv. Co. of San Antonio, 779 S.W.2d 802, 803 (Tex.1989); see also Mo. Pac. R.R. Co. v. Handley,
341 S.W.2d 203, 205 (Tex.Civ.App.-San Antonio 1960, no writ) (concluding that damages for “mental anguish, severe
and continued pain and suffering, disfigurement, embarrassment and inability to live a normal life” were not excessive
when the plaintiff's fingers had been amputated and he was unable to grip anything or hunt and fish as he had in the
past); but see Ramos v. Kuzas, 65 Ohio St.3d 42, 600 N.E.2d 241, 243 (1992) (holding that “ ‘[h]edonic losses' include
the inability to perform the plaintiff's usual specific activities which had given pleasure to this particular plaintiff, such
as playing golf, dancing, bowling, playing musical instruments, and engaging in specific outdoor sports,” which must be
distinguished from “[b]asic losses” or “disability losses” that “include the inability to perform the basic mechanical body
movements of walking, climbing stairs, feeding oneself, and driving a car”).
17 See Houston Transit Co. v. Felder, 146 Tex. 428, 208 S.W.2d 880, 883–84 (1948); Int'l & G.N. Ry. Co. v. Butcher, 98
Tex. 462, 84 S.W. 1052, 1053 (1905); Int'l–Great N. R.R. Co. v. King, 41 S.W.2d 234, 236 (Tex. Comm'n App.1931,
holding approved); see also Dupont v. Preston, 9 P.3d 1193, 1197 (Colo.Ct.App.2000) (physical impairment can result
in pecuniary or nonpecuniary harm).
18 755 S.W.2d 890, 893 (Tex.App.-Houston [1st Dist.] 1988, writ denied); see also Rosenboom Mach. & Tool, Inc. v.
Machala, 995 S.W.2d 817, 825 (Tex.App.-Houston [1st Dist.] 1999, pet. denied).
19 755 S.W.2d at 893.
20 44 S.W.3d 558 (Tex.2001).
21 Id. at 561.
22 Id. at 560.
23 Estrada v. Dillon, 23 S.W.3d 422, 427–28 (Tex.App.-Amarillo 2000), rev'd in part, 44 S.W.3d 558 (Tex.2001).
24 Id. at 427.
25 Estrada, 44 S.W.3d at 562 (citing TEX.R. APP. P. 44.1(b)).
26 Id. at 561.
27 Id.
28 See, e.g., Green v. Baldree, 497 S.W.2d 342, 350 (Tex.Civ.App.-Houston [14th Dist.] 1973, no writ) (observing “[i]t would
not be proper in every personal injury case to instruct the jury that it might consider loss of earning capacity, pain and
physical impairment as separate elements of plaintiff's damage,” but concluding that “in almost all of such cases, if not
all of them, the defendant would be entitled, on request, to have the court submit a special instruction that would be
calculated to prevent the jury from allowing a double recovery”); Santa Rosa Med. Ctr. v. Robinson, 560 S.W.2d 751,
760 (Tex.Civ.App.-San Antonio 1977, no writ) (reviewing charge that included physical pain and mental anguish, loss of
earnings, and physical impairment, concluding that “[t]here is clearly a possibility of some overlapping and blending in
the issues as submitted,” but finding no reversible error); Mikell v. La Beth, 344 S.W.2d 702, 709 (Tex.Civ.App.-Houston
1961, writ ref'd n.r.e.) (concluding that when physical impairment and diminished capacity to work and earn money were
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Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
both submitted, “there was no necessary duplication of elements of damage.... But if we are mistaken in this, we are of
the opinion that appellants' [point of error] nevertheless must be overruled because the objection made to the issue in
the Trial Court did not specifically point out that there was any duplication in the elements of damage as submitted.”).
29 Blankenship v. Mirick, 984 S.W.2d 771, 777 (Tex.App.-Waco 1999, pet. denied); Peter v. Ogden Ground Servs., Inc., 915
S.W.2d 648, 650 (Tex.App.-Houston [14th Dist.] 1996, no writ); Sharm, Inc. v. Martinez, 900 S.W.2d 777, 784 (Tex.App.-
Corpus Christi 1995, judgm't vacated); Pipgras v. Hart, 832 S.W.2d 360, 366 (Tex.App.-Fort Worth 1992, writ denied);
Lawson–Avila Constr., Inc. v. Stoutamire, 791 S.W.2d 584, 599 (Tex.App.-San Antonio 1990, writ denied); Tri–State Motor
Transit Co. v. Nicar, 765 S.W.2d 486, 493 (Tex.App.-Houston [14th Dist.] 1989, no writ); Robinson v. Minick, 755 S.W.2d
890, 893 (Tex.App.-Houston [1st Dist.] 1988, writ denied); S. Pac. Transp. Co. v. Harlow, 729 S.W.2d 946, 950 (Tex.App.-
Corpus Christi 1987), writ dism'd, improvidently granted, 745 S.W.2d 320 (Tex.1988); Landacre v. Armstrong Bldg. Maint.
Co., 725 S.W.2d 323, 324 (Tex.App.-Corpus Christi 1986, writ ref'd n.r.e.); Baker Marine Corp. v. Herrera, 704 S.W.2d
58, 62 (Tex.App.-Corpus Christi 1985, writ ref'd n.r.e.); Allen v. Whisenhunt, 603 S.W.2d 242, 244 (Tex.Civ.App.-Houston
[14th Dist.] 1980, writ dism'd); Browning v. Paiz, 586 S.W.2d 670, 675 (Tex.Civ.App.-Corpus Christi 1979, writ ref'd n.r.e.);
French v. Grigsby, 567 S.W.2d 604, 607 (Tex.Civ.App.-Beaumont), writ ref'd n.r.e., 571 S.W.2d 867 (Tex.1978); Santa
Rosa Med. Ctr., 560 S.W.2d at 760; Green, 497 S.W.2d at 350.
30 29 S.W.3d at 928 (quoting Blankenship, 984 S.W.2d at 777).
31 See Rosenboom Mach. & Tool, Inc. v. Machala, 995 S.W.2d 817, 826–28 (Tex.App.-Houston [1st Dist.] 1999, pet.
denied); Blankenship, 984 S.W.2d at 778 (concluding that evidence that plaintiff could no longer do aerobic exercises,
she did not walk as well, her knees gave out, and her physician said likelihood of developing arthritis was much higher
was sufficient to support award for physical impairment); Peter, 915 S.W.2d at 650; Lawson–Avila Constr., Inc., 791
S.W.2d at 600 (noting that physician testified that 27–year–old plaintiff would have to restrict his activities for the rest of
his life and his condition would become worse over time); Tri–State Motor Transit Co., 765 S.W.2d at 493 (concluding
that evidence of loss of ability to enjoy recreational sports supported award); S. Pac. Transp. Co., 729 S.W.2d at 950–51;
Allen, 603 S.W.2d at 244 (observing that plaintiff could no longer engage in manual labor as an employee or for his own
benefit, mow a lawn, or play basketball); Platt v. Fregia, 597 S.W.2d 495, 495–96 (Tex.Civ.App.-Beaumont 1980, writ
ref'd n.r.e.); Browning, 586 S.W.2d at 675 (observing that physician testified that condition of plaintiff's leg was permanent
and the prognosis was poor, perhaps requiring amputation); French, 567 S.W.2d at 607–08; Santa Rosa Med. Ctr., 560
S.W.2d at 760 (concluding that evidence of partial paralysis, spasticity, difficulty focusing both eyes, slurring of words,
and inability to perform any of the usual tasks of a working man supported award for physical impairment); Charles T.
Picton Lumber Co. v. Redden, 452 S.W.2d 713, 723 (Tex.Civ.App.-Corpus Christi 1970, writ ref'd n.r.e.) (noting that
plaintiff, a paraplegic, was permanently injured and would require braces, crutches, or a wheel chair); Dr. Pepper Bottling
Co. v. Rainboldt, 66 S.W.2d 496, 501 (Tex.Civ.App.-Waco 1933), rev'd on other grounds, Schroeder v. Rainboldt, 128
Tex. 269, 97 S.W.2d 679 (1936) (plaintiff's bladder was permanently injured and she would be unable to have children);
see also Mo. Pac. R.R. Co. v. Handley, 341 S.W.2d 203, 205 (Tex.Civ.App.-San Antonio 1960, no writ).
32 See, e.g., Schindler Elevator Corp. v. Anderson, 78 S.W.3d 392, 412–13 (Tex.App.-Houston [14th Dist.] 2001, judgm't
vacated) (holding that temporary injuries supported award for past physical impairment, but that permanent injuries
supported award for future physical impairment).
33 44 S.W.3d 558, 561–62 (Tex.2001).
34 98 Tex. 462, 84 S.W. 1052 (1905).
35 25 Tex.Civ.App. 145, 60 S.W. 314, 316 (1901).
36 Id.
37 66 S.W.2d at 497.
38 Id. at 501.
39 Id.
40 Id.
41 Id.
42 See, e.g., Mo. Pac. R.R. Co. v. Lane, 720 S.W.2d 830, 834 (Tex.App.-Texarkana 1986, writ denied); Spohn Hosp. v.
Mayer, 72 S.W.3d 52, 67 (Tex.App.-Corpus Christi 2001), rev'd on other grounds, 104 S.W.3d 878 (Tex.2003); Brookshire
Bros., Inc. v. Wagnon, 979 S.W.2d 343, 353 (Tex.App.-Tyler 1998, pet. denied).
43 Akers v. Kelley Co., 173 Cal.App.3d 633, 219 Cal.Rptr. 513, 526 (1985); Loth v. Truck–A–Way Corp., 60 Cal.App.4th
757, 70 Cal.Rptr.2d 571, 575 (1998); Knight v. Lord, 271 Ill.App.3d 581, 207 Ill.Dec. 917, 648 N.E.2d 617, 623 (1995);
Sena v. N.M. State Police, 119 N.M. 471, 892 P.2d 604, 610–11 (Ct.App.1995) (noting that loss of enjoyment of life is a
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Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
factor to be considered in relation to other elements of damage such as disability, pain, suffering, and mental anguish);
Jones v. Chicago Osteopathic Hosp., 316 Ill.App.3d 1121, 250 Ill.Dec. 326, 738 N.E.2d 542, 554–55 (2000); Frito–Lay,
Inc. v. Cloud, 569 N.E.2d 983, 989 (Ind.Ct.App.1991); Poyzer v. McGraw, 360 N.W.2d 748, 753 (Iowa 1985); Gregory v.
Carey, 246 Kan. 504, 791 P.2d 1329, 1336 (1990); Adams v. Miller, 908 S.W.2d 112, 116 (Ky.1995) (holding that hedonic
value of life “is already recoverable in the recognized category of mental suffering”); Anunti v. Payette, 268 N.W.2d 52,
55 (Minn.1978); Anderson v. Neb. Dep't of Soc. Servs., 253 Neb. 813, 572 N.W.2d 362, 367 (1998) (holding that loss of
enjoyment of life may properly be considered as it relates to pain and suffering and to disability, but it is improper to treat
it as a separate category of nonpecuniary damages); Bennett v. Lembo, 145 N.H. 276, 761 A.2d 494, 498 (2000); Wilt v.
Buracker, 191 W.Va. 39, 443 S.E.2d 196, 207 (1993); but see Ogden v. J.M. Steel Erecting, Inc., 201 Ariz. 32, 31 P.3d
806, 813 (Ct.App.2001); Preston v. Dupont, 35 P.3d 433, 441 (Colo.2001); Montalvo v. Lapez, 77 Hawai'i 282, 884 P.2d
345, 364 (1994); Curtis v. Porter, 784 A.2d 18, 26 (Me.2001); Kan. City S. Ry. Co. v. Johnson, 798 So.2d 374, 380–81
(Miss.2001); Moscatello v. Univ. of Med. and Dentistry, 342 N.J.Super. 351, 776 A.2d 874, 881 (2001); Boan v. Blackwell,
343 S.C. 498, 541 S.E.2d 242, 244 (2001); Overstreet v. Shoney's, Inc., 4 S.W.3d 694, 715 (Tenn.Ct.App.1999); Kirk v.
Wash. State Univ., 109 Wash.2d 448, 746 P.2d 285, 292–93 (1987); Mariner v. Marsden, 610 P.2d 6, 12 (Wyo.1980).
44 720 S.W.2d at 834.
45 813 S.W.2d 658, 674 (Tex.App.-Texarkana 1991, writ denied) (stating that loss of enjoyment of life “may be treated as
a factor in determining damages in general or for pain and suffering”).
46 72 S.W.3d at 67.
47 979 S.W.2d at 353.
48 956 S.W.2d 590, 599 (Tex.App.-Tyler 1997), rev'd on other grounds, 1 S.W.3d 91 (Tex.1999) (reversing award of
attorney's fees).
49 Schindler Elevator Corp. v. Anderson, 78 S.W.3d 392, 412 (Tex.App.-Houston [14th Dist.] 2001, judgm't vacated).
50 Santa Rosa Med. Ctr. v. Robinson, 560 S.W.2d 751, 762 (Tex.Civ.App.-San Antonio 1977, no writ) (Cadena, C.J.,
dissenting).
51 See generally Boan v. Blackwell, 343 S.C. 498, 541 S.E.2d 242, 244–45 (2001) (holding that, when supported by the
evidence, a jury shall be charged that the injured person is entitled to recover damages for loss of enjoyment of life); Kan.
City S. Ry. Co., Inc. v. Johnson, 798 So.2d 374, 380 (Miss.2001) (holding that “loss of enjoyment of life should be fully
compensated and should be considered on its own merits as a separate element of damages, not as a part of one's pain
and suffering”); Ogden v. J.M. Steel Erecting, Inc., 201 Ariz. 32, 31 P.3d 806, 813 (Ct.App.2001) (holding that a “separate
charge on hedonic damages will minimize the risk that a jury will under- or over-compensate an injured person for her
noneconomic losses”); Jones v. Chicago Osteopathic Hosp., 316 Ill.App.3d 1121, 250 Ill.Dec. 326, 738 N.E.2d 542, 554
(2000) (stating that “ ‘loss of normal life’ has almost universally been interpreted as a component of disability which
compensates for a change in the plaintiff's lifestyle”); Knepper v. Robin, 745 So.2d 1248, 1257 (La.Ct.App.1999) (holding
that trial court erred in “depriv[ing] the jurors of the opportunity to consider the distinctions between loss of enjoyment of
life and the general damages of pain and suffering”); Loth v. Truck–A–Way Corp., 60 Cal.App.4th 757, 70 Cal.Rptr.2d
571, 575 (1998) (surveying decisions and holding that “[l]oss of enjoyment of life, however, is only one component of a
general damage award for pain and suffering [but] is not calculated as a separate award”); Smallwood v. Bradford, 352
Md. 8, 720 A.2d 586, 592–95 (1998) (examining authorities, concluding that loss of enjoyment of life was not recoverable
when decedent was almost instantly killed in a car crash); Adams v. Miller, 908 S.W.2d 112, 116 (Ky.1995) (holding
that hedonic value of life “is already recoverable in the recognized category of mental suffering”); Knight v. Lord, 271
Ill.App.3d 581, 207 Ill.Dec. 917, 648 N.E.2d 617, 623 (1995) (noting that loss of enjoyment of life is a component of
disability damages, but the term “loss of a normal life” is less likely to be misunderstood than “disability”); Fantozzi v.
Sandusky Cement Prods. Co., 64 Ohio St.3d 601, 597 N.E.2d 474, 481–87 (1992) (surveying decisions regarding loss
of enjoyment of life and holding that “permitting a separate interrogatory and jury finding on this damage, would help the
jury understand exactly what claimed damages it is addressing”); Eyoma v. Falco, 247 N.J.Super. 435, 589 A.2d 653,
658 (1991) (holding that loss of enjoyment of life is a separate and distinct item of damages); Frito–Lay, Inc. v. Cloud, 569
N.E.2d 983, 989 (Ind.Ct.App.1991) (holding it “is error to instruct the jury on the loss of quality and enjoyment of life as
an element of damages separate from other elements of damage, such as pain and suffering or permanency of injury”);
Gregory v. Carey, 246 Kan. 504, 791 P.2d 1329, 1335–36 (1990) (discussing the various decisions that have considered
loss of enjoyment of life and concluding that it is “inextricably included within the more traditional areas of damages for
disability and pain and suffering”); Nussbaum v. Gibstein, 73 N.Y.2d 912, 539 N.Y.S.2d 289, 536 N.E.2d 618, 619 (1989)
(holding that “loss of enjoyment of life is not a separate element of damages deserving a distinct award but is, instead, only
a factor to be considered by the jury in assessing damages for conscious pain and suffering”); McDougald v. Garber, 73
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
N.Y.2d 246, 538 N.Y.S.2d 937, 536 N.E.2d 372, 376–77 (1989) (surveying authorities and holding that loss of enjoyment
of life is a permissible factor in assessing pain and suffering, but no purpose would be served by having the jury make
separate awards); see generally Hermes, Loss of Enjoyment of Life–Duplication of Damages Versus Full Compensation,
63 N.D. L.REV. 561 (1987); Annotation, Loss of Enjoyment of Life as Distinct Element or Factor in Awarding Damages
for Bodily Injury, 34 A.L.R.4TH 293 (1984); Cramer, Comment, Loss of Enjoyment of Life as a Separate Element of
Damages, 12 PAC. L.J. 965 (1981).
52 See, e.g., Green v. Baldree, 497 S.W.2d 342, 350 (Tex.Civ.App.-Houston [14th Dist.] 1973, no writ) (holding that “[t]he
plaintiff must sustain the burden of proving that the effect of his physical impairment extends beyond any impediment to
his earning capacity and beyond any pain and suffering to the extent that it produces a separate and distinct loss that
is substantial and for which he should be compensated”).
53 29 S.W.3d at 928 (quoting Blankenship v. Mirick, 984 S.W.2d 771, 777 (Tex.App.-Waco 1999, pet. denied)).
54 See, e.g., Rosenboom Mach. & Tool, Inc. v. Machala, 995 S.W.2d 817, 825 (Tex.App.-Houston [1st Dist.] 1999, pet.
denied); Green, 497 S.W.2d at 350 (commenting that when physical impairment is submitted as a separate element, “the
defendant would be entitled, on request, to have the court submit a special instruction that would be calculated to prevent
the jury from allowing a double recovery”); see also Robinson v. Minick, 755 S.W.2d 890, 894–95 (Tex.App.-Houston
[1st Dist.] 1988, writ denied) (stating that limiting instruction might have prevented jury from considering past physical
impairment in making its award for other elements).
55 567 S.W.2d 604 (Tex.Civ.App.-Beaumont), writ ref'd n.r.e., 571 S.W.2d 867 (Tex.1978).
56 Id. at 608.
57 TEXAS PATTERN JURY CHARGES PJC 8.2 (2000 ed.).
58 See, e.g., Thomas v. Oldham, 895 S.W.2d 352, 360 (Tex.1995); Price v. Short, 931 S.W.2d 677, 688 (Tex.App.-Dallas
1996, no writ); Greater Houston Transp., Inc. v. Zrubeck, 850 S.W.2d 579, 589 (Tex.App.-Corpus Christi 1993, writ
denied).
59 See Price, 931 S.W.2d at 688.
60 Greater Houston Transp., Inc., 850 S.W.2d at 589.
61 See Gillette Motor Transp. Co. v. Whitfield, 145 Tex. 571, 200 S.W.2d 624, 626 (Tex.1947); see also In re K.R., 63
S.W.3d 796, 800–01 (Tex.2001); Turner, Collie, & Braden, Inc. v. Brookhollow, Inc., 642 S.W.2d 160, 167 (Tex.1982);
Daugherty v. S. Pac. Transp. Co., 772 S.W.2d 81, 83 (Tex.1989).
62 Kan. City S. Ry. Co. v. Johnson, 798 So.2d 374, 381 (Miss.2001) (distinguishing loss of enjoyment of life from pain and
suffering, noting that “[a] permanent injury differs from pain and suffering in that it is an injury from which the plaintiff
cannot completely recover”); Ogden v. J.M. Steel Erecting, Inc., 201 Ariz. 32, 31 P.3d 806, 813 (Ct.App.2001) (defining
loss of enjoyment of life as “damages [that] compensate the individual not only for the subjective knowledge that one
can no longer enjoy all of life's pursuits, but also for the objective loss of the ability to engage in these activities”);
Bennett v. Lembo, 145 N.H. 276, 761 A.2d 494, 498 (N.H.2000) (holding that damages for loss of enjoyment of life are
a component of permanent impairment); Sena v. N.M. State Police, 119 N.M. 471, 892 P.2d 604, 611 (Ct.App.1995)
(holding that “New Mexico permits proof of nonpecuniary damages resulting from the loss of enjoyment of life in tort
actions involving permanent injuries”); Laing v. Am. Honda Motor Co., Inc., 628 So.2d 196, 204 (La.Ct.App.1993) (finding
evidence sufficient to support award for hedonic damages when, seven years after the accident, plaintiff could not feed
himself or enjoy writing or cooking, and required assistance to perform basic tasks); Wilt v. Buracker, 191 W.Va. 39, 443
S.E.2d 196, 200 (1993) (stating that “damages for the loss of enjoyment of life are a valid element of recovery when a
plaintiff has suffered a permanent injury”) (emphasis omitted); Fantozzi v. Sandusky Cement Prods. Co., 64 Ohio St.3d
601, 597 N.E.2d 474, 486–87 (1992) (holding that a jury should be instructed that it may award damages for an inability
to perform usual activities of life or usual activities that give pleasure if it finds a permanent disability); Eyoma v. Falco,
247 N.J.Super. 435, 589 A.2d 653, 662 (1991) (holding that loss of enjoyment of life is an element of the permanent injury
a plaintiff has suffered); Kirk v. Wash. State Univ., 109 Wash.2d 448, 746 P.2d 285, 292–93 (1987) (holding that trial
court did not err in allowing jury to consider loss of enjoyment of life when injury to plaintiff's elbow was permanent and
she could not become a professional dancer); Gowdy v. United States, 271 F.Supp. 733, 751 (W.D.Mich.1967) (noting
in reviewing evidence of loss of enjoyment of life that the plaintiff's impairment was permanent).
63 Smith v. City of Evanston, 260 Ill.App.3d 925, 197 Ill.Dec. 810, 631 N.E.2d 1269, 1279 (1994) (noting that “loss of a
normal life” should be “defined as plaintiff's ‘diminished ability to enjoy life that the plaintiff has experienced,’ which
should include plaintiff's temporary or permanent inability to pursue the pleasurable aspects of life, such as recreation
or hobbies”) (citation omitted).
64 44 S.W.3d 558 (Tex.2001).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 17
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (2003)
Prod.Liab.Rep. (CCH) P 16,745, 46 Tex. Sup. Ct. J. 1133
65 Berger v. Weber, 411 Mich. 1, 303 N.W.2d 424, 436 (1981).
66 Am. Nat'l Watermattress Corp. v. Manville, 642 P.2d 1330, 1341 (Alaska 1982).
67 755 S.W.2d 890 (Tex.App.-Houston [1st Dist.] 1988, writ denied).
68 29 S.W.3d at 929.
69 755 S.W.2d at 894.
70 29 S.W.3d at 929.
71 725 S.W.2d 323, 325 (Tex.App.-Corpus Christi 1986, writ ref'd n.r.e.).
72 597 S.W.2d 495, 495–96 (Tex.Civ.App.-Beaumont 1980, writ ref'd n.r.e.).
73 725 S.W.2d at 325; see also Platt, 597 S.W.2d at 495–96 (holding that jury was not required to award damages for
physical impairment in addition to damages for past physical and mental anguish even though plaintiff severely injured
his knee, surgery was required, and there was a 30% functional loss).
74 822 S.W.2d 223, 230 (Tex.App.-Dallas 1991, writ denied).
75 Id. at 231; see also Waltrip v. Bilbon Corp., 38 S.W.3d 873, 881–82 (Tex.App.-Beaumont 2001, pet. denied) (holding that
$100 award for past physical pain and mental anguish was not against great weight and preponderance of the evidence);
Srite v. Owens–Ill., Inc., 870 S.W.2d 556, 563 (Tex.App.-Houston [1st Dist.] 1993), rev'd on other grounds, Owens–Ill.,
Inc. v. Estate of Burt, 897 S.W.2d 765 (Tex.1995) (reversing only on pre-judgment interest).
76 884 S.W.2d 811, 820 (Tex.App.-Dallas 1994, writ denied).
77 Id. at 819.
78 Id. at 820.
79 715 S.W.2d 629, 635 (Tex.1986).
80 TEX.R. CIV. P. 277.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 18
W
Gonzalez v. Grimm, --- S.W.3d ---- (2015)
2015 WL 4137862
of the prosecution in the plaintiff's favor; (4)
the plaintiff's innocence; (5) lack of probable
2015 WL 4137862
cause to initiate or procure the prosecution; (6)
Only the Westlaw citation is currently available.
malice in filing the charge; and (7) damage to the
NOTICE: THIS OPINION HAS NOT BEEN plaintiff.
RELEASED FOR PUBLICATION IN THE
Cases that cite this headnote
PERMANENT LAW REPORTS. UNTIL RELEASED,
IT IS SUBJECT TO REVISION OR WITHDRAWAL.
[2] Malicious Prosecution
Court of Appeals of Texas, Instigation of or participation in prosecution
El Paso.
Malicious Prosecution
Gary Gonzalez, Appellant, Institution or continuation of prosecution
v. Malicious prosecution plaintiff must prove that
Ione Grimm, Appellee. the defendant either initiated or procured the
prosecution as an element of the claim, and
No. 08–13–00326–CV | July 8, 2015 initiating the action describes executing the
charging instrument which goes before the
Synopsis magistrate, who then may issue an arrest warrant.
Background: After parent of schoolchild was charged with
harassment regarding parent's phone call to school principal, Cases that cite this headnote
parent brought action against principal for malicious criminal
prosecution. The 171st District Court, El Paso County,
[3] Malicious Prosecution
Yvonne Rangel, J., awarded summary judgment to principal
Instigation of or participation in prosecution
but declined to award attorney fees. Parent and principal
appealed. The Court of Appeals, Guadalupe Rivera, J., 353 Defendant can be liable for malicious
S.W.3d 270, reversed and remanded. AFter remand, the 171st prosecution for procuring the prosecution, and
District Court, El Paso County, Yvonne Rangel, J., granted person procures a criminal prosecution if his
principal's motion for directed verdict, and parent appealed. actions are enough to cause the prosecution, and
but for his actions the prosecution would not
have occurred.
[Holding:] The Court of Appeals, Ann Crawford McClure, Cases that cite this headnote
C.J., held that parent did not establish malicious prosecution
claim against principal.
[4] Malicious Prosecution
Instigation of or participation in prosecution
Affirmed. Merely aiding or cooperating with the authorities
cannot “cause” a criminal prosecution for
purposes of malicious prosecution claim, nor
does a person procure a criminal prosecution
West Headnotes (6) when the decision whether to prosecute is left
to the discretion of another person, such as law
[1] Malicious Prosecution enforcement or a grand jury.
Nature and elements of malicious
Cases that cite this headnote
prosecution in general
Elements of malicious prosecution are: (1)
commencement of a criminal prosecution against [5] Malicious Prosecution
the plaintiff; (2) the defendant's initiation or Instigation of or participation in prosecution
procurement of that prosecution; (3) termination
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Gonzalez v. Grimm, --- S.W.3d ---- (2015)
2015 WL 4137862
Even if the decision is ultimately left to law a charge of criminal harassment, which was later dismissed
enforcement, when a person knowingly provides at the request of the State's prosecutor. After the charge was
false information which causes a criminal dismissed, Gonzalez sued Grimm who initially prevailed on
prosecution, they have effectively procured the a motion for summary judgment, premised on an affirmative
prosecution and may be liable for malicious defense under the Education Code. That summary judgment
prosecution. was reversed on appeal. Gonzalez v. Grimm, 353 S.W.3d 270
(Tex.App.–El Paso 2011, no pet.). Following remand, the
Cases that cite this headnote case proceeded to trial and at the conclusion of Gonzalez' case
in chief, the trial court granted a directed verdict, the propriety
[6] Malicious Prosecution of which is the only issue before us.
Instigation of or participation in prosecution
Malicious Prosecution
Institution or continuation of prosecution Standard of Review
Parent, who was charged with harassment
A directed verdict is properly granted when there is “no
regarding parent's phone call to school principal,
evidence” to support a material issue in the case. Prudential
did not establish malicious prosecution claim
Insurance Company of America v. Financial Review Services,
against principal; prosecutor initiated charge and
Inc., 29 S.W.3d 74, 77 (Tex.2000). A trial record contains “no
not the principal, the claim that principal was
evidence” when (1) there is a complete absence of evidence
threatened with bodily injury was itself false,
of a vital fact, (2) the court is barred by the rules of law or
but it did not come from principal, and even if
evidence from giving weight to the only evidence offered to
principal provided false information, there was
prove a vital fact, (3) the evidence offered to prove a vital
no indication that the claimed false information
fact is no more than a mere scintilla, or (4) the evidence
procured the prosecution.
conclusively establishes the opposite of a vital fact. City of
Cases that cite this headnote Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.2005).
In reviewing a directed verdict, we examine the evidence in
the light most favorable to the person suffering the adverse
Appeal from 171st District Court of El Paso County, Texas judgment. S.V. v. R.V., 933 S.W.2d 1, 8 (Tex.1996). But
(TC # 2008–3874). Yvonne Rangel, Judge. evidence cannot be taken out of context in a way that makes it
seem to support a material issue when in fact it never did. City
Attorneys and Law Firms of Keller, 168 S.W.3d at 812. Nor do we consider the evidence
“in isolated bits and pieces divorced from its surroundings;
Mark Berry, El Paso, TX, for Appellant. it must be viewed in its proper context with other evidence.”
AutoZone, Inc. v. Reyes, 272 S.W.3d 588, 592 (Tex.2008).
Albert Armendariz Jr., Law Offices of Dunbar, Armendariz,
Evidence is legally sufficient if it rises to a level that would
Hegeman & Holguin, P.L.L.C., El Paso, TX, for Appellee.
enable a reasonable and fair-minded jury to make the finding.
Before McClure, C.J., Rodriguez, J., and Perez, Judge City of Keller, 168 S.W.3d at 810. Evidence that is “so weak
as to do no more than create a mere surmise or suspicion”
of a fact is not legally sufficient. Kroger Tex. Ltd. P'ship v.
Suberu, 216 S.W.3d 788, 793 (Tex.2006), quotingFord Motor
OPINION
Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex.2004). With these
ANN CRAWFORD McCLURE, Chief Justice standards in mind, we turn to the facts presented prior to the
directed verdict.
*1 This is an appeal from a directed verdict. Gary Gonzalez
sued Ione Grimm for malicious prosecution. At the time of
events in question, Grimm was a middle school principal and
Factual Summary
Gonzalez was the father of two students at the school. The
malicious prosecution claim arose out of Gonzalez' arrest on
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Gonzalez v. Grimm, --- S.W.3d ---- (2015)
2015 WL 4137862
Gonzalez' case was presented through four witnesses: Ione the EPISD where they both could make money. At that point,
Grimm; Victor Araiza (the school district's police chief); she claims to have hung up on him.
Gonzalez; and his wife. The admitted exhibits included
the court's file from the underlying criminal case, and the Conversely, Gonzalez denied ever talking to Grimm about
investigation file from the police. We recite only those holding his daughter back, as that is a decision made by a
matters from the testimony and exhibits that bear on the specific committee at the school. Instead, Grimm wanted to
issues before us and the background necessary to put them in talk about his complaint to the District about her. While he
context. agreed there was a discussion about his possession of her
personnel file and Social Security number, he mentioned it
*2 Ione Grimm started with the El Paso Independent School only so she could pursue an action against the school district.
District (EPISD) as a principal at Wiggs Middle School in He denied any intent to participate in such a lawsuit himself.
2000. Following a run-in with an EPISD board member's He also denied making any threats to harm to Grimm through
wife, she was transferred to an administrative position for use of her Social Security number, including the statement
several years. By 2004, she was assigned to Magoffin Middle “do you know what I could do with this?”
School as its principal.
Following the phone call, Grimm consulted her husband, her
Her tenure at Magoffin Middle School was not without some personal attorney, and an EPISD Associate Superintendent,
conflict. Five sets of parents had issues with her and Grimm all of whom recommended that she file a report with the
believed that Gonzalez led the group. By January 2006, this police. She then reported the matter to the EPISD campus
group of parents had filed a complaint against Grimm with police 1 who took her statement on March 14, 2006. She
the EPISD. Part of the dispute related to the PTA chapter at signed and initialed the written statement which repeated the
the school. Gonzalez also complained about an incident with substance of her version of the March 8 phone conversation
his daughter. The EPISD Board ruled in Grimm's favor in set out above. Grimm also sent a letter to the EPISD
February 2006. superintendent regarding the phone call and requested that
the EPISD look into the possible release of her un-redacted
The genesis of this lawsuit is a telephone call that occurred personnel file. On March 28, 2006 she completed a second
on March 8, 2006. Grimm contends that Gonzalez called the statement for the EPISD police department. It repeated
school and left a message for her that morning, and that the the substance of her version of theconversation and then
two talked later that day. Gonzalez claims he never left a concluded by stating: “I am afraid of Gary Gonzalez and
message for Grimm, and that he called the school to talk to I do believe that he will use any method within his power
his daughter's teacher, but instead the call was routed into to cause me harm. I do want to prosecute Gary Gonzalez
Grimm's office. Gonzalez and Grimm sharply dispute what for being in possession of my identifying numbers and
was said in the conversation. threatening me with using those numbers.” Several EPISD
officers participated in the investigation, the last being Officer
Grimm maintains the phone call started with Gonzalez Lionel Calanche. He had passed away by the time of trial.
requesting that the school hold his daughter back a year. Only Victor Araiza, Chief of EPISD Police, testified at trial
Grimm did not think that was a good idea, as the daughter about the handling of the investigation. Generally, when an
was passing all her classes. Gonzalez was upset with this allegation is brought to his department, it is investigated and if
decision and then told Grimm she was going to be “real the complaining witness desires prosecution, the department
unhappy” because he had something that belonged to her proceeds further. In some instances, the department might
and that he had gotten it from the EPISD. He explained pursue prosecution even if the complaining witness wanted
that he had her Social Security number and then asked her to drop the matter. After the investigation was completed, the
“how it made me feel” and “do you know what I could investigating officers, and their supervisor, would discuss the
do with this?” Grimm interpreted this as a threat. Gonzalez matter and determine what charges might be appropriate and
then supposedly explained that another parent had gotten how to pursue them. In some cases, the officers might decide
Grimm's un-redacted personnel file from the EPISD through to immediately take a probable cause affidavit to a judge to
an open records request and that person had given him a copy. secure an arrest. In other cases, they may refer the matter to
Gonzalez then solicited Grimm's participation in a suit against the district attorney's office through a “non-arrest” complaint.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Gonzalez v. Grimm, --- S.W.3d ---- (2015)
2015 WL 4137862
The district attorney would then decide whether and how to file was sent to the district attorney's office. The Complaint,
proceed further. sworn to by Officer Calanche, alleges three violations of
TEX. PEN. CODE ANN.. § 42.07, the criminal harassment
*3 In this particular case, based on the March 28, 2006 statute. Paragraph A alleged that Gonzalez with the intent to
written statement from Grimm, the EPISD police believed “harass, annoy, alarm, abuse, torment, and embarrass Ione
that Gonzalez may have violated TEX. PEN. CODE ANN.. Grimm threaten Ione Grimm by telephone, in a manner
§ 32.51 (West Supp.2014) which is entitled “Fraudulent likely to alarm Ione Grimm, to wit: commit a felony against
Use or Possession of Identifying Information.” 2 Thatcharge Ione Grimm.” [Emphasis added]. Paragraph B alleged that,
was presented to the district attorney's office which declined with the same intent, Gonzalez caused Grimm's phone to
to prosecute the matter. The district attorney instead asked ring repeatedly. Paragraph C alleged that, with the same
that the EPISD police investigate the case under a possible intent, Gonzalez made repeated telephone communications in
charge of criminal harassment. TEX. PEN. CODE ANN.. § a manner to harass, annoy, alarm, abuse, torment or embarrass
Grimm.
42.07. 3 Based on this direction, Officer Calanche resumed
the investigation.
The supporting Complaint Affidavit, also sworn to by
Officer Calanche, alleged that Gonzalez committed criminal
At the same time the EPISD police department was handling
harassment “by threatening by telephone in manner
its initial investigation, Grimm was encountering more
reasonably likely to alarm the person receiving the threat,
problems at work. On March 24, 2006 the new EPISD
to inflict bodily injury on the person or to commit a felony
superintendent had posted an agenda item to reassign Grimm
against the person.” [Emphasis added]. The factual basis for
to a different school. 4 The next day he told her it was a the allegation is stated in a separate paragraph:
mistake and that he wanted more time to investigate the
unauthorized release of her personal information. On May 1, Affiant [Officer Calanche] is aware of defendants conduct
2006, she was informed that the district wanted to put her on and constant harassments during the months of February
a “growth plan” which is apparently a euphemism for a poor And March of 2006 by means of EPISD Case reports
performance report in the EPISD system. In June 2006, the 06–44288 and numerous witness statements. On March
EPISD Board demoted her to an assistant principal position 8, 2006 at 11:59 a.m. at 4931 Hercules, El Paso, Tx.
at Hornedo Middle School. Grimm soon thereafter filed a The Principal at Magoffin Middle School and defendant
federal lawsuit against the EPISD claiming the demotion and spoke via the school business telephone. Defendant
growth plan constituted retaliation for her complaint about the had initiated the phone contact and asked to speak to
unauthorized release of her personal information to Gonzalez. the Principal. Defendant in a threatening manner in
Gonzalez countered in this trial that Grimm's true motive in conversation informed the Principal of obtaining her Social
making the allegations against him was to set up a retaliation Security number and alarmed the Principal by asking,
claim to protect her position at Magoffin Middle School. ‘HOW DOES THAT MAKE YOU FEEL? YOU KNOW
WHAT I CAN DO WITH IT DON'T YOU?’Defendant
*4 On February 2, 2007, Grimm was contacted by was able to provide the Principal with the correct SS #
Officer Calanche of the EPISD police department. Calanche belonging to the Principal. The Principal felt harassed,
explained that the district was examining “cold cases” and annoyed, alarmed, abused, tormented, and or embarrassed
he was following up on the Gonzalez complaint and wanted by defendant's comments. Affiant does believe this to be
to meet with her. Under the department's policy, an officer true and correct to the best of his knowledge.
should check again with the complaining witness to be sure
that he or she still wanted to pursue a charge, and if not, the Contrary to the Complaint Affidavit, Grimm testified that
case would likely be dropped. No new statement was taken she did not believe that Gonzalez ever threatened her with
from Grimm at the February 2007 meeting. A note in Officer bodily injury, and as importantly, she never made that claim to
Calanche's file following the meeting recites that she “will Officer Calanche. Chief Araiza agreed that the department's
appear for court, if necessary.” The file note reflects that the investigation file does not contain any supporting information
case was being presented to the district attorney's office. for a threat of bodily injury, as sworn to by Officer Calanche.
Grimm denied knowing that Calanche was going to initiate
Following their meeting, Officer Calanche executed a charges against Gonzalez following their meeting, and she
Complaint and a Complaint Affidavit, which along with his
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Gonzalez v. Grimm, --- S.W.3d ---- (2015)
2015 WL 4137862
denied seeing his complaint paperwork before he filed it with the consequences of arrest and prosecution for an offense
the district attorney's office. are considerable, and every citizen should be protected from
a prosecution based on false claims arising from some
The Complaint, the Complaint Affidavit, and various witness malicious intent. Id.
statements were forwarded to the district attorney's office that
then had the discretion to pursue or not pursue the charge. The There is no dispute below that Gonzalez was charged for
district attorney's office did not contact Grimm during that an offense that was terminated in his favor. Grimm does
process. On February 21, 2007, Assistant District Attorney not challenge that he suffered some damages. The relevant
Manny Arambula executed and filed an “Information” 5 issues focus on whether Grimm initiated or procured the
repeating the same three paragraphs as were in Calanche's criminal charge, whether Gonzalez was innocent of the
Complaint form. On March 1, 2007, a capias for Gonzalez' charge, whether there was probable cause to make the charge,
arrest was issued and several months later he turned himself and whether the charge was brought with malice. We find
in. The charges were later dropped based on prosecutorial the element of initiation or procurement, which embodies
discretion. a causation element, to be determinative and begin our
discussion there.
*5 At the conclusion of Gonzalez' case, the trial court
granted Grimm's motion for directed verdict and entered a [2] A plaintiff must prove that the defendant either initiated
final judgment in her favor. Raising three issues on appeal, or procured the prosecution as an element of the claim.
Gonzalez challenges that ruling. Issue One questions whether RESTATEMENT (SECOND) OF TORTS, § 653(a)(1977).
Gonzalez was required to prove that Grimm made false Initiating the action describes executing the charging
statements to the police. Issue Two contends there is evidence instrument which goes before the magistrate, who then
to support the element of malice and Issue Three generally may issue an arrest warrant. Id.§ 653(a) cmt.c (“Criminal
contends he presented evidence of each element of his proceedings are initiated by making a charge before a public
malicious prosecution claim. official or body in such form as to require the official or
body to determine whether process shall or shall not be issued
against the accused.”); see alsoLieck, 881 S.W.2d at 292. (“A
person initiates a criminal prosecution if he makes a formal
Malicious Prosecution charge to law enforcement authorities.”).
[1] The elements of malicious prosecution are: (1)
[3] [4] [5] A defendant can also be liable for procuring
commencement of a criminal prosecution against the
the prosecution. Lieck, 881 S.W.2d at 292. A person procures
plaintiff; (2) the defendant's initiation or procurement of
a criminal prosecution “if his actions are enough to cause the
that prosecution; (3) termination of the prosecution in the
prosecution, and but for his actions the prosecution would
plaintiff's favor; (4) the plaintiff's innocence; (5) lack of
not have occurred.” Id. Merely aiding or cooperating with
probable cause to initiate or procure the prosecution; (6)
the authorities cannot “cause” a criminal prosecution. Id.
malice in filing the charge; and (7) damage to the plaintiff.
Nor does a person “procure a criminal prosecution when
Suberu, 216 S.W.3d at 793 n. 3; Richey v. Brookshire Grocery
the decision whether to prosecute is left to the discretion of
Co., 952 S.W.2d 515, 517 (Tex.1997).
another person” such as law enforcement or a grand jury. Id.
But even if the decision is ultimately left to law enforcement,
We are reminded by the Texas Supreme Court to strictly apply
when a person knowingly provides false information which
these elements as they reflect a delicate balance of societal
causes a criminal prosecution, they have effectively procured
values. Browning–Ferris Industries, Inc. v. Lieck, 881
the prosecution and may be liable. Id. at 292, 294 (“What is
S.W.2d 288, 291 (Tex.1994)(“Even a small departure from
true is that a person who provides false information cannot
the exact prerequisites for liability may threaten the delicate
balance between protecting against wrongful prosecution and complain if a prosecutor acts on it”). 6
encouraging reporting of criminal conduct.”). Citizens must
be encouraged and free to report possible crimes to the *6 The Texas Supreme Court expanded on this false
authorities. Id., citingSebastian v. Cheney, 86 Tex. 497, 25 information exception in King v. Graham, 126 S.W.3d 75
S.W. 691, 694 (1894) and RESTATEMENT (SECOND) OF (Tex.2003). As King is controlling of the outcome here, we
TORTS ch. 29, intro. note, at 405 (1977). At the same time, revisit its facts. The plaintiffs in King were hunting guides
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Gonzalez v. Grimm, --- S.W.3d ---- (2015)
2015 WL 4137862
who agreed to secure for the defendants hunting rights and the defendant, or from expert testimony on prosecutorial
reserve a certain number of animals to be hunted. Id. at 76. decision-making. Id. at 189. The court never suggested,
The defendants were promoters who would arrange the hunts however, that the decision making process of the district
for paying hunters. Id. The defendants advanced money to attorney was not a necessary component of the plaintiff's case.
the plaintiffs for that purpose and then the defendants began
soliciting, apparently unsuccessfully, hunters for the venture.
Id. As hunting season approached, the defendants believed the
Analysis
plaintiffs had not fulfilled their end of the deal and contacted
the sheriff's office claiming the plaintiffs committed theft and [6] Gonzalez had the burden to prove that Grimm either
criminal fraud. Id. at 77. The sheriff's office investigated the initiated or procured the criminal prosecution. The court in
matter and referred it to a prosecutor, who in turn submitted Lieck chose not to provide a jury instruction defining the
the case to a grand jury which indicted the plaintiffs. Id. term “initiate” because ordinarily that would be apparent
from the formal charging instruments. 881 S.W.2d at 293. In
The criminal case soon unraveled. While the defendants other words, it is usually a question of law. As the record
claimed to the authorities that they had booked several here reflects, Officer Calanche executed the Complaint and
hunters, that turned out to be false. Id. The claim that the Complaint affidavit, and the district attorney's office executed
plaintiffs had not reserved any animals was also false. Id. the Information which led to the capias. The Information is
Ultimately the district attorney dismissed the charges and the a formal charging instrument in Texas. “An ‘information’
plaintiff hunting guides filed suit for malicious prosecution, is a written statement filed and presented in behalf of the
prevailing against some defendants before a jury and the court State by the district or county attorney, charging the defendant
of appeals. The Texas Supreme Court reversed and rendered. with an offense which may by law be so prosecuted.” TEX.
Id. at 76. While noting the false information exception from CODE CRIM. PROC. ANN. art. 21.20 (West 2009). Thus,
Lieck, the court held proving that false information was Grimm did not “initiate” the charge, the State's prosecutor
given to authorities is “necessary” but it is not “sufficient.” did. Lermon v. Minyard Food Stores, Inc., No. 05–13–
Id. Instead, the plaintiff has the burden of proving that the 00034–CV, 2014 WL 6466840 *5 (Tex.App.–Dallas, Nov.
decision to prosecute “would not have been made but for the 19, 2014, pet.denied)(mem.op.)(voluntary statement made
false information supplied by the defendant.” Id. at 78. In by defendant was not a “formal charge” nor did it actually
King, the prosecutor testified, but was never asked whether operate to initiate the criminal prosecution when detective
the specific pieces of false information which the plaintiffs
presented his own probable cause affidavit to a magistrate). 7
had alleged influenced his decision to take the case to the
grand jury. Id. Because the plaintiffs failed to meet this
*7 Gonzalez was therefore left with proving that Grimm
burden, the court rendered judgment in the defendants' favor.
procured the charge by showing she provided false
information that led to the filing of the information. The false
Several years later the court discussed a malicious
information Gonzalez focuses upon is contested statements
prosecution plaintiff's burden in In re Bexar County Criminal
such as “do you know what I could do with this” which
Dist. Attorney's Office, 224 S.W.3d 182 (Tex.2007). There, a
imply some improper use of the Social Security number.
malicious prosecution plaintiff subpoenaed several assistant
But in this case, Officer Calanche executed a Complaint and
district attorneys to solicit testimony as to how the charging
Complaint Affidavit that made three specific allegations, one
decision was made in that case. Id. at 184. The district
of which stated Grimm was threatened with bodily injury.
attorneys sought to quash the subpoena, contending any
Grimm testified she never made such a claim, and there is no
testimony they might give would be privileged. Id. The
evidence in the record that she did. Stated otherwise, Officer
court of appeals concluded that King necessitated the district
Calanche included allegations in the complaint paperwork
attorney's testimony because the plaintiff had to show any
that Grimm never made, and the claim that she was threatened
false information was important to the charging decision.
with bodily injury was itself false, but it did not come from
Id. at 185. The Texas Supreme Court disagreed, noting
Grimm. Whether the district attorney filed the information
the plaintiffs need for the testimony did not outweigh the
based on Calanche's false information, or that alleged to
importance of the privilege. Id. at 187–88. Moreover, the
be from Grimm, is unknowable without testimony from the
court suggested a malicious prosecution plaintiff might prove
district attorney, its file, or some other indication as to how
their case through circumstantial evidence, testimony from
the actual decision to proceed with the charge was made.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Gonzalez v. Grimm, --- S.W.3d ---- (2015)
2015 WL 4137862
district in the course and scope of her employment. But all
Gonzalez had neither the district attorney's testimony, nor the
of these contentions in one way or another turn on whether
district attorney's file. On the facts in this case, the lack of any
Gonzalez in fact threatened Grimm in the March 8 phone call.
such testimony is fatal to his claim.
If he never threatened her, there was no crime to report, no
probable cause to make a complaint, and no crime of which
The plaintiffs in King argued that a jury could infer causation
to be guilty. The threat arose from the words “do you know
from the falsity of the information itself. 126 S.W.3d at 79.
what I could do with” in the context of the other things said in
And the court suggests such an inference might be drawn
the call. Because the witnesses disputed what was said in that
when the only information the official relied on was the
phone call, as well as the other surrounding contextual facts,
false information. Id. But just like in King, the prosecutor
these issues would have all been appropriate for the jury to
here had much more information before him than just
decide.
the defendant's statement. For instance, Officer Calanche's
Complaint affidavit references events over a two month
*8 In summary, we overrule Issue One which contends there
period, supported by statements from multiple witnesses,
was no need for proof of a false statement. Because there
which were forwarded to the district attorney's office. Those
was no evidence that Grimm initiated the prosecution, and
statements included claims by another principal, a PTA
the ultimate decision was left to the district attorney's office,
vice president, and a teacher who described confrontations
the only means to prove Grimm procured the prosecution
with Gonzalez. 8 The charging decision made by the district
was to prove she knowingly provided false information. But
attorney's office involved more than simply looking at
even assuming she did provide false information, there was
Grimm's version of the March 8, 2006, phone call. Without
no evidence that the claimed false information procured the
some evidence that Grimm's version of the March 8 phone call
prosecution, and we accordingly overrule Appellant's third
formed the basis of the district attorney's decision, Gonzalez
issue (claiming there is some evidence of each element of
simply lacks any evidence of causation. 9 the claim). The second issue regarding evidence of Grimm's
malice is moot. We affirm the judgment below.
Grimm urges that we could also affirm the judgment below
based upon her having probable cause (as a matter of
law) to believe that Gonzalez committed Fraudulent Use or
Perez, Judge, sitting by assignment
Possession of Identifying Information (the charge the district
attorney initially declined). She also believes the record All Citations
shows that Gonzalez is guilty of that charge as a matter of
law. She contends that she was privileged as a matter of law --- S.W.3d ----, 2015 WL 4137862
to report a crime because she did so an employee of a school
Footnotes
1 The EPISD police are certified peace officers in Texas. SeeTEX. EDUC. CODE ANN. § 37.081(b)(2)(West Supp.
2014)(school board may commission peace officers who “may enforce all laws, including municipal ordinances, county
ordinances and state laws”).
2 Section 32.51 provides in pertinent part:
(a) In this section:
(1) ‘Identifying information’ means information that alone or in conjunction with other information identifies a person,
including a person's:
...
(E) social security number or other government-issued identification number.
...
(b) A person commits an offense if the person, with the intent to harm or defraud another, obtains, possesses, transfers,
or uses an item of:
(1) identifying information of another person without the other person's consent;
...
(c) An offense under this section is:
(1) a state jail felony if the number of items obtained, possessed, transferred, or used is less than five.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Gonzalez v. Grimm, --- S.W.3d ---- (2015)
2015 WL 4137862
3 Section 42.07 titled, “Harassment” provides in pertinent part:
(a) A person commits an offense if, with intent to harass, annoy, alarm, abuse, torment, or embarrass another, the
person:
...
(2) threatens, in a manner reasonably likely to alarm the person receiving the threat, to inflict bodily injury on the person
or to commit a felony against the person, a member of the person's family or household, or the person's property;
...
(4) causes the telephone of another to ring repeatedly or makes repeated telephone communications anonymously or
in a manner reasonably likely to harass, annoy, alarm, abuse, torment, embarrass, or offend another;
...
(c) An offense under this section is a Class B misdemeanor, except that the offense is a Class A misdemeanor if the
actor has previously been convicted under this section.
4 In February of 2006, the district hired a new superintendent, Lorenzo Garcia. Grimm believed that the new superintendent
and Gonzalez knew each other and that Gonzalez took advantage of that relationship to work against her. For instance,
Grimm claims that Gonzalez had a picture of Garcia on his cell phone and would flash it and claim he had a personal
relationship with Garcia that would help him get rid of Grimm.
5 “An ‘information’ is a written statement filed and presented in behalf of the State by the district or county attorney, charging
the defendant with an offense which may by law be so prosecuted.”TEX. CODE CRIM. PROC. ANN. art. 21.20 (West
2009). “The primary pleading in a criminal action on the part of the State is the indictment or information.”TEX. CODE
CRIM. PROC. ANN. art. 27.01 (West 2006).
6 The Lieck court provides this instruction for the jury:
A person procures a criminal prosecution if his actions were enough to cause the prosecution, and but for his actions
the prosecution would not have occurred. A person does not procure a criminal prosecution when the decision
whether to prosecute is left to the discretion of another, including a law enforcement official or the grand jury, unless
the person provides information which he knows is false. A criminal prosecution may be procured by more than
one person.
Id. at 293.
7 Gonzalez cites a number of cases in support his contention that Grimm initiated the charge. We have previously discussed
Lieck and King, and neither supports the claim that simply signing a witness statement is the same as initiating a formal
charge. The four other cases cited by Gonzalez are all inapposite. All American Telephone, Inc. v. USLD Communications,
Inc., 291 S.W.3d 518, 534 (Tex.App.–Fort Worth 2009, pet. denied)(“Appellants do not assert that appellees initiated
Nowik's and Thibodeaux's prosecutions by filing a formal complaint.”); Tranum v. Broadway, 283 S.W.3d 403, 416
(Tex.App.–Waco 2008, pet. denied)(court affirmed on evidence that defendant procured the prosecution by presenting
false evidence, not by initiating the charge); Ogg v. Dillard's, Inc., 239 S.W.3d 409, 422 (Tex.App.–Dallas 2007, pet.
denied)(holding defendant did not initiate or procure prosecution, rather the State did); Thrift v. Hubbard, 974 S.W.2d
70, 77-78 (Tex.App.–San Antonio 1998, pet. denied) (court did not need to reach question of whether sworn complaint
was equivalent of formal charging document because there was ample proof of false information given to authorities
which led to arrest).
8 At time of Grimm's first report about the March 8 phone call, the EPISD police already were already investigating
Gonzalez, based on staff concerns that he was aggressive, rude, and abrasive, which some perceived as threatening
conduct. Some of the witnesses stated that Gonzalez never threatened them. None claimed that Gonzalez ever physically
threatened them, and of most of his statements were related to threats of filing lawsuits, getting people fired, or filing
grievances with the EPISD.
9 The Austin Court of Appeals in Bennett v. Grant, 460 S.W.3d 220 (Tex.App.–Austin March 20, 2015, no pet. hist.) recently
held that a plaintiff could also overcome a prosecutor's role in the decision making process by showing that “a defendant's
conduct was the determining factor in the prosecutor's decision to prosecute.”Id. at 233. Without endorsing this holding, we
note that the facts in Grant are unique and far different than those here. In Grant, the defendant shopped the prosecution
to four different counties, and when no one would pursue the matter, he was apparently instrumental in having a special
prosecutor appointed who did pursue the case. Id. at 229–32. In any event, the special prosecutor testified that he relied
on the false information provided by the defendant, which provided some evidence for the false information exception
described in Lieck. Id. at 233–36.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Gonzalez v. Grimm, --- S.W.3d ---- (2015)
2015 WL 4137862
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
X
Gray v. Nash, 259 S.W.3d 286 (2008)
Ex-wife of insured was entitled to disputed
life insurance policy proceeds; ex-wife was the
259 S.W.3d 286
designated beneficiary to $60,000 of the life
Court of Appeals of Texas,
insurance proceeds. V.T.C.A., Insurance Code §
Fort Worth.
1103.102(a).
Brenda GRAY, Appellant
1 Cases that cite this headnote
v.
Maria Gloria NASH, Appellee.
[2] Insurance
No. 2–07–351–CV. | June 19, 2008. Policies considered as contracts
Insurance
Synopsis
Application of rules of contract construction
Background: Life insurance company filed an interpleader
action to determine who was entitled to a portion of An insurance policy is a contract, and it is
life insurance proceeds. The 17th District Court, Tarrant governed by the same rules of construction
County, Fred W. Davis, J., granted wife's motion for applicable to all contracts.
summary judgment and denied ex-wife's motion for summary
1 Cases that cite this headnote
judgment. Ex-wife appealed.
[3] Contracts
Language of contract
Holdings: The Court of Appeals, Anne Gardner, J., held that:
When interpreting a contract the court's primary
[1] statute governing the applicability of a pre-divorce decree goal is to give effect to the written expression of
designation of an ex-spouse as the beneficiary under a the parties' intent.
life insurance policy did not apply to invalidate insured's
1 Cases that cite this headnote
designation of ex-wife as the beneficiary of $60,000 of
insured's life insurance proceeds;
[4] Insurance
[2] ex-wife had a continuing insurable interest in insured's life Effect on prior designation of beneficiary
at the time of his death; Statute governing the applicability of a pre-
divorce decree designation of an ex-spouse as the
[3] termination of insured's child support obligation did beneficiary under a life insurance policy did not
not override insured's designation of his ex-wife as the apply to invalidate insured's designation of ex-
beneficiary of $60,000 in life insurance proceeds; and wife as the beneficiary of $60,000 of insured's
life insurance proceeds; statute provided that
[4] ex-wife was not entitled to recover from wife $1,500 in only divorce decrees and annulments nullified
costs the trial court awarded life insurance company. the beneficiary designations, insured named
ex-wife as a beneficiary after they divorced,
and order modifying insured's parent child
Reversed and rendered.
relationship did not trigger statute, as argued
by insured's wife. V.T.C.A., Family Code §
9.301(a).
West Headnotes (13)
Cases that cite this headnote
[1] Insurance
[5] Statutes
Divorce or Separation; Agreements and
Plain Language; Plain, Ordinary, or
Settlements
Common Meaning
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Gray v. Nash, 259 S.W.3d 286 (2008)
Statutes Insufficient discussion of objections
Language Insured's wife waived her appellate argument
When construing a statute, the Court of Appeals that alleged the doctrines of unjust enrichment
begins with the statute's plain language because and estoppel precluded ex-wife form recovering
the court assumes that the legislature tried to say any life insurance proceeds, where wife failed
what it meant and, thus, that its words are the to cite any authority in support of her argument.
surest guide to its intent. Rules App.Proc., Rules 38.1(h), 38.2(a)(1).
2 Cases that cite this headnote 5 Cases that cite this headnote
[6] Statutes [10] Appeal and Error
Statute as a Whole; Relation of Parts to Insufficient discussion of objections
Whole and to One Another An argument may be waived if inadequately
In ascertaining legislative intent, for the purpose briefed.
of statutory construction, the Court of Appeals
does not confine its review to isolated statutory 14 Cases that cite this headnote
words, phrases, or clauses, but it instead
examines the entire act. [11] Interpleader
Costs and fees
3 Cases that cite this headnote
Ex-wife was not entitled to recover from wife
$1,500 in costs the trial court awarded life
[7] Insurance insurance company, even though ex-wife was
Spouses and former spouses the prevailing party in the litigation; ex-wife
Insured's ex-wife had a continuing insurable specifically agreed that insurance company was
interest in insured's life at the time of his death, entitled to recover its reasonable attorney fees,
for the purpose of proceeding to determine costs and expenses paid out of the interpleaded
beneficiary to life insurance proceeds, where funds.
insured applied for the life insurance policy
on his own life and designated ex-wife as Cases that cite this headnote
a beneficiary. V.T.C.A., Insurance Code §§
1103.053, 1103.054. [12] Interpleader
Costs and fees
1 Cases that cite this headnote
A party interpleading funds may be entitled to
have his attorney's fees deducted from the funds.
[8] Insurance
Effect on prior designation of beneficiary Cases that cite this headnote
The termination of insured's child support
obligation did not override insured's designation [13] Interpleader
of his ex-wife as the beneficiary of $60,000 in Costs and fees
life insurance proceeds; insured named ex-wife
Generally, the ultimate burden between rival
individually, and not as trustee for child, as the
claimants should fall on the party whose
beneficiary under the policy, and insured never
unsuccessful claim rendered the interpleader
changed the beneficiary designation, even after
necessary.
his support obligation terminated.
Cases that cite this headnote
Cases that cite this headnote
[9] Appeal and Error
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Gray v. Nash, 259 S.W.3d 286 (2008)
support payment obligations” and ordered that Brent's child
Attorneys and Law Firms support obligation was terminated.
*288 Moses, Palmer & Howell, LLP and Shayne D. Moses,
Brent died on October 14, 2006, in a motor vehicle accident.
David A. Palmer and Brandon J. Edmundson, Fort Worth, for
Gloria submitted his death certificate and a claim for payment
Appellant.
of the full $500,000 death benefit to Pan–American in
Thorne & Skinner and Michael L. Skinner, Grand Prairie, for December 2006. Pan– *289 American filed an interpleader
Appellee. action and deposited $60,460.27 (the proceeds plus interest)
into the trial court's registry. Pan–American paid the rest
Panel B: LIVINGSTON, HOLMAN, and GARDNER, JJ. of the death benefit to Gloria. By agreement of the parties,
the trial court dismissed Pan–American from the suit and
awarded it costs of $1,500 out of the funds in the registry.
OPINION
Brenda and Gloria filed traditional cross-motions for
ANNE GARDNER, Justice. summary judgment. The trial court denied Brenda's motion
and granted Gloria's and awarded Gloria the $58,960.27
This is a life insurance case. The question before the court
remaining in the court's registry. Brenda filed this appeal.
is whether a disputed portion of the policy's death benefit
is payable to Appellant Brenda Gray—the insured's ex-wife
and the policy's designated beneficiary—or to Appellee Maria
Gloria Nash (“Gloria”)—the insured's wife at the time of his Standard of Review
death. We reverse the trial court's summary judgment in favor
In a summary judgment case, the issue on appeal is
of Gloria and render judgment in favor of Brenda.
whether the movant met the summary judgment burden by
establishing that no genuine issue of material fact exists and
that the movant is entitled to judgment as a matter of law.
Background TEX.R. CIV. P. 166a(c); Sw. Elec. Power Co. v. Grant,
73 S.W.3d 211, 215 (Tex.2002); City of Houston v. Clear
The following facts are not in dispute. The decedent, Brent
Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979). We
Nash, and Brenda were divorced in 1997. The divorce decree
review summary judgments de novo. Valence Operating Co.
required Brent, as “additional child support,” to purchase a
v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005); Tex. Dep't of
life insurance policy with a death benefit of at least $60,000
Transp. v. Needham, 82 S.W.3d 314, 318 (Tex.2002). When
and naming Brenda as irrevocable beneficiary as trustee for
both parties move for summary judgment and the trial court
the benefit of Brent and Brenda's daughter, Amanda.
grants one motion and denies the other, the reviewing court
should review both parties' summary judgment evidence and
In July 1997, Brent purchased a life insurance policy from
determine all questions presented. Valence Operating Co.,
Pan–American Life Insurance Co. with a death benefit of
164 S.W.3d at 661. The reviewing court should render the
$500,000 and designated Amanda as the beneficiary.
judgment that the trial court should have rendered. Id.
Brent married Gloria in 1998. In June 1998, Brent submitted
a change of beneficiary form to Pan–American. The new
beneficiary designation states that “$60,000.00 shall be paid Discussion
to [Brenda]. The balance of the net proceeds, if any, shall be
Brenda argues that she is entitled to the disputed policy
paid to [Gloria], wife.” It is undisputed that Brent never again
proceeds because she is the policy's designated beneficiary.
changed the beneficiary designation thereafter.
Gloria argues that she is entitled to the proceeds because the
divorce court's July 2001 order appointing Brent as Amanda's
In July 2001, the divorce court issued its “Order in
primary joint managing conservator was the equivalent of a
Suit to Modify Parent–Child Relationship and Motion
divorce decree and terminated Brenda's rights to the policy
for Enforcement,” appointing Brent to serve as Amanda's
proceeds under family code section 9.301(a); Brenda had
primary joint managing conservator. The divorce court found
no insurable interest in Brent's life; family code section
that Brent was “current in all child support and medical
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Gray v. Nash, 259 S.W.3d 286 (2008)
154.015(f) imposes a constructive trust on the proceeds as death of the insured to the designated
excess child support payments; and failure of consideration, beneficiary.
unjust enrichment, and estoppel preclude Brenda from
collecting the proceeds. TEX. INS.CODE. ANN. § 1103.102(a) (Vernon 2007).
Subsection (b) provides that the insurer is not required to pay
the proceeds of the policy to a designated beneficiary under
1. Under the express terms of the policy, Brenda subsection (a) if the company receives notice of an adverse
is entitled to the disputed proceeds as the policy's claim to the proceeds from a person who has a bona fide
designated beneficiary. 1 legal claim to all or part of the proceeds. Id. § 1103.102(b). 2
[1] [2] [3] An insurance policy is a contract, and it is Thus, but for notice of Gloria's adverse claim to the proceeds,
governed by the same rules of construction applicable to all section 1103.102 obliged Pan–American to pay the policy
contracts. Balandran v. Safeco Ins. Co., 972 S.W.2d 738, proceeds to Brenda.
740–41 (Tex.1998). The court's primary goal is to give effect
to the written expression of the parties' intent. Id. at 741. We therefore hold that under the express terms of the
insurance contract, Brenda is entitled to the disputed
In this case, the insurance contract provides as follows: proceeds.
We will pay the life insurance proceeds upon proof the
Insured died prior to the Expiration Date. The proceeds will 2. Family code section 9.301.
be paid to the Beneficiary. [4] Gloria argues that notwithstanding the plain language
of the policy and insurance code section 1103.102, Brenda is
.... not entitled to the proceeds by virtue of family code section
9.301(a). That section, captioned “Pre–Decree Designation
You may change any Beneficiary at any time during the
of Ex–Spouse as Beneficiary of Life Insurance,” provides in
Insured's lifetime unless otherwise provided in the previous
relevant part as follows:
designation. The new designation must be made by a
signed notice in satisfactory form to our Home Office. The (a) If a decree of divorce or annulment is rendered after an
change *290 will take effect on the date the notice was insured has designated the insured's spouse as a beneficiary
signed subject to any action taken by us before recording under a life insurance policy in force at the time of
the change. rendition, a provision in the policy in favor of the insured's
former spouse is not effective unless:
It is undisputed that Brenda was the designated beneficiary of
$60,000 of the policy proceeds at the time of Brent's death. (1) the decree designates the insured's former spouse as
Thus, under its contract of insurance, Pan–American was the beneficiary;
obligated to pay $60,000 to Brenda upon Brent's death.
(2) the insured redesignates the former spouse as the
The Texas Insurance Code compels the same result. Insurance beneficiary after rendition of the decree; or
code section 1103.102, captioned “Payment to Designated
Beneficiary,” mandates that a life insurance company must (3) the former spouse is designated to receive the
pay a policy's death benefit to the policy's designated proceeds in trust for, on behalf of, or for the benefit of a
beneficiary: child or a dependent of either former spouse.
Except as provided by Subsection (b) If a designation is not effective under Subsection
(b) or (c), if an individual obtains a (a), the proceeds of the policy are payable to the named
policy insuring the individual's life, alternative beneficiary or, if there is not a named alternative
designates in writing a beneficiary to beneficiary, to the estate of the insured.
receive the proceeds of the policy,
TEX. FAM.CODE ANN. § 9.301 (Vernon 2006). Gloria
and files the written designation with
contends that the divorce court's July 2001 order appointing
the company, the company shall pay
Brent as Amanda's primary managing conservator was the
the proceeds that become due on the
equivalent of a divorce decree, thus triggering section
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Gray v. Nash, 259 S.W.3d 286 (2008)
9.301 and nullifying Brent's 1998 designation of Brenda as [7] Gloria next argues that Brenda did not have an insurable
beneficiary, and that the difference between *291 “a decree interest in Brent's life at the time of his death. In a closely-
of divorce or annulment” and an order modifying the parent- related argument, she contends that public policy prohibits
child relationship is merely a matter of semantics. Brenda from collecting the policy proceeds. We recently
addressed a similar question in Allen v. United of Omaha
[5] [6] When construing a statute, our goal is to ascertain Life Insurance Co., 236 S.W.3d 315, 322–23 (Tex.App.-
and give effect to the legislature's intent as expressed by Fort Worth 2007, pet. denied). In Allen, the question was
the plain and common meaning of the statute's words. TEX. whether a limited partnership had a continuing insurable
GOV'T CODE ANN. § 312.002 (Vernon 2005); F.F.P. interest in the life of its former CEO after his association with
Operating Partners, L.P. v. Duenez, 237 S.W.3d 680, 683 the partnership ended. Id. at 319. We noted that under the
(Tex.2007); Tex. Dep't of Transp. v. City of Sunset Valley, common law, the designated beneficiary of a life insurance
146 S.W.3d 637, 642 (Tex.2004). We begin with the statute's policy must have an insurable interest in the insured's life
plain language because we assume that the legislature tried when the policy is issued and when the insured dies. Id. at 322
to say what it meant and, thus, that its words are the surest (citing Torrez v. Winn–Dixie Stores, Inc., 118 S.W.3d 817,
guide to its intent. Fitzgerald v. Advanced Spine Fixation Sys., 820 (Tex.App.-Fort Worth 2003, pet dism'd)). Two policies
Inc., 996 S.W.2d 864, 865–66 (Tex.1999). In ascertaining drive the common law rule: A practice that encourages one to
legislative intent, we do not confine our review to isolated take another's life should be prohibited, and no one should be
statutory words, phrases, or clauses, but we instead examine permitted to wager on the life of another. Id. (citing Torrez,
the entire act. Meritor Auto., Inc. v. Ruan Leasing Co., 44 118 S.W.3d at 820).
S.W.3d 86, 90 (Tex.2001); Rodgers v. Comm'n for Lawyer
Discipline, 151 S.W.3d 602, 614 (Tex.App.-Fort Worth 2004, While the insurable-interest rule is still followed by Texas
pet. denied). It is a well-settled rule of statutory construction courts, the legislature *292 has enlarged the class of persons
that every word of a statute must be presumed to have been deemed to have an insurable interest. Id. Under the insurance
used for a purpose. See Quick v. City of Austin, 7 S.W.3d code, an individual may apply for a life insurance policy
109, 123 (Tex.1998); Laidlaw Waste Sys., Inc. v. City of on the individual's own life and designate as beneficiary
Wilmer, 904 S.W.2d 656, 659 (Tex.1995). Likewise, every any individual. TEX. INS.CODE ANN. § 1103.054 (Vernon
word excluded from a statute must also be presumed to have 2007); Allen, 236 S.W.3d at 323. Insurance code section
been excluded for a purpose. Quick, 7 S.W.3d at 123; Laidlaw 1103.053 further provides that a beneficiary of a life insurance
Waste Sys., Inc., 904 S.W.2d at 659. policy who is designated in accordance with section 1103.054
has, at all times after the designation, an insurable interest
The legislature specified that only divorce decrees and in the life of the individual who is insured under the policy.
annulments nullify beneficiary designations; we must TEX. INS.CODE ANN. § 1103.053; Allen, 236 S.W.3d at
presume that it included those instruments, and excluded 323. Thus, the legislature has conferred an insurable interest
others, like orders modifying the parent-child relationship, for on those persons named by an insured as beneficiaries in a
a purpose. See TEX. FAM.CODE ANN. § 9.301(a); Quick, 7 policy on the insured's own life. Allen, 236 S.W.3d at 323.
S.W.3d at 123; Laidlaw Waste Sys., Inc., 904 S.W.2d at 659.
Moreover, the legislature limited section 9.301's nullifying The cases cited by Gloria for the proposition that a beneficiary
effect to designations made before the decree or annulment, must have a continuing insurable interest independent of
at a time when the insured and the designated beneficiary are the beneficiary designation predate insurance code sections
still married—a circumstance not present in this case. 1103.053 and 1103.054 and their predecessor. See TEX.
INS.CODE ANN. §§ 1103.053, .054 (effective June 1, 2003);
Because the unambiguous language of section 9.301 limits Act of April 30, 1953, 53rd Leg., R.S., ch. 113, § 1, 1953
its application to life insurance policies issued before a trial Tex. Gen. Laws 400, repealed by Act of May 22, 2001,
court renders a decree of divorce or an annulment, we hold 77 Leg., R.S., ch. 1419, § 31(a), 2001 Tex. Gen. Laws
that it does not apply in this case and does not nullify Brent's 4208; Cheeves v. Anders, 87 Tex. 287, 28 S.W. 274, 275
designation of Brenda as beneficiary of the disputed proceeds. (Tex.1894); McBride v. Clayton, 140 Tex. 71, 166 S.W.2d
125, 128–29 (Tex. Comm'n App.1942); Drane v. Jefferson
Standard Life Ins. Co., 139 Tex. 101, 161 S.W.2d 1057, 1059
3. Insurable interest. (Tex. Comm'n App.1942); Whiteselle v. Nw. Mut. Life Ins.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Gray v. Nash, 259 S.W.3d 286 (2008)
Co., 221 S.W. 575, 576 (Tex. Comm'n App.1920), overruled trustee for the benefit of the child” as ordered by the divorce
in part on other grounds by Womack v. Womack, 141 Tex. decree and (2) never undesignated Brenda as beneficiary
299, 172 S.W.2d 307, 308 (Tex.1943). Gloria also cites after the 2001 modification order terminated his child support
Torrez as fundamentally indistinguishable from this case. But obligation. There is no evidence in the record that Brent
in Torrez, the insured's employer—not the insured himself— obtained life insurance coverage solely to comply with the
took out a policy on the insured's life. Torrez, 118 S.W.3d divorce decree, and the only evidence of his intent regarding
at 819. Thus, unlike this case, Torrez did not implicate the the disputed proceeds is his unconditional and unambiguous
continuing-insurable-interest provisions of insurance code designation of Brenda as beneficiary. Therefore, the record
sections 1103.053 and 1103.054. does not support Gloria's argument that the policy proceeds
are solely a form of child support, excess or otherwise.
In Allen, we held that because the CEO, himself, applied
for the life insurance policy on his own life and designated Nor do the foreign cases Gloria cites support her argument
the partnership as the beneficiary, the partnership had, at the that a beneficiary designation in favor of a former spouse is
policy's inception and at all times thereafter, an insurable ineffective when the insured's child support obligation ends.
interest in the CEO's life, even after the CEO's relationship In Caracansi v. Caracansi, the Connecticut court of appeals
with the partnership ended. Allen, 236 S.W.3d at 323. held that a divorce court erred by ordering a father to maintain
Likewise, in this case, Brent, himself, applied for the life a life insurance policy for the benefit of his children after
insurance policy on his own life and designated Brenda as they reached the age of majority because the insurance policy
a beneficiary. Thus, we hold that Brenda had a continuing served solely as a means to secure payment of the father's
insurable interest in Brent's life. child support obligations. 4 Conn.App. 645, 496 A.2d 225,
227–28 (1985). Likewise, in H.P.A. v. S.C.A., the Supreme
Court of Alaska held that a divorce court could not order
4. Effect of termination of Brent's child support a father to maintain a life insurance policy for the benefit
obligation. of his children past their ages of majority. 704 P.2d 205,
[8] Gloria next argues that because the life insurance 211 (Alaska 1985). In Equitable Life Assurance Society v.
policy was security for Brent's child support obligation Flaherty, a federal district court in Alabama held that when
under the 1997 divorce decree, and the 2001 order a father failed to obtain a divorce-court-ordered $10,000
modifying the parent-child relationship terminated his child life insurance policy for the benefit of his minor child as
support obligation, the sole reason for designating Brenda security for child support payments, his ex-wife was entitled
as beneficiary was extinguished. Gloria further argues to recover $10,000 for the benefit of the child from the only
that allowing Brenda to collect the disputed proceeds is policy the father had at the time of his death, even though
tantamount to an excess child support payment, which Brenda it named his second wife as beneficiary. 568 F.Supp. 610,
would merely hold in constructive trust for Brent's estate. See 616 (D.C.Ala.1983). In In re Marriage of Weidner, the Iowa
TEX. FAM.CODE ANN. § 154.015(f) (Vernon 2007) (“If supreme court held that a divorce court had the power to order
money paid to the obligee for the benefit of the child exceeds a father to maintain an existing life insurance policy for the
the amount of the unpaid child support obligation remaining benefit of his minor children. 338 N.W.2d 351, 360 (Iowa
at the time of the obligor's death, the obligee shall hold the
1983). 3
excess amount as constructive trustee for the benefit of the
deceased obligor's estate until the obligee delivers the excess
Thus, all of the cases Gloria cites support a divorce court's
amount to the legal representative of the deceased obligor's
power to order a parent to maintain life insurance for the
estate.”).
benefit of the parent's minor children, and some of the cases
recognize such insurance as security for the parent's support
*293 Implicit in Gloria's arguments are the notions that
obligation. To this extent, they are consistent with Texas law.
the only reason Brent designated Brenda as beneficiary was
See TEX. FAM.CODE ANN. § 154.006(a) (recognizing trial
to comply with the divorce decree—a notion which Gloria
court's authority to order that child support payments continue
calls an undisputed fact—and that he did not intend Brenda
after obligor's death); Miles v. Peacock, 229 S.W.3d 384, 389
to receive any portion of the policy proceeds after the 2001
(Tex.App.-Houston [1st Dist.] 2007, no pet.) (recognizing
modification order. But Brenda does dispute these assertions,
trial court's authority to order parent to maintain life insurance
and the record is silent as to why Brent (1) designated Brenda
for benefit of minor children); Niskar v. Niskar, 136 S.W.3d
as beneficiary in her individual capacity rather than “as
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Gray v. Nash, 259 S.W.3d 286 (2008)
749, 759 (Tex.App.-Dallas 2004, no pet.) (same); Grayson
6. Allocation of costs awarded to Pan–American.
v. Grayson, 103 S.W.3d 559, 563 (Tex.App.-San Antonio
[11] [12] [13] Brenda argues that she is entitled to
2003, no pet.) (same). But none of the cases hold that recover from Gloria the $1,500 in costs the trial court awarded
termination of a child support obligation during the child's to Pan–American out of the disputed proceeds. A party
minority overrides a life insurance policy's *294 beneficiary interpleading funds may be entitled to have his attorney's
designation in favor of the insured's former spouse. fees deducted from the funds. Foreman v. Graham, 693
S.W.2d 774, 778 (Tex.App.-Fort Worth 1985, writ ref'd
Finding no support for Gloria's argument in the record or the n.r.e.). Generally, the ultimate burden between rival claimants
law, we hold that the termination of Brent's child support should fall on the party whose unsuccessful claim rendered
obligation in 2001 does not override his designation of the interpleader necessary. Id. (citing Monarch Tile Sales v.
Brenda, individually, as beneficiary of the disputed proceeds Frost Nat'l Bank, 496 S.W.2d 254, 255–56 (Tex.Civ.App.-
or result in an excess child support payment. San Antonio 1973, no writ); Givens v. Girard Life Ins. Co.,
480 S.W.2d 421, 430 (Tex.Civ.App.-Dallas 1972, writ ref'd
n.r.e.) (op. on reh'g)). But in this case, Brenda and Gloria
5. Gloria's remaining arguments.
specifically agreed in the “Joint Stipulations and Motion for
[9] Gloria—without citation to any authority—argues (1)
Dismissal with Prejudice Regarding [Pan–American]” that
that failure of consideration and the doctrine of unjust
“[a]s a disinterested stakeholder, Pan–American is entitled to
enrichment preclude Brenda's recovery of the policy proceeds
because the divorce decree was a contract between Brent and recover its reasonable attorney[']s fees, costs, and expenses,
paid out of the interpleaded funds ... in the amount of
Brenda and Brenda failed to hold up her end of the bargain
$1,500.00.” Because Brenda agreed to pay Pan–American's
by serving as Amanda's primary managing conservator after
fees and costs out of the interpleaded funds, we hold that the
2001; (2) that Brenda is estopped from claiming the policy
trial court did not err by so ordering.
proceeds because she agreed in the divorce decree that Brent
was obligated to fund the life insurance policy only so long
as he was obligated to pay child support; and (3) that even if
Brenda is entitled to the disputed proceeds, Gloria is entitled Conclusion
to at least one-half of the value of the policy premiums
because Brent paid them with community property. We sustain Brenda's sole issue. We reverse the trial court's
judgment and render judgment in favor of Brenda for the
[10] An appellate brief must contain appropriate citations to remaining policy proceeds on deposit in the trial court's
authorities. TEX.R.APP. P. 38.1(h), 38.2(a)(1). An argument registry.
may be waived if inadequately briefed. Fredonia State Bank
v. Gen. Am. Life Ins. Co., 881 S.W.2d 279, 284 (Tex.1994).
All Citations
Because Gloria cites no authority whatsoever in support of
these arguments, we hold that she has waived them. 259 S.W.3d 286
Footnotes
1 Gloria does not argue otherwise; instead, she argues that other factors preclude Brenda's entitlement to the proceeds.
Thus, we may curtail our analysis of this threshold issue.
2 Subsection (c) involves private placement contracts and is not relevant to this case. See id. § 1103.102(c).
3 Gloria cites Weidner for the proposition that an order to maintain life insurance may be invalid to the extent that the
amount of insurance required exceeds the insured's alimony or child support obligation. The case does not support or
even discuss that proposition.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Y
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
Waiver of Objections
Subject matter jurisdiction is essential to the
KeyCite Yellow Flag - Negative Treatment
authority of a court to decide a case; it is never
Superseded by Statute as Stated in Lemery v. Ford Motor Co.,
S.D.Tex., November 19, 2002 presumed and cannot be waived.
982 S.W.2d 165 1 Cases that cite this headnote
Court of Appeals of Texas,
Houston (1st Dist.). [3] Courts
Causes which may be transferred
Carolyn GREATHOUSE, Individually and
as Independent Executor of the Estate of Statutory probate court had authority to transfer
legal malpractice claim from the district court
Clyde R. Greathouse, Deceased, Appellant,
to itself, where client's estate administration
v.
was pending before probate court, and legal
Gary L. McCONNELL, Appellee.
malpractice action was brought by executor of
client's estate in her capacity as such. V.A.T.S.
No. 01–97–00324–CV. | July 30, 1998.
Probate Code, §§ 5A(b), 5B.
Action was brought for legal malpractice in representation of
6 Cases that cite this headnote
client and his estate. Suit was transferred to the Probate Court
and County Court at Law No. 3, Brazoria County, James
Blackstock, J., which granted attorney's motion for summary [4] Courts
judgment. Client's executor appealed. The Court of Appeals, Causes which may be transferred
Wilson, J., held that: (1) transfer of suit was authorized, and Statutory probate court may properly transfer to
(2) executor failed to create genuine issues of material fact itself any case brought by or against a personal
regarding whether client could have prevailed in underlying representative of an estate, regardless of whether
litigation but for attorney's conduct. the claim meets the definition of “appertaining to
or incident to” an estate. V.A.T.S. Probate Code,
Affirmed. §§ 5A(b), 5B.
4 Cases that cite this headnote
West Headnotes (10)
[5] Judgment
Motion or Other Application
[1] Courts
A defendant is not entitled to a summary
Acts and proceedings without jurisdiction
judgment on the entire case unless the defendant
When a trial court acts without subject matter files a summary judgment that addresses, and
jurisdiction by exceeding the limits of its then conclusively demonstrates, that the plaintiff
statutory authority, any orders entered by the is not entitled to recover on any theory of liability
court are void, and not merely voidable. alleged.
4 Cases that cite this headnote Cases that cite this headnote
[2] Courts [6] Judgment
Jurisdiction of Cause of Action Attorneys, cases involving
Courts Claims against attorney for breach of fiduciary
Presumptions and Burden of Proof as to duty, breach of the duty of good faith and
Jurisdiction fair dealing, fraud, Deceptive Trade Practices
Courts Act (DTPA) violations, breach of contract,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
and breach of express and implied warranties By failing to make reference to issue in her
were essentially duplicative of legal malpractice appellate brief, executor of client's estate waived
claim, and therefore, attorney could obtain any complaint concerning propriety of summary
summary judgment on entire case by disproving, judgment on legal malpractice claim relating to
as matter of law, one element of legal attorney's duty to raise the affirmative defense
malpractice claim. V.T.C.A., Bus. & C. §§ of interest beyond the contractual term, in
17.41–17.63. underlying suit to recover deficiency judgment.
38 Cases that cite this headnote 5 Cases that cite this headnote
[7] Attorney and Client
Elements of malpractice or negligence
action in general Attorneys and Law Firms
Generally, to recover on a claim of legal *166 Timothy Ferguson, Cheryl A. Schultz, Beaumont, for
malpractice, a plaintiff must prove: (1) the appellant.
attorney owed the plaintiff a duty; (2) the
attorney breached that duty; (3) the breach Gary L. McConnell, Lynn J. Klement, Angleton, for appellee.
proximately caused the plaintiff's injuries; and
(4) damages occurred. Before SCHNEIDER, C.J., and WILSON and SMITH, * JJ.
30 Cases that cite this headnote
OPINION
[8] Attorney and Client
Pleading and evidence WILSON, Justice.
When a legal malpractice case arises from prior The case involves a legal malpractice action originally
litigation, the plaintiff has the burden to prove brought by the appellants, Carolyn Greathouse in her
that, “but for” the attorney's breach of duty, he individual capacity and as representative of her husband's
or she would have prevailed on the underlying estate (Greathouse), in state district court. The case was
cause of action and would have been entitled to later transferred to a statutory probate court which granted a
judgment. summary judgment on the merits of the dispute in favor of the
appellee, Gary McConnell. Greathouse appealed to this Court
28 Cases that cite this headnote
challenging both the transfer and the granting of summary
judgment. We affirm.
[9] Judgment
Attorneys, cases involving
Executor of client's estate failed to create genuine Facts
issues of material fact as to whether client could
have prevailed in underlying suit to recover Greathouse's current claims against McConnell arise out of
deficiency judgment but for attorney's failure to his representation of Greathouse's deceased husband, Clyde
raise commercial reasonableness of the sale of R. Greathouse (Clyde), and Forrest Allen & Associates, Inc.
the collateral and usury as affirmative defenses, (Forrest Allen), an insurance agency formerly owned by
as would preclude summary judgment on legal Clyde, in a suit (the “underlying suit”) brought against them
malpractice claim. by Charter National Bank–Southwest (Charter) to recover a
deficiency judgment on a $250,000 loan Charter made to the
Cases that cite this headnote Forrest Allen agency. Pursuant to the terms of that loan, the
Forrest Allen agency was pledged as collateral and Clyde
[10] Appeal and Error agreed to act as guarantor. After Charter declined to renew
To verdict, findings, or judgment the note, Clyde informed Charter that he was abandoning the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
Forrest Allen agency. Charter than took control of the agency court lacked subject matter jurisdiction to transfer the legal
and sold it to another insurance agency in Corpus Christi. malpractice suit from the district court to itself, and (2) even
Charter subsequently sought to recover a deficiency judgment if the transfer was proper, the trial court erred in granting
from Forrest Allen as maker and from Clyde as guarantor on summary judgment to McConnell.
the note.
After Clyde's death, Greathouse was appointed independent
Transfer Pursuant to Section 5B of the Probate Code
executrix of his estate and, on June 3, 1986, Clyde's will was
admitted to probate in the statutory Probate Court and County [1] [2] In her first point of error, Greathouse alleges
Court at Law Number 3 of Brazoria County (the probate the probate court lacked statutory authority to transfer the
court). The administration of Clyde's estate is still pending, legal malpractice claim from the district court to itself, and,
and no final distribution or accounting has been made. therefore, the order granting the transfer and all subsequent
rulings by the probate court are void. When a trial court acts
Because Clyde died during the pendency of the underlying without subject matter jurisdiction by exceeding the limits
suit, Greathouse, in her capacity as independent executrix of of its statutory authority, any orders entered by the court are
Clyde's estate, was substituted as a party in place of Clyde. void, and not merely voidable. See Qwest Microwave, Inc. v.
On August 24, 1989, the trial court entered a judgment in Bedard, 756 S.W.2d 426, 437 (Tex.App.–Dallas 1988, orig.
the underlying suit against Forrest Allen and against Clyde's proceeding). Subject matter jurisdiction is essential to the
estate for an amount in excess of $250,000. authority of a court to decide a case; it is never presumed and
cannot be waived. Texas Ass'n of Bus. v. Texas Air Control
On August 11, 1993, Greathouse, in her individual capacity, Bd., 852 S.W.2d 440, 443–44 (Tex.1993).
instituted the current action (the “legal malpractice suit”)
against McConnell in the 149th District Court of *167
Brazoria County (the district court) alleging legal malpractice 1. The Probate Code
and violations of the Deceptive Trade Practices Act (DTPA), The provisions of the Probate Code at issue in this appeal
TEX.BUS. & COM.CODE ANN. § 17.41–.63 (Vernon 1987 are section 5B and subsections (b) through (e) of section
& Supp.1998), stemming from McConnell's representation of 5A. Section 5B of the Probate Code, entitled “Transfer of
Clyde and Clyde's estate in the underlying suit. In an amended Proceeding,” permits the judge of a statutory probate court
petition filed on May 3, 1995, Greathouse sued McConnell in to transfer from another court an action appertaining to or
her capacity as independent executrix of Clyde's estate as well incident to an estate pending in the probate court. Specifically,
as in her individual capacity, and added allegations of breach section 5B provides:
of contract and fraud. On November 22, 1995, McConnell
A judge of a statutory probate court on
filed a motion in the probate court asking the court to transfer
the motion of a party to the action or
the legal malpractice suit from the district court to itself and
on the motion of a person interested
to consolidate that action with Clyde's estate administration
in an estate, may transfer to his court
pending in the probate court. McConnell alleged that section
from a district, county, or statutory
5B of the Probate Code authorized the probate court to
court a cause of action appertaining
transfer the legal malpractice suit from the district court to
to or incident to an estate pending in
itself because the legal malpractice suit was appertaining to or
the statutory probate court and may
incident to Clyde's estate. Greathouse filed a motion opposing
consolidate the transferred cause of
the transfer claiming that the legal malpractice suit was not
action with the other proceedings in
appertaining to or incident to the estate administration, and,
the statutory probate court relating to
therefore, transfer pursuant to section 5B was inappropriate.
that estate.
The probate court granted McConnell's motion.
TEX.PROB.CODE ANN. § 5B (Vernon Supp.1998)
After the legal malpractice suit was transferred, McConnell (emphasis added).
filed a motion for summary judgment which the probate court
granted on December 6, 1996 without stating the grounds. In Subsections (b) through (e) of section 5A, entitled “Matters
two points of error, Greathouse alleges that (1) the probate Appertaining and Incident to an Estate and Other Probate
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
Court Jurisdiction,” set forth the subject matter jurisdiction jurisdiction to matters in which the controlling issue was
of statutory probate courts. Those sections, as they existed in the settlement, partition, or distribution of an estate, and that
1995, provided, in pertinent part: wrongful death actions did not fall within this definition.
Seay, 677 S.W.2d at 23. Seay did not involve an interpretation
(b) In proceedings in the statutory probate courts and of the transfer statute, section 5B, but addressed only whether
district courts, the phrases “appertaining to estates” and the plaintiff's claims could be filed in the probate court in the
“incident to an estate” in this Code include the probate first instance pursuant to the jurisdictional requirements of
of wills, the issuance of letters testamentary and of section 5A(b).
administration, and the determination of heirship, and also
include, but are not limited to, all claims by or against In 1985, the Legislature responded to Seay by amending the
an estate, all actions for trial of title to land and for Probate Code to broaden statutory probate court jurisdiction.
the enforcement of liens thereon, all actions for trial Palmer v. Coble Wall Trust Co., Inc., 851 S.W.2d 178, 181
of the right of property, *168 all actions to construe (Tex.1992). The 1985 amendment added a sentence to the
wills, the interpretation and administration of testamentary end of section 5A(b) which provided that “in actions by
settlement, partition, and distribution of estates of deceased or against a personal representative, the statutory probate
persons.... In situations where the jurisdiction of a statutory courts have concurrent jurisdiction with the district court.”
probate court is concurrent with that of a district court, any Palmer, 851 S.W.2d at 181. The purpose of the amendment
cause of action appertaining to estates or incident to an was to legislatively overrule the result in Seay by insuring
estate shall be brought in a statutory probate court rather that personal representatives could bring wrongful death or
than in the district court. survival actions on behalf of others in the statutory probate
courts. See Palmer, 851 S.W.2d at 181.
(c) A statutory probate court has concurrent jurisdiction
with the district court in all actions: (1) by or
However, after the 1985 amendment many courts continued
against a person in the person's capacity as a personal
to apply the “controlling issue” test set out in Seay in
representative....
determining whether a claim was “appertaining to or incident
(d) A statutory probate court may exercise the pendent to an estate,” which had the effect of denying statutory probate
and ancillary jurisdiction necessary to promote judicial courts jurisdiction over wrongful death and survival actions
efficiency and economy. because the “controlling issue” in such actions was not the
settlement, partition, and distribution of an estate. See Palmer,
(e) Subsections (c) and (d) apply whether or not the matter 851 S.W.2d at 181. To further clarify the issue, in 1989 the
is appertaining to or incident to an estate. Legislature again amended section 5A to give probate courts
jurisdiction over claims by or against personal representatives
Act of May 30, 1993, 73rd Leg., R.S., ch. 957, § 6, 1993 “whether or not the matter is appertaining to or incident to an
Tex.Gen.Laws 4081, 4162 (amended 1997) (current version
estate.” Palmer, 851 S.W.2d at 182. 1
at TEX.PROB.CODE ANN. § 5A(b) (Vernon Supp.1998));
TEX.PROB.CODE ANN. § 5A(c)–(e) (Vernon Supp.1998).
In 1992, the supreme court in Palmer addressed the effect
of the 1985 and 1989 amendments to section 5A, and
2. Legislative and Decisional Law History the continuing validity of the “controlling issue” test in
To answer whether the probate court was authorized under determining probate court jurisdiction under that section.
the Probate Code to transfer the district court case to Palmer, 851 S.W.2d at 178. The court stated that to apply the
itself, a review of the case law and legislative amendments “controlling issue” test in the context of the 1985 amendment,
relevant to these sections is necessary. In Seay v. Hall, as some courts continued to do, *169 would deny probate
the Texas Supreme Court, interpreting an earlier version courts jurisdiction over wrongful death and survival actions,
of Section 5A(b), held that a statutory probate court did in direct contravention of the purpose of the amendment.
not have jurisdiction over a wrongful death and survival Palmer, 851 S.W.2d at 181–82. Furthermore, the court stated
action filed in that court by the representative of a decedent's the 1989 amendment, which gave probate courts jurisdiction
estate. 677 S.W.2d 19, 23 (Tex.1984). The court stated that over claims by or against personal representatives whether or
the “appertaining to an estate and incident to an estate” not the matter was “appertaining to or incident to an estate,”
language of section 5A(b) was designed to limit probate court had dispensed altogether with the need to determine whether
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
the “controlling issue” test applied in suits involving personal D.B. Entertainment, Inc. v. Windle, 927 S.W.2d 283, 288
representatives. Palmer, 851 S.W.2d at 182. However, the (Tex.App.—Fort Worth 1996, orig. proceeding). In D.B.
court stated that the need for an ascertainable meaning of Entertainment, the defendants in a wrongful death and
“appertaining to or incident to an estate” still existed in survival action pending in a district court sought mandamus
certain circumstances. Id. The court went on to confirm relief after a statutory probate court transferred the district
its earlier reasoning in Seay that, under section 5A, a court case to itself pursuant to section 608 of the Probate Code
suit is “appertaining to or incident to an estate” when the to be consolidated with guardianship proceedings pending in
controlling issue is the settlement, partition, or distribution of the probate court. TEX.PROB.CODE ANN. § 608 (Vernon
an estate insofar as it does not apply to suits by or against Supp.1998); D.B. Entertainment, 927 S.W.2d at 284–85.
a personal representative. Palmer, 851 S.W.2d at 182. As Sections 607 and 608 of the Probate Code, which apply to
in Seay, Palmer addressed only a probate court's concurrent guardianships, are almost identical to sections 5A and 5B
jurisdiction over wrongful death and survival actions, but did respectively. TEX.PROB.CODE ANN. §§ 607, 608 (Vernon
not involve a transfer under section 5B of the Probate Code. Supp.1998). Because of the similarity in the statutes, the Fort
Worth Court examined sections 5A and 5B and the case
law construing those sections to determine if the section 608
3. The Present Dispute transfer was appropriate. The court held that the wrongful
[3] As previously stated, McConnell moved to transfer the death and survivorship action at issue in that case was not a
legal malpractice suit from the district court to the probate cause of action “appertaining to or incident to” a guardianship
court pursuant to section 5B of the Probate Code. The trial estate, and, therefore, the transfer was not authorized by
court granted McConnell's request, specifically finding that section 608. The court noted that the “controlling issue”
the legal malpractice claim was “appertaining to or incident test, used to determine what claims were “appertaining to
to” Clyde's pending estate administration. On appeal, the or incident to” an estate, was still good law in certain
only issue contested by the parties is whether the legal circumstances, *170 as was the Seay court's determination
malpractice claim was “appertaining to or incident to” a that wrongful death actions do meet that standard. D.B.
pending estate administration, as required by section 5B. Entertainment, 927 S.W.2d at 286. The court also noted
See Henry v. LaGrone, 842 S.W.2d 324, 326 (Tex.App. that, despite the fact that statutory probate courts were
—Amarillo 1992, orig. proceeding) (holding that transfer unquestionably given concurrent jurisdiction over claims by
under section 5B requires showing that (1) court ordering or against personal representatives by adding to section 5A
transfer is a statutory probate court, (2) an estate is pending the language “whether or not the [claim by or against a
in that court, (3) a separate case is pending in a district, representative] is appertaining to or incident to an estate,” this
county, or statutory court, and (4) that case involves claims language does not appear in section 5B, which controls the
that are appertaining to or incident to the estate pending in transfer of actions. D.B. Entertainment, 927 S.W.2d at 287–
the statutory probate court ). On appeal, McConnell argues 88. The court concluded that (1) because nothing in section
that, because the definition of “appertaining to or incident 608 authorizes the transfer of actions by or against a person in
to an estate” found in section 5A(b) includes “all claims by their capacity as a guardian, regardless of whether the matter
or against an estate,” Greathouse's legal malpractice claim is “appertaining to or incident to” a guardianship estate, and
brought in her capacity as the personal representative of because (2) a wrongful death action was not “appertaining to
Clyde's estate was a claim “appertaining to or incident to or incident to” an estate under the “controlling issue” test, the
an estate,” and, therefore, transfer pursuant to section 5B probate court had no statutory authority to transfer the action
was proper. According to McConnell, whether the legal to itself under section 608. D.B. Entertainment, 927 S.W.2d
malpractice claim is one “appertaining to or incident to at 287.
an estate” under section 5B should not be judged by the
“controlling issue” test because, as the supreme court stated In Ford, the defendants in a wrongful death and survival
in Palmer, that test is not applicable when the claim is brought action pending in a district court sought mandamus relief
by or against a personal representative. See Palmer, 851 after a statutory probate court transferred that case to itself
S.W.2d at 182. pursuant to section 5B after finding that the wrongful death
action was “appertaining to or incident to” an estate action
Greathouse points out two cases which she claims support pending in the probate court. Ford, 965 S.W.2d at 572–
her position. See In re Ford Motor Co., 965 S.W.2d 571, 575 73. The Fourteenth Court relied on D.B. Entertainment,
(Tex.App.—Houston [14th Dist.] 1997, orig. proceeding);
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
finding its reasoning equally applicable to the facts in all actions by or against a personal representative whether
Ford, 965 S.W.2d at 574. The court went on to note or not the matter is appertaining to or incident to an estate,
that D.B. Entertainment was not inconsistent with Palmer. section 5B contains no language allowing the court to transfer
Ford, 965 S.W.2d at 574. According to the Fourteenth any action whether or not the matter is appertaining to or
Court, although in Palmer the supreme court acknowledged incident to an estate. See *171 Ford, 965 S.W.2d at
that the subsequent amendments to section 5A dispensed 575; D.B. Entertainment, 927 S.W.2d at 287–88. The courts
with the need to determine by use of the “controlling concluded that, due to the absence of this language in section
issue” test whether a claim is “appertaining to or incident 5B, a probate court may only transfer causes of action which
to an estate” in suits involving a personal representative, are appertaining to or incident to an estate, regardless of
Palmer did recognize the continued validity of that test whether the action was brought by a personal representative.
in certain circumstances. Ford, 965 S.W.2d at 574. The See Ford, 965 S.W.2d at 575; D.B. Entertainment, 927
Fourteenth Court held that, as implicitly recognized in D.B. S.W.2d at 287–88.
Entertainment, a transfer is such a circumstance because
there is nothing in section 5B that authorizes the transfer of [4] However, we find no reason to draw such a distinction
an action by or against a personal representative, regardless between sections 5A and 5B. In unambiguous terms, the
of whether the action is “appertaining to or incident to” an legislature amended section 5A in 1989 to grant probate
estate. Ford, 965 S.W.2d at 574. The court concluded that, courts concurrent jurisdiction over all actions brought by or
although the relators in that case argued that section 5B cannot against a personal representative, whether or not those claims
be applied without looking to section 5A, section 5A is a standing alone would meet the definition of “appertaining to
jurisdictional statute that determines the court where a suit or incident to” an estate. See Palmer, 851 S.W.2d at 182.
may be filed. Ford, 965 S.W.2d at 575. Unlike section 5B, the While similar language was not added to section 5B, we
court stated, section 5A does not govern transfers, and courts believe the broad grant of jurisdiction found in section 5A
need only look to section 5A to ascertain the definition of the requires that the two sections be read together. We do not
phrase “appertaining to or incident to” an estate. Ford, 965 believe the legislature intended to grant the probate courts
S.W.2d at 575. concurrent jurisdiction over such claims in one section and
then restrict the transfer of those claims in another. As
Based on our reading of the plain language of sections 5A and the supreme court stated in Palmer, the 1989 amendments
5B, and upon the nature of the underlying cause of action at “dispensed with the need to make this inquiry [whether
issue in this case, we decline to follow the holdings in Ford an action was appertaining to or incident to an estate]
and D.B. Entertainment. At the outset, we note that, unlike in suits involving a personal representative” under section
Seay, Ford, and D.B. Entertainment, this case involves the 5A. Palmer, 851 S.W.2d at 182. We find this reasoning
transfer of a legal malpractice claim and not wrongful death applies equally to section 5B. Therefore, we hold that a
and survivorship claims. Key to the holdings in both Ford and statutory probate court may properly transfer to itself any
D.B. Entertainment was the fact that, according to that portion case brought by or against a personal representative of an
of the Seay opinion which is still good law, wrongful death estate, regardless of whether the claim meets the definition
and survivorship claims are not causes of action appertaining of “appertaining to or incident to” an estate. Accordingly,
to or incident to an estate. Ford, 965 S.W.2d at 575; D.B. because Greathouse brought her legal malpractice claim in
Entertainment, 927 S.W.2d at 287. No cases have extended her capacity as independent executrix of Clyde's estate, and
this per se rule to other causes of action. because Clyde's estate administration was pending before the
probate court, the court had jurisdiction to transfer the legal
Notwithstanding the fact that in this case we are not faced malpractice suit to itself.
with a wrongful death or survivorship claim, we disagree
with the conclusion reached by the courts in Ford and D.B. We overrule Greathouse's first point of error.
Entertainment that, because section 5A is a “jurisdiction”
statute and section 5B is a “transfer” statute, the two statutes
should not be read together. See Ford, 965 S.W.2d at 575;
Propriety of Summary Judgment
D.B. Entertainment, 927 S.W.2d at 287–88. In both Ford and
D.B. Entertainment, the courts noted that, although section Because we have held that the probate court properly
5A grants to the probate courts concurrent jurisdiction over transferred Greathouse's legal malpractice claim to itself,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
we now address Greathouse's second point of error which what is essentially a legal malpractice claim into several
challenges the trial court's granting of summary judgment in causes of action. We agree.
favor of McConnell.
Although Greathouse did allege multiple causes of action,
they were all essentially “means to an end” to achieve
1. Standard of Review one complaint of legal malpractice. See Klein, 923 S.W.2d
A defendant, as the movant, is entitled to prevail on a motion at 49. A cause of action arising out of bad legal advice
for summary judgment if the defendant can establish with or improper representation is legal malpractice. Sullivan
competent summary judgment proof that, as a matter of law, v. Bickel & Brewer, 943 S.W.2d 477, 481 (Tex.App.—
there is no genuine issue of fact as to one or more of the Dallas 1995, writ denied). Although Greathouse alleged
essential elements of the plaintiff's cause of action. City of separate and distinct causes of action, the crux of each of
Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 679 those claims was that McConnell did not provide adequate
(Tex.1979). The standard for appellate review of a summary legal representation to Greathouse. Greathouse's petition
judgment is well established: separately alleges negligence, breach of fiduciary duty,
and breach of the duty of good faith and fair dealing;
(1) the movant has the burden of showing that there is no
however, each of those allegations are followed by identical
genuine issue of material fact and that it is entitled to
paragraphs detailing how McConnell breached these duties
judgment as a matter of law;
to Greathouse. Under her DTPA subheading, Greathouse
(2) in deciding whether there is a disputed material fact alleged that McConnell (1) falsely represented that his legal
issue precluding summary judgment, evidence favorable services were of a competent quality, when they were not, (2)
to the nonmovant must be taken as true; and represented that the attorney-client relationship between them
conferred certain rights, remedies or obligations that it did
(3) every reasonable inference must be indulged in favor of not have, (3) engaged in an unconscionable course of conduct
the nonmovant and any doubts resolved in its favor. that took advantage of Greathouse's lack of knowledge and
experience such that there existed a gross disparity between
Nixon v. Mr. Property Management Co., 690 S.W.2d 546, the value of legal services received and the consideration
548–49 (Tex.1985). On appeal, we will affirm a summary paid to McConnell for those services, because McConnell's
judgment if any of the theories advanced in the motion is legal services were of no value. Under her breach of contract
meritorious. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d subheading, Greathouse alleged that (1) McConnell made
623, 626 (Tex.1996). express and implied warranties to Greathouse that McConnell
would provide good and competent legal services, and
McConnell breached those warranties by failing to, among
2. Nature of Action
[5] [6] Before determining if any of the grounds asserted other things, handle the lawsuit as a reasonably prudent
by McConnell supported the trial court's grant of summary attorney would have. 2 As to Greathouse's allegations of
judgment, we must first address the precise nature of fraud, she does not provide any specific allegations separate
the claims Greathouse has alleged against McConnell. A from those alleged misrepresentations which, according
defendant is not entitled to a summary judgment on the to Greathouse, violated the DTPA. We hold that these
entire case unless the defendant files a summary judgment claims amounted to nothing more than allegations of legal
that addresses, and then conclusively demonstrates, that the malpractice, and, therefore, McConnell could have obtained
plaintiff is not entitled to recover on any theory of liability summary judgment on the entire case by disproving, as a
alleged. *172 Klein v. Reynolds, Cunningham, Peterson matter of law, one element of Greathouse's legal malpractice
& Cordell, 923 S.W.2d 45, 48–49 (Tex.App.—Houston cause of action.
[1st Dist.] 1995, no writ). Greathouse's petition contained
allegations of legal malpractice (professional negligence),
3. Legal Malpractice Cause of Action
breach of fiduciary duty, breach of the duty of good faith
[7] [8] Generally, to recover on a claim of legal
and fair dealing, fraud, DTPA violations, breach of contract,
malpractice, a plaintiff must prove: (1) the attorney owed
and breach of express and implied warranties. McConnell
the plaintiff a duty; (2) the attorney breached that duty; (3)
contends that Greathouse should not be allowed to “fracture”
the breach proximately caused the plaintiff's injuries; and
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
(4) damages occurred. Farah v. Mafrige & Kormanik, P.C., in a commercially reasonable manner, McConnell attached
927 S.W.2d 663, 670 (Tex.App.—Houston [1st Dist.] 1996, the affidavit of Winston Davis, the president of Charter Bank
no writ). When a legal malpractice case arises from prior at the time Charter brought suit against Clyde and Forrest
litigation, the plaintiff has the burden to prove that, “but for” Allen. In his affidavit, Davis outlined the events surrounding
the attorney's breach of duty, he or she would have prevailed the sale of the Forrest Allen agency, including (1) the notice
on the underlying cause of action and would have been given to the parties, (2) Davis's efforts to solicit bids from
entitled to judgment. Jackson v. Urban, Coolidge, Pennington insurance agents in Corpus Christi, and (3) the sale of the
& Scott, 516 S.W.2d 948, 949 (Tex.Civ.App.—Houston [1st agency to the only bidder, Courtesy Insurance Agency, for
Dist.] 1974, writ ref'd n.r.e.); *173 Schlager v. Clements, $100,000. 3 McConnell refers us to several cases in which
939 S.W.2d 183, 186–87 (Tex.App.—Houston [14th Dist.] affidavits similar to Davis's were found sufficient to prove,
1996, writ denied). This aspect of the plaintiff's burden is as a matter of law, that a sale of collateral was commercially
commonly referred to as the “suit within a suit” requirement. reasonable pursuant to section 9.504. See Wilson v. General
See id. Motors Acceptance Corp., 897 S.W.2d 818, 822 (Tex.App.
—Houston [1st Dist.] 1994, no writ); Folkes v. Del Rio Bank
& Trust Co., 747 S.W.2d 443, 446 (Tex.App.—San Antonio
4. Failure to Raise Affirmative Defenses
1988, no writ). We hold that Davis's affidavit contains
[9] Although Greathouse's pleadings alleged several
sufficient information to establish, as a matter of law, that the
breaches of the applicable standard of care, the crux of her
sale was conducted in a commercially reasonable manner.
claim was that McConnell did not raise affirmative defenses
in the underlying suit which a reasonable attorney would
In her response to McConnell's motion for summary
have raised. Specifically, Greathouse alleged that McConnell
judgment, Greathouse objected to Davis's affidavit on the
should have raised the following affirmative defenses: (1)
ground that it contained *174 legal conclusions and
the commercial reasonableness of the sale of the collateral
was therefore not competent summary judgment proof.
securing the note in the underlying case; (2) usury; and
Greathouse also attached the affidavit of Denice Smith,
(3) interest beyond the contractual term of the note. In
an attorney, which Greathouse claimed raised fact issues
his motion for summary judgment, McConnell attempted to
concerning McConnell's culpability for failing to plead and
disprove the “suit within a suit” element of Greathouse's legal
prove the affirmative defense of commercial reasonableness.
malpractice cause of action by showing that, even if he would
have raised those affirmative defenses, Greathouse would
However, neither Greathouse's objections to McConnell's
not have prevailed in the underlying litigation. Therefore, if
summary judgment proof nor her own summary judgment
McConnell was successful in proving as a matter of law that
evidence addressed the element of her cause of action
raising these defenses would not have resulted in a favorable
which McConnell sought to disprove, namely, the “suit
outcome for Greathouse, McConnell was entitled to summary
within a suit” requirement. As previously stated, McConnell
judgment on Greathouse's legal malpractice claim.
proved, as a matter of law, that the sale of Clyde's
insurance company was conducted in a commercially
a. Commercial Reasonableness reasonable manner. Therefore, even if McConnell would have
In his motion for summary judgment, McConnell attempted pleaded and proved the affirmative defense of commercial
to show that the sale of the collateral securing the note, reasonableness, Greathouse would not have been successful
the Forrest Allen agency, was conducted in a commercially in the underlying action because the sale was commercially
reasonable manner, and, therefore, raising commercial reasonable. Greathouse objected to those portions of Davis's
reasonableness as a defense would not have resulted in a affidavit in which he stated “Charter gave reasonable notice
successful outcome for Greathouse in the underlying suit. of a private sale of the collateral to Forrest Allen and the
Greathouses,” and “Charter subsequently sold the collateral
Section 9.504 of the Business and Commerce Code requires in a commercially reasonable manner, including the method,
that, before the holder of a note can obtain a deficiency manner, time, place and terms.” However, in addition to
judgment against the maker, or in this case a guarantor, it these statements, Davis provided a detailed summary of the
must show the sale was made in a commercially reasonable facts surrounding the loan transaction and the subsequent
manner. See TEX.BUS. & COM.CODE ANN. § 9.504 sale of the collateral. As in Wilson and Folkes, these facts
(Vernon 1991). In support of his claim that the sale was made allowed McConnell to prove the commercial reasonableness
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
of the sale as a matter of law, notwithstanding any conclusory we will review Smith's affidavit to determine if it raised a fact
statements contained in the affidavit. issue concerning McConnell's usury arguments.
The affidavit of Denice Smith, attached as summary judgment As she did in connection with the affirmative defense of
evidence to Greathouse's response, also misses the mark. In commercial reasonableness, Smith states in her affidavit that
her affidavit, Smith stated it was her expert opinion that a McConnell, *175 by failing to raise the affirmative defense
reasonably prudent attorney would have raised the affirmative of usury, failed to act as a reasonable and prudent attorney
defense of commercial reasonableness, and that by failing would have. However, in his motion for summary judgment
to do so, McConnell breached the standard of care owed to McConnell sought to negate the “suit within a suit” element
Greathouse. However, in her affidavit Smith did not attempt of Greathouse's legal malpractice action by proving that the
to dispute the facts surrounding the sale of the underlying affirmative defense of usury was not available to Clyde,
collateral as described in Davis's affidavit, nor did she explain and, therefore, Greathouse would not have prevailed in the
why the sale was not conducted in a commercially reasonable underlying suit even if McConnell would have raised that
manner. Smith merely attempted to establish that McConnell defense. Merely stating that McConnell, by failing to raise
breached a duty owed to Greathouse, but did not address usury as a defense, breached a duty of care to Greathouse does
the question whether Greathouse would have prevailed in the not counter McConnell's summary judgment argument that
underlying suit but for McConnell's negligence. Therefore, the defense was not available in the first instance. Therefore,
as to the affirmative defense of commercial reasonableness, as to the affirmative defense of usury, Greathouse did not raise
Greathouse failed to raise a fact issue concerning the “suit a fact issue concerning the “suit within a suit” element of her
within a suit” element of her legal malpractice cause of action. legal malpractice cause of action.
b. Usury c. Interest Beyond the Contractual Term
Greathouse also alleged in her pleadings that McConnell [10] Finally, Greathouse alleged McConnell was negligent
should have raised the affirmative defense of usury. In his by not raising interest beyond the contractual term as an
motion for summary judgment, McConnell argued (1) the affirmative defense. In his motion for summary judgment,
note and Clyde's guarantee, which were attached as summary McConnell argued that the loan documents clearly show
judgment evidence, make clear that Clyde was liable for the Clyde was liable for the interest accruing on the note until
interest which accrued on the note, and (2) even if Charter final payment, and that his death had no effect on his
had charged usurious interest to Forrest Allen and sought to obligation because his liability for that interest was created
recover that interest from Clyde, the defense of usury was not prior to his death. However, Greathouse makes no mention
available to Clyde because he was only a guarantor on the of interest beyond the contractual term in her appellate
note. brief. Although Greathouse does make the general assertion
that Smith's affidavit raises fact issues precluding summary
It is well settled that usury is a defense personal to the debtor, judgment, we find no reference to the affirmative defense of
one that a guarantor may not interpose. Arndt v. National interest beyond the contractual term in Smith's affidavit. We
Supply Co., 633 S.W.2d 919, 925 (Tex.App.—Houston [14th are not authorized to reverse a judgment in the absence of
Dist.] 1982, writ ref'd n.r.e.). Because Clyde was a guarantor properly assigned error, and thus cannot address contentions
on the note, McConnell could not have raised this defense on which Greathouse either failed to raise or chose to abandon.
Clyde's behalf, and, therefore, his failure to do so could not See Houston Mercantile Exch. Corp. v. Dailey Petroleum
have affected the outcome of the underlying suit. Corp., 930 S.W.2d 242, 249 (Tex.App.—Houston [14th
Dist.] 1996, no writ). Therefore, Greathouse has waived any
In her response to McConnell's motion, Greathouse did complaint concerning the propriety of summary judgment
not specifically mention McConnell's failure to raise usury relating to McConnell's duty to raise the affirmative defense
as a defense, nor did she specifically address McConnell's of interest beyond the contractual term.
summary judgment arguments on this issue. However, in her
response to McConnell's motion and in her appellate brief
Greathouse makes the general statement that Smith's affidavit 7. Conclusion
raised fact issues precluding summary judgment. Therefore, Because McConnell proved, as a matter of law, that raising
the affirmative defenses of (1) commercial reasonableness
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Greathouse v. McConnell, 982 S.W.2d 165 (1998)
and (2) usury in the underlying suit would not have
resulted in a successful outcome for Greathouse, and because
All Citations
Greathouse waived any argument concerning the affirmative
defense of interest beyond the contractual term, we overrule 982 S.W.2d 165
Greathouse's second point of error and affirm the judgment
of the trial court.
Footnotes
* The Honorable Jackson B. Smith, Jr., retired Justice, Court of Appeals, First District of Texas at Houston, participating
by assignment.
1 The 1989 amendment to section 5A was the last legislative change relevant to this appeal. An amendment in 1993 had
no bearing on the issues in this case, and an amendment in 1997 became effective after the conclusion of the trial court
proceedings.
2 In Jampole v. Matthews, we recognized a cause of action for breach of contract independent of a legal malpractice
claim. 857 S.W.2d 57, 62 (Tex.App.—Houston [1st Dist.] 1993, writ denied). That case, however, limited this distinction
to actions against attorneys for excessive legal fees:
We distinguish ... between an action for negligent legal malpractice and one for fraud allegedly committed by an
attorney relating to the establishing and charging of fees for services. Similarly, we distinguish between an action for
negligent legal malpractice and one for breach of contract relating to excessive fees for services.
Id. However, this case does not involve a dispute over the amount of attorney's fees which McConnell charged
Greathouse. Rather, Greathouse alleges only that, by not taking certain actions during the course of his representation,
McConnell did not provide the services for which Greathouse contracted, i.e., the services that a reasonably prudent
attorney would have provided. Therefore, the facts of this case do not give rise to the Jampole exception. See id.
3 Davis's affidavit began by detailing the terms of the loan transaction, specifically, that Charter loaned $253,308.19 to
Forrest Allen, Clyde's insurance agency, and that the loan was guaranteed by Clyde and was secured by all rights,
title and interest in the insurance expirations, commissions, accounts receivable, furniture, and fixtures belonging to
Forrest Allen. Davis then explained that Forrest Allen and Clyde were notified that the loan would not be renewed at
maturity, and that upon maturity, Charter demanded full payment of all sums owed to Charter. According to Davis, a
representative of Greathouse informed Charter that the Greathouses were abandoning the insurance agency. Davis
then traveled to Corpus Christi to inspect Charter's collateral, and sent a Charter employee to watch over the collateral
pending sale. Charter then gave notice of a private sale to Forrest Allen and Greathouse, a copy of which was attached
to the affidavit. Davis then contacted a number of insurance agents in Corpus Christi to solicit bids for the agency. Davis
received only one offer in the amount of $100,000 from Courtesy Insurance Agency, and on May 9, 1985, Charter sold
the agency to Courtesy for that amount. Davis concluded that, based on his background and experience, Charter gave
reasonable notice of the sale to Forrest Allen and Greathouse, and the subsequent sale of the collateral was conducted
in a commercially reasonable manner.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Z
Heath v. Herron, 732 S.W.2d 748 (1987)
Cases that cite this headnote
732 S.W.2d 748
Court of Appeals of Texas,
Houston (14th Dist.). [2] Judgment
Persons Not Parties or Privies
Bob HEATH, Appellant, Judgment
v. Scope and Extent of Estoppel in General
Glen Earl HERRON, Appellee. Collateral estoppel did not bar relitigation
of issue of existence of partnership in
No. A14–86–517–CV. | June 11,
partner's subsequent legal malpractice suit; facts
1987. | Rehearing Denied July 7, 1987.
concerning that issue were not fully and fairly
In legal malpractice suit alleging negligence and violations litigated in underlying lawsuit, in absence of
of Texas Deceptive Trade Practices Act, the 133rd District failure to verify denial of partnership, and parties
Court, Harris County, David Hittner, J., entered judgment to present action were not cast as adversaries in
against attorney, who appealed. The Court of Appeals, former action.
J. Curtiss Brown, Chief Justice, held that: (1) client's
Cases that cite this headnote
introduction of trial pleadings and judgment from underlying
partnership suit did not act as collateral or judicial
estoppel on that issue in malpractice suit, and settlement [3] Election of Remedies
of partnership suit did not bar client from bringing legal Nature and Grounds in General
malpractice suit under election doctrine; (2) attorney had Election doctrine may constitute bar to relief
duty to file verified denial of partnership or failure of when one successfully exercises informed choice
consideration, under circumstances of case; (3) evidence was between two or more remedies, rights, or states
legally and factually sufficient to support jury's answers to of facts which are so inconsistent as to constitute
special issues finding attorney's omissions to be negligent manifest injustice.
conduct proximately causing damage to client; (4) emotional
distress damages should not have been awarded, absent 1 Cases that cite this headnote
egregious or extraordinary circumstances; and (5) attorney's
announcement of “ready” in open court at commencement [4] Election of Remedies
of partnership suit was not false representation giving rise to Acts Constituting Election
cause of action under Deceptive Trade Practices Act.
Client's decision to settle lawsuit did not act as
bar to later malpractice suit against his attorney
Affirmed in part, reversed and rendered in part.
under election doctrine, in view of client's
testimony that attorney told him his case was lost
and that he should probably settle and that he was
West Headnotes (10) relying on his attorney to make legal decision on
what course to pursue.
[1] Evidence 1 Cases that cite this headnote
Conclusiveness of Evidence on Party
Introducing It
[5] Torts
Client's introduction of trial pleadings from Duty and Breach Thereof in General
underlying partnership suit did not act as
In order to establish tort liability, plaintiff must
judicial admission in legal malpractice suit
initially prove existence and breach of duty owed
of truth of matters contained therein; party
to him by defendant.
was not conclusively bound by introduction of
opponent's pleadings and could disprove any Cases that cite this headnote
facts in document introduced.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Heath v. Herron, 732 S.W.2d 748 (1987)
[6] Attorney and Client [10] Antitrust and Trade Regulation
Conduct of Litigation Legal Professionals; Attorney and Client
For purposes of legal malpractice suit, attorney Attorney's announcement of “ready” in open
had duty to file verified denial of partnership and court at commencement of suit was not
failure of consideration in partnership suit, and false representation to client concerning
failure to do so deprived client of viable defense characteristics and quality of legal services
notwithstanding that other party's pleadings in giving rise to cause of action under Deceptive
that suit did not allege partnership or make Trade Practices Act. V.T.C.A., Bus. & C. §
failure of consideration an issue; failure to 17.46(a, b).
deny partnership status resulted in admission
of partnership's existence and was result of 1 Cases that cite this headnote
oversight rather than mere error in judgment.
Vernon's Ann.Texas Rules Civ.Proc., Rule 93.
3 Cases that cite this headnote Attorneys and Law Firms
*749 Robert Heath, Houston, for appellant.
[7] Attorney and Client
Pleading and Evidence J.L. Culpepper, Houston, for appellee.
Evidence was legally and factually sufficient
to support jury's answers to special issues, Before J. CURTISS BROWN, C.J., and ROBERTSON and
finding numerous omissions by attorney in his CANNON, JJ.
representation of client in partnership suit to be
negligent conduct that was proximate cause of
damage to client. OPINION
1 Cases that cite this headnote J. CURTISS BROWN, Chief Justice.
This is an appeal from a judgment entered against appellant
[8] Attorney and Client (Heath or appellant) in a legal malpractice suit brought
Conduct of Litigation by appellee (Herron or appellee) alleging negligence and
In order to support malpractice recovery against violations of the Texas Deceptive Trade Practices Act. We
attorney representing defendant in civil suit, it is affirm the trial court's judgment except as to the award of
necessary to establish that client had meritorious damages and attorney's fees under the DTPA claim and those
defense to that suit; “meritorious defense” is one damages awarded for mental anguish under the negligence
that, if proved, would cause different result upon claim.
retrial of case.
Appellee retained appellant to represent him as sole defense
11 Cases that cite this headnote counsel in a suit filed by Neil Beene, who sought a dissolution
and accounting of monies and property under partnerships
[9] Damages and other business relationships with appellee (hereafter the
Mental Suffering and Emotional Distress Beene/Herron suit). In particular, Beene alleged that in 1977
he and appellee entered into a written partnership agreement
Emotional distress damages should not be
whereby each was to share an interest in the Jerry Dominy,
awarded in legal malpractice cases, at least
Trustee, tract of land. Beene's petition further alleged that
in absence of egregious or extraordinary
in 1978 he and appellee entered into an oral agreement of
circumstances.
partnership whereby Beene was to pay appellee one-half of all
5 Cases that cite this headnote profits received by Beene for the construction of the Houston
Northwest Professional Building in return for one-half of
appellee's ownership interest in the building.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Heath v. Herron, 732 S.W.2d 748 (1987)
Appellant, on behalf of appellee, filed an answer denying We find these pleas in bar inapplicable. Appellee's
“that there was ever any *750 agreement finally consumated introduction into evidence of the trial pleadings from the
[sic] between the Plaintiff and Defendant concerning any Beene/Herron suit does not act as a judicial admission of
1977 written partnership agreement” and denying “that the truth of the matters contained therein; a party is not
any oral agreement was entered into in 1978” between conclusively bound by the introduction of his opponent's
Plaintiff and Defendant concerning the Houston Northwest pleadings and may disprove any facts in a document he
Professional Building. This answer was not verified. introduced. Pope v. Darcey, 667 S.W.2d 270, 274 (Tex.App.
—Houston [14th Dist.] 1984, writ ref'd n.r.e.). Nor does
Trial proceeded before a jury. At the conclusion of the collateral estoppel bar relitigation of the issue of the existence
presentation of Beene's evidence, Beene moved for an of a partnership between Beene and appellee. The facts
“instructed verdict” requesting that all testimony offered concerning this issue were not fully and fairly litigated in
by appellee contradicting the existence of partnerships be the Beene/Herron lawsuit since appellant failed to verify a
stricken from the record as appellee had failed to verify denial of partnership; nor were appellant and appellee cast
his answer as required by Tex.R.Civ.P. 93(f). The motion as adversaries in that action. See Bonniwell v. Beech Aircraft
further requested the trial court to instruct the jury to return a Corp., 663 S.W.2d 816, 818 (Tex.1984).
verdict that established Beene and appellee as partners in the
Houston Northwest Professional Building, the Jerry Dominy The election doctrine may constitute a bar to relief when (1)
tract and two other properties located in Limestone County. one successfully exercises an informed choice (2) between
Understanding that the trial court was inclined to grant the two or more remedies, rights or states of facts (3) which are so
motion, appellee decided to settle with Beene. The settlement, inconsistent as to (4) constitute manifest injustice. Bocanegra
approved by the court, resulted in a judgment dissolving v. Aetna Life Insurance Co., 605 S.W.2d 848, 851 (Tex.1980).
the alleged partnerships and awarding $250,000.00 to Beene Contrary to appellant's assertion otherwise, appellee denied
from funds held in escrow pending trial deposited by Sumed, throughout both trials that a partnership existed as to the Jerry
Inc., the management company for the alleged partnership Dominy tract and the Northwest Professional Building. Nor is
in the Northwest Professional Building. The final judgment this court convinced that appellee made his decision to settle
further awarded to Beene several parcels of land in which he with a full and clear understanding of the problem, facts and
claimed an interest. remedies essential to the exercise of an intelligent choice.
Appellee testified that appellant told him that his case was
Appellee complied with the settlement agreement, then lost because of appellant's pleading mistake and that, while
filed his legal malpractice suit against appellant alleging they could try the case and hope for *751 different results
negligence and violations of the DTPA (hereafter the Herron/ on appeal, Beene was ready to settle and that was probably
Heath or malpractice suit). Trial was to the jury, which what appellee should do. Appellee further testified that he did
answered special issues favorably to appellee on both claims. not understand the legal significance of what appellant was
Judgment was entered awarding appellee $298,308.58 telling him and was relying on appellant to make the legal
in actual damages, $2,000.00 under the DTPA claim, decision on what course to pursue. Under these circumstances
$25,000.00 in attorney's fees, and pre- and postjudgment appellee's decision to settle does not act as a bar to the later
interest. It is from this judgment that appellant appeals. malpractice suit. Points of error 1, 2, 5 and 17 are overruled.
[1] [2] [3] [4] Appellant brings 74 points of error.In points of error 6–9 and 28 appellant contends the trial
In points of error 1, 2, 5 and 17 appellant contends the court erred in failing to grant his Motions for Directed Verdict
trial court erred in failing to grant his Motion for Directed and New Trial because appellant had no duty to plead and
Verdict because, as a matter of law, appellee's introduction have appellee verify a denial of partnership or failure of
into evidence of the trial pleadings and judgment from the consideration.
Beene/Herron suit act as collateral or judicial estoppel on
the issue of partnership in the Herron/Heath suit. Appellant [5] [6] In order to establish tort liability, a plaintiff must
further contends that the settlement of the Beene/Herron suit initially prove the existence and breach of a duty owed
bars appellee from bringing suit against appellant for legal to him by the defendant. Otis Engineering Corp. v. Clark,
malpractice according to the election doctrine. 668 S.W.2d 307, 309 (Tex.1983). Appellant argues that as
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Heath v. Herron, 732 S.W.2d 748 (1987)
appellee's attorney in the Beene/Herron lawsuit he had no with Beene, while Beene in other parts of his pleading
duty to file a verified denial of partnership or failure of labelled his business relationships with appellee as “joint
consideration with appellee's trial pleading because Beene's ventures.” Thus, appellant argues, the “truth of such matters
pleadings did not allege partnership nor was failure of appear of record” and need not be verified under Rule 93.
consideration made an issue by Beene. Appellant further
contends that no verified denial was required as a matter of Appellant further contends that the true issues raised by
law because there is no statutory or case authority in this state Beene's petition had to do with whether certain agreements
mandating that certain steps be taken in preparing a defense. between the two were carried out, not the identity of the
relationship between the two; therefore he should have been
The two main issues in the Beene/Herron suit are contained allowed to defend appellee's case without addressing the
within paragraphs V and VI of Beene's second amended partnership issue.
petition. Paragraph V states that:
We are not persuaded by appellant's “no duty” argument.
In 1977, Plaintiff and Defendant, A lawyer is required under the Texas Code of Professional
GLEN EARL HERRON, entered Responsibility to represent a client competently, and this
into a written partnership agreement includes a mandate that the lawyer shall not handle a legal
whereby each party was to share a one- matter without adequate preparation under the circumstances.
half (½) undivided interest in a ten Under the pleadings in effect at the time of trial, Beene
per cent (10%) interest in the JERRY clearly alleged the existence of a partnership with appellee
DOMINY, TRUSTEE, tract of land. in paragraphs V and VI concerning the Jerry Dominy tract
A copy of this written partnership and the Northwest Professional Building. Equally clear from
agreement is attached as Exhibit “D” appellee's testimony is that he maintained throughout the
and included herein for all purposes Beene/Herron suit and the malpractice suit that no such
verbatim. partnership existed. The failure by appellant to file the *752
verified denial required by Rule 93 deprived appellee of a
Paragraph VI states that:
viable defense in the Beene/Herron suit, since the failure
In 1978, Plaintiff and Defendant, to deny partnership status by a verified denial results in an
GLEN EARL HERRON entered into admission of the existence of a partnership which cannot
an oral agreement of partnership be controverted at trial. Washburn v. Krenek, 684 S.W.2d
whereby Plaintiff was to pay said 187, 191 (Tex.App.—Houston [14th Dist.] 1984, writ ref'd
Defendant one-half (½) of all n.r.e.). Nor was appellant's omission a mere error in judgment
profits received by Plaintiff for the for which he would not be held liable since he admitted in
construction of a building known testimony that he would have filed a verified denial had he
as Houston Northwest Professional thought of it.
Building, in return for one-half (½) of
Defendant, GLEN EARL HERRON'S We therefore hold that appellant had a duty under the
twenty per cent (20%) ownership circumstances to file a verified denial of partnership and
interest in the building. failure of consideration on behalf of appellee in the Beene/
Herron suit. Points of error 6–9 and 28 are overruled.
Tex.R.Civ.P. 93 (Vernon 1979) provides that “A pleading
setting up any of the following matters, unless the truth of [7] In points of error 4, 10, 11, 19, 20, 30, 32–47, 55 and
such matters appear of record, shall be verified by affidavit.... 56, appellant challenges the factual and legal sufficiency of
(f) A denial of partnership as alleged in any pleading as to any the evidence to support the jury's answers to Special Issue
party to the suit.” Nos. 2, 3 and 4. In these issues the jury found numerous
omissions by appellant in his representation of appellee in
Appellant insists that these pleadings do not require a verified the Beene/Herron suit to be negligent conduct and that such
denial because the nature of the relationship between Beene negligence was a proximate cause of damage to appellee.
and appellee was not the controlling issue, particularly as These omissions included the failures to file verified denials
appellee acknowledged the existence of some partnerships denying partnership and failure of consideration, to properly
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Heath v. Herron, 732 S.W.2d 748 (1987)
prepare appellee's defense for trial, to properly represent he might well have a malpractice case against him for failing
appellee during trial, to properly counsel and advise appellee to verify the denial.
concerning his defense, and to properly counsel and warn
appellee concerning the risks of loss involved in the Beene/ The jury found these omissions to be negligent conduct
Herron trial. in answers to Special *753 Issue No. 3. David Lueders,
an attorney called by appellee as an expert witness in the
Appellant's briefing obligations do not end with a statement of malpractice case, testified that the organization of facts was
his points of error. He has the further burden to show that the essential to the preparation of appellee's defense in the Beene/
record supports his contentions and to point out the place in Herron suit and that appellant did not conduct the pretrial
the record where the matters upon which he relies are shown. discovery that he should have. Lueders further testified that
Perez v. Baker Packers, 694 S.W.2d 138, 142 (Tex.App.— appellant should have advised appellee of the state of the
Houston [14th Dist.] 1985, writ ref'd n.r.e.). Appellant's few evidence and how the law would affect the issues, and
references to the record do not meet this burden. We also note should have evaluated the probable outcome of the trial
that nowhere in his voluminous brief does appellant cite the so that appellee could properly evaluate the risks of loss
applicable standards of review for these points of error. involved. Finally, Lueders testified that appellant's failure
to verify the denials was negligent and that appellee was
When reviewing legal sufficiency points of error, this court not properly represented. Appellant raised no objection to
must consider only the evidence and the inferences tending to this testimony nor did he object to Lueders' qualifications as
support the findings and disregard all evidence and inferences an expert witness. Concerning the proximate cause issue in
to the contrary. Garza v. Alviar, 395 S.W.2d 821, 823 Special Issue No. 4, the record indicates that no settlement
(Tex.1965). In considering factual insufficiency points of negotiations were undertaken prior to the indication by the
error, we are required to consider and weigh all of the trial court that appellee would not be permitted to present
evidence. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, evidence on the issue of partnership. In addition, Vernon
661 (1951). Hankins, Beene's counsel, testified at the malpractice trial
that appellant's failure to file a verified denial effectively
A review of the evidence shows these points to be without destroyed appellee's trial strategy and his basis for strength in
merit even with proper briefing by appellant. With respect negotiating a settlement.
to Special Issue No. 2 concerning whether appellant failed
to do certain acts on behalf of appellee in the Beene/Herron The jury had before it sufficient evidence to answer the
suit, it is uncontested that appellant failed to file a verified contested issues affirmatively. Points of error 4, 10, 11, 19,
denial of partnership and failure of consideration. Concerning 20, 30, 32–42, 55 and 56 are overruled.
the failures to properly prepare appellee's defense, to properly
represent appellee during the trial and to properly counsel In points of error 12, 18 and 29 appellant asserts that the jury's
appellee concerning his defense and the risks of loss involved, answer to Special Issue No. 1 should have been disregarded
the record reflects that appellant submitted to Beene no because the issue of whether appellee had a meritorious
interrogatories, requests for admission nor production of defense in the Beene/Herron suit is immaterial in deciding
documents, did not depose any witnesses or Beene, did not whether appellant's acts were negligent and the proximate
attend two depositions taken by Beene, sought no records cause of injury to appellee. In related points of error 21, 48,
from anyone but appellee and did not prepare what records 70 and 72 appellant contends the evidence does not support
he did obtain in admissible form. During trial appellant did an award of damages under a negligence theory.
not seek a trial amendment even after the trial court indicated
it would sustain Beene's motion to exclude all testimony on [8] In order to support a malpractice recovery against
the partnership issue because of the failure to file a verified an attorney, it is necessary that the client establish that
denial. Appellee testified that at no time did appellant consult he had a meritorious defense to the suit filed by Beene.
with him on his trial strategy or advise him on the merits of Rice v. Forestier, 415 S.W.2d 711, 713 (Tex.Civ.App.—San
his suit. Appellant testified that the reason he did not file a Antonio 1967, writ ref'd n.r.e.). A meritorious defense is one
verified denial was because he did not think to do it, that it that, if proved, would cause a different result upon retrial of
was an oversight, and that he probably would have done it had the case. Martin v. Allman, 668 S.W.2d 795, 797 (Tex.App.
he thought to do so. Appellee testified that appellant told him —Dallas 1984, no writ).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Heath v. Herron, 732 S.W.2d 748 (1987)
*754 [10] In points of error 22, 52 and 68 appellant
contends the trial court erred in entering judgment for
While we agree with appellant that appellee had the burden of
appellee on the DTPA claim because appellee failed to prove
proving what would have happened in the Beene/Herron suit
a cause of action under the DTPA as a matter of law. We
had special issues been submitted and answered, and that the
agree. The jury found in Special Issue No. 10 that appellant
proper measure of damages would have been the difference
represented to appellee that he was adequately prepared for
between the value of the settlement handled properly and
trial in the Beene/Herron lawsuit when appellant was not
improperly, appellant did not object to the submission of
adequately prepared.
Special Issue No. 1, nor did he submit issues on the correct
measure of damages. While appellant did submit instructions
Appellee contends that appellant's announcement of “ready”
to be included with Special Issue No. 9 concerning the proper
in open court at the commencement of the Beene/Herron suit
measure of damages, his request was not made separate
was a false representation to appellee that the characteristics
from his objections to the court's charge as required by
and quality of his legal services were such that appellee's
Tex.R.Civ.P. 273. See Woods v. Crane Carrier Co., 693
defense was prepared and appellant was competent to begin
S.W.2d 377, 379 (Tex.1985). Points of error 12, 18, 21, 29,
trial, and that this misrepresentation gave rise to a cause of
48, 70 and 72 are overruled.
action under sections 17.46(a) and (b) of the DTPA. We are
aware that legal services are actionable under the DTPA.
[9] In point of error 49 appellant contends the trial court
See, e.g., DeBakey v. Staggs, 612 S.W.2d 924 (Tex.1981).
erred in failing to grant his Motion to Reform the Judgment
We are not willing, however, to go so far as to say that an
on grounds that the evidence is legally insufficient to
announcement of “ready” in open court with later adverse
support the jury's award of $10,000.00 for mental anguish.
results constitutes the basis for a DTPA claim. As appellee's
Appellee concedes that no Texas court to date has awarded
DTPA cause of action fails as a matter of law, the trial
mental anguish damages in a legal malpractice suit, but
court erred in entering judgment based on this claim and in
suggests this court do so by comparing legal malpractice
awarding attorney's fees. We sustain points of error 22, 52
to medical malpractice. Appellee further cites recent cases
and 68.
in which the Texas Supreme Court has eliminated the
requirement of a physical manifestation of injury to recover
We affirm the trial court's judgment except as to the award
for mental anguish. See St. Elizabeth Hospital v. Garrard,
to appellee of $10,000.00 in damages for mental anguish,
730 S.W.2d 649 (Tex.1987); Moore v. Lillebo, 722 S.W.2d
$2,000.00 in DTPA damages, and attorney's fees. As to these
683 (Tex.1986). We choose to decline appellee's offer and
we reverse and render judgment that appellee take nothing.
hold that emotional distress damages should not be awarded
All other points are overruled. The trial court's judgment is
in legal malpractice cases at least in the absence of egregious
affirmed in part and reversed and rendered in part.
or extraordinary circumstances. See Gautam v. De Luca, 215
N.J.Super. 388, 521 A.2d 1343 (1987). Appellant's point of
error 49 is sustained.
All Citations
732 S.W.2d 748
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
AA
Hernandez v. Bumbo (Pty.) Ltd., Slip Copy (2014)
2014 WL 924238, Prod.Liab.Rep. (CCH) P 19,346
response, Plaintiffs contend that the Motion should be denied
because (1) the applicable statute of limitations has expired;
2014 WL 924238
(2) the doctrine of parental immunity bars Mrs. Hernandez
Only the Westlaw citation is currently available.
being designated as a responsible third party; and (3) Mrs.
United States District Court,
Hernandez cannot be designated a responsible third party
N.D. Texas,
because she is already a party to this lawsuit.
Dallas Division.
Candido HERNANDEZ, Sr. and Waikiki
Hernandez, Individually and as Next Friends II. LEGAL STANDARD
and Guardians of C.H., a Minor, Plaintiffs,
v. Chapter 33 of the CPRC applies to all common law torts
BUMBO (PTY.) LTD. and Bumbo and statutory torts that do not have a separate and conflicting
fault-allocation scheme. Tex. Civ. Prac. & Rem.Code §
International Trust f/k/a Jonibach
33.002; JCW Elec., Inc. v. Garza, 257 S.W.3d 701, 704–
Management Trust, Defendants.
07 (Tex.2008). The statute applies to federal diversity cases
No. 3:12–cv–1213–M. | Signed March 10, 2014. under the Erie Doctrine, as it is state substantive law that
does not conflict with Rule 14 of the Federal Rules of
Attorneys and Law Firms Civil Procedure, the closest federal procedural counterpart.
Nationwide Lloyds Ins. Co. v. Norcold, Inc., Nos. 09–0113 &
M. Ross Cunningham, Elizabeth Mitchell Cunningham, Rose 09–0114, 2009 WL 3381523, at *2 n. 1 (W.D.Tex. Oct.19,
Walker LLP, Dallas, TX, for Plaintiffs. 2009); Harris Constr. Co. v. GG–Bridgeland, LP, No. 07–
3468, 2009 WL 2486030, at *1 n. 1 (S.D.Tex. Aug.10, 2009).
Tarush R. Anand, Brown Sims, Houston, TX, for Defendants.
Chapter 33 provides that “[a] defendant may seek to designate
a person as a responsible third party by filing a motion
MEMORANDUM OPINION & ORDER for leave to designate that person as a responsible third
party.”Tex. Civ. Prac. & Rem.Code § 33.004(a). Under
BARBARA M.G. LYNN, District Judge.
Chapter 33, a defendant may liberally designate responsible
*1 Before the Court is the Motion of Defendants Bumbo third parties, including parties not subject to the court's
(Pty.) Ltd. and Bumbo International Trust (collectively jurisdiction, unknown parties, and parties immune from
“Bumbo”) for Leave to Designate Waikiki Hernandez a suit. Id. § 33.004(j); In re Unitec Elevator Servs. Co.,
Responsible Third Party with respect to the claims of the 178 S.W.3d 53, 58 n. 5 (Tex.App.-Houston [1st Dist.]
minor Plaintiff, C.H. [Docket Entry # 42]. For the reasons 2005, no pet.). If the court provides leave to designate a
stated below, the Motion is GRANTED. responsible third party, and there is evidence sufficient to
submit a jury question regarding the party's conduct, the
trier of fact determines the percentage of responsibility “by
any combination” of claimants, defendants, settling persons,
I. BACKGROUND
and designated responsible third parties. Tex. Civ. Prac. &
In this products liability action, Defendants have moved Rem.Code § 33.003; Dhaliwal v. Vanguard Pharm. Mach.,
under Section 33.004 of the Texas Civil Practice and Inc., No. 08–2452, 2010 WL 231755, at *1 (S.D.Tex. Jan.20,
Remedies Code (“CPRC”) for leave to designate Waikiki 2010).
Hernandez as a responsible third party with respect to the
claims of her minor son and Plaintiff, C.H. Defendants claim *2 Once a defendant has moved for leave to designate a
that Mrs. Hernandez's use of the Bumbo Seat on a raised responsible third party, a plaintiff may object in a timely
surface was an improper use of the product, and contrary fashion. Tex. Civ. Prac. & Rem.Code § 33.004(f). Once
to the warnings that accompanied the product. Defendants the plaintiff objects, the court must grant leave to designate
seek to designate Mrs. Hernandez as a responsible third party the person as a responsible third party “unless the objecting
so that the jury may determine whether, and to what extent, party establishes: (1) the defendant did not plead sufficient
she shares in the responsibility for C.H.'s fall and injuries. In facts concerning the alleged responsibility of the person to
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Hernandez v. Bumbo (Pty.) Ltd., Slip Copy (2014)
2014 WL 924238, Prod.Liab.Rep. (CCH) P 19,346
satisfy the pleading requirement of the Texas Rules of Civil Defendants' Motion was filed on Monday, November 25,
Procedure; and (2) after having been granted leave to replead, 2013, the Motion would be timely even if it were limited to
the defendant [still] failed to plead sufficient facts.”Id. § Mrs. Hernandez's bystander claim.
33.004(g).
B. Mrs. Hernandez's Designation as a Responsible Third
Party Is Not Precluded by the Doctrine of Parental
III. ANALYSIS Immunity.
Plaintiffs also allege that the doctrine of parental immunity
A. Defendants' Motion Is Not Untimely Under Section
prohibits the designation of Mrs. Hernandez as a responsible
33.004(d) of the CPRC
third party to the claims of C.H. under Chapter 33 of
Plaintiffs maintain that the statute of limitations on Mrs.
the CPRC. Although Plaintiffs are correct that the parental
Hernandez's individual bystander cause of action expired
immunity doctrine applies generally under Texas law,
on November 24, 2013, and argue that Defendants' motion,
Plaintiffs' cited authority does not concern parental immunity
which was filed on November 25, 2013, is therefore time-
in the context of responsible third party designations made
barred under Section 33.004(d). The full text of Section
after the 2003 amendments to Chapter 33.
33.004(d) states:
A defendant may not designate a *3 Previously, Chapter 33 required that the person
person as a responsible third party with designated be someone who could be held liable—i.e.,
respect to a claimant's cause of action someone not immune from suit by the plaintiff.Fisher v.
after the applicable limitations period Halliburton, Nos. 05–1731 & 06–1971, 2009 WL 1098457,
on the cause of action has expired at *4 (S.D.Tex. Apr.23, 2009), rev'd on other grounds,667
with respect to the responsible third F.3d 602, 621–22 (5th Cir.2012). However, in 2003, the
party if the defendant has failed to Texas Legislature “significantly liberalized who could be
comply with its obligations, if any, to designated as a responsible third party,” and since then, the
timely disclose that the person may statute has allowed defendants to designate “parties [who
be designated as a responsible third are] not subject to the court's jurisdiction, immune from
party under the Texas Rules of Civil suit or who are unknown.”Nationwide Lloyds, 2009 WL
Procedure. 3381523, at *2 (quotation omitted) (emphasis added); see
also Galbraith Eng'g Consultants, Inc. v. Pochucha, 290
Id. § 33.004(d) (emphasis added). S.W.3d 863, 868 n. 6 (Tex.2009) (“The 2003 amendments
substantially broadened the meaning of the term ‘responsible
Plaintiffs, as an initial matter, have not alleged that third party’ ... regardless of whether ... there is some other
Defendants have failed to comply with any obligations to impediment to the imposition of liability on them, such as a
“disclose” that Mrs. Hernandez may be designated as a statutory immunity.”) (quoting 19 Dorsaneo, Texas Litigation
responsible third party. Furthermore, the relevant limitations Guide § 291.03[2][b][i] ).
period in Section 33.004(d) is specific to the “claimant's cause
of action.” Id. Here, Defendants' motion is limited to the Under Chapter 33 as it now exists, traditional immunity
claims of Mrs. Hernandez's minor son and Plaintiff, C.H, defenses under Texas law, including parental immunity, do
and does not concern Mrs. Hernandez's individual bystander not prevent responsible third party designations. See Fisher
claim. Plaintiffs do not allege that the statute of limitations v. Halliburton, 667 F.3d 602, 621–22 (5th Cir.2012) (“Even
for C.H.'s claims has expired. parties ‘who ... are immune from liability to the claimant’ can
be designated responsible third parties under the statute.”); In
However, even if Mrs. Hernandez's bystander claim were re Unitec, 178 S.W.3d at 58 n. 5 (“a responsible third party
relevant to the analysis, Defendants' motion would still be may include persons ... who are immune from liability to the
timely, because November 24, 2013 was a Sunday. The claimant”); David W. Holman, Responsible Third Parties,
CPRC provides that “[i]f the last day of a limitations period 46 S. Tex. L.Rev. 869, 885 (2005) (noting that a “claimant's
under any statute of limitations falls on a Saturday, Sunday, parents whom the claimant cannot sue because of parental
or holiday, the period for filing suit is extended to include immunity” may now be submitted as a responsible third
the next day....”Tex. Civ. Prac. & Rem.Code § 16.072. Since party after the 2003 amendments). Therefore, the doctrine
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Hernandez v. Bumbo (Pty.) Ltd., Slip Copy (2014)
2014 WL 924238, Prod.Liab.Rep. (CCH) P 19,346
of parental immunity does not preclude Mrs. Hernandez's damage. The court shall grant the
designation as a responsible third party under Chapter 33 of motion to strike unless a defendant
the CPRC. produces sufficient evidence to raise
a genuine issue of fact regarding the
designated person's responsibility for
C. Despite Being A Party to the Case, Mrs. Hernandez the claimant's injury or damage.
May Be Designated as a Responsible Third Party with
Respect to the Claims of the Minor, C.H.
Id. at 262.The appellate court emphasized that this provision
Plaintiffs allege that because Mrs. Hernandez is already a
lacks any mechanism for a responsible third party to challenge
party to the lawsuit, Defendants cannot designate her as a
its designation. Flack, 334 S.W.3d at 262. The appellate
responsible third party. Defendants assert that while Mrs.
court held that Langley & Banack could not strike itself
Hernandez is a party to this lawsuit through her individual
as a responsible third party because under Chapter 33, the
bystander claim, she is not a party to the claims of the minor
only entity that could possibly respond to such a motion
Plaintiff C.H., for which Defendants seek to designate her a
is “a defendant produc[ing] sufficient evidence” as to the
responsible third party, because she is merely bringing those
designated person's responsibility. Id. The court reasoned
claims as the next friend and guardian of C.H. Nevertheless,
that with Hanke, the defendant who designated Langley &
Chapter 33 still classifies Mrs. Hernandez as a “claimant”
Banack, dismissed from the case, “[i]t would be illogical
with respect to C.H.'s claims, because its definition of
to assume Langley & Banack, as a defendant, would
“claimant” encompasses both “the person who was injured”
raise an issue against” its own motion and that “such an
and “any person who is seeking ... recovery of damages for
interpretation would permit defendants to re-litigate their
the injury ... of that person.”Tex. Civ. Prac. & Rem.Code §
designation of [responsible third parties]—which the statute
33.011(1). There is, however, little authority as to whether a
does not permit.”Id. at 262.Here, however, Defendants are
claimant, particularly a guardian bringing a claim on behalf of
not attempting to contest designation of them as responsible
a minor plaintiff, may nonetheless be designated a responsible
third parties. Instead, they are attempting to designate Mrs.
third party.
Hernandez as a responsible third party, and she would not,
as Langley & Banack were, be placed on both sides of a
*4 Plaintiffs rely on Flack v. Hanke, 334 S.W.3d 251,
single motion in contravention of the statute. Therefore, the
254 (Tex.App.-San Antonio 2010, pet. denied). In Flack,
concerns expressed in Flack are not at issue here.
defendant Hanke designated two law firms-Langley &
Banack and Cox Smith-as responsible third parties under
The parties also each cite to unpublished orders in support of
Chapter 33. Id. at 255.Shortly thereafter, plaintiff Flack and
their positions. Plaintiffs cite to an order in Ferrell v. Bumbo
defendant Hanke jointly moved to add the two law firms
(Pty.) Ltd., in which the court denied a similar motion to
as defendants. Id. After granting that motion, the trial court
designate the parents of a minor plaintiff as responsible third
signed an agreed order dismissing Hanke, leaving the two
parties on the basis that Chapter 33 “clearly distinguishes
law firms as the only remaining defendants in the case.
between ‘claimants' and ‘responsible third part[ies]’ ” and that
Id. Langley & Banack then moved to strike its previous
plaintiffs were “first parties, having brought the case in the
designation as a responsible third party by Hanke. Id. The trial
first place.”No. A–11–CA–467–SS (W.D.Tex. Feb. 21.2012)
court granted the motion, but the appellate court overturned
(quoting Tex. Civ. Prac. & Rem.Code. §§ 33.004(a)(1), (4)).
this decision on the grounds that allowing Langley & Banack,
Defendants respond that in a similar case, Blythe v. Bumbo
which was then a defendant, to strike the prior designation
Int'l Trust, No. 6:12–CV–00036 (S.D.Tex. Nov. 5, 2013), the
of it as a responsible third party, would contradict the plain
court granted the defendants' motion to designate the minor
meaning of Section 33.004(l ):
plaintiff's mother as a responsible third party, despite the fact
After adequate time for discovery, that she was a plaintiff in the case. 1 Defendants also note two
a party may move to strike the other instances in which federal courts in Texas have granted
designation of a responsible third motions to designate parents bringing claims on behalf of
party on the ground that there minor children as responsible third parties, even though the
is no evidence that the designated parents were also asserting claims individually; however,
person is responsible for any portion these motions were unopposed. See Stanley v. Target Corp.,
of the claimant's alleged injury or
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Hernandez v. Bumbo (Pty.) Ltd., Slip Copy (2014)
2014 WL 924238, Prod.Liab.Rep. (CCH) P 19,346
would preclude Defendants from asserting any claim for
No. H–07–03680 (S.D. Tex. June 3, 2008); Mix v. Target
contribution against her, thereby making a claim by
Corp., No. 3:09–cv00382–PRM (W.D.Tex. Aug. 2, 2010).
Defendants against her legally untenable. See Salinas v.
Kristensen, No. 13–08–00110–CV, 2009 WL 4263107, at
*5 The differences between the pre- and post–2003
*2 (Tex.App.-Corpus Christi 2009, no pet.)(“[W]here the
amendment versions of the CPRC are instructive in deciding
parental immunity doctrine bars legal action by a child against
this issue. Before 2003, the CPRC restricted designations of
his parents, that child's recovery from other defendants is not
responsible parties to persons “to whom all of the following
reduced by his parents' percentage of negligence.”) (quotation
apply: (1) the court in which the action was filed could
omitted). Since Mrs. Hernandez's assertion of parental
exercise jurisdiction over the person; (2) the person could
immunity would prevent a jury from considering the extent of
have been, but was not, sued by the claimant; and (3) the
her liability in the contributory negligence context, allowing
person is or may be liable to the plaintiff for all or part
Mrs. Hernandez to be designated as a responsible third party
of the damages claimed against the named defendant or
would not be “superfluous,” as Plaintiffs claim. Rather, it
defendants.”In re Unitec, 178 S.W.3d at 58 n. 5. In its
would facilitate the goals behind the 2003 amendments to
current form, however, the CPRC lacks such restrictions and
the CPRC, by allowing pursuit of the only mechanism by
explicitly defines a responsible third party as “any person”
which such alleged fault could be considered. See Galbraith,
alleged to have caused or contributed to harm. Tex. Civ. Prac.
290 S.W.3d at 868 n. 6 (concluding that “[t]he thrust of the
& Rem.Code. §§ 33.004(a), 33.011(6).
statute is that the jury should allocate responsibility among
all persons who are responsible”) (emphasis added) (quoting
The purpose of the 2003 amendments to the requirements
19 Dorsaneo, Texas Litigation Guide § 291.03[2][b][i] ).
for designating responsible third parties was to liberalize
who may be so designated, such that the jury may be
*6 In Ferrell, the parents of the minor plaintiff were also
permitted to consider the extent to which each involved
plaintiffs and were not asserting parental immunity, and the
entity is at fault, regardless of the extent to which the
court there underscored the fact that the defendants' motion to
plaintiff could actually recover against such an entity. Fisher
designate was redundant because the trier of fact was already
v. Halliburton, 2009 WL 1098457, at *3 (describing “the
required to consider the degree of responsibility attributed
legislature's expansive intentions” with regard to Chapter
to the parents. No. A–11–CA–467–SS (W.D.Tex. Feb. 21,
33); Galbraith, 290 S.W.3d at 868 n. 6 (noting that while
2012). In contrast, in this case if the Court were to deny
the 1995 proportionate responsibility legislation contained
Defendants' Motion, the trier of fact will have no other means
several limitations on responsible third party designations, the
of apportioning the alleged fault of Mrs. Hernandez for C.H.'s
2003 amendments “substantially broadened” the meaning of
injuries, thereby frustrating the goals of the 2003 amendments
responsible third parties to eliminate those restrictions and
to the CPRC.
to allow the jury to allocate responsibility among all persons
potentially responsible); Holman, supra, at 884 (describing
Therefore, because (1) Defendants' motion was timely; (2)
the new rule as a “veritable free-for-all, with submission of ‘...
Mrs. Hernandez's designation is not precluded by parental
unidentified defendants, phantom vehicles, subcontractors ...
immunity; and (3) her designation as a responsible third party
whose names can't be remembered,’ and so forth”) (quoting
would be consistent with the aims of the 2003 amendments
Tort Reform of 2003: Hearings on Tex. H.B. 4 Before the
to the CPRC, the Court GRANTS Defendants' motion and
Senate Comm. on State Affairs, 78th Leg., R.S. (Apr. 10,
designates Waikiki Hernandez as a responsible third party.
2003), reprinted in 2 Legislative History of Texas H.S. 4: The
Medical Malpractice & Tort Reform Act of 2003, at 1304
SO ORDERED.
(2003)).
Accordingly, in furtherance of this goal, courts should permit
All Citations
the designation of responsible third parties where those
parties' alleged fault could not otherwise be considered. Slip Copy, 2014 WL 924238, Prod.Liab.Rep. (CCH) P 19,346
Here, Mrs. Hernandez's assertion of parental immunity
Footnotes
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Hernandez v. Bumbo (Pty.) Ltd., Slip Copy (2014)
2014 WL 924238, Prod.Liab.Rep. (CCH) P 19,346
1 The court in Blythe apparently did not sign an order, but instead, ruled on the record, and no transcript has been furnished
to the Court. However, Mrs. Hernandez's counsel also represented the plaintiffs in Blythe, and Plaintiffs do not dispute
Defendants' account of the ruling.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
BB
Hines v. Commission for Lawyer Discipline, 28 S.W.3d 697 (2000)
pursuant to amended summary judgment rule.
Vernon's Ann.Texas Rules Civ.Proc., Rule 166a
28 S.W.3d 697
comment.
Court of Appeals of Texas,
Corpus Christi. 12 Cases that cite this headnote
Zerrie L. HINES, Appellant,
v. [3] Appeal and Error
THE COMMISSION FOR Verdict
LAWYER DISCIPLINE, Appellee. In reviewing the legal sufficiency of the
evidence, appellate court must consider all of
No. 13–99–233–CV. | Aug. 17, 2000. the record evidence in a light most favorable
to the party in whose favor the verdict has
Commission for Lawyer Discipline initiated disciplinary
been rendered, and indulge in that party's favor
action against attorney for alleged violations of rules of
every reasonable inference deducible from the
professional conduct in representation of client in child
evidence.
support enforcement proceeding. The 127th District Court,
Harris County, Dean R. Keith, J., entered judgment against 7 Cases that cite this headnote
attorney. On appeal, the Court of Appeals, Hinojosa, J.,
held that: (1) appellate court did not have jurisdiction to
[4] Appeal and Error
review trial court's denial of attorney's no evidence motion
Total Failure of Proof
for summary judgment, and (2) evidence was sufficient to
find that attorney failed to keep client reasonably informed Legal sufficiency point must and may only be
about status of her case, failed to explain matter to extent sustained by the appellate court when the record
reasonably necessary to permit client to make informed discloses: (1) a complete absence of evidence
decisions regarding representation of her case, and failed to of a vital fact; (2) the court is barred by rules
take steps to extent reasonably practicable to protect client's of law or of evidence from giving weight to
interests upon termination of attorney's representation. the only evidence offered to prove a vital fact;
(3) the evidence offered to prove a vital fact
Affirmed. is no more than a mere scintilla; and (4) the
evidence established conclusively the opposite
of the vital fact; if there is more than a scintilla
of evidence to support the finding, the legal
West Headnotes (10) sufficiency challenge fails.
23 Cases that cite this headnote
[1] Appeal and Error
Determining Action and Preventing
Judgment [5] Evidence
Generally, appellate courts do not have Sufficiency to Support Verdict or Finding
jurisdiction to hear denied motions for summary When the evidence offered to prove a vital fact
judgment on appeal. is so weak as to do no more than create a
mere surmise or suspicion of its existence, the
11 Cases that cite this headnote evidence is not more than a scintilla and, in legal
effect, is no evidence.
[2] Appeal and Error
13 Cases that cite this headnote
Determining Action and Preventing
Judgment
Appellate court did not have jurisdiction [6] Evidence
to review trial court's denial of attorney's Sufficiency to Support Verdict or Finding
no evidence motion for summary judgment
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Hines v. Commission for Lawyer Discipline, 28 S.W.3d 697 (2000)
Test for the application of no evidence/scintilla
rule is that if reasonable minds cannot differ [10] Attorney and Client
from the conclusion, then the evidence offered Weight and Sufficiency
to support the existence of a vital fact lacks Evidence was sufficient to find that attorney
probative force, and it will be held to be the legal failed to keep client reasonably informed
equivalent of no evidence. about status of her case, failed to explain
matter to extent reasonably necessary to permit
10 Cases that cite this headnote client to make informed decisions regarding
representation of her case, and failed to take
[7] Appeal and Error steps to extent reasonably practicable to protect
On Conflicting Evidence client's interests upon termination of attorney's
representation, though there was no written
Appeal and Error
contract between attorney and client, and he was
Credibility and Number of Witnesses
never paid for appellate representation, given
Appeal and Error that attorney did accept money to represent
Clearly, Plainly, or Palpably Contrary client, and failed to file necessary amendment
In reviewing the factual sufficiency of the to client's pleadings to keep case from being
evidence, appellate court will consider, weigh dismissed, failed to inform her of her options
and examine all of the evidence which supports after adverse ruling dismissed case so that she
or undermines the finding of the trier of fact, could make an informed decision, and thereafter
keeping in mind that it is the fact finder's role, failed to promptly comply with reasonable
not appellate court's, to judge the credibility of requests from client for information after he
the evidence, to assign the weight to be given to stopped representing her. V.T.C.A., Government
testimony, and to resolve inconsistencies within Code Title 2, Subtitle G App. A–1, Disciplinary
or conflicts among the witnesses' testimony, and Procedure Rule 1.03, 1.03(b), 1.15(d).
court will then set aside the verdict only when it
finds that the evidence standing alone is too weak 1 Cases that cite this headnote
to support the finding or that the finding is so
against the overwhelming weight of the evidence
that it is manifestly unjust and clearly wrong.
Attorneys and Law Firms
Cases that cite this headnote
*699 Joseph Rutherford Willie, Houston, for appellant.
[8] Appeal and Error Luis Andres Paredes, Office of General Counsel, State Bar of
Implied Findings in General Texas, Houston, Linda Acevedo, Asst. Disciplinary Counsel,
It is implied that the trial court made all the Austin, for appellee.
necessary findings to support its judgment.
Before Justices HINOJOSA, CHAVEZ, and RODRIGUEZ.
Cases that cite this headnote
[9] Appeal and Error OPINION
Reasons for Decision
Opinion by Justice HINOJOSA.
Judgment of the trial court must be affirmed if it
can be upheld on any legal theory supported by This is an attorney discipline case. Appellee, the Commission
the evidence. for Lawyer Discipline (the “Commission”), initiated a
disciplinary action against appellant, Zerrie L. Hines, and
1 Cases that cite this headnote the case was tried in the 127th District Court of Harris
County. The trial court: (1) found that appellant had violated
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Hines v. Commission for Lawyer Discipline, 28 S.W.3d 697 (2000)
Texas Disciplinary Rules of Professional Conduct 1.03(a), 1
1.03(b), 2 and 1.15(d), 3 (2) ordered that he be given a 1. Summary Judgment
public reprimand, and (3) ordered him to pay $1,000 in
attorney's fees. By two issues, appellant contends: (1) the [1] In his first issue, appellant complains the trial court
trial court erred in denying his “no evidence” motion for erred in denying his no evidence motion for summary
summary judgment, and (2) the evidence is factually and judgment. The general rule is that appellate courts do not have
legally insufficient to support the trial court's judgment. We jurisdiction to hear denied motions for summary judgment
affirm. on appeal. Ackermann v. Vordenbaum, 403 S.W.2d 362, 365
(Tex.1966); Highlands MGMT. Co. v. First Interstate Bank of
Appellant agreed to handle a child support enforcement Tex., N.A., 956 S.W.2d 749, 752 (Tex.App.—Houston [14th
hearing for Nancy A. Hennessy when Hennessy's attorney, Dist.] 1997, pet. denied). Appellant contends there should be
Alicia Johnson, moved to Fort Worth. Johnson arranged for an exception to this general rule because the federal courts
appellant to handle the hearing, and Hennessy paid appellant allow review of a denial of a no evidence motion for summary
$500 for his services. Appellant met with Hennessy, her judgment after a trial on the merits, 4 and the Texas no
husband, and her son to discuss the case. At the time the evidence motion for summary judgment was modeled after
hearing was scheduled, Hennessy's ex-husband did not appear the federal rule.
and could not be located, and the hearing was reset. At the
next hearing, appellant continued representing Hennessy. At [2] The Texas Supreme Court order approving the
the conclusion of the hearing, the judge dismissed the case amendment to Rule 166a of the Texas Rules of Civil
because Hennessy's pleadings were not proper. Procedure which authorized the no evidence motion for
summary judgment provides in relevant part:
The record reflects that Hennessy was very upset. Appellant
told Hennessy only that she had a right to appeal. He did The comment appended to these
not *700 file new pleadings. After the hearing, appellant changes, unlike other notes and
failed to maintain contact with Hennessy. Hennessy tried comments in the rules, is intended
many times to contact appellant, but appellant made no effort to inform the construction and
to reply until after Hennessy filed a grievance against him. By application of the rule.
then, it was too late to file an appeal.
Order in Misc. Docket No. 97–9139, dated August 15, 1997,
published in 60 TEX. B.J. 872 (Oct.1997). The comment
The Commission determined that appellant was culpable
appended to the changes states in relevant part:
for his actions, and appellant elected to have the complaint
heard in a district court of Harris County, without a The denial of a [no evidence motion
jury. TEX.R. DISCIPLINARY P. 2.14, reprinted in TEX. for summary judgment under Texas
GOVT.CODE ANN., tit. 2, subtit. G app. A–1 (Vernon Rule of Civil Procedure 166a(i) ]
1998). The Commission filed a disciplinary petition, is no more reviewable by appeal or
TEX.R. DISCIPLINARY P. 3.01, and the supreme court mandamus than denial of a [motion for
appointed Judge Dean R. Keith to hear the case. TEX.R. summary judgment under Texas Rule
DISCIPLINARY P. 3.02. Appellant filed a “no evidence” of Civil Procedure 166a(c) ].
motion for summary judgment under Texas Rule of Civil
Procedure 166a(i), but the trial court denied the motion. After TEX.R. CIV. P. 166a cmt. to 1997 change. Following this
a trial on the merits, the trial court found that appellant had guidance from the supreme court, we conclude we have no
violated Texas Disciplinary Rules of Professional Conduct jurisdiction to review the trial court's denial of appellant's
1.03(a), 1.03(b), and 1.15(d). The trial court entered judgment no evidence motion for summary judgment. We overrule
against appellant, ordered that he be given a public reprimand, appellant's first issue.
and ordered him to pay $1,000 in attorney's fees. This appeal
ensued. TEX.R. DISCIPLINARY P. 3.16.
2. Sufficiency of the Evidence
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Hines v. Commission for Lawyer Discipline, 28 S.W.3d 697 (2000)
In his second issue, appellant contends the evidence is
[8] [9] Appellant did not request findings of fact and
factually and legally insufficient to support the verdict of the
conclusions of law, and none were made by the trial court.
trial court.
In the absence of findings of fact and conclusions of law,
*701 [3] [4] [5] [6] When we review the legalwe must presume that the trial court made all necessary
findings to support its judgment. Worford v. Stamper, 801
sufficiency of the evidence, we must consider all of the
S.W.2d 108, 109 (Tex.1990); In re W.E.R., 669 S.W.2d 716,
record evidence in a light most favorable to the party in
717 (Tex.1984). It is implied that the trial court made all
whose favor the verdict has been rendered, and indulge in
the necessary findings to support its judgment. Roberson v.
that party's favor every reasonable inference deducible from
Robinson, 768 S.W.2d 280, 281 (Tex.1989); Buchanan v.
the evidence. Formosa Plastics v. Presidio Engineers, 960
Byrd, 519 S.W.2d 841, 842 (Tex.1975). The judgment of the
S.W.2d 41, 48 (Tex.1998). A legal sufficiency point must
trial court must be affirmed if it can be upheld on any legal
and may only be sustained when the record discloses: (1) a
theory supported by the evidence. In re W.E.R., 669 S.W.2d
complete absence of evidence of a vital fact; (2) the court
at 717.
is barred by rules of law or of evidence from giving weight
to the only evidence offered to prove a vital fact; (3) the
[10] Appellant argues the evidence shows that: (1) the
evidence offered to prove a vital fact is no more than a mere
only written contract was between Hennessy and Johnson,
scintilla; and (4) the evidence established conclusively the
(2) Hennessy never paid for appellate representation, (3)
opposite of the vital fact. Juliette Fowler Homes, Inc. v. Welch
Johnson remained Hennessy's attorney of record, and (4) the
Assoc., 793 S.W.2d 660, 666 n. 9 (Tex.1990). If there is more
Commission failed to present any evidence of an adverse
than a scintilla of evidence to support the finding, the legal
judgment against Hennessy. However, none of this evidence
sufficiency challenge fails. Stafford v. Stafford, 726 S.W.2d
negates the implied findings by the trial court necessary to
14, 16 (Tex.1987). When the evidence offered to prove a vital
support a violation of rules 1.03(a), 1.03(b), or 1.15(d). See
fact is so weak as to do no more than create a mere surmise
Roberson, 768 S.W.2d at 281.
or suspicion of its existence, the evidence is not more than a
scintilla and, in legal effect, is no evidence. Kindred v. Con/
Appellant accepted money to represent Hennessy. He did
Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983). The test for the
not file the necessary amendment to Hennessy's pleadings
application of this no evidence/scintilla rule is: if reasonable
to keep Hennessy's case from being dismissed. He failed to
minds cannot differ from the conclusion, then the evidence
inform Hennessy of her options after the adverse ruling so that
offered to support the existence of a vital fact lacks probative
she could make an informed decision. He did not promptly
force, and it will be held to be the legal equivalent of no
comply with reasonable *702 requests for information and
evidence. Id.
failed to protect her interests after he stopped representing her.
If appellant believed that his representation had terminated or
[7] When we review the factual sufficiency of the evidence,
that Johnson was going to further advise Hennessy, he could
we consider, weigh and examine all of the evidence which
easily have made that clear to her, either orally or in writing.
supports or undermines the finding of the trier of fact. Plas–
He did neither.
Tex, Inc. v. United States Steel Corp., 772 S.W.2d 442, 445
(Tex.1989). We review the evidence, keeping in mind that it
We hold the evidence is legally and factually sufficient to
is the fact finder's role, not ours, to judge the credibility of
support the trial court's finding that appellant violated Texas
the evidence, to assign the weight to be given to testimony,
Disciplinary Rules of Professional Conduct 1.03(a), 1.03(b),
and to resolve inconsistencies within or conflicts among the
and 1.15(d). We overrule appellant's second issue.
witnesses' testimony. Corpus Christi Teachers Credit Union
v. Hernandez, 814 S.W.2d 195, 197 (Tex.App.—San Antonio
We affirm the judgment of the trial court.
1991, no writ). We then set aside the verdict only when we
find that the evidence standing alone is too weak to support
the finding or that the finding is so against the overwhelming
All Citations
weight of the evidence that it is manifestly unjust and clearly
wrong. Garza, 395 S.W.2d at 823. 28 S.W.3d 697
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Hines v. Commission for Lawyer Discipline, 28 S.W.3d 697 (2000)
Footnotes
1 “A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable
requests for information.” TEX. DISCIPLINARY R. PROF'L CONDUCT 1.03(a), reprinted in TEX. GOVT.CODE ANN .,
tit. 2, subtit. G app. A (Vernon 1998) (TEX. STATE BAR R . art. X, § 9).
2 “A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions
regarding the representation.” TEX. DISCIPLINARY R. PROF'L CONDUCT 1.03(b).
3 “Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's
interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering
papers and property to which the client is entitled and refunding any advance payments of fee that has not been earned.
The lawyer may retain papers relating to the client to the extent permitted by other law only if such retention will not
prejudice the client in the subject matter of the representation.” TEX. DISCIPLINARY R. PROF'L CONDUCT 1.15(d).
4 See e.g. Dickinson v. Auto Center Mfg. Co., 733 F.2d 1092, 1102 (5th Cir.1983) (“Under the final appealability rule, a
party may obtain review of prejudicial adverse interlocutory rulings upon his appeal from adverse final judgment, at which
time the interlocutory rulings (nonreviewable until then) are regarded as merged into the final judgment terminating the
action.”); Kamen v. Kemper Fin. Servs., 908 F.2d 1338, 1341 (7th Cir.1990).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
CC
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
36 Cases that cite this headnote
KeyCite Yellow Flag - Negative Treatment
Distinguished by Barnes v. LPP Mortg., Ltd., Tex.App.-Dallas, July
12, 2011
[2] Judgment
Bar of statute of limitations
44 S.W.3d 562 A party moving for summary judgment on
Supreme Court of Texas. limitations grounds must prove when the cause
of action accrued.
HOLY CROSS CHURCH OF
GOD IN CHRIST, Petitioner, 31 Cases that cite this headnote
v.
Johnny WOLF, Respondent.
[3] Limitation of Actions
No. 00–0250. | Argued Dec. 6, Bills and notes
2000. | Decided April 12, 2001. | If a promissory note or deed of trust secured by
Rehearing Overruled June 21, 2001. real property contains an optional acceleration
clause, default does not ipso facto start the statute
The maker of a promissory note brought action against of limitations running on the note; rather, the
holder for a declaratory judgment that foreclosure sale was action accrues only when the holder actually
void as barred by the statute of limitations. The District exercises its option to accelerate.
Court entered summary judgment in favor of maker. Holder
appealed. The Tyler Court of Appeals reversed and remanded. 51 Cases that cite this headnote
On review, the Supreme Court, Baker, J., held that: (1)
a predecessor of the holder could accelerate the debt by [4] Bills and Notes
a clear and unequivocal notice of intent to accelerate and Maturity on nonpayment of installment of
notice of acceleration without taking affirmative steps toward interest or principal
foreclosure, disapproving Swoboda v. Wilshire Credit Corp.,
Effective acceleration of a debt evidenced
975 S.W.2d 770; Shepler v. Kubena, 563 S.W.2d 382;
by a promissory note requires two clear
National Debenture Corp. v. Smith, 132 S.W.2d 429; (2)
and unequivocal acts: (1) notice of intent to
holder's cause of action accrued, and four-year statute of
accelerate, and (2) notice of acceleration.
limitations began to run, when the predecessor accelerated the
debt; and (3) as a matter of first impression, federal six-year 51 Cases that cite this headnote
statute of limitations for suit by the Federal Deposit Insurance
Corporation (FDIC) did not apply.
[5] Bills and Notes
Reversed and rendered. Maturity on nonpayment of installment of
interest or principal
Even when the holder of a promissory note has
accelerated the note upon default, the holder can
West Headnotes (15) abandon acceleration if the holder continues to
accept payments without exacting any remedies
[1] Appeal and Error available to it upon declared maturity.
Rendering Final Judgment
37 Cases that cite this headnote
When both sides move for summary judgment
and the trial court grants one motion, but denies
the other, the reviewing court should review both [6] Mortgages
sides' summary judgment evidence, determine Time to sue, limitations and laches
all questions presented, and render the judgment Mortgages
that the trial court should have rendered. Time to foreclose
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
Promissory note holder's cause of action accrued,
and four-year statute of limitations began to run, 24 Cases that cite this headnote
when predecessor gave a clear and unequivocal
notice of intent to accelerate and notice [11] Mortgages
of acceleration, even though the predecessor Change in time or mode of payment
took no affirmative steps toward foreclosure.
The holder of a promissory note secured by
V.T.C.A., Civil Practice & Remedies Code §
real property could accelerate the debt without
16.035(b).
taking affirmative steps toward foreclosure;
31 Cases that cite this headnote rather, it could accelerate the debt by a clear
and unequivocal notice of intent to accelerate
and notice of acceleration without following the
[7] Limitation of Actions posting and notice procedures for foreclosure;
Questions for Jury disapproving Swoboda v. Wilshire Credit Corp.,
The issue of when a cause of action accrues is a 975 S.W.2d 770; Shepler v. Kubena, 563 S.W.2d
question of law, not fact. 382; National Debenture Corp. v. Smith, 132
S.W.2d 429. V.T.C.A., Property Code § 51.002.
20 Cases that cite this headnote
37 Cases that cite this headnote
[8] Stipulations
Matters which may be subject of stipulation [12] Banks and Banking
While accrual of a cause of action is a legal Actions
question, whether a holder has accelerated a The federal six-year statute of limitations for suit
promissory note is a fact question to which by the Federal Deposit Insurance Corporation
parties may agree by stipulation. (FDIC) did not apply to the claim by the holder
of promissory note sold by the FDIC, since the
10 Cases that cite this headnote cause of action on the accelerated debt accrued
after the sale; even though the maker was in
[9] Evidence default while the FDIC held the note, it did not
Judicial admissions in general accelerate the debt. Federal Deposit Insurance
Act, § 2[11](d)(14), 12 U.S.C.A. § 1821(d)(14).
A judicial admission that is clear and
unequivocal has conclusive effect and bars the 6 Cases that cite this headnote
admitting party from later disputing the admitted
fact.
[13] Banks and Banking
52 Cases that cite this headnote Actions
The Federal Deposit Insurance Corporation's
[10] Evidence (FDIC) successors do not receive the benefit
Construction of the FDIC's six-year limitations period if the
cause of action does not accrue until after the
Promissory note holder's agreement that
note leaves the FDIC's hands. Federal Deposit
predecessor had accelerated note and that the
Insurance Act, § 2[11](d)(14), 12 U.S.C.A. §
statute of limitations began to run on that
1821(d)(14).
date amounted to a judicial admission of the
acceleration date in a response to a summary 5 Cases that cite this headnote
judgment motion and in a counter-motion for
summary judgment. V.T.C.A., Civil Practice &
Remedies Code § 16.035(b). [14] Banks and Banking
Actions
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
The federal six-year statute of limitations for suit limitations statute barred Wolf's foreclosure of the Church's
by the Federal Deposit Insurance Corporation property. The trial court granted the Church summary
(FDIC) has no significance independent of a judgment on that ground. The court of appeals held that an
claim to which it applies; it attaches only to an optional acceleration clause cannot be effectively exercised
accrued claim, not to a performing promissory without the noteholder's taking specific affirmative steps
note. Federal Deposit Insurance Act, § 2[11](d) towards foreclosure. Because the Church did not present
(14), 12 U.S.C.A. § 1821(d)(14). summary-judgment evidence that Wolf's predecessor had
taken these affirmative steps, the court of appeals reversed
1 Cases that cite this headnote the summary judgment, *565 concluding that the Church
did not carry its burden of proving conclusively when Wolf's
[15] Banks and Banking cause of action accrued. For this reason, the court did not
Powers, functions and dealings in general reach the question of whether the four-year or six-year statute
of limitations applied.
Banks and Banking
Actions
We hold that, absent evidence of abandonment or a contrary
The federal six-year statute of limitations
agreement between the parties, a clear and unequivocal notice
for suit by the Federal Deposit Insurance
of intent to accelerate and a notice of acceleration is enough
Corporation (FDIC) does not attach to the
to conclusively establish acceleration and therefore accrual.
bundle of rights passed to subsequent assignees
Thus, we conclude the Church did conclusively prove when
unless the express terms of the Financial
the Church's note was accelerated, and consequently, when
Institutions Reform, Recovery, and Enforcement
Wolf's cause of action accrued. We also conclude that the
Act (FIRREA) actually trigger the right. Federal
Texas four-year limitations period applies here. We hold
Deposit Insurance Act, § 2[11](d)(14), 12
that the FDIC's six-year limitations period only enures to a
U.S.C.A. § 1821(d)(14).
subsequent noteholder's benefit if a claim accrues on the note
4 Cases that cite this headnote before the FDIC transfers the note. Accordingly, we reverse
the court of appeals' judgment and render judgment for the
Church.
Attorneys and Law Firms
I. BACKGROUND
*564 Susan Lea Hays, Shawn Preston Ricardo, Jeffrey
Michael Goldfarb, Akin Gump Strauss Hauer & Feld, Dallas, In June 1987, Holy Cross Church executed a $140,000,
for petitioner. twenty-year promissory note payable to Wynnewood Bank
and secured by a deed of trust on its South Dallas church
William Bret, III, Given & Bret, Dallas, for respondent. property. Wynnewood Bank failed and Continental Bank
succeeded it. Continental Bank also eventually failed and the
Opinion
Federal Deposit Insurance Corporation (FDIC) became its
Justice BAKER delivered the opinion of the Court. receiver and holder of the Church's note. While the FDIC held
the Church's note, the Church could not make its $1,640.20
We decide two issues in this case: (1) whether a noteholder monthly payment but paid $500 a month to show good
must take affirmative steps towards foreclosure, in addition faith. The FDIC and the Church agreed to settle the note
to serving a debtor with notice of acceleration, to effectively for $75,000. The Church was unable to pay this amount on
accelerate a note secured by real property and thereby trigger the due date. However, even though the Church remained
limitations; and (2) whether the Texas four-year or the federal in default, the FDIC did not accelerate the note. The FDIC
six-year statute of limitation applies to the noteholder's claim then sold the note to Mortgage Investment Trust Corporation
in this case. (MITC).
Holy Cross Church of God in Christ sued Johnny Wolf On July 15, 1994, MITC sent the Church a notice of
seeking a declaratory judgment that the Texas four-year default and intent to accelerate. On August 15, and again
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
on September 8, MITC sent the Church letters indicating question existed about when Wolf's claim accrued. Thus,
it had accelerated the note. Both letters specified dates it held that the trial court erroneously granted the Church's
for nonjudicial foreclosure sales. But MITC never actually motion and reversed and remanded the claims. 49 S.W.3d at
foreclosed and the Church did not resume payments. On ––––, 1999 WL 33256589.
August 1, 1995, MITC sold the note to Great Plains Capital
Corporation. Finally, on February 2, 1998, Great Plains sold
the note to Johnny Wolf.
II. APPLICABLE LAW
On February 23, 1998, Wolf's attorney sent the Church a letter
informing it that Wolf now owned the note and that the note A. SUMMARY JUDGMENT
was in default. On July 29, Wolf's attorney sent another letter —STANDARD OF REVIEW
stating that the “maturity of the aforesaid note has occurred
[1] [2] A party moving for summary judgment must
and full payment of the balance of same is now due and
conclusively prove all elements of its cause of action or
owing.” On September 11, Wolf's attorney sent a notice of
defense as a matter of law. TEX.R. CIV. P. 166a(c); Rhone–
foreclosure on the promissory note explaining a foreclosure
Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999);
sale was scheduled for October 6. On the sale date, a trial court
Walker v. Harris, 924 S.W.2d 375, 377 (Tex.1996). When
granted the Church a temporary injunction to prevent the sale.
both sides move for summary judgment and the trial court
Nevertheless, the trustee held the sale and Wolf purchased the
property. grants one motion but denies the other, the reviewing court
should review both sides' summary judgment evidence,
determine all questions presented, and render the judgment
The Church sued Wolf for a declaratory judgment that the
that the trial court should have rendered. FM Props.
foreclosure sale was void because limitations barred Wolf's
Operating Co. v. City of Austin, 22 S.W.3d 868, 872
foreclosure. The Church also pleaded wrongful foreclosure,
(Tex.2000). A party moving for summary judgment on
unjust enrichment, and constructive trust but later nonsuited
limitations grounds must prove when the cause of action
these claims without prejudice. The parties then agreed to a
accrued. Burns v. Thomas, 786 S.W.2d 266, 267 (Tex.1990).
temporary injunction. Subsequently, the Church moved for
summary judgment, arguing that MITC's August 15, 1994,
demand and acceleration triggered the limitations period on
Wolf's claim. Thus, the Church argued, limitations had run on B. ACCRUAL
August 15, 1998, almost two months before the foreclosure
sale. By statute, if a series of notes or obligations or a note or
obligation payable in installments is secured by a lien on real
*566 In response, Wolf agreed that limitations began to run property, limitations does not begin to run until the maturity
on August 15, 1994. However, he argued that because the date of the last note, obligation, or installment. TEX. CIV.
FDIC had once owned the note, the six-year limitations period PRAC. & REM.CODE § 16.035(e); Swedlund v. Banner,
afforded federal receivers applied rather than the Texas four- 970 S.W.2d 107, 111 (Tex.App.—Corpus Christi 1998, pet.
year period. He filed a cross-motion for summary judgment, denied). Section 16.035 modifies the general rule that a claim
contending that limitations did not bar the foreclosure because accrues and limitations begins to run on each installment
the federal statute applied. He also argued the Church lacked when it becomes due. See Palmer v. Palmer, 831 S.W.2d 479,
standing to sue, but he abandons that argument here. See 481–82 (Tex.App.—Texarkana 1992, no writ).
TEX.R.APP. P. 74(f). The trial court granted the Church's
summary-judgment motion on limitations grounds, declared [3] [4] [5] If a note or deed of trust secured by real
the Church's obligations under the deed and note time-barred, property contains an optional acceleration clause, default does
declared the sale void, and ordered the Church vested with fee not ipso facto start limitations running on the note. Rather,
simple title to the property. the action accrues only when the holder actually exercises
its option to accelerate. Hammann v. H.J. McMullen & Co.,
Wolf appealed, arguing that the six-year federal limitations 122 Tex. 476, 62 S.W.2d 59, 61 (1933); Curtis v. Speck,
period governed his claim. The court of appeals did not reach 130 S.W.2d 348, 351 (Tex.Civ.App.—Galveston 1939, writ
the limitations issue. Instead, the court concluded that a fact ref'd). Effective acceleration requires two acts: (1) notice
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
of intent to accelerate, and (2) notice of acceleration. See of limitations under state law. 12 U.S.C. § 1821(d)(14)(A)
Shumway v. Horizon Credit Corp., 801 S.W.2d 890, 892 (i). While FIRREA's express terms only grant this six-year
(Tex.1991); Ogden v. Gibraltar Sav. Ass'n, 640 S.W.2d limitations period to the FDIC, we have held that the FDIC's
232, 233 (Tex.1982). Both notices must be “clear and successors in interest are entitled to the benefit of this longer
unequivocal.” Shumway, 801 S.W.2d at 893. Even when a period when the claim had already accrued before the FDIC
noteholder has accelerated a note upon default, the holder received the note. Jackson v. Thweatt, 883 S.W.2d 171, 174
can abandon acceleration if the holder continues to accept (Tex.1994).
payments *567 without exacting any remedies available to
it upon declared maturity. City Nat'l Bank v. Pope, 260 S.W.
903, 905 (Tex.Civ.App.—San Antonio 1924, no writ); see
III. ANALYSIS
also San Antonio Real Estate, Bldg. & Loan Ass'n v. Stewart,
94 Tex. 441, 61 S.W. 386, 388 (1901) (explaining that the The court of appeals did not reach the limitations issue
parties' agreement or actions can “have the effect of obviating because it concluded that the Church had not conclusively
the default and restoring the contract to its original condition established the date Wolf's claim accrued. Accordingly, we
as if it had not been broken”); Denbina v. City of Hurst, consider that question first.
516 S.W.2d 460, 463 (Tex.Civ.App.—Tyler 1974, no writ)
(explaining that an option to accelerate may be withdrawn
or revoked after it is exercised by the noteholder, effectively
restoring the note's original maturity date). A. ACCRUAL
[6] Under its terms, the Church's note would mature in June
Federal law provides a different scheme for determining 2007, the month the last installment was due. See TEX. CIV.
accrual of foreclosure actions brought by the FDIC. The PRAC. & REM.CODE § 16.035(e). The Church claims, and
Financial Institutions Reform, Recovery, and Enforcement Wolf agreed, that MITC's August 15, 1994, letter accelerated
Act of 1989 (FIRREA) provides that limitations on FDIC this maturity date. The parties also agreed that, upon this
claims begins to run on the later of (1) the date the FDIC is acceleration, any cause of action for unpaid amounts accrued,
appointed receiver, or (2) the date the cause of action accrues. thereby triggering limitations under both state and federal
12 U.S.C. § 1821(d)(14)(B). law.
[7] The court of appeals correctly noted that when a cause
C. LIMITATIONS of action accrues is a question of law, not fact. See Moreno v.
Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex.1990). It then
Under state law, a sale of real property under a power of sale concluded that the parties' agreement about the acceleration
in a mortgage or deed of trust that creates a real-property and accrual date was an impermissible attempt *568 to
lien must be made not later than four years after the day the stipulate to a legal question. The court explained that it
cause of action accrues. TEX. CIV. PRAC. & REM.CODE § was incumbent upon the Church to prove the actual accrual
16.035(b); McLemore v. Pacific Southwest Bank, 872 S.W.2d date rather than rely on the parties' agreement. Because it
286, 292 (Tex.App.—Texarkana 1994, writ dism'd by agr.). determined that the Church had not carried this burden, the
When this four-year period expires, the real-property lien court of appeals reversed the trial court's summary judgment
and the power of sale to enforce the lien become void. for the Church and remanded the case for further proceedings.
TEX. CIV. PRAC. & REM.CODE § 16.035(d). This four- 49 S.W.3d at ––––, 1999 WL 33256589.
year limitations period can be suspended by filing a written
agreement in the county clerk's office where the real property The Church argues that the court of appeals violated Rule
is located. TEX. CIV. PRAC. & REM.CODE § 16.036. 166a(c) by reversing summary judgment on grounds other
than those presented in the trial court. See TEX.R. CIV.
Federal law provides a different limitations period for FDIC P. 166a(c); McConnell v. Southside Indep. Sch. Dist., 858
foreclosure actions. FIRREA provides that when the FDIC S.W.2d 337, 341 (Tex.1993). The Church also argues that
brings a contract action as a conservator or receiver, the the court of appeals erred in holding that it did not present
statute of limitations is the longer of (1) the 6 year period summary-judgment evidence conclusively establishing that
beginning on the date the claim accrues, or (2) the statute
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Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
the note was accelerated on August 15, 1994, and that included: (1) a copy of the deed of trust containing optional
limitations began running on that date. acceleration and power of sale clauses in favor of the original
mortgagee and its successors and assigns; (2) documents
Wolf responds by arguing that the trial court's recognition tracing the note's ownership from Wynnewood bank to each
during the summary-judgment hearing that “everybody seems *569 successor, including MITC and Wolf; and (3) a July
to agree” on the accrual date establishes that the issue was 15, 1994, notice of intent to accelerate and an August 15,
before the trial court and thus the court of appeals could 1994, notice of acceleration signed by MITC's attorneys.
review it. He also contends that the court of appeals correctly
held that the Church did not establish the accrual date, and The court of appeals held that this evidence was not enough
that, in fact, the record shows that MITC's attempted August to establish effective acceleration, or, in the alternative, that
1994 acceleration was ineffective or abandoned. MITC had abandoned acceleration:
[8] We disagree with the court of appeals' analysis and hold MITC was required to serve the
that the parties' agreement about the acceleration date and Church with written notice of the sale,
the summary-judgment evidence each provide independent post written notice at the courthouse
bases for the trial court to find the Church had conclusively door for twenty-one days, and file a
established an accrual date. While accrual is a legal question, copy of the notice with the county
whether a holder has accelerated a note is a fact question clerk. There is no evidence in the
to which parties may, and in this case did, agree. See, e.g., record that MITC posted the property
McLemore, 872 S.W.2d at 291 (treating whether “note was for sale or filed the notice with
accelerated, and when” as fact question); Texas Airfinance the county clerk. There is nothing
Corp. v. Lesikar, 777 S.W.2d 559, 563 (Tex.App.—Houston in the record stating that MITC
[14th Dist.] 1989, no writ) (treating whether promissory note actually conducted a foreclosure sale.
had been accelerated as fact question). Accordingly, based on the record
before us, it appears that, although
[9] [10] “Assertions of fact, not plead in the alternative, the Church was in default and MITC
in the live pleadings of a party are regarded as formal served the Church with notice of
judicial admissions.” Houston First Am. Sav. v. Musick, a sale, MITC did not comply with
650 S.W.2d 764, 767 (Tex.1983). A judicial admission that the contractual or statutory conditions
is clear and unequivocal has conclusive effect and bars necessary to exercise its option
the admitting party from later disputing the admitted fact. to accelerate the note as declared.
Gevinson v. Manhattan Constr. Co., 449 S.W.2d 458, 467 Apparently, MITC abandoned the note
(Tex.1969). Here, Wolf's summary-judgment response and acceleration.
counter-motion for summary judgment states: “Defendant
49 S.W.3d at ––––, 1999 WL 33256589 (citations omitted).
accepts Plaintiff's argument that the note was accelerated by
We disagree.
the [sic] MITC on August 15, 1994, and that the statute of
limitations began to run on that date.” And at the summary-
judgment hearing and in his court of appeals' brief Wolf
consistently agreed that MITC accelerated the Church's note 1. ACCELERATION
on August 15, 1994. Wolf's agreement amounted to a judicial
In holding that MITC's acceleration was ineffective, the court
admission of the acceleration date. Once Wolf's judicial
of appeals concluded that an optional acceleration clause
admission established the acceleration date, the trial court
cannot be exercised without actually taking steps towards
could apply the law to conclude as a matter of law that
foreclosing on the property. It relied on section 51.002 of
accrual occurred upon this acceleration and that limitations
the Texas Property Code and Swoboda v. Wilshire Credit
then began running.
Corp., 975 S.W.2d 770 (Tex.App.—Corpus Christi 1998, pet.
denied).
[11] And, even without Wolf's admission, the summary-
judgment evidence conclusively establishes an August 15,
Section 51.002 establishes the procedures for conducting a
1994, accrual. The Church's summary-judgment evidence
foreclosure sale. The court of appeals held that MITC could
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Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
not have accelerated the Church's note without following such action. To hold, as the court of appeals did here, that
section 51.002's posting and notice procedures. In other acceleration does not occur and thus an action does not accrue
words, the court held that the cause of action on the until a foreclosure posting or sale takes place would, in
Church's note could not have accrued absent compliance with essence, mean the foreclosure posting or sale would be the
section 51.002. However, section 51.002 has nothing to do triggering event bringing about the right to hold a foreclosure
with accrual or limitations; it only governs the procedures sale. This result is nonsensical.
noteholders must follow if they choose to exercise their power
of sale. Rather, section 16.035 of the Texas Civil Practice
and Remedies Code governs accrual, and it provides that a
2. ABANDONMENT
cause of action accrues and limitations begins to run from an
installment note's maturity date. The court of appeals alternatively held that MITC abandoned
its attempted acceleration. However, as the court of appeals
Swoboda holds that: noted, it “is undisputed that the Church did not pay the
balance or any portion thereof, or resume making regular
Exercise of the right of acceleration
payments or in any way change its position.” 49 S.W.3d at
requires the mortgagee to make a clear,
––––, 1999 WL 33256589. And Wolf has not argued that
positive, and unequivocal declaration
MITC or its successors had otherwise expressed an intent to
in some manner of the exercise
abandon acceleration. Thus, abandonment is not implicated
thereof, followed by affirmative
in this case.
action towards enforcing the declared
intention.... [A] declaration alone
Both MITC's notice of intent to accelerate and its notice of
does not amount to an election
acceleration were “clear and unequivocal.” See Shumway,
to accelerate without accompanying
801 S.W.2d at 893. Because there is no evidence of
enforcement action, i.e., steps to
abandonment, these notices established MITC's acceleration.
execute foreclosure on the real
Accordingly, we conclude that the Church presented
property.
conclusive evidence that MITC accelerated the Church's note
975 S.W.2d at 776 (citations omitted). Several other cases on August 15, 1994. The trial court correctly held that any
have likewise required affirmative steps towards foreclosure cause of action on the note accrued on that date and that
to accelerate a note secured by real property. E.g., Shepler v. limitations then began to run. Thus, the court of appeals erred
Kubena, 563 S.W.2d 382, 385 (Tex.Civ.App.—Austin 1978, in holding that a fact issue existed about when MITC's action
no writ) (“Intention to mature the note may be evidence[d] accrued.
by declarations, which alone do not amount to an election,
unless followed by affirmative action toward enforcing the
declared intention.”); National Debenture Corp. v. Smith, B. LIMITATIONS
132 S.W.2d 429, 431 (Tex.Civ.App.—Galveston 1939,
writ dism'd judgm't cor.) (“[D]eclaration alone does not [12] Wolf foreclosed on the Church's property on October
amount to an election to accelerate the maturity; ... to 6, 1998. Because Wolf's action accrued August 15, 1994, we
be effective as such, it must be followed by affirmative must decide whether the state four-year or federal six-year
action toward enforcing the declared intention.”); cf. Joy statute of limitations governs his right to foreclose.
Corp. v. Nob Hill N. Props., Ltd., 543 S.W.2d 691, 694–95
(Tex.Civ.App.—Tyler 1976, no writ) (holding acceleration Wolf urges us to hold that, as a FDIC successor, he is entitled
may be accomplished by either declaring *570 entire debt to FIRREA's six-year limitations period. See Jackson, 883
due or taking some other unequivocal action indicating debt S.W.2d at 178 (applying six-year FIRREA limitations period
is accelerated). to FDIC successor in interest where cause of action accrued
before FDIC received the note). He recognizes that two
We disapprove of Swoboda and this line of cases to the federal courts have refused to extend FIRREA's limitations
extent they can be read to require affirmative action towards to FDIC successors when the notes were not in default until
foreclosure to trigger acceleration of a note secured by after the notes left the FDIC's hands. See Beckley Capital
real property when the parties' agreement does not require Ltd. P'ship v. DiGeronimo, 184 F.3d 52, 58 (1st Cir.1999)
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
( “[T]he assignee does not get this benefit where an obligation
is transferred by the FDIC before it is in default.”); Cadle Co. (i) the date of the appointment of the Corporation as
v. 1007 Joint Venture, 82 F.3d 102, 105 (5th Cir.1996) (“We conservator or receiver; or
agree with Joint Venture that an assignee of the FDIC can
(ii) the date on which the cause of action accrues.
invoke FIRREA's six-year period of limitations only if the
note at issue was in default either before the FDIC acquired 12 U.S.C. § 1821(d)(14). FIRREA does not expressly extend
it or while the FDIC owned it.”). However, he argues that the benefit of this expanded limitations period to the FDIC's
because the Church's note was in default while in the FDIC's successors in interest. However, most jurisdictions have
hands, he should receive the benefit of the six-year limitations recognized, based on different theories, that the FDIC's
period. successors do enjoy the benefit of the six-year period
in some circumstances. See, e.g., UMLIC–Nine Corp. v.
Conversely, the Church argues that the state four-year Lipan Springs Dev. Corp., 168 F.3d 1173, 1177 n. 3 (10th
limitations period applies in this case. It contends that the Cir.1999); United States v. Thornburg, 82 F.3d 886, 891–
relevant question is not whether the note was in default 92 (9th Cir.1996); FDIC v. Bledsoe, 989 F.2d 805, 810 (5th
while the FDIC held it, but whether a cause of action had Cir.1993); Tivoli Ventures, Inc. v. Bumann, 870 P.2d 1244,
accrued before the FDIC transferred the note to a subsequent 1246 (Colo.1994); Cadle Co. II, Inc. v. Lewis, 254 Kan. 158,
holder, thereby triggering limitations. It reasons that applying 864 P.2d 718, 724 (1993); N.S.Q. Assocs. v. Beychok, 659
FIRREA's *571 limitations period when a cause of action So.2d 729, 734 (La.1995); Investment Co. of the Southwest
does not accrue until after the FDIC transfers the note does v. Reese, 117 N.M. 655, 875 P.2d 1086, 1095 (1994); Union
nothing to further FIRREA's policies. Recovery Ltd. P'ship v. Horton, 252 Va. 418, 477 S.E.2d 521,
524 (1996). And we so held in Jackson v. Thweatt, the case
upon which Wolf relies. 883 S.W.2d at 178.
1. FIRREA
[13] The question we did not answer in Jackson, however, is
FIRREA's relevant section provides: the one presented here—whether the FDIC's successors enjoy
the benefit of the six-year limitations period when a cause of
(14) Statute of limitations for actions brought by action on the note has not accrued before the FDIC assigns
conservator or receiver. the note to a subsequent holder. We agree with the Church
that the policy justifications we cited for extending limitations
(A) In general
in Jackson do not apply here. Thus, we join the two federal
Notwithstanding any provision of any contract, the courts that have considered this issue and hold that the FDIC's
applicable statute of limitations with regard to any successors do not receive the benefit of the FDIC's six-year
action brought by the Corporation as conservator or limitations period if the cause of action does not accrue until
receiver shall be— after the note leaves the FDIC's hands.
(i) In the case of any contract claim, the longer of—
(I) the 6–year period beginning on the date the claim 2. JACKSON V. THWEATT
accrues; or
In Jackson, we considered two conflicting court of appeals
(II) the period applicable under State law; opinions about whether FIRREA's six-year limitations period
applies to the FDIC's successors in interest. 883 S.W.2d at
.... 172–74. In both cases the noteholders' claims had accrued
before the FDIC became the receiver of the noteholders.
(B) Determination of the date on which a claim accrues
Jackson, 883 S.W.2d at 172–74. We recognized that
For purposes of subparagraph (A), the date on which 18 U.S.C. § 1821(d)(14) expressly confers the six-year
the statute of limitations begins to run on any claim limitations only on actions the FDIC brings. Jackson, 883
described in such subparagraph shall be the later of— S.W.2d at 174. However, based on the common law maxim
*572 that “[a]n assignee stands in the shoes of his assignor,”
we held that the FDIC's successors also have the benefit of the
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Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
FDIC's longer limitations period. Jackson, 883 S.W.2d at 174. applies; it attaches only to an accrued
Any other holding, we explained, would diminish the note's claim, not to a performing note.... The
market value in the hands of the FDIC, thereby hindering the six-year period is not triggered by
purpose behind the longer limitations period: the FDIC's appointment as receiver;
rather, it becomes relevant only upon
To hold that assignees are relegated to the accrual of a cause of action, at
the state statute of limitations would which time it identifies the starting
serve only to shrink the private market date for the six-year period. Until there
for the assets of failed banks. It would is a default, there is no claim....
require the FDIC to hold onto and
prosecute all notes for which the Cadle Co., 82 F.3d at 105. The court recognized the policies
state statute of limitations has expired behind extending the six-year period to transferees, but noted
because such obligations would be that this “reasoning loses force with a note performing when
worthless to anyone else. This runs the FDIC transfers it; because such a note is not in default, it
contrary to the policy of allowing the has value to a prospective transferee and no limitation period
FDIC to rid the federal system of failed is running.” Cadle Co., 82 F.3d at 106. Thus, it distinguished
bank assets. The FDIC can only make these facts from its previous cases holding that the six-year
full use of the market in discharging its period applies to the FDIC's successors in interest. See, e.g.,
statutory responsibilities if the market Bledsoe, 989 F.2d at 810–11.
purchasers have the same rights to
pursue actions against recalcitrant
debtors as does the FDIC.
4. BECKLEY CAPITAL LIMITED
Jackson, 883 S.W.2d at 174 (quoting Fall v. Keasler, 1991 PARTNERSHIP V. DIGERONIMO
WL 340182, at *4 (N.D.Cal. Dec. 18, 1991)).
In DiGeronimo, the First Circuit considered whether
FIRREA's six-year limitations period applied to expand a
While we have never considered whether the result we
state statute of limitations requiring that suit be brought
reached in Jackson would compel extending FIRREA's
against an estate within one year after a decedent's death. 184
limitations if the cause of action accrued after the note left
F.3d at 55. DiGeronimo guaranteed a note that was in default
the FDIC's hands, two federal circuit courts have declined to
while the FDIC held it. DiGeronimo, 184 F.3d at 54. The
extend limitations in such a situation. See DiGeronimo, 184
FDIC later sold the note to Beckley Capital and DiGeronimo
F.3d at 58; Cadle Co., 82 F.3d at 105.
died a month later. DiGeronimo, 184 F.3d at 58. Because
the note was already in default when the FDIC transferred
the note, DiGeronimo was already subject to *573 suit as
3. CADLE COMPANY V. 1007 JOINT VENTURE guarantor while the FDIC held the note. Despite this, the court
refused to extend the statute of limitations:
In Cadle Company, the Fifth Circuit first considered whether
FIRREA's six-year limitations period enured to the benefit of [T]he one-year New Hampshire statute
a FDIC successor when the note was not in default until after [for bringing suit against an estate]
the FDIC transferred it. 82 F.3d at 104–05. It held “that an had not begun to run at the time of
assignee of the FDIC can invoke FIRREA's six-year period the transfer because Beckley acquired
of limitations only if the note at issue was in default either the note and the guaranty in June
before the FDIC acquired it or while the FDIC owned it.” 1994 and DiGeronimo did not die
Cadle Co., 82 F.3d at 105. While the court spoke in terms until July 1994. Accordingly, Beckley
of “default” rather than “accrual,” its analysis treated the had the same one-year period to sue
concepts as synonymous: as any other person (apart from the
FDIC) who happened to have a claim
FIRREA's six-year period of against a New Hampshire decedent.
limitations has no significance And because Beckley acquired the
independent of a claim to which it guaranty before this period even began
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
to run, its position is closely analogous be contrary to the policies behind FIRREA's enactment. See
to the assignee in Cadle that acquired generally Jackson, 883 S.W.2d at 174.
its note prior to the default. Put
differently, there is no reason why a The second justification cited for extending FIRREA's
special statute of limitations is needed limitations period to its successors is the premise that “[a]n
in this case to make the obligation assignee stands in the shoes of his assignor.” General Fin.
marketable to a purchaser, and absent Servs., Inc. v. Practice Place, Inc., 897 S.W.2d 516, 520
such a reason, the policy behind state (Tex.App.—Fort Worth 1995, no writ). This maxim supports
statutes of limitation—vivid in this the notion that the FDIC's right to an extended limitations
case—ought to be respected. period is part of the bundle of rights that transfers to its
subsequent assignees. See, e.g., Bledsoe, 989 F.2d at 810. But
DiGeronimo, 184 F.3d at 58. The court expressly “adopt[ed] see WAMCO, III, Ltd. v. First Piedmont Mortgage Corp.,
the principle in Cadle that the assignee does not get this 856 F.Supp. 1076, 1087–88 (E.D.Va.1994) (holding common
benefit where an obligation is transferred by the FDIC before law assignment theories do not support extending FIRREA
it is in default.” DiGeronimo, 184 F.3d at 58 (emphasis limitations to assignees). We cited both justifications for our
added). And, as the Cadle court had done, the First Circuit holding in Jackson. 883 S.W.2d at 174.
discussed default and accrual as synonymous concepts.
*574 However, while these policies justify extending the
six-year limitations period when a cause of action has accrued
5. ANALYSIS before the FDIC transfers the note, we agree with the First
Circuit that “[n]o reason exists to extend this special benefit
In response to the huge number of bank failures in 1987 and beyond the point where it serves the federal policy; and it does
1988, FIRREA was enacted to “strengthen the enforcement not do so here.” DiGeronimo, 184 F.3d at 57. When a cause
power of [f]ederal regulators of depository institutions.” of action has not accrued before the FDIC transfers the note,
Boteler, Comment: Protecting the American Taxpayers: a transferee has the same four years under section 16.035(b)
Assigning the FDIC's Six Year Statute of Limitations to Third of the Texas Civil Practice and Remedies Code to sue as any
Party Purchasers, 24 TEX. TECH L.REV. 1169, 1169–71 other person. Accordingly, refusal to extend limitations in
(1993). The six-year limitations period was created because this situation does not significantly impact the FDIC's notes'
“once the FDIC is appointed receiver, it needs extra time to marketability.
review all of the assets and liabilities it has just acquired,
before it can go forward with any litigation by which to [14] [15] Moreover, even though an assignee generally
recover on defaulted promissory notes.” Boteler, supra at “stands in the shoes of his assignor,” Bledsoe, 989 F.2d at
1078. 810, the Fifth Circuit aptly explained why that concept would
not apply here, where a claim has not accrued and thus the
Two justifications are generally cited to support extending FDIC's right to a six-year limitations period is never triggered.
FIRREA's six-year period to FDIC's successors in interest “FIRREA's six-year period of limitations has no significance
even though FIRREA is silent about assignees. First, absent independent of a claim to which it applies; it attaches only
such an exception, the FDIC would be forced to prosecute to an accrued claim, not to a performing note.” Cadle Co.,
all notes where state limitations has already run. See, 82 F.3d at 105. We agree. Absent application of FIRREA's
e.g., Bosque Asset Corp. v. Greenberg, 19 S.W.3d 514, statute of limitations, a noteholder's right to sue is limited by
521 (Tex.App.—Eastland 2000, pet. denied) (“[T]he federal section 16.035(b). The six-year provision does not “attach”
policy of insuring a market for the assets of failed depositories to the bundle of rights passed to subsequent assignees unless
militates strongly in favor of extending the federal statute of FIRREA's express terms actually trigger the right.
limitations to all subsequent assignees of the FDIC.”); see
also Tivoli Ventures, Inc., 870 P.2d at 1250 (“Requiring the Wolf recognizes that the Cadle and DiGeronimo courts
FDIC to prosecute each outstanding loan would ... unduly refused to extend FIRREA's limitations when the notes
delay the transfer and sale of the insolvent bank's assets.”). were not in default until after the FDIC transferred the
Interpreting FIRREA to require the FDIC to prosecute all notes. However, he argues that their reasoning cannot apply
notes where the state statute of limitations had run would here because it is undisputed that the Church's note was
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (2001)
44 Tex. Sup. Ct. J. 605
be effectively exercised without specific affirmative steps
in default in the FDIC's hands. We disagree. While Cadle
towards foreclosure. Rather, absent evidence of abandonment
and Beckley do use the term “default” as the triggering
or a contrary agreement between the parties, a clear and
event for determining whether FIRREA's limitations period is
unequivocal notice of intent to accelerate and a notice of
extended, it is clear from their reasoning that these courts rely
acceleration is enough to conclusively establish acceleration.
on the default date only to the extent that it was synonymous
Therefore, the trial court correctly concluded that the
with the accrual date in those cases. However, under Texas
Church's evidence conclusively established the date its note
law we look to the accrual date as the event to determine
was accelerated and thus the date Wolf's cause of action
if limitations had been triggered while the FDIC held the
accrued. And, because we further conclude that the cause of
note. Because the evidence reflects that accrual occurred after
action accrued after the FDIC had assigned the note, we also
the FDIC transferred the note, we hold that Texas' four-year
hold that the Texas four-year statute of limitation applicable
statute of limitations applies to bar Wolf's foreclosure. See
to foreclosure actions governs this case. Accordingly, we
TEX. CIV. PRAC. & REM.CODE § 16.035(b).
reverse the court of appeals' judgment and render judgment
for the Church.
IV. CONCLUSION
The parties here agreed about the date the note was Justice HANKINSON did not participate in this decision.
accelerated and the summary judgment evidence conclusively
established the note's acceleration date. The court of appeals All Citations
erred in holding that an optional acceleration clause cannot 44 S.W.3d 562, 44 Tex. Sup. Ct. J. 605
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
DD
Houston First American Sav. v. Musick, 650 S.W.2d 764 (1983)
33 Cases that cite this headnote
KeyCite Yellow Flag - Negative Treatment
Distinguished by Hughes Wood Products, Inc. v. Wagner, Tex., May
25, 2000
[3] Evidence
Judicial Admissions in General
650 S.W.2d 764 Act of defendant in admitting as a fact that
Supreme Court of Texas. individual bought note and deed of trust in name
of corporation which named substitute trustee
HOUSTON FIRST AMERICAN
under whose deed plaintiff claimed was to be
SAVINGS, et al., Petitioners,
regarded as a formal judicial admission and,
v.
hence, conclusively established in trespass to try
Vann MUSICK and C.C. Divine, et al., Respondents. title action that corporation had bought the deed
of trust.
No. C–1370. | April 20, 1983.
| Rehearing Denied June 15, 1983. 5 Cases that cite this headnote
Action was instituted in trespass to try title. The District
Court No. 164, Harris County, Solito, J., rendered judgment [4] Evidence
non obstante veredicto in favor of plaintiff, and defendants Private Contracts and Other Writings
appealed. The Houston Court of Civil Appeals, Fourteenth Recitals contained in deed by which substitute
Supreme Judicial District, Murphy, J., reversed and trustee conveyed property were prima facie
remanded, and plaintiff brought error. The Supreme Court, evidence that terms of trust were fulfilled, but
Ray, J., held that: (1) trust deed on which plaintiff based gave rise only to a presumption of validity and
its claim to property was invalid when trustee failed to give related only to matters of evidence, and thus
notice of sale as required by law, and (2) plaintiff was, did not conclusively establish that foreclosure
however, entitled to rely on doctrine of after-acquired title sale under which plaintiff claimed property
with respect to remaining defendants. conformed to conditions set out in deed.
Judgment of the Court of Appeals reversed, judgment 13 Cases that cite this headnote
rendered that plaintiff take nothing from one defendant, and
judgment of trial court as to remaining defendants affirmed. [5] Mortgages
Notice of Sale
Substitute trustee's deed was invalid where
West Headnotes (17) substitute trustee was not appointed until within
21 days of sale, with result that notice of sale was
not given for 21 days prior to sale as required
[1] Evidence
by deed of trust and statute. Vernon's Ann.Texas
Admissibility in Same Proceedings
Civ.St. art. 3810.
Assertions of fact, not pled in alternative, in
live pleadings of a party are regarded as formal 14 Cases that cite this headnote
judicial admissions.
[6] Mortgages
80 Cases that cite this headnote
Power as Authority for Sale in General
Maker of a deed of trust with power of sale
[2] Evidence
may condition exercise of power upon such
Conclusiveness and Effect
conditions as he may prescribe and, since
Any fact admitted is conclusively established that power admits of no substitution and no
in case without introduction of pleadings or equivalent, trustee must strictly adhere to terms
presentation of other evidence. of power.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Houston First American Sav. v. Musick, 650 S.W.2d 764 (1983)
6 Cases that cite this headnote 7 Cases that cite this headnote
[7] Mortgages [11] Evidence
Necessity Pleadings
Compliance with notice condition contained in Facts alleged or admitted in live pleadings of a
deed of trust and as prescribed by law is a party are accepted as true by court and jury and
prerequisite to right of trustee to make sale. are binding on pleader.
20 Cases that cite this headnote 27 Cases that cite this headnote
[8] Evidence [12] Trial
Pleadings Effect of Failure to Object or Except
Language in answer and cross petition referring Party relying on his opponent's pleadings as
to “purported” appointment of substitute trustee judicial admissions of fact must protect his
on certain date was not so clear and unequivocal record by objecting to introduction of evidence
as to rise to a judicial admission that substitute contrary to that admission of fact and by
trustee was appointed on that date, particularly objecting to submission of any issue bearing on
where answer included plea of not guilty on fact admitted.
general denial.
35 Cases that cite this headnote
5 Cases that cite this headnote
[13] Estoppel
[9] Evidence By Deed
Admissibility in Same Proceedings Although substitute trustee's deed was invalid as
Allegations in answer which includes a general between grantee of the trustee's deed and grantor
denial are not a waiver of the general denial and of deed of trust, where it did give appearance of
may not be used by plaintiff as admissions. good title in grantee, grantor would be estopped
to assert the invalidity of the trustee's sale with
Cases that cite this headnote respect to a subsequent bona fide purchaser of
the property.
[10] Evidence
3 Cases that cite this headnote
Pleadings
Assuming that answer in trespass to try title
case admitted that substitute trustee, under [14] Mortgages
whose deed plaintiff claimed, was appointed Grantees or Mortgagees of Purchasers
on certain date, plaintiff nonetheless waived its Although invalid trustee's deed gave appearance
right to rely on admission, where plaintiff's only of good title, party claiming under the grantee
objection to special issue regarding appointment was not a bona fide purchaser or bona fide
of substitute trustee was that there was no mortgagee, and thus had no better title than its
evidence raising such an issue and that it was grantor, where it was aware of litigation at time
irrelevant, and objection did not indicate that it it acquired its interest and notice of lis pendens
was relying on defendant's pleadings as a judicial had been filed.
admission, and where plaintiff's own chain of
title established that substitute trustee was not 12 Cases that cite this headnote
appointed on date claimed by plaintiff.
[15] Appeal and Error
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Houston First American Sav. v. Musick, 650 S.W.2d 764 (1983)
To Sustain Judgment Appealed From
Opinion
Where trial court's judgment non obstante
veredicto was exactly the judgment requested by RAY, Justice.
plaintiff, it was unnecessary for plaintiff to file
cross points on defendant's appeal in order to This is a trespass to try title case. Houston First American
advance arguments supporting the trial court's Savings Association, successor to American Savings &
judgment. Loan Association of Houston, filed suit in 1966 to recover
possession of 618.7 acres in Harris *766 County. Named as
4 Cases that cite this headnote
defendants were Vann Musick, 1 who claims an undivided #
interest in the 618.7 acres, and C.C. Divine, 2 who claimed
[16] Estoppel a specific 27 acres. The trial court rendered judgment
Actual Transfer of Title by Operation of non obstante veredicto in favor of Houston First American
Law Savings (American). The court of appeals reversed the
When one conveys land by warranty of title, judgment of the trial court and remanded the cause with
or in such a manner as to be estopped to instructions to render judgment for Vann Musick and C.C.
dispute title of his grantee, a title subsequently Divine consistent with the jury's verdict. 3
acquired to that land will pass eo instante to his
warrantee, binding both warrantor and his heirs We reverse the judgment of the court of appeals and render
and subsequent purchasers from either. judgment that American take nothing from defendant Vann
Musick and that the judgment of the trial court be affirmed
8 Cases that cite this headnote
in all other respects. American's claims against the respective
defendants are unrelated and will be discussed separately.
[17] Mortgages
Conveyance to Purchaser
Plaintiff was entitled to rely on doctrine of after-
I. American v. Vann Musick
acquired title with respect to certain tract of land,
though deed to its ancestor in title was executed, In 1951, W.O. Bartle conveyed the 618.7 acres in controversy
individually, by one of three trustees while to Ted and Levoy Musick, the brothers of Vann Musick. In
property was held under deed of trust requiring 1952 Ted Musick and Levoy, joined by his wife Mary Ann
signature of two trustees, where, subsequently, Musick, conveyed an undivided # interest in the property to
all three trustees conveyed the property to Vann Musick. On March 14, 1961, Vann Musick, joined by
a person who, through mesne conveyance, her brothers, executed a deed of trust covering the 618.7 acres
conveyed the property to the grantor of the first to secure a note of the same date payable to Theodore Lucas,
deed. trustee of the J.B. Lucas Trust. This note was subsequently
purchased by TWI Development Company, a corporation
2 Cases that cite this headnote
wholly owned by Levoy Musick and his wife. Thereafter,
TWI appointed B.J. Brown, substitute trustee, to replace
the trustee originally named in the deed of trust. At the
trustee's sale held on July 2, 1963, Brown, as substitute
Attorneys and Law Firms trustee, conveyed the 618.7 acres to TWI. In June 1964, TWI
conveyed the land to Harry Holmes, Jr. and W.M. Wheless,
*765 Anderson, Brown, Orn & Jones, Nelson Jones,
Sr., reserving an option to repurchase. Four months after this
Houston, for petitioners.
conveyance Levoy Musick died. Under the terms of his will,
Heath & Associates, Robert A. Heath, Gladys R. Goffney, Mary Ann Musick became owner of all TWI stock and the
Houston, for respondents. repurchase option. Subsequently, TWI agreed to a plan for
exercising its repurchase option. Pursuant to this plan, TWI
repurchased the land and conveyed the 618.7 acres to Meyer
Jacobson and T.S. Kent who used the land as collateral to
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Houston First American Sav. v. Musick, 650 S.W.2d 764 (1983)
secure a loan from American. On December 18, 1964, three American argues that the court of appeals has erred in
transactions occurred: remanding the cause for entry of judgment on the jury's
verdict, because the special issues are immaterial and
1) TWI exercised its option and Holmes and Wheless unsupported by the pleadings and evidence. American
executed a warranty deed to TWI; submits that the trial court correctly rendered judgment in its
favor because it established superior title out of a common
2) Mary Ann Musick, as president of TWI conveyed the
source.
land to Kent and Jacobson by general warranty deed;
3) Kent and Jacobson executed a deed of trust to Ralph B. American's claim of superior title depends upon the
Lee as trustee for the benefit of American. foreclosure of a deed of trust signed by Vann Musick and
her brothers on March 14, 1961. This deed of trust was given
The deed of trust secured a loan of $150,000 from American to secure a note payable to Theodore Lucas, Trustee of the
to Kent and Jacobson. No payments were ever made on the J.B. Lucas Trust. This deed of trust granted the trustee the
promissory note. At a trustee's sale held on February 6, 1966, power to sell the property at the request of the holder or payee
the property was sold to American for $25,000. of the note in the event of default. The deed of trust further
set forth the conditions of the Trustee's power of sale which
American initiated its trespass to try title action in 1966, included, among others, that notice of the sale be posted
naming as defendants several members of the Musick family in three public places in Harris County for at least twenty-
who were already litigating their respective rights in the one days prior to the sale. The deed of trust also contained
property. American's lawsuit and the Musick family litigation the customary provisions authorizing the trustee, or a duly
were consolidated in 1968. Thereafter, American's claims appointed substitute trustee, to recite in the trustee's deed the
against Vann Musick and C.C. Divine were severed and a facts concerning the sale, and that such recitals should be
separate trial ordered. Before this case was tried, a separate prima facie evidence of the truth of the facts recited.
trial was held between American, Levoy Musick, Mary Ann
Musick, TWI and others who claimed an interest in the [1] [2] [3] In order to connect this deed of trust to
618.7-acre tract. As between the parties to that suit, this a substitute trustee's deed which purported to convey the
Court rendered judgment for American. American Savings 618.7-acre tract to TWI, American introduced in evidence
and Loan Ass'n of Houston v. Musick, 531 S.W.2d 581 a document entitled “Appointment of Substitute Trustee.”
(Tex.1975). This document recited that TWI was the owner and holder of
the note and deed of trust, dated March 14, 1961. Although
In January, 1980, American's trespass to try title claim against there was no other evidence in the record confirming that
Vann Musick and C.C. Divine came to trial. At the close of TWI bought the note and deed of trust from the J.B. Lucas
*767 evidence American moved for an instructed verdict. Trust, none was necessary. Vann Musick admitted as a fact
The trial court denied American's motion and submitted that Levoy Musick “bought the note and deed of trust in the
twenty-four special issues requested by Vann Musick. All name of TWI Development Company, a corporation” in a
of the jury's answers to these issues favored Vann Musick. pleading which she entitled “Cross-Plaintiff's First Amended
Vann Musick thereafter moved for judgment on the verdict. Petition.” Assertions of fact, not pled in the alternative, in
American filed an opposing motion for judgment non the live pleadings of a party are regarded as formal judicial
obstante veredicto. The trial court granted American's motion, admissions. Any fact admitted is conclusively established
finding that the jury's verdict was not supported by the in the case without the introduction of the pleadings or
pleadings or evidence and was immaterial. presentation of other evidence. Kirk v. Head, 137 Tex. 44,
152 S.W.2d 726 (1941); 1A R. Ray, Texas Law of Evidence,
The court of appeals reversed the judgment of the trial court § 1144 (Texas Practice 3d ed. 1980).
and remanded the cause for entry of judgment on the jury's
verdict. Although the court of appeals found evidence to American next introduced in evidence the deed by which the
support the verdict, the court did not specifically discuss the substitute trustee conveyed the property to TWI. This deed
evidence or address which issue or issues served to defeat recited compliance with all conditions of the deed of trust.
American's title. American argues that the recitals in the substitute trustee's
deed establish that the foreclosure sale at which TWI acquired
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Houston First American Sav. v. Musick, 650 S.W.2d 764 (1983)
the property conformed to the conditions set out in the deed the trustee to make the sale. Goode v. Davis, 135 S.W.2d 285,
of trust. 292 (Tex.Civ.App.—Fort Worth 1939, writ dism'd judgmt
cor.); Childs v. Hill, 20 Tex.Civ.App. 162, 49 S.W. 652
[4] While we agree that these recitals are prima facie (Tex.Civ.App.1898, no writ).
evidence that the terms of the trust were fulfilled, we note that
the recitals in a trustee's deed only give rise to a presumption [8] [9] [10] American argues, however, that the jury
of validity and relate only to matters of evidence. Slaughter finding that the substitute trustee was not appointed by TWI
v. Qualls, 139 Tex. 340, 162 S.W.2d 671, 676 (1942). The until sometime after June 17, 1963 is immaterial because
presumption of the validity of the sale is not conclusive and Vann Musick admitted in her pleadings that the appointment
may be rebutted. Hart v. Eason, 159 Tex. 375, 321 S.W.2d of the substitute trustee was made on May 21, 1963. In
574, 575 (1959). Although Vann Musick admitted in her “Cross-Plaintiff's First Amended Petition,” Vann Musick
“cross-claim” that TWI purchased the note and deed of trust alleged:
and *768 thereby conceded TWI's authority to appoint a
substitute trustee, Vann Musick nevertheless did rebut the “On the 21st day of May, 1963,
presumption that the substitute trustee complied with the conspiring with B.J. Brown and Pat
conditions contained in the deed of trust. Towery, a purported appointment of
Substitute Trustee was executed by
[5] The “Appointment of Substitute Trustee” recites that A.R. Morris, as president attested by
B.J. Brown was appointed substitute trustee on May 21, 1963. Pat Towery, Secretary of the TWI
The appointment, however, refers to the volume and page Development Company.”
where the deed of trust is recorded. Since the deed of trust was
In her amended answer she alleged:
not recorded until June 17, 1963, the volume and page could
not have been known on May 21, 1963. The jury found that “The TWI Development Company
B.J. Brown was not appointed substitute trustee until some obtained title to the 618.7 acres
time after June 17, 1963. Since Brown sold the property to in question by an invalid substitute
TWI on July 2, 1963, it is apparent that notice of the sale was trustee sale from B.J. Brown who
not given for twenty-one days prior to sale as required by the was appointed trustee by A.R.
deed of trust and Article 3810. 4 Morris purported president of TWI
Development Company on the 21st
[6] [7] The maker of a deed of trust with power of sale may day of May, 1963.”
condition the exercise of the power upon such conditions as
he may prescribe. Slaughter v. Qualls, supra. The trustee must Assuming for the sake of argument that Vann Musick's
strictly adhere to the terms of the power for the power “admits pleadings do admit as fact that TWI appointed the substitute
of no substitution and no equivalent.” Michael v. Crawford, trustee on May 21, 1963, 5 American has nevertheless waived
108 Tex. 352, 193 S.W. 1070 (1917). In Fuller v. O'Neal, 69 its right to rely on the admission. *769 American's only
Tex. 349, 6 S.W. 181 (1887) we wrote: objection to the special issue regarding the appointment of
B.J. Brown as substitute trustee was “there is no evidence
The course marked out for the trustee which raises such an issue and it is irrelevant.” American's
to pursue must be strictly followed objection did not indicate that it was relying on Vann Musick's
by him: for the method of enforcing pleadings as a judicial admission. Furthermore, American's
the collection through such deeds is a own chain of title, and hence its own evidence, establishes
harsh one. The grantor of the power is that B.J. Brown was not appointed substitute trustee on May
entitled to have his directions obeyed; 21, 1963. Although the “Appointment of Substitute Trustee”
to have the proper notice of sale given; recites that the appointment was executed on May 21, 1963,
to have it to take place at the time and when this instrument is considered together with the deed of
place, and by the person appointed by trust to which it refers by volume and page, it is evident that
him. the May 21 date is erroneous.
Compliance with the notice condition contained in the deed of
trust and as prescribed by law is a prerequisite to the right of
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Houston First American Sav. v. Musick, 650 S.W.2d 764 (1983)
[11] [12] The facts alleged or admitted in the live pleadings title is identical to that traced above with respect to its claim
of a party are accepted as true by the court and jury and are against Vann Musick.
binding on the pleader. 1A R. Ray, Texas Law of Evidence, §
1127 (Texas Practice 3d ed. 1980). The party relying on his On December 13, 1961, Levoy and his wife conveyed the 27
opponent's pleadings as judicial admissions of fact, however, acres to C.C. Divine. On October 25, 1962, C.C. Divine and
must protect his record by objecting to the introduction of H.G. Divine placed certain property in trust. The corpus of
evidence contrary to that admission of fact and by objecting the trust included the 27 acres in controversy. The purpose of
to the submission of any issue bearing on the fact admitted. the trust was to serve as security for the posting *770 of bail
Starks v. City of Houston, 448 S.W.2d 698 (Tex.Civ.App. bonds. The trust required the signatures of at least two trustees
—Houston [1st Dist.] 1969, writ ref'd n.r.e.); Restelle v. for a valid conveyance of property from the trust. C.C. Divine,
Williford, 364 S.W.2d 444 (Tex.Civ.App.—Beaumont 1963, H.G. Divine and A. Divine were named trustees. On July 27,
writ ref'd n.r.e.); Dallas Transit Co. v. Young, 370 S.W.2d 6 1963, C.C. Divine, individually, executed a general warranty
(Tex.Civ.App.—Dallas 1963, writ ref'd n.r.e.). deed conveying the 27 acres to Levoy Musick and his wife.
The other two trustees did not join in this conveyance.
[13] [14] Although the substitute trustee's deed was invalid
as between TWI and Vann Musick, it did give the appearance On September 5, 1963, all three trustees conveyed the 27
of good title in TWI. Were American a bona fide purchaser acres to Fred Divine who, on March 19, 1964, conveyed the
of the property, Vann Musick would be estopped to assert property to W.E. Whitter and G.D. Peyton. On June 15, 1965,
the invalidity of the trustee's sale. Slaughter v. Qualls, 162 Whitter and Peyton, by general warranty deed, conveyed the
S.W.2d at 675. The jury, however, found that American was 27 acres to C.C. Divine.
neither a bona fide purchaser, nor a bona fide mortgagee. Both
terms were defined as requiring the purchaser or mortgagee Over the objections of American, C.C. Divine was permitted
to acquire its interest in the property in good faith, for value to testify that he did not intend to convey the 27 acres by his
and without notice of the claim or interest of a third party. warranty deed of July 27, 1963. The jury apparently believed
Houston Oil Co. of Texas v. Hayden, 104 Tex. 175, 135 S.W. Divine's testimony, because all special issues were answered
1149 (1911). There is evidence in the record from which in Divine's favor. The trial court, however, disregarded the
the jury could reasonably have concluded that American was jury's verdict and rendered judgment for American.
aware of the Musick family litigation at the time it acquired its
interest in the 618.7-acre tract. This land was the subject of a The court of appeals reversed the judgment of the trial court
lawsuit filed in May, 1962. Vann Musick, Ted Musick, Levoy and remanded the cause for entry of judgment on the verdict.
Musick, TWI and other members of the Musick family were The court of appeals concluded that there was evidence to
all parties to the litigation. In 1963, a notice of lis pendens was support the jury verdict and that American had waived any
filed in the lis pendens records of Harris County. American error by failing to file cross-points.
did not take its deed of trust on the property until December,
1964, and did not foreclose on the property until 1966. American argues that it was not required to file cross-points
in the court of appeals. American further argues that under
In summary, we hold that the substitute trustee's deed the doctrine of after-acquired title, the title conveyed to C.C.
conveying the property to TWI is invalid because the trustee Divine by Whitter and Peyton on June 15, 1965, flowed
failed to give the notice required by law and by the terms of immediately into Levoy Musick and wife, and their assigns
the deed of trust. We further hold that American is not a bona because of Divine's general warranty deed dated July 27,
fide purchaser and, hence, has no better title than its grantor. 1963.
See Hartel v. Dishman, 135 Tex. 600, 145 S.W.2d 865 (1940).
[15] We agree with both arguments. In Jackson v. Ewton,
411 S.W.2d 715, 717 (Tex.1967) we explained that “cross-
points” are used to preserve error committed by the trial
II. American v. C.C. Divine
court and “are the means by which an appellee may bring
C.C. Divine claimed a specific 27 acres out of the 618.7-acre forward complaints of some ruling or action of the trial court
tract. Levoy Musick is the common source of title. American's which the appellee alleges constituted error as to him.” The
judgment non obstante veredicto rendered by the trial court
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Houston First American Sav. v. Musick, 650 S.W.2d 764 (1983)
that land will pass eo instante to his warrantee, binding both
is exactly the judgment requested by American. In fact, the
the warrantor and his heirs and subsequent purchasers from
trial court judgment incorporates by reference American's
either.” Caswell v. Llano Oil Co., 120 Tex. 139, 36 S.W.2d
entire motion for judgment non obstante veredicto. Hence, it
208, 211 (Tex.Comm'n App.1931, opinion adopted), citing
was unnecessary for American to file cross-points, because
Baldwin v. Root, 90 Tex. 546, 40 S.W. 3, 6 (1897).
American had no complaint with the judgment of the trial
court.
The judgment of the court of appeals is reversed. We render
[16] [17] The court of appeals' erroneous “cross-point” judgment that American take nothing from Vann Musick. The
judgment of the trial court is affirmed in all other respects.
holding apparently caused the court to conclude that
American had waived its argument under the doctrine of after-
acquired title. We hold that American is entitled to rely on
All Citations
the doctrine. The rule is that “when one conveys land by
warranty of title, or in such a manner as to be estopped to 650 S.W.2d 764
dispute the title of his grantee, a title subsequently acquired to
Footnotes
1 Vann Musick has conveyed a part of her interest in the 618.7 acres to her attorney, Bob Heath.
2 C.C. Divine is deceased.
3 The court of appeals decision is unpublished. Tex.R.Civ.P. 452.
4 Tex.Rev.Civ.Stat.Ann. art. 3810 (1966) provided in part:
“ * * * Notice of such proposed sale shall be given by posting written notice thereof for three
consecutive weeks prior to the day of sale in three public places in said county or counties, one
of which shall be made at the courthouse door of the county in which such sale is to be made,
and if such real estate be in more than one county, one at the courthouse door of each county
in which said real estate may be situated, or the owner of such real estate may, upon written
application, cause the same to be sold as provided in said deed of trust or contract lien. * * * ”
5 We doubt that Vann Musick judicially admitted as fact that TWI appointed B.J. Brown substitute trustee on May 21, 1963.
Both the answer and cross-petition use “purported” which is synonymous with “rumored.” We do not view the sentence
from either the cross-petition or answer as being so clear and unequivocal as to rise to a judicial admission. American
Savings and Loan Ass'n of Houston v. Musick, supra, at 589. Furthermore, the answer includes a plea of not guilty and a
general denial. Allegations in a defendant's answer which includes a general denial are not a waiver of the general denial
and may not be used by the plaintiff as admissions. Climatic Air Distributors v. Climatic Air Sales, Inc., 162 Tex. 237,
345 S.W.2d 702 (1961); Hynes v. Packard, 92 Tex. 44, 45 S.W. 562, 564 (1898).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
EE
In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
KeyCite Yellow Flag - Negative Treatment West Headnotes (13)
Distinguished by In re Hays County Criminal Dist. Attorney's Office,
Tex.App.-Austin, October 1, 2010
[1] Mandamus
224 S.W.3d 182 Remedy by Appeal or Writ of Error
Supreme Court of Texas. Mandamus
Matters of discretion
IN RE BEXAR COUNTY CRIMINAL
DISTRICT ATTORNEY'S OFFICE, Relator. The Supreme Court grants mandamus relief
when the trial court has abused its discretion and
No. 05–0613. | Argued Sept. 28, a party has no adequate appellate remedy.
2006. | Decided May 4, 2007.
9 Cases that cite this headnote
| Rehearing Denied June 29, 2007.
Synopsis [2] Mandamus
Background: Former criminal defendant brought malicious Matters of discretion
prosecution action against complainants, following county's
For purposes of the “abuse of discretion” prong
dismissal of criminal terroristic threat charges against
for mandamus relief, a lower court has no
defendant, and issued subpoenas for testimony of county
discretion in determining what the law is, even
assistant district attorney, former assistant district attorney,
when the law is unsettled.
and investigator. District attorney's office moved to quash
the subpoenas based on discovery privilege. The 408th 2 Cases that cite this headnote
Judicial District Court, Bexar County, Karen H. Pozza, J.,
granted the motion. Former defendant petitioned for writ of
[3] Mandamus
mandamus. The San Antonio Court of Appeals, 179 S.W.3d
Modification or vacation of judgment or
47, conditionally granted a writ. District attorney's office and
order
complainant petitioned for writ of mandamus.
Appeal is inadequate, as element for mandamus
relief, when a court erroneously orders
disclosure of privileged information.
Holdings: The Supreme Court, Don R. Willett, J., held that:
7 Cases that cite this headnote
[1] district attorney's office did not waive attorney work-
product protection, and
[4] Malicious Prosecution
Instigation of or participation in prosecution
[2] assuming testimony sought by former criminal defendant
was non-core attorney work product, former criminal Malicious Prosecution
defendant did not have substantial need for the testimony. Presumptions and burden of proof
To recover for malicious prosecution when
the decision to prosecute is within another's
Writ conditionally granted. discretion, the plaintiff has the burden of proving
causation, i.e., that the decision would not have
Don R. Willett, J., filed a concurring opinion. been made but for the false information supplied
by the defendant.
Phil Johnson, J., filed a dissenting opinion, in which
Jefferson, C.J., and Medina, J., joined. 5 Cases that cite this headnote
[5] Pretrial Procedure
Work-product privilege
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
The primary purpose of the attorney work- Subpoena duces tecum
product rule is to shelter the mental processes, While disclosure pursuant to subpoena duces
conclusions, and legal theories of the attorney, tecum, by county district attorney's office to
providing a privileged area within which the plaintiff in malicious prosecution action against
lawyer can analyze and prepare his or her complainant, of documents from prosecution
case. Vernon's Ann.Texas Rules Civ.Proc., Rule file, regarding conversations made in course
192.5(a)(1). of criminal investigation, information learned
during investigation, and district attorney's
7 Cases that cite this headnote
decision to drop the criminal prosecution,
waived attorney work-product protection as to
[6] Pretrial Procedure those documents, such selective disclosure did
Work product privilege; trial preparation not waive attorney work-product protection as
materials to trial testimony from staff of district attorney's
Attorney work-product protection continues office, interpreting, explaining, or otherwise
indefinitely beyond the litigation for which the elaborating on matters contained in file. Vernon's
materials were originally prepared. Vernon's Ann.Texas Rules Civ.Proc., Rule 192.5(a)(1),
Ann.Texas Rules Civ.Proc., Rule 192.5(a)(1). (b)(1); Rules of Evid., Rule 511(1).
1 Cases that cite this headnote 2 Cases that cite this headnote
[7] Pretrial Procedure [10] Witnesses
Work-product privilege Judges, Jurors, and Judicial Officers, as
Witnesses as to Proceedings by or Before Them
Pretrial Procedure
Work product privilege; trial preparation Assuming that trial testimony sought, by
materials plaintiff in malicious prosecution action against
complainant, from staff of county district
Attorney work-product protection covers more
attorney's office was non-core attorney work
than just documents: it extends to an attorney's
product, as would be discoverable upon showing
mental impressions, opinions, conclusions, and
of substantial need and undue hardship, plaintiff
legal theories, as well as the selection and
did not have substantial need; the live testimony
ordering of documents. Vernon's Ann.Texas
sought by plaintiff would merely improve
Rules Civ.Proc., Rule 192.5(a)(1), (b)(1).
plaintiff's chances of showing, but was not
2 Cases that cite this headnote essential to showing, causation, i.e., that decision
by district attorney's office to prosecute would
not have been made but for false information
[8] Pretrial Procedure
supplied by complainant. Vernon's Ann.Texas
Work-product privilege
Rules Civ.Proc., Rule 192.5(b)(2).
Attorney work-product protection is broader
than the attorney-client privilege, because it 8 Cases that cite this headnote
includes all communications made in preparation
for trial, including an attorney's interviews
[11] Witnesses
with parties and non-party witnesses. Vernon's
Judges, Jurors, and Judicial Officers, as
Ann.Texas Rules Civ.Proc., Rule 192.5(a)(1, 2);
Witnesses as to Proceedings by or Before Them
Rules of Evid., Rule 503.
Assuming that trial testimony sought, by
2 Cases that cite this headnote plaintiff in malicious prosecution action against
complainant, from staff of county district
attorney's office was non-core attorney work
[9] Witnesses
product, as would be discoverable upon showing
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
of substantial need and undue hardship, plaintiff
did not show inability to obtain, without undue Robert W. Wilson, Mark A. Sanchez, Christopher John Gale,
hardship, the substantial equivalent of such Law Offices of Gale, Wilson & Sa#nchez, P.L.L.C., San
testimony by other means; while malicious Antonio, for Real Party In Interest.
prosecution claim required proof of causation,
Opinion
i.e., that decision by district attorney's office to
prosecute would not have been made but for false Justice WILLETT delivered the opinion of the Court,
information supplied by complainant, district in which Justice HECHT, Justice O'NEILL, Justice
attorney's office had produced for plaintiff WAINWRIGHT, and Justice BRISTER joined.
the office's prosecution file, which was the
substantial equivalent of the testimony sought by This case presents an issue of first impression: whether the
plaintiff. Vernon's Ann.Texas Rules Civ.Proc., work-product privilege protects prosecutors from testifying
Rule 192.5(b)(2). in a malicious prosecution suit when they have already
released the prosecution file. Relator Bexar County Criminal
10 Cases that cite this headnote District Attorney's Office (“DA” or “DA's Office”) provided
its prosecution file to real party in interest David Crudup, who
[12] Evidence had sued relator Cynthia Blank for malicious prosecution.
Making of statement fact in issue Crudup subpoenaed DA representatives to testify, but the trial
court granted the DA's Motion to Quash and For Protective
Any false statements made by complainant
Order. The court of appeals disagreed and ordered the trial
to county district attorney's office would
not constitute hearsay, in former criminal court to withdraw its order. 1 The DA's Office and Blank now
defendant's malicious prosecution action against seek mandamus relief in this Court, and given the record and
complainant, if offered for their effect on the circumstances presented, we conditionally grant it.
listener rather than for the truth of the matter
asserted. Rules of Evid., Rule 801(d).
I. Factual and Procedural Background
8 Cases that cite this headnote
David Crudup and his wife were feuding neighbors of
[13] Pretrial Procedure Cynthia Blank and her teenage son Travis. The Crudups and
Work-product privilege the Blanks complained repeatedly about each other to the
Bexar County Sheriff's Office regarding such incivilities as
The attorney work-product rule strikes a sensible
barking dogs, obscenities yelled, cut cable lines, strewn grass
balance, recognizing that a lawyer's thoughts are
clippings, trash left in a yard, rocks thrown at a fence, water
his own and that a party cannot invade every
sprayed on cars and grass, and a sprinkler that ran too long
nook and cranny of a lawyer's case preparation,
and created a puddle. Each time, the responding officer would
particularly when the essence of what the party
talk to both sides and prepare an incident report.
seeks has already been revealed to him or is
readily available. Vernon's Ann.Texas Rules
On one occasion, Travis Blank alleged that Crudup threatened
Civ.Proc., Rule 192.5.
to kill him. Following this complaint, the DA charged Crudup
Cases that cite this headnote with making terroristic threats. 2 During their investigation,
members of the DA's Office interviewed Blank on several
occasions. The DA's prosecution file contains sheriff's
department reports, typed internal memos, letters written by
Attorneys and Law Firms Blank, and handwritten notes from interviews and telephone
calls prepared by the DA's office. One set of notes detailed
*184 Susan Dolan Reed, Criminal District Attorney, a series of calls between Blank and Assistant DA Robert
Clarkson F. Brown, Assistant Criminal District Attorney, McCabe. The file indicates that Blank refused to testify or
Thomas W. Gendry, Claudia Damy Brown, Gendry & to allow Travis to testify at trial, despite McCabe's warnings
Spargue, P.C., San Antonio, for Relator.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
that the DA's Office would drop the charges against Crudup appellate remedy. 5 As to the first prong, a lower court has
if they did not testify. no discretion in determining what the law is, even when the
law is unsettled. 6 As to the second, we have repeatedly held
The DA's Office indeed dropped the charges, and Crudup
that appeal is inadequate when a court erroneously orders
sued the Blanks for malicious prosecution. The DA's Office
complied with a subpoena duces tecum and turned over disclosure of privileged information. 7
its prosecution file to Crudup for use in the civil case.
Crudup subpoenaed McCabe, another assistant DA, and a
DA investigator to testify at trial. The DA's Office and B. The King Decision Does Not Mandate DA Testimony
the three subpoenaed individuals filed a Motion to Quash
and For Protective Order, arguing that the work-product [4] Causation is an indispensable element of this malicious
privilege precluded the testimony *185 Crudup sought. prosecution case. As we explained in King, “to recover
Crudup's response attached no evidentiary support other than for malicious prosecution when the decision to prosecute
the previously produced prosecution file. Crudup insisted is within another's discretion, the plaintiff has the burden
the DA testimony was not work product, and in any event of proving that that decision would not have been made
the DA had waived any privilege claim by disclosing the but for the false information supplied by the defendant.” 8
prosecution file. The trial court conducted a brief non- So Crudup must prove not only that the Blanks furnished
evidentiary hearing and granted the DA's motion from the false information, but also that this false information caused
bench. At the hearing, Crudup's counsel complained, without
Crudup to be prosecuted. 9
elaboration, that the court had “damaged my case” and
“severely limited and handicapped my case.” Crudup filed
In King, Kerr County district attorney Sutton testified in the
a motion for reconsideration, attaching a transcript of the
malicious prosecution case brought by plaintiffs Graham and
hearing and arguing that he needed the testimony from the
DA personnel “to fully develop” his case and to prove the *186 Wren. 10 In rendering judgment for defendants, we
elements of malicious prosecution. The motion also attached wrote, “Graham and Wren offered no evidence whatever—as
notes from the prosecution file written by McCabe, and by opinion from Sutton, for example—that the decision to
purporting to “state the reasons” and “describe the reason” the prosecute was based on any information supplied by King that
criminal case was dismissed. The trial court entered a written Graham and Wren assert was false.” 11 The King decision and
order again granting the DA's motion and effectively denying our review of the King record do not reveal whether Sutton
the motion for reconsideration. testified voluntarily or pursuant to a subpoena.
The court of appeals granted Crudup mandamus relief and Crudup argues that “[a] necessary element for a malicious
directed the trial court to withdraw its order. The court of prosecution is the testimony of the District Attorney's office,”
appeals concluded that under King v. Graham 3 Crudup must and insists that this Court “has ruled that the testimony
prove that Blank's provision of false information was the of the District Attorney's office is necessary to prove an
determining factor in the DA's decision to bring the criminal element of malicious prosecution.” This is assuredly wrong;
prosecution, and that “[u]nder these circumstances the work- nothing in King suggests that plaintiffs must provide direct
product privilege does not operate as a blanket privilege evidence of causation or that prosecutors can be subpoenaed
to provide live testimony regarding causation or anything
covering all decisions made by the DA's office.” 4 The DA
else. In King, the district attorney did testify, and as this
now seeks mandamus relief in this Court.
Court weighed but-for causation in that case, we noted that
his testimony nowhere opined “that the decision to prosecute
was based on any information supplied by [the defendant]
II. Discussion that [plaintiffs] assert was false.” 12 We summarized what
the district attorney did and did not say and mentioned
A. Standard of Review his testimony as merely one way causation could have
been proved in that case. Our reference to the district
[1] [2] [3] We grant mandamus relief when the trial attorney's testimony in King, however, did not announce a
court has abused its discretion and a party has no adequate blanket privilege waiver or authorize plaintiffs to subpoena
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
prosecutors to testify whenever plaintiffs wish to bolster the
the statements made by Defendant Cindy.” He stated in his
causation element of their malicious prosecution lawsuit. motion for reconsideration that he needed the testimony in
order to “present evidence of the conduct of the Defendants
before the criminal case was initiated” and also “to present
evidence of the conduct of the Defendants during the course
C. Crudup Cannot Overcome
of the criminal proceedings, especially as to the reason of the
the DA's Testimonial Privilege
dismissal of the criminal case.” In his briefing to this Court,
[5] [6] [7] [8] The United States Supreme Courthe stresses that without DA testimony, he cannot prove the
first recognized the work-product doctrine 60 years ago in specific elements of malicious prosecution.
Hickman v. Taylor, 13 and our state discovery rules protect
[9] For purposes of his civil case, conversations made
those materials prepared by or at the request of an attorney
in the course of the criminal investigation, information
in anticipation of litigation. 14 As we have explained, “The learned during that investigation, and the DA's decision to
primary purpose of the work product rule is to shelter drop the case all constitute work product as defined above,
the mental processes, conclusions, and legal theories of and while producing the prosecution file unquestionably
the attorney, providing a privileged area within which the waived protection of the documents themselves, that selective
lawyer can analyze and prepare his or her case.” 15 The disclosure does not oblige DA staff to provide deposition
privilege continues indefinitely beyond the litigation for and trial testimony interpreting, explaining, or otherwise
which the materials were originally prepared. 16 Moreover, elaborating on matters contained in the file. The dissent notes
the privilege covers more than just documents: it extends that Crudup may well want to quiz DA staff about various
to an attorney's mental impressions, opinions, conclusions, matters unrelated to the specifics of the prosecution against
him: “testimony as to general procedures such as procedures
and legal theories, 17 as well as the selection and ordering
of the DA's office for intake of criminal complaints,
of documents. 18 The work product privilege is broader processing of those complaints, whether investigation is
than the attorney-client privilege 19 because it includes all made into the facts of cases before criminal proceedings
communications made in preparation for trial, including an are instituted, and whether contacts are typically made
attorney's interviews with parties and non-party witnesses. 20 with complaining witnesses before criminal proceedings are
begun, during the proceedings, or after the proceedings are
*187 In the pending case, all of the DA's Office's work completed.” 224 S.W.3d at 193. Crudup, however, has never
in connection with the criminal proceeding against Crudup, expressed the slightest interest in such general matters, which
and relevant to the decision to bring criminal charges against might well be fair game; the record and his briefs to this Court
him, constitutes work product, namely “material prepared show him focused solely on eliciting DA testimony regarding
or mental impressions developed in anticipation of litigation the specific events surrounding his criminal case and insisting
or for trial” or communications “made in anticipation of that without such case-specific details, “he will not be able to
litigation or for trial ... among a party's representatives” under prove every element of malicious prosecution.”
Rule 192.5(a). The totality of the DA's work on the Crudup
matter, as evidenced by the prosecution file, consisted of Rule 192.5(b)(1) distinguishes everyday work product from
the preparation of a criminal charge against Crudup and “core work product” and makes clear that the latter—defined
the criminal litigation that followed. The trial court record as “the attorney's or the attorney's representative's mental
indicates that Crudup was not interested in eliciting general impressions, opinions, conclusions, or legal theories”—is
factual testimony from DA witnesses regarding how the inviolate and flatly “not discoverable,” subject to narrow
DA's Office receives, processes, and investigates criminal exceptions that are inapplicable here. 21 Core work product is
complaints. Crudup only subpoenaed DA employees who sacrosanct *188 and its protection impermeable. Assuming
had been directly involved with his criminal case to testify arguendo that the testimony Crudup seeks is non-core work
in the civil case. He informed the district court, in his product, which seems doubtful, Crudup still bears a heavy
response to the Motion to Quash and For Protective Order, burden: he must show that he “has substantial need” for the
that he was interested in their testimony because “[t]he DA's testimony in the preparation of his case and that he “is unable
office had numerous conversations with Defendant Cindy without undue hardship to obtain the substantial equivalent of
and because of these conversations they are fact witnesses to the material by other means.” 22
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
of records in order to establish that the prosecution file
The court of appeals said it granted mandamus relief because contains records of a regularly conducted activity under Rule
“the DA's office has failed to meet its burden of showing 803(6). Crudup is not required to produce live testimony
any basis to quash the subpoenas.” 23 This misses the from a prosecutor, and he might well be able to prove his
mark. In the record, briefing, and oral argument, Crudup case through alternative means, including (1) circumstantial
continued to demonstrate his intention to interrogate the evidence, (2) trial testimony and pretrial discovery from the
DAs about case-specific details. Such testimony would Blanks, and (3) expert testimony on prosecutorial decision-
unquestionably require the disclosure of DA work product, making and whether the file suggests the DA would not have
which, at a minimum, places the burden on Crudup to show a charged Crudup but for the allegedly false information. Rule
“substantial need” for the testimony and the inability to obtain 192.5 strikes a sensible balance, recognizing that a lawyer's
its substantial equivalent by other means without “undue thoughts are his own and that a party cannot invade every
hardship.” nook and cranny of a lawyer's case preparation, particularly
when the “essence” of what the party seeks has already
[10] Addressing the first prong, “substantial need,” Crudup been revealed to him or is readily available. 27 Indeed, while
contends that he “will not be able to prove an element of insisting he needs live testimony to prove Blank's malice,
his case” (namely, causation) without testimony from the Crudup's brief concedes that the prosecution file contains
prosecutors. To be sure, granting Crudup access to live DA all the evidence he needs: “The notes of District Attorney
testimony might improve his chances in court, but improving McCabe clearly indicate the malice of Cynthia Blank.”
a civil litigant's odds of winning is not enough. Substantial
need is not merely substantial desire. Prosecutors could win Understandably, Crudup desires live testimony to fortify his
more convictions absent the Fifth Amendment, or the priest- case, but Rule 192.5(b)(2) is not nearly so permissive. Even
penitent privilege, or the marital privilege, but we safeguard assuming the testimony sought is non-core work product,
these privileges and others because they advance a greater Crudup's burden of showing causation in his malicious
societal good. Like every litigant, Crudup wants to strengthen prosecution suit is insufficient to constitute “substantial
his lawsuit, understandably so, but that cannot trump a need.” Nor has Crudup shown an inability to obtain the
settled privilege and justify a wide-ranging excavation of substantial equivalent of the testimony sought without “undue
prosecutorial decision-making. hardship.” If anything, when it comes to affecting Crudup's
burdens at trial, the DA's disclosure of its prosecution file did
[11] [12] [13] The second prong is inability to obtain more to alleviate than to aggravate.
the substantial equivalent of the requested material. As stated
above, Crudup cannot win his malicious prosecution suit
without showing that false information supplied by the Blanks
D. The DA Has Not Consented
to the DA's Office caused the DA to prosecute. 24 The to Testify by Producing the File
DA's Office, however, has already provided Crudup with
the substantial equivalent of testimony: it has, pursuant to Crudup alternatively argues that the DA waived the privilege
a subpoena duces tecum, turned over its entire prosecution under Texas Rule of Evidence 511(1) and cannot resist
file, which contains notes related to the investigation, sheriff's testifying. Again, we disagree. Rule 511(1) provides that a
department complaint reports, Travis Blank's affidavit to person waives a privilege against disclosure if he “voluntarily
the sheriff's department detailing Crudup's alleged threat, discloses or consents to disclosure of any significant part of
and McCabe's log of conversations with Cynthia Blank that the privileged matter....” Although the DA's Office turned
ultimately prompted him to dismiss the criminal charges. over its prosecution file without objection, which waived the
Many if not all of these documents might come into evidence work-product privilege as to the file's contents, the record is
either through a non-hearsay use or as an *189 exception devoid of any indication that by doing so the DA likewise
to hearsay. 25 Any false statements made by the Blanks enlisted its current and former personnel to testify in Crudup's
to the DA, for example, would not constitute hearsay if malicious prosecution suit regarding their case materials and
offered for their effect on the listener rather than for the related impressions and communications. The DA's waiver
here is limited, not limitless, and agreeing to produce a
truth of the matter asserted. 26 And Crudup has already
prosecution file does not in itself require the DA to produce
taken a deposition on written questions of the DA's custodian
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
its personnel so that their mental processes and related case asserted as a bar to discovery in civil litigation, its role in
preparation may be further probed. assuring the proper functioning of the criminal justice system
is even more vital.” 1 In my view, mandating testimony from
We therefore hold on this record, given the protected nature DA personnel on these facts would impose an unwarranted
of what Crudup intends to elicit, that the DA's selective burden on our State's finite prosecutorial resources and
disclosure of the prosecution file, while waiving the privilege impede the vigorous deployment of such resources.
as to the documents themselves, does not waive the DA's
testimonial work-product privilege regarding the prosecutor's When interpreting the rules of procedure and evidence, courts
mental processes; nor did the DA's file disclosure itself give must always be mindful of the mandates of Rule of Civil
rise to a *190 “substantial need” or “undue hardship” Procedure 1 and Rule of Evidence 102. The former declares
sufficient to overcome the privilege that protects non-core this paramount objective: “to obtain a just, fair, equitable and
work product. impartial adjudication ... with as great expedition and dispatch
and at the least expense both to the litigants and to the state
as may be practicable.” The latter states a similar overarching
III. Conclusion purpose: “to secure ... elimination of unjustifiable expense
and delay.” These two policy pronouncements, both adopted
Direct prosecutor testimony is not required to prove causation by this Court, govern construction of the rules and require the
and malice in malicious prosecution suits. Nor, on this promotion of fair and efficient proceedings. And both rules
record, did the DA's Office waive its work-product privilege necessarily inform our analysis of whether Texas law permits
against testifying by producing the prosecution file. Given private plaintiffs to force DA testimony in cases like this.
the nature of what Crudup seeks and his inability to show
both “substantial need” and “undue hardship” under Rule The DA's Office's brief advances various practical reasons
192.5(b)(2), he cannot force DA personnel to discuss their for its view that “turning every prosecutor's office into civil
mental processes or other case-related communications and litigants' private investigators and witnesses on the public's
preparation, even if the subpoenaed testimony relates to dime is not sound public policy.” One argument is that
documents already produced. allowing malicious prosecution plaintiffs to commandeer DA
personnel to testify under a Rule 511 waiver theory would
We conditionally grant the petition for writ of mandamus and actually cause plaintiffs more problems than it would cure.
direct the court of appeals to vacate its writ of mandamus and I agree with the DA's Office that granting *191 Crudup's
to reinstate the trial court order quashing the subpoenas and demand for live testimony would, if anything, exacerbate
issuing a protective order. 28 The writ will issue only if the evidentiary challenges for future malicious prosecution
court of appeals fails to comply. plaintiffs. District attorneys are chiefly focused on their
criminal caseloads—“the primary duty of all prosecuting
attorneys ... [is] to see that justice is done” 2 —not on
being taxpayer-funded witnesses and investigators in private
Justice WILLETT delivered a concurring opinion.
damages suits. If selective production of a case file effected a
Justice JOHNSON delivered a dissenting opinion, in which sweeping subject-matter waiver that forfeited the testimonial
Chief Justice JEFFERSON and Justice MEDINA joined. privilege and obliged DAs to endure civil depositions,
hearings, and trials while their criminal caseloads languished,
Justice GREEN did not participate in the decision. prosecutors would simply forswear cooperation altogether
and never disclose anything. Plaintiffs like Crudup would
Justice WILLETT, concurring. then be forced to prove “substantial need” and “undue
Privileges, to be effective, must be predictable; an uncertain hardship” for each individual document in the prosecutor's
privilege, or one subject to widely varying applications, is file, a laborious practice that would succeed only in wasting
barely better than no privilege at all. time and expense for the bench and bar alike.
The United States Supreme Court declared a generation The Court properly limited the scope of the work-product
ago, “Although the work-product doctrine most frequently is waiver resulting from the DA's disclosure to the documents
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50 Tex. Sup. Ct. J. 733
themselves, not to live testimony concerning the thoughts and relevant to the suit; (3) there had been other instances of
communications underlying each document's contents. DA employees or attorneys having been subpoenaed to give
testimony in malicious prosecution cases and that testifying
I write separately only to make these practical points, which in such suits was becoming burdensome; or (4) the witnesses'
while unnecessary to our holding today, are nonetheless attendance at court in this particular suit would disrupt the
compelling. work of the DA's office. 2 McCabe, who no longer worked
for the DA, did not urge that his attendance at court would
work a hardship or that he needed some accommodation as to
Justice JOHNSON, joined by Chief Justice JEFFERSON and the time or date of his attending court.
Justice MEDINA, dissenting.
The trial court quashed trial subpoenas and granted a The Crudups' response asserted, in part, that (1) the
protective order shortly before trial was scheduled to start subpoenaed individuals were fact witnesses based on their
in a malicious prosecution case, effectively excluding all having had conversations with real party in interest Cindy
testimony from current and former employees of the Bexar Blank and testimony about such conversations was not
County Criminal District Attorney's office who participated privileged; (2) even if some documents in the DA's file might
in prosecuting the underlying criminal case. The trial court's ordinarily be privileged work product, not all documents in
action was based on an unsworn “Motion to Quash Trial the file would be privileged as work product; and (3) the
Subpoenas and For Protective Order” filed by the DA's office DA's entire file had already been produced in response to a
and argued by the parties without testimony or evidence. I subpoena duces tecum, had been on file in the civil case for
agree with the court of appeals that based on this record the over a year, and any privilege which might otherwise exist as
trial court abused its discretion in quashing the subpoenas. to the contents of the file was waived. A copy of the DA's case
file and the written deposition questions and answers proving
The Bexar County District Attorney's office filed its unsworn it up were attached to the response. Following a hearing at
motion in late February 2005 in a malicious prosecution which no evidence was introduced, the trial court quashed the
suit filed by David and Annette Crudup. The motion related subpoenas.
that DA investigator Al Larry, assistant DA Sylvia Cavazos,
and former assistant DA Robert McCabe had been served The DA's argument relies to a significant degree on our
with subpoenas on behalf of the Crudups to give trial opinion in State ex rel. Curry v. Walker, 873 S.W.2d 379
testimony in early March in the 166th District Court in (Tex.1994). The DA cites Walker in support of its position
San Antonio. The motion stated that “The [DA's] Office that the work-product privilege exempts its entire litigation
objects, on its behalf and on behalf of these individuals, to case file from discovery. In Walker a subpoena duces tecum
their required appearance and testimony based on the work was issued for:
product privilege.” By its motion the DA's office claimed
Any and all records, books, papers,
that testimony based on the individuals' work or by reference
documents written memoranda [sic],
to the DA's records should be found privileged; that the
handwritten notes, photographs and
mental impressions, opinions, conclusions, legal theories and
videotapes, including but not limited
strategies of an attorney and the attorney's employees which
to the entire file(s) in your
were “prepared in anticipation of litigation or for trial”
possession or under your custody or
were privileged; and that the DA's entire litigation file was
control, indictments, arrest records,
privileged. 1 The motion requested that the subpoenas be investigation, punishment evidence,
quashed *192 and a protective order granted. The motion forensics, internal correspondence and
did not mention that the DA's litigation case file had been memos regarding the arrest and
produced in August 2003 in response to a subpoena duces subsequent conviction of [NAME OF
tecum or that an assistant DA had given a deposition on DEFENDANT] on September 27,
written questions at that time to prove the file as a business 1993.
record. Nor did the motion claim that (1) the file had been
involuntarily or mistakenly disclosed; (2) testimony of the Id. at 380.
subpoenaed witnesses would not be relevant to the civil suit
or that the witnesses did not possess knowledge of facts
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In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
Before the file was produced in Walker the DA moved to be determined. Witnesses occasionally are instructed, upon
quash the subpoena and for a protective order. The trial timely and proper motion, not to answer certain questions
court examined the DA's files in camera, directed that certain because the questions seek testimony as to matters which
documents comprising work product be withheld and directed are privileged or are otherwise inadmissible. But if the
production of the remaining documents, including police questions are rephrased the witnesses then may sometimes
reports, court documents, photographs, etc. We conditionally be allowed to answer. Lawyers may be instructed not to
granted a writ directing the trial court to rescind that part of ask witnesses about certain matters, such as privileged work
its order denying the DA's motion to quash. In doing so, we product, but that does not preclude lawyers from asking, and
stated: witnesses from testifying about, other matters. 4 For example,
testimony as to general procedures such as procedures of
In effect, this requires the District Attorney to produce
the DA's office for intake of criminal complaints, processing
his entire litigation file, except for documents involving
of those complaints, whether investigation is made into the
direct communications. This order is too broad. In National
facts of cases before criminal proceedings are instituted,
Union Fire Insurance *193 Co. v. Valdez, 863 S.W.2d
and whether contacts are typically made with complaining
458, 460 (Tex.1993, orig. proceeding), we stated that “[a]n
witnesses before criminal proceedings are begun, during the
attorney's litigation file goes to the heart of the privileged
proceedings, or after the proceedings are completed would
work area guaranteed by the work product exemption. The
not be work product as to the Crudup prosecution. Yet
organization of the file, as well as the decision as to what
such testimony was encompassed by the DA's motion and is
to include in it, necessarily reveals the attorney's thought
precluded by the trial court's order.
processes concerning the prosecution or defense of the
case.”
There is no rule that gives an attorney or an attorney's
employees a privilege *194 from being called to testify.
Id. The DA's reliance on Walker is misplaced. 3
Texas Rule of Evidence 501 provides that:
First, in the case before us the file was produced over a Except as otherwise provided by Constitution, by statute,
year before the DA filed the motion to quash. The subpoena by these rules, or by other rules prescribed pursuant to
duces tecum pursuant to which the Bexar County DA's office statutory authority, no person has a privilege to:
produced its file in 2003 required the production of all records
relating to, and the case file for, the prosecution of David (1) refuse to be a witness;
Crudup. The testimony of the assistant DA in response to
the subpoena was that all the requested records had been (2) refuse to disclose any matter;
produced. To the extent that the DA's work product was
(3) refuse to produce any object or writing; or
disclosed by documents, notes, trial preparatory memoranda,
organization of the case file or in any other way by the file, (4) prevent another from being a witness or disclosing
the privilege was waived long before the DA's motion was any matter or producing any object or writing.
filed in February 2005. See TEX.R. EVID. 511(1); Axelson,
Inc. v. McIlhany, 798 S.W.2d 550, 554 (Tex.1990). Privileges are addressed in Article V of the Texas Rules
of Evidence. The DA's office does not cite a provision of
Second, the objects of the DA's motion to quash were Article V, any rule, or a Constitutional or statutory provision
witnesses. The work product privilege precludes testimony which allows its attorneys and employees to be completely
or discovery as to types of information; it does not make exempted from attending court or testifying as to facts or
persons privileged from testifying. Witnesses are not the relevant matters within their knowledge. The DA cites an
same as documents. Documents have fixed contents that can exemption only for testimony as to one area: work product.
be analyzed to determine whether the documents and their The work product privilege in our rules of civil procedure
contents are privileged. But the full knowledge of a witness as allows the DA employees to be protected from testifying as
to facts and matters relevant to claims made in a lawsuit can to the subject matter of their work product and that protection
hardly ever be known, and the testimony of a witness is not continues past termination of the criminal case and applies in
fixed until after the witness has completed testifying. It is only a situation such as that before us. Owens–Corning Fiberglas
while witnesses are testifying or after they have testified that Corp. v. Caldwell, 818 S.W.2d 749, 751–52 (Tex.1991).
the admissibility or privileged nature of their testimony can However, the privilege is not a general exemption from being
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In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
called as a witness. It is limited and as relevant here extends communication between attorney and
to (1) material prepared or mental impressions developed client. But those principles *195 give
in anticipation of litigation or for trial by or for a party us no real assistance here because what
or a party's representatives, including the party's attorneys, is being sought is neither evidence
consultants, employees, or agents; or (2) communications nor is it a privileged communication
made in anticipation of litigation or for trial between a between attorney and client.
party and the party's representatives or among a party's
representatives, including the party's attorneys, consultants, Id. at 515–16, 67 S.Ct. 385 (Jackson, J., concurring) (citation
employees, or agents. See TEX.R. CIV. P. 192.5(a). The omitted). As to statements signed or written by witnesses,
privilege does not extend to protecting facts the attorney or “Such statements are not evidence for the defendant.... Nor
the attorney's representatives may acquire. Owens–Corning should I think they ordinarily could be evidence for the
Fiberglas Corp., 818 S.W.2d at 750 and n. 2; Axelson, 798 plaintiff.” Id. at 519, 67 S.Ct. 385.
S.W.2d at 554.
In United States v. Nobles, 422 U.S. 225, 95 S.Ct. 2160,
In Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 45 L.Ed.2d 141 (1975), the Supreme Court addressed the
L.Ed. 451 (1947), cited by the Court, the United States work-product privilege as to an investigator's report when
Supreme Court addressed the question of whether either the investigator was called as a witness in the criminal trial.
written witness statements in possession of, or oral witness The Court held that under the circumstances the privilege
statements made to, an attorney in the case at bar had to was waived. Id. at 239–40, 95 S.Ct. 2160. Justice White,
be produced to opposing parties in response to a pretrial in a concurring opinion joined by then-Justice Rehnquist,
discovery request. The witness statements being discussed questioned the Court's reaching the “waiver” issue before
were not made by a non-client witness to an attorney in determining what protection the report had in the first
another case, as is the situation with the Crudups, nor were instance. Justice White opined that the work-product doctrine
the witness statements asserted to be evidence in another of Hickman could not be
proceeding. They were witness statements taken by an
extended wholesale from its historic role as a limitation on
attorney as part of trial preparation in the case in which the
the nonevidentiary material which may be the subject of
discovery was sought. In addressing disclosure of any such
pretrial discovery to an unprecedented role as a limitation
oral witness statements, the Hickman Court noted that:
on the trial judge's power to compel production of
Such testimony could not qualify evidentiary matter at trial....
as evidence; and to use it
[T]he work-product doctrine of Hickman v. Taylor, supra,
for impeachment or corroborative
has been viewed almost exclusively as a limitation on the
purposes would make the attorney
ability of a party to obtain pretrial discovery. It has not
much less an officer of the court
been viewed as a “limitation on the broad discretion as to
and much more an ordinary witness....
evidentiary questions at trial.”
Denial of production of this nature
does not mean that any material, non- Id. at 242–43, 95 S.Ct. 2160 (White, J., concurring). As to
privileged facts can be hidden from the the work-product privilege and trial evidence Justice White
petitioner in this case. continued:
Id. at 513, 67 S.Ct. 385. In a concurring opinion, Justice Indeed, even in the pretrial discovery area in which
Jackson noted that the question of depriving a litigant of the work-product rule does apply, work-product notions
evidence was not involved: have been thought insufficient to prevent discovery of
evidentiary and impeachment material. In Hickman v.
It seems clear and long has been
Taylor, 329 U.S. at 511, 67 S.Ct. 385, the Court stated:
recognized that discovery should
“... Where relevant and nonprivileged facts remain hidden
provide a party access to anything
in an attorney's file and where production of those facts is
that is evidence in his case. It seems
essential to the preparation of one's case, discovery may
equally clear that discovery should not
properly be had....” Pursuant to this language, the lower
nullify the privilege of confidential
courts have ordered evidence to be turned over pretrial even
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In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
when it came into being as a result of the adversary's efforts (providing that a party seeking to avoid having a witness
in preparation for trial ... give deposition testimony on the basis of privilege is required
to provide evidence to support the claim of privilege in the
Accordingly, it would appear that with one exception to be form of testimony or affidavits served before hearing on the
discussed below, the work-product notions of Hickman v. privilege claim). The quashed subpoenas in this case were
Taylor, supra, impose no restrictions on the trial judge's not discovery inquiries requesting the DA's office to disclose
ordering production of evidentiary matter at trial; that these specific information to which the motion for protective order
notions apply in only a very limited way, if at all, to a party's was directed. They were trial subpoenas which would require
efforts to obtain evidence pretrial pursuant to discovery the witnesses to testify generally. At a minimum the trial court
devices.... should have required the DA's office to show what particular
knowledge and information possessed by its employees was
Id. at 249–51, 95 S.Ct. 2160 (emphasis in original). Justice
work product for which the privilege had not been waived. It
White then referenced an example of such a disclosable fact:
then could have limited the Crudups' inquiries pending further
“A member of a defense team [who] witnesses an out-of-
development of a record. Because this record is clear that the
court statement of someone who later testifies at trial in a
DA did not make any such showing, the DA's employees were
contradictory fashion becomes at that moment a witness to a
not entitled by law or rule to refuse to be witnesses and testify,
relevant and admissible event....” Id. at 250, 95 S.Ct. 2160.
even if some testimony as to their knowledge, information,
Although Justice White was addressing whether notes of
and mental processes was later properly excluded upon
the defense team member concerning the witness's statement
objection. TEX.R. EVID. 501(1), (2); 511(1). Nor was the
should be disclosed in the trial for which the notes were
DA's office entitled to prevent its employees from being
prepared, a matter on which Texas and federal procedure
witnesses and testifying absent such showing. TEX.R. EVID.
might differ, the substance of his example applies to the
501(4).
situation before us. Attorneys and members of an attorney's
trial-preparation team may in some circumstances be fact
The Court concludes that conversations between the DA's
witnesses to matters and events.
office and Blank during the course of the criminal charge
investigation were work product. But Blank was a non-
*196 Furthermore, to the extent a work product privilege
party to the criminal proceeding and was not an employee
exists, it can be waived. Nobles, 422 U.S. at 239, 95 S.Ct.
of the state. The DA's office did not offer any proof that
2160. Texas rules and practice are in accord. If a privilege
more conversations between Blank and DA employees took
applies, it is waived if the “person or a predecessor of the
place than were memorialized by the DA's file. Apart from
person while holder of the privilege voluntarily discloses or
information disclosed by notes in the DA's file, for which
consents to disclosure of any significant part of the privileged
the privilege had been waived by disclosure, the content
matter unless such disclosure is itself privileged.” TEX.R.
of statements made by Blank to the DA's employees, if
EVID. 511(1); see Axelson, 798 S.W.2d at 554.
any, might be work product. See TEX.R. CIV. P. 192.3(h).
But even in the absence of a record showing there were
In disputes such as this, the burden of proceeding and
more conversations between Blank and the employees than
producing evidence must be on one of the parties. The trial
are disclosed in the DA's file and assuming there were,
court effectively placed the burden on the Crudups to show
statements made by the DA's employees to Blank arguably,
why the DA's attorneys and employees should be required to
if not conclusively, were not privileged. The DA's office did
testify and what information or facts would be elicited from
not show that any conversations between its employees and
them. That is different from the placement of the burden by
Blank not memorialized in its litigation file included work
Texas Rule of Evidence 501 and our prior cases. We have
product, that is, either (1) material prepared by the DA's office
previously required the party resisting testifying or having its
or its employees for, or mental impressions of its *197
employees testify to shoulder the burden of properly asserting
employees developed in anticipation of, the criminal trial; or
a privilege and showing that it applied to the testimony
(2) communications made in preparation for the criminal trial
in question. See Huie v. DeShazo, 922 S.W.2d 920, 926
between a party and the party's representatives. See TEX.R.
(Tex.1996) (orig. proceeding); Peeples v. Honorable Fourth
CIV. P. 192.5(a). If the DA's employee's statements to
Supreme Judicial Dist., 701 S.W.2d 635, 637 (Tex.1985)
Blank did not include work product, the statements were not
(orig. proceeding); Giffin v. Smith, 688 S.W.2d 112, 114
privileged to start with. If the statements to Blank disclosed
(Tex.1985) (orig. proceeding). See also TEX.R. CIV. P. 199.6
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In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
work product, the privilege as to the material disclosed was may have occurred as to more of the DA's work product
presumptively waived and the DA would have had the burden than just the amount disclosed. See TEX.R. EVID. 511(1).
to prove or show why the conversations did not effect a waiver Intuitively, one could speculate that there remained some of
of privilege as to the disclosed matters. See TEX.R. EVID. the DA's work product for which the privilege had not been
511(1); Jordan v. Court of Appeals for Fourth Supreme waived. But speculation is not sufficient: proof is required.
Judicial Dist., 701 S.W.2d 644, 648–49 (Tex.1985) (orig.
proceeding); see also Axelson, 798 S.W.2d at 553–54 (“Since In their motion for reconsideration of the trial court's order,
there was evidence that the investigation [which was being the Crudups attached and quoted individual notes from the
claimed as privileged work product] was disclosed to the DA's file setting out the contents of a conversation between
FBI, IRS, and the Wall Street Journal, the court of appeals Blank and the assistant DA handling the prosecution. They
properly held that these privileges had been waived.”); Nat'l *198 again urged that the contents of notes reflecting
Union Fire Ins. Co. v. Hoffman, 746 S.W.2d 305, 311 conversations were a proper subject of testimony from the
(Tex.App.-Dallas 1988) (orig. proceeding). And, to the extent subpoenaed witnesses. The DA's office still did not attempt to
that documents memorializing the conversations had been show authority for or offer evidence to support its employees
produced and the privilege as to their contents thereby being exempt from giving testimony as to contents of
waived, the DA's employees had no privilege to refuse to the notes. The trial court denied the Crudups' motion to
testify about them. See TEX.R. EVID. 501; Hoffman, 746 reconsider.
S.W.2d at 311 (holding that attorneys who authored letter to
client which had been disclosed could be examined about the The quashing of subpoenas by the trial court on this record
letter despite claim of attorney-client privilege). turned the procedure for protecting privileged work product
upside down. Instead of the DA having to show why its
Because the Crudups' response raised the question of employees who had knowledge of relevant matters should be
disclosure of the DA's work product both by disclosure of the protected from testifying, the Crudups' attorney had to try to
DA's litigation file and by its employees' conversations with preserve his clients' right to call witnesses by disclosing his
Blank, the question of waiver of privilege was raised and the work product in pleadings and argument in the trial court and
DA had the burden of proving that no waiver occurred. See setting out testimony he wanted to elicit from the subpoenaed
Jordan, 701 S.W.2d at 648–49. Even though the Crudups did employees. He has had to continue that course through two
not have the burden to proceed, given the state of the record, appellate court proceedings.
their response to the motion specifically set out some reasons
the DA's motion should be denied. As noted above, those Unlike the situation in Walker where the district attorney
reasons included assertions that (1) the subpoenaed witnesses challenged an overly broad subpoena and court order, here
were fact witnesses because they had conversations with it was the DA's office that made an overly broad request
real party in interest Cindy Blank and testimony about those seeking an order from the trial court permitting witnesses to
conversations was not privileged; and (2) prior production refuse to give testimony. See TEX. R. EVID. 501; Walker,
of the DA's file waived any privilege as to contents of the 873 S.W.2d at 380. If the DA's office had sought only to
file. The Crudups provided support for their response: a copy preclude testimony as to work product, the privileged nature
of the DA's file. The file contains, among other matters, of the subject matter might not have required much, if any,
a report from investigator Larry and notes documenting proof. The trial court could have entered a protective order
progress of the prosecution and conversations between Blank precluding the Crudups' attorney from inquiring into certain
and assistant DAs handling the case. At least one of the matters pending further orders of the court. Then as the trial
conversations took place after the criminal proceeding was proceeded the court would have had the benefit of at least
dismissed. As previously noted, the DA was representing the some record on which to base its decision as to both the
State in the criminal proceeding against David Crudup; Blank existence of privilege as to the subject matter and whether
was neither a party to the proceeding nor an employee of the waiver of the privilege as to the specific testimony sought had
state; and the DA did not prove any reason that the content occurred. When the DA's office ended its pretrial presentation
of its employees' conversations with such a non-party witness in the trial court without providing proof that all of the
was privileged work product. If the DA's employees disclosed testimony the subpoenaed witnesses could give would be
work product to Blank in the conversations or by disclosure work product for which the privilege had not been waived,
of the file and if either disclosure was significant, then waiver however, that should have been the end of the matter as to
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In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
with the Crudups' attorney's trial preparation and forecloses
the motion to quash. There was no evidence to support the
certain choices as to how his client's case can be presented
trial court's order which effectively granted a privilege to the
at trial. Among other problems it creates, the trial court's
DA's employees and attorneys from testifying at all, and the
order (1) impairs the Crudups' attorney's ability to determine
motion should have been denied. See TEX.R. EVID. 501. The
how best to present the Crudups' case to the jury because
motion should have been denied also because the question of
he cannot count on having the subpoenaed witnesses (or any
waiver of the privilege by disclosure was raised and there was
other witness from the DA's office) available to testify; (2)
not evidence that waiver had not occurred. See TEX.R. EVID.
forecloses the Crudups' attorney from using live testimony
511(1).
to present and explain matters disclosed by the DA's file
such as the dates of contact with Blank, the substance of
A quote from the United States Supreme Court which we have
conversations with her and both the existence and substance
previously referenced is applicable here:
of reports from police officers and investigators; and (3) keeps
“Proper presentation of a client's case the Crudups' attorney from asking DA employees to interpret
demands that (the attorney) assemble notes they made in the case file, or even whether records of
information, sift what he considers to all conversations with complaining witnesses were made.
be the relevant from the irrelevant
facts, prepare his legal theories and The Crudups' counsel has maintained that he planned to prove
plan his strategy without undue and that the complaint made by the Blanks to the DA was false
needless interference.” and that the DA would not have filed the criminal proceedings
absent the false complaint. Maybe he can; maybe he can't.
Nat'l Union Fire Ins. Co. v. Valdez, 863 S.W.2d 458, 461 But counsel was entitled to formulate and pursue trial strategy
(Tex.1993) (quoting Hickman, 329 U.S. at 511, 67 S.Ct. without having it limited by a preemptive exclusion of certain
385). Much evidence can be presented in different ways. For witnesses with knowledge of relevant matters or having to
example, records of events can be read or witnesses can be disclose his strategy and justify it in pretrial and appellate
called to testify as to the matters covered by the records; proceedings simply because the DA's office filed a motion
witnesses can be called live or by reading depositions; or such as the one it filed.
several witnesses can be called to present evidence (hopefully
non-repetitiously) which could be presented by one witness I would deny the relief sought by the DA's office. See State v.
when the impact of calling multiple witnesses will be greater Biggers, 360 S.W.2d 516, 517 (Tex.1962).
in the trial lawyer's judgment than using only one witness to
tell the story. Decisions about how evidence will be presented
at trial so as to maximize the client's chances of prevailing All Citations
are among the most *199 important a trial lawyer must
224 S.W.3d 182, 50 Tex. Sup. Ct. J. 733
make. In this case the trial court's order unduly interfered
Footnotes
1 179 S.W.3d 47, 51.
2 This crime ranges from a Class B misdemeanor to a state jail felony depending upon the circumstances of the threat.
See TEX. PENAL CODE § 22.07.
3 126 S.W.3d 75 (Tex.2003) (per curiam).
4 179 S.W.3d at 50.
5 In re Prudential Ins. Co., 148 S.W.3d 124, 135–36 (Tex.2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833,
839–40 (Tex.1992) (orig. proceeding).
6 Prudential, 148 S.W.3d at 135 (citing Huie v. DeShazo, 922 S.W.2d 920, 927–28 (Tex.1996)).
7 In re Ford Motor Co., 211 S.W.3d 295, 298 (Tex.2006) (per curiam) (orig. proceeding); In re Bass, 113 S.W.3d 735, 745
(Tex.2003) (orig. proceeding).
8 126 S.W.3d at 78.
9 See id. at 76; see also Browning–Ferris Indus., Inc. v. Lieck, 881 S.W.2d 288, 292–93 (Tex.1994) (citing RESTATEMENT
(SECOND) OF TORTS § 653 cmt. g (1977)).
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In re Bexar County Criminal Dist. Attorney's Office, 224 S.W.3d 182 (2007)
50 Tex. Sup. Ct. J. 733
10 126 S.W.3d at 78–79.
11 Id. at 78 (emphasis added).
12 Id.
13 329 U.S. 495, 509, 67 S.Ct. 385, 91 L.Ed. 451 (1947).
14 TEX.R. CIV. P. 192.5(a)(1).
15 Owens–Corning Fiberglas Corp. v. Caldwell, 818 S.W.2d 749, 750 (Tex.1991) (orig. proceeding) (citing Axelson, Inc. v.
McIlhany, 798 S.W.2d 550, 554 (Tex.1990)).
16 Id. at 751–52.
17 TEX.R. CIV. P. 192.5(b)(1).
18 Nat'l Union Fire Ins. Co. v. Valdez, 863 S.W.2d 458, 460 (Tex.1993) (orig. proceeding) (citing Hickman, 329 U.S. at 511,
67 S.Ct. 385).
19 See TEX.R. EVID. 503.
20 See TEX.R. CIV. P. 192.5(a)(1)-(2); Hickman, 329 U.S. at 512–13, 67 S.Ct. 385.
21 Rule 192.5(c) provides exceptions to the work-product privilege for:
(1) information discoverable under Rule 192.3 concerning experts, trial witnesses, witness statements, and
contentions; (2) trial exhibits ordered disclosed under Rule 166 or Rule 190.4; (3) the name, address, and telephone
number of any potential party or any person with knowledge of relevant facts; (4) any photograph or electronic image
of underlying facts (e.g., a photograph of the accident scene) or a photograph or electronic image of any sort that
a party intends to offer into evidence; and (5) any work product created under circumstances within an exception to
the attorney-client privilege in Rule 503(d) of the Rules of Evidence.
A “witness statement” under Rule 192.3(h) includes signed witness statements and recorded statements, but does not
include “[n]otes taken during a conversation or interview with a witness.”
22 TEX.R. CIV. P. 192.5(b)(2).
23 179 S.W.3d at 51.
24 See King, 126 S.W.3d at 78.
25 See TEX.R. EVID. 801(e)(2) (admission by party-opponent); id. 803(6) (records of regularly conducted activity); id. 803(8)
(A), (C) (public records and reports).
26 See id. 801(d).
27 See Hickman, 329 U.S. at 509, 67 S.Ct. 385.
28 See TEX.R.APP. P. 52.8(c).
1 United States v. Nobles, 422 U.S. 225, 238, 95 S.Ct. 2160, 45 L.Ed.2d 141 (1975).
2 TEX.CODE CRIM. PROC. art. 2.01.
1 The DA's motion arguably sought protection for the contents of its case file. The trial court's order granted the motion
without specifying whether the material in the DA's case file was going to be excluded from evidence as work product
or whether the court only quashed the trial subpoenas. The DA disclaims any issue as to the documents which were
produced and asserts that the only issue is whether the subpoenas were properly quashed.
2 The motion was signed by an Assistant Civil Division DA whose address was listed as 300 Dolorosa in San Antonio.
The record gives the address of the Bexar County Courthouse as 100 Dolorosa—apparently a short distance from the
DA's office.
3 Even though Walker dealt with discovery matters and the case before us deals with trial testimony, neither party contends
that the principles to be applied in determining privilege and waiver are different in the different settings. Both parties
rely on cases involving discovery matters.
4 See TEX.R. CIV. P. 199.5(d)-(g) and 199.6 as to conduct of oral depositions and assertion of privilege from testifying.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
FF
In re Brokers Logistics, Ltd., 320 S.W.3d 402 (2010)
Mandamus
Matters of discretion
KeyCite Yellow Flag - Negative Treatment
To be entitled to mandamus relief, a relator must
Distinguished by In re Transit Mix Concrete & Materials Co.,
Tex.App.-Tyler, May 14, 2014 show the trial court clearly abused its discretion
and he must demonstrate that he has no adequate
320 S.W.3d 402 remedy by appeal.
Court of Appeals of Texas,
El Paso. 1 Cases that cite this headnote
In re: BROKERS LOGISTICS, LTD. (f/
[2] Antitrust and Trade Regulation
k/a Brokers Logistics, Inc.) and Brokers
Parties
Logistics Genpar, L.L.C. (General Partner
Negligence
of Brokers Logistics, Ltd.), Relators.
Nature of conduct to which doctrine
No. 08–09–00086–CV. | May 19, applies; what constitutes “fault”
2010. | Rehearing Overruled July 7, 2010. Under statute governing the designation of
a responsible third party for purposes of
Synopsis apportioning responsibility in tort and deceptive
Background: Worker who was injured while making trade practice actions, which permits party to
delivery on premises in course and scope of his employment move to strike designation of a responsible third
filed suit against premises owners, seeking to recover for his party on the ground that there is no evidence
injuries. Owners filed motion for leave to designate physician that the designated person is responsible for
as a responsible third party, alleging that physician's any portion of the claimant's alleged injury or
negligence in treating worker's knee injuries caused worker's damages, the legislature did not intend for a
injuries, which motion was granted. Thereafter, worker filed responsible third party designation to be struck
motion to strike the designation of physician as a responsible on any ground other than the one contained in
third party. The 34th District Court, El Paso County, William the statute. V.T.C.A., Civil Practice & Remedies
E. Moody, J., granted motion. Owners filed petition for writ Code § 33.004(l ).
of mandamus, challenging this ruling.
9 Cases that cite this headnote
Holdings: The Court of Appeals, Ann Crawford McClure, J., [3] Damages
held that: Aggravation of previous injury, disease, or
disability
[1] owners produced sufficient evidence to raise a genuine Premises owners produced sufficient evidence to
issue of fact regarding physician's responsibility for at least a raise a genuine issue of fact regarding physician's
portion of worker's injuries or damages, and responsibility for at least a portion of worker's
injuries or damages, arising out of worker being
[2] owners had no adequate remedy by appeal. injured on premises while making a delivery
in course and scope of his employment, such
that trial court was not justified in striking
Petition conditionally granted.
the designation of physician as a responsible
third party in worker's suit against owners, in
which owners alleged that physician's negligence
West Headnotes (8) in treating worker's injuries caused workers'
damages; owners' expert report stated that
physician's treatment of worker's knee injury
[1] Mandamus was excessive, unnecessary, and more likely
Remedy by Appeal or Writ of Error than not contributed to a rapid chondrolysis of
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
In re Brokers Logistics, Ltd., 320 S.W.3d 402 (2010)
the articular surfaces of the knee resulting in a considers whether mandamus review will allow
total knee replacement, and expert also believed the appellate court to give needed and helpful
that the steroidal treatments possibly resulted in direction to the law that would otherwise prove
immune compromise and may have led to post- elusive in appeals from final judgments.
operative infection. V.T.C.A., Civil Practice &
Remedies Code § 33.004(l ). Cases that cite this headnote
1 Cases that cite this headnote
[7] Mandamus
Remedy by Appeal or Writ of Error
[4] Mandamus In determining adequacy of an appellate remedy
Modification or vacation of judgment or for mandamus purposes, appellate court must
order consider whether mandamus will spare litigants
Premises owners, on whose premises worker and the public the time and money utterly
was injured while making a delivery in the wasted enduring eventual reversal of improperly
course and scope of his employment, had no conducted proceedings.
adequate remedy by appeal with respect to trial
court's erroneous order striking designation of Cases that cite this headnote
physician as a responsible third party in worker's
suit against owners, in which owners alleged [8] Mandamus
that physician's negligence in treating worker's Remedy by Appeal or Writ of Error
injuries caused workers' damages, and, thus,
Where a trial court's error will cause a waste
mandamus relief, compelling trial court to set
of judicial resources, an appellate court may
aside order, was appropriate; denial of owners'
properly consider that factor in determining the
right to designate physician as responsible third
adequacy of an appeal to remedy the error in
party would skew proceedings, potentially affect
question for mandamus purposes.
outcome of case, and compromise presentation
of owners' defense in ways unlikely to be 2 Cases that cite this headnote
apparent in appellate record. V.T.C.A., Civil
Practice & Remedies Code § 33.004(l ).
9 Cases that cite this headnote
Attorneys and Law Firms
[5] Mandamus *404 Steven L. Hughes, Mounce, Green, Myers, Safi,
Remedy by Appeal or Writ of Error Paxson & Galatzan, El Paso, TX, for Relator.
The adequacy of an appellate remedy must John P. Mobbs, Attorney at Law, El Paso, TX, for Real Party
be determined by balancing the benefits of in Interest.
mandamus review against the detriments; in
evaluating benefits and detriments, the appellate Before CHEW, C.J., McCLURE, J., and ANTCLIFF, Judge.
court considers whether mandamus will preserve
important substantive and procedural rights from
impairment or loss. OPINION ON PETITION FOR WRIT OF MANDAMUS
1 Cases that cite this headnote ANN CRAWFORD McCLURE, Justice.
Relators seek a writ of mandamus against the Honorable
[6] Mandamus
William E. Moody, Presiding Judge of the 34th District Court
Remedy by Appeal or Writ of Error
of El Paso County, Texas, to compel him to set aside an order
In determining adequacy of an appellate remedy striking the designation of Dr. Randy J. Pollet as a responsible
for mandamus purposes, the appellate court third party. We conditionally grant relief.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
In re Brokers Logistics, Ltd., 320 S.W.3d 402 (2010)
or responsibility of Dr. Randy J. Pollet under the Health
Care Liability Act.” Echoing what Judge Moody had stated
at the previous hearing, Martinez also alleged that permitting
FACTUAL SUMMARY
Relators to hold Dr. Pollet liable “would subject Dr. Pollet to
The real party in interest, Rafael Martinez, filed suit potential licensure issues without being able to defend himself
against Relators alleging he was injured on the premises against his accuser, Dr. Blair.” At the conclusion of a hearing
while making a delivery in the course and scope of his held on February 12, 2009, Judge Moody orally granted
employment with Aeroground. Relators filed a motion for Dr. Pollet's motion to dismiss Martinez's suit against him. 2
leave to designate Randy Pollet, M.D. as a responsible Following entry of a written order dismissing Martinez's
third party under Section 33.004 of the Civil Practice and suit against Dr. Pollet and severing that portion of the case
Remedies Code, alleging that Dr. Pollet's negligence in into a new cause number, Martinez filed notice of appeal.
treating Martinez's injuries caused Martinez's damages. See The trial court also granted Martinez's motion to strike the
TEX.CIV.PRAC. & REM.CODE ANN. § 33.004(a)(Vernon designation of Dr. Pollet without specifying the basis for the
2008). Relators based their designation on an expert report ruling. Relators filed a mandamus petition to challenge the
prepared by William Blair, M.D. The trial court granted trial court's order striking the designation. This mandamus
the motion and designated Dr. Pollet as a responsible third proceeding does not concern the dismissal of Martinez's
party. As permitted by Section 33.004, Martinez amended claims against Dr. Pollet. 3
his petition within sixty days of the designation to include
a negligence claim against Dr. Pollet. 1 When Martinez did
not file an expert report and curriculum vitae within 120
RESPONSIBLE THIRD PARTY DESIGNATION
days after filing his claims against Dr. Pollet, Dr. Pollet filed
a motion to dismiss pursuant to Section 74.351(b) of the In their sole issue, Relators contend that the trial court abused
Civil Practice and Remedies Code. Dr. Pollet also filed a its discretion by striking the designation of Dr. Pollet as a
motion for summary judgment on the ground that the two- responsible third party. Because Judge Moody did not specify
year statute of limitations had expired. During this same time the basis for his ruling, Relators must show that the ruling
period, Martinez filed a motion to strike the designation of Dr. cannot be upheld on any ground asserted by Martinez in his
Pollet on the ground that Relators had not produced sufficient motion to strike the designation.
evidence to raise a genuine issue of fact regarding Dr. Pollet's
responsibility for Martinez's injuries or damages. Initially, the [1] To be entitled to mandamus relief, a relator must meet
trial court took Dr. Pollet's motion to dismiss and Martinez's two requirements. First, it must show the trial court clearly
motion to strike the designation under advisement pending abused its discretion. In re Prudential Insurance Company
discovery. Dr. Pollet challenged the trial court's failure to rule of America, 148 S.W.3d 124, 135 (Tex.2004). Second, the
by filing a writ of mandamus and we conditionally granted relator must demonstrate it has no adequate remedy by appeal.
relief on September 25, 2008. See In re Randy J. Pollet, M.D., Id. at 136.
281 S.W.3d 532 (Tex.App.-El Paso 2008, orig. proceeding).
A trial court abuses its discretion if it reaches a decision
On January 6, 2009, the trial court conducted a hearing on so arbitrary and unreasonable as to amount to a clear and
Dr. Pollet's motion to quash the deposition of Dr. Blair. prejudicial error of law. In re Ford Motor Company, 165
During this hearing, the trial court expressed a number of S.W.3d 315, 317 (Tex.2005). When reviewing the trial court's
concerns about the responsible third party designation being decision for an abuse of discretion, the reviewing court may
unfair to Dr. *405 Pollet. First, Dr. Pollet's insurance carrier not substitute its judgment for that of the trial court with
could take the position it did not have a duty to defend, respect to resolution of factual issues or matters committed to
and if the jury found Dr. Pollet was 90 percent responsible, the trial court's discretion. Downer v. Aquamarine Operators,
then Dr. Pollet would have a judgment against him for Inc., 701 S.W.2d 238, 242 (Tex.1985); see Walker v. Packer,
medical malpractice and the insurance company could raise 827 S.W.2d 833, 839 (Tex.1992). Review of the trial court's
Dr. Pollet's premiums. Second, Dr. Pollet's medical license determination of the legal principles controlling its ruling is
could be at risk in the event there was a judgment against much less deferential. Walker, 827 S.W.2d at 840. A trial
him. A few days after this hearing, Martinez filed another court has no discretion in determining what the law is or
motion to strike the designation because “there is no liability applying the law to the facts, even when the law is unsettled.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
In re Brokers Logistics, Ltd., 320 S.W.3d 402 (2010)
In re Prudential, 148 S.W.3d at 135. A clear failure by the issue of fact regarding the designated person's responsibility
trial court to analyze or apply the law correctly will constitute for the claimant's injury or damages. Id.
an abuse of discretion. Walker, 827 S.W.2d at 840.
The mandamus record reflects that Martinez filed an untimely
objection to Relators' motion for leave to designate Dr.
Clear Abuse of Discretion Pollet as a responsible third party. 4 Thus, the trial court
complied with the mandate of Section 33.004(f) by entering
Chapter 33 sets forth the statutory scheme for the an order which designated Dr. Pollet as responsible third
apportionment of responsibility *406 in tort and deceptive party. Once Dr. Pollet was designated as a responsible third
trade practice actions. See TEX.CIV.PRAC. & REM.CODE party, the only statutory ground for striking the designation
ANN. § 33.003. Section 33.004(a) of the Civil Practice and is that “there is no evidence that the designated person
Remedies Code provides: is responsible for any portion of the claimant's alleged
injury or damage.” TEX.CIV.PRAC. & REM.CODE ANN.
A defendant may seek to designate a § 33.004(l ). Martinez asserted non-statutory grounds in
person as a responsible third party by his motion to strike the designation and the trial court
filing a motion for leave to designate certainly expressed concern at various hearings about the
that person as a responsible third party. potential negative and unfair consequences of permitting the
The motion must be filed on or before designation to stand. The first issue we must address is
the 60th day before the trial date unless whether the statutory ground for striking a designation is
the court finds good cause to allow the the only permissible ground. When construing a statute, we
motion to be filed at a later date. begin with its language. State v. Shumake, 199 S.W.3d 279,
284 (Tex.2006). Our primary objective is to determine the
TEX.CIV.PRAC. & REM.CODE ANN. § 33.004(a). A court
Legislature's intent which, when possible, we discern from
is required to grant leave to designate the named person
the plain meaning of the words chosen. Id.; City of San
as a responsible third party unless another party files an
Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex.2003).
objection on or before the 15th day after the date the
If the statute is clear and unambiguous, we must apply its
motion is served. TEX.CIV.PRAC. & REM.CODE ANN.
words according to their common meaning without resort to
§ 33.004(f). If an objection is timely filed, the court shall
rules of construction or extrinsic aids. *407 Shumake, 199
grant leave to designate unless the objecting party establishes:
S.W.3d at 284; Fitzgerald v. Advanced Spine Fixation Sys.,
(1) the defendant did not plead sufficient facts concerning
Inc., 996 S.W.2d 864, 865–66 (Tex.1999). We may consider
the alleged responsibility of the person to satisfy the
other matters in ascertaining legislative intent, including the
pleading requirement of the Texas Rules of Civil Procedure;
objective of the law, its history, and the consequences of
and (2) after having been granted leave to replead, the
a particular construction. See TEX. GOVT.CODE ANN. §
defendant failed to plead sufficient facts. TEX.CIV.PRAC.
311.023(1), (3), (5)(Vernon 2005); Shumake, 199 S.W.3d at
& REM.CODE ANN. § 33.004(g). By granting a motion for
284. It is a well-settled rule of statutory construction that
leave to designate a person as a responsible third party, the
every word of a statute must be presumed to have been used
person named in the motion is designated as a responsible
for a purpose, and those excluded must be presumed to have
third party for purposes of the Proportionate Responsibility
been excluded for a purpose. See Quick v. City of Austin, 7
Chapter of the Civil Practice and Remedies Code without
S.W.3d 109, 123 (Tex.1998). Because statutory construction
further action by the court or any party. TEX.CIV.PRAC. &
is a question of law, we review it de novo. Shumake, 199
REM.CODE ANN. § 33.004(h).
S.W.3d at 284.
After adequate time for discovery, a party may move to
[2] Section 33.004(l ) articulates a single ground for striking
strike the designation of a responsible third party on the
a designation of a responsible third party. If the Legislature
ground that there is no evidence that the designated person is
had intended to authorize trial courts to strike designations on
responsible for any portion of the claimant's alleged injury or
any other ground it could have easily indicated that intent in
damages. TEX.CIV.PRAC. & REM.CODE ANN. § 33.004(l
the statute. It did not. The trial court clearly believed it was
). The court is required to grant the motion to strike unless
unfair to permit the case to proceed against Dr. Pollet given
a defendant produces sufficient evidence to raise a genuine
that the court had dismissed Martinez's suit against him. 5
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
In re Brokers Logistics, Ltd., 320 S.W.3d 402 (2010)
There is nothing in Section 33.004 that suggests a designation the clinical literature, Dr. Pollet's treatment of Martinez fell
can be struck if the plaintiff's suit against the responsible third below the acceptable standard of care.
party is dismissed for some reason. To the contrary, Section
33.004 permits a claimant to sue a designated responsible We conclude that Relators produced sufficient evidence
third party but it does not require that the claimant do so for to raise a genuine issue of fact regarding Dr. Pollet's
the designation to stand. We conclude that the plain language responsibility for at least a portion of Martinez's injury or
of Section 33.004(l ) reflects that the Legislature did not damages. The trial court clearly abused its discretion by
intend for a responsible third party designation to be struck striking the designation of Dr. Pollet as a responsible third
on any ground other than the one contained in the statute. party. The only remaining issue is whether Relators have an
adequate remedy by appeal.
[3] We now consider whether the trial court's ruling can
be upheld on the statutory ground. If Relators failed to
produce sufficient evidence to raise a genuine issue of fact
Inadequate Remedy by Appeal
regarding Dr. Pollet's responsibility for the claimant's injury
or damages, Section 33.004(l ) would have required the trial [4] [5] The adequacy of an appellate remedy must be
court to strike the designation. On the other hand, if Relators determined by balancing the benefits of mandamus review
produced evidence raising a genuine issue of fact on that against the detriments. In re Team Rocket, L.P., 256 S.W.3d
issue, the trial court clearly abused its discretion by striking 257, 262 (Tex.2008), citing Prudential Insurance Company
the designation. of America, 148 S.W.3d 124, 136 (Tex.2004). In evaluating
benefits and detriments, we consider whether mandamus will
Relators claim to have offered sufficient evidence to raise preserve important substantive and procedural rights from
an issue of fact regarding Dr. Pollet's responsibility for impairment or loss. Id. We have already determined that
any portion of Martinez's injury or damages. Dr. Blair's Relators presented sufficient evidence to raise a genuine
expert report described how Dr. Pollet treated Martinez's issue of fact regarding Dr. Pollet's responsibility for at
knee injury with multiple steroidal injections over a two least a portion Martinez's injury or damages. Under these
month period along with steroidal phonophoretic treatments circumstances, Relators have a statutory right to demand
during physical therapy. Dr. Blair expressed grave concern that the trier of fact determine Dr. Pollet's percentage of
over the number of steroidal treatments given in this time- responsibility for Martinez's injuries or damages. Mandamus
frame and he believed it was more likely than not that the review would preserve this valuable right.
injections and other steroidal treatments played a significant
role in the degeneration of the articular cartilage subsequently [6] In addition to impairment of rights, we consider whether
requiring a total knee replacement. The report states that Dr. mandamus review will “allow the appellate courts to give
Pollet's treatment of Martinez's knee injury was excessive, needed and helpful direction to the law that would otherwise
unnecessary, and more likely than not contributed to a prove elusive in appeals from final judgments.” In re Team
rapid chondrolysis of the articular surfaces of the knee Rocket, 256 S.W.3d at 262, quoting Prudential, 148 S.W.3d
resulting in a total knee replacement. He also believed that at 136. The trial court's ruling certainly could be reviewed
the steroidal treatments possibly resulted *408 in immune on appeal in the event Relators suffer an adverse judgment,
compromise and may have led to post-operative infection. but Relators would be required to prove that the court's error
Relators provided another report by Dr. Blair in which he caused the rendition of an improper judgment in order to
concluded that: (1) the medical documentation indicates that obtain a reversal. See TEX. R. APP. P. 44.1(a)(1). The denial
clinical protocols initiated by Dr. Pollet resulted in a severe of Relators' right to designate Dr. Pollet as a responsible
compromise of Martinez's left lower leg resulting in a total third party would skew the proceedings, potentially affect the
knee arthroplasty, which became infected and resulted in outcome of the litigation, and compromise the presentation
multiple surgeries and an unknown long-term prognosis; of Relators' defense in ways unlikely to be apparent in the
(2) Dr. Pollet deviated from the acceptable standard of appellate record. See In re Arthur Andersen, L.L.P., 121
medical care established by the clinical literature and the S.W.3d 471, 486 (Tex.App.-Houston [14th Dist.] 2003, orig.
standardized guidelines for acceptable patient care published proceeding). Thus, it is possible Relators would be unable
by the American Academy of Orthopaedic Surgeons; and (3) to obtain relief on direct appeal from the trial court's clearly
based upon Dr. Blair's analysis of the medical records and
erroneous ruling. 6 Id.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
In re Brokers Logistics, Ltd., 320 S.W.3d 402 (2010)
however, a trial court's error will cause a waste of judicial
*409 [7] [8] Finally, we must also consider whether resources, an appellate court may properly consider that factor
in determining the adequacy of an appeal to remedy the error
mandamus will spare litigants and the public “the time
in question. See id. at 843. The potential waste of resources,
and money utterly wasted enduring eventual reversal of
when combined with the possibility that Relators may not
improperly conducted proceedings.” In re Team Rocket, 256
be able to successfully prosecute an appeal, supports our
S.W.3d at 262, quoting Prudential, 148 S.W.3d at 136. It is
conclusion that Relators do not have an adequate remedy at
beyond dispute that there will be a substantial waste of the
law. Accordingly, we sustain the sole issue presented in the
litigants' time and money if they to proceed to trial without
mandamus petition and conditionally grant mandamus relief.
the error being corrected, proceed through the appellate
The writ will issue only if the trial court fails to withdraw its
process only to have the judgment reversed, and then retry the
order striking the designation.
entire case with Dr. Pollet as a designated responsible third
party. The additional expense and effort of preparing for and
participating in those trials does not, standing alone, justify
All Citations
the issuance of a writ of mandamus. See Walker, 827 S.W.2d
at 842 (remedy by appeal not inadequate merely because it 320 S.W.3d 402
may involve more delay or cost than mandamus). Where,
Footnotes
1 If a person is designated under Section 33.004 as a responsible third party, a claimant is not barred by limitations from
seeking to join that person provided that the claimant joins the person not later than sixty days following the designation.
TEX. CIV. PRAC. & REM. CODE ANN. . § 33.004(e).
2 The trial court did not sign a written order until May 8, 2009.
3 Because the issues in this mandamus proceeding are distinct from the issues in the direct appeal, we denied Martinez's
motion to consolidate the cases.
4 Relators served the motion for leave on June 6, 2006 and Martinez did not file his objection until July 10,2006.
5 Many of the trial court's concerns regarding the negative consequences of a judgment finding Dr. Pollet responsible
for Martinez's injuries or damages are unfounded. Section 33.004(i) expressly provides that: “The filing or granting of a
motion for leave to designate a person as a responsible third party or a finding of fault against the person: (1) does not by
itself impose liability on the person; and (2) may not be used in any other proceeding, on the basis of res judicata, collateral
estoppel, or any other legal theory, to impose liability on the person.” TEX.CIV.PRAC. & REM.CODE ANN. § 33.004(i).
6 We are aware that the Fourteenth Court of Appeals has more recently denied mandamus relief in a case where the trial
court refused to allow a party to designate a responsible third party within sixty days of the trial date because it found
appeal was an adequate remedy. See In re Investment Capital Corporation, No. 14–09–00105–CV, 2009 WL 310899
(Tex.App.-Houston [14th Dist.] Feb. 4, 2009, orig. proceeding). In that case, a party attempted to designate a former
defendant, SCI Funeral, as a responsible third party after the trial court had granted summary judgment in favor of SCI
Funeral and dismissed it from the case. A party seeking to file the designation must show good cause for filing the motion
inside of the sixty day time period. TEX.CIV.PRAC. & REM.CODE ANN. § 33.004(a). The court of appeals did not address
whether the trial court clearly abused its discretion but instead found that mandamus relief was unavailable because the
facts were relatively straightforward and the error could be corrected through the regular appellate process. Our case
is distinguishable because it does not concern the good cause issue as Dr. Pollet had been properly designated as a
responsible third party when the trial court struck the designation for a non-statutory reason. Further, we have concluded
that Relators might not be able to have the error corrected on direct appeal because it is possible the appellate record
would not show how the trial court's ruling caused the rendition of an improper judgment.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
GG
In re Smith, 366 S.W.3d 282 (2012)
366 S.W.3d 282 West Headnotes (7)
Court of Appeals of Texas,
Dallas.
[1] Attorney and Client
In re Houston M. SMITH and the Law In general; limitations
Offices of Houston Smith, P.C., Relators. Legal malpractice is a tort, such that chapter
of civil practices and remedies code relating
No. 05–11–01657–CV. | March 30, 2012. to proportionate responsibility in a tort action
applied in legal malpractice action in which trial
Synopsis
court denied defendants' motion to designate a
Background: Client filed action against attorney and his law
responsible third party without giving defendants
firm for legal malpractice after those defendants failed to
an opportunity to replead. V.T.C.A., Civil
timely sue motorist allegedly at fault in accident giving rise to
Practice & Remedies Code §§ 33.002(a)(1),
underlying personal injury action. Defendants motioned for
33.004.
leave to designate that motorist as a responsible third party.
Following a hearing, the 192nd Judicial District Court, Dallas 1 Cases that cite this headnote
County, Craig Smith, J., denied motion without affording
defendants an opportunity to replead. Defendants petitioned
for writ of mandamus. [2] Parties
Application and proceedings thereon
Allowing defendants in legal malpractice action
an opportunity to replead the facts prior to
Holdings: The Court of Appeals, Fitzgerald, J., held that:
denying their motion to designate a responsible
third party, i.e., the allegedly negligent motorist
[1] the trial judge does not have the discretion in tort action
whom defendants failed to timely sue in
to deny, on basis of futility, a motion for leave to designate
underlying personal injury action, would not
a responsible third party without first giving the movant an
necessarily be futile, even though motorist was
opportunity to replead;
not an attorney; plaintiff did not negate every set
of facts that might show the motorist could have
[2] client failed, in response to defendants' motion, to shift
contributed to cause harm at issue in malpractice
any burden to defendants to request an opportunity to replead
action, namely, the loss of plaintiff's negligence
the facts;
claim against motorist. V.T.C.A., Civil Practice
& Remedies Code § 33.004.
[3] trial judge was statutorily required to give defendants
an opportunity to replead before denying their motion, 1 Cases that cite this headnote
regardless of whether defendants made a specific request for
time to replead; and
[3] Parties
[4] for purposes of determining availability of mandamus Application and proceedings thereon
relief, appeal is ordinarily an inadequate remedy when a trial The trial judge does not have the discretion in
judge erroneously denies a motion in tort action for leave to tort action to deny, on basis of futility, a motion
designate a responsible third party without granting leave to for leave to designate a responsible third party
replead. without first giving the movant an opportunity
to replead. V.T.C.A., Civil Practice & Remedies
Code § 33.004(a, f, g).
Petition conditionally granted.
3 Cases that cite this headnote
Murphy, J., filed a dissenting opinion.
[4] Parties
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
In re Smith, 366 S.W.3d 282 (2012)
Application and proceedings thereon
[7] Courts
Plaintiff in legal malpractice action failed, in
Number of judges concurring in opinion,
responding to defendant's motion for leave to
and opinion by divided court
designate a responsible third party, namely, the
allegedly negligent motorist whom defendants Absent an intervening change in the law by
had failed to timely sue in underlying personal the legislature, a higher court, or the Court of
injury action, to shift any burden to defendants Appeals sitting en banc, three-judge panel of
to request an opportunity to replead the facts; Court of Appeals was obliged was follow a
plaintiff made bare assertion, buried in a prior panel decision of the Court of Appeals,
footnote, that defendants could not merely holding in mandamus action that appeal is
“contend” that motorist caused or contributed to ordinarily an inadequate remedy when a trial
damages at issue in malpractice action, and that judge erroneously denies a motion for leave
defendants had failed to plead any specific facts to designate a responsible third party without
explaining how motorist could have committed granting leave to replead. V.T.C.A., Civil
legal malpractice upon plaintiff. V.T.C.A., Civil Practice & Remedies Code § 33.004.
Practice & Remedies Code § 33.004(g).
3 Cases that cite this headnote
Cases that cite this headnote
[5] Parties
Attorneys and Law Firms
Application and proceedings thereon
Trial judge was statutorily required to give *284 Michael A. Yanof, Alison H. Moore, Jason R. Jobe,
defendants in legal malpractice action an Thompson, Coe, Cousins, & Iron, L.L.P., Dallas TX, for
opportunity to replead before denying their Relators.
motion to designate a responsible third party,
regardless of whether defendants made a Daniel J. Sheehan, Jr., Michael Patrick McShan, John M.
specific request for time to replead; plaintiff, Phalen, Jr., Daniel Sheehan & Associates, L.L.P., Dallas TX,
in objecting to motion, made no showing that for Real Party in Interest.
defendants were given leave to replead, as
Before Justices BRIDGES, FITZGERALD, and MURPHY.
would be necessary before trial judge could have
discretion to deny motion for leave to designate.
V.T.C.A., Civil Practice & Remedies Code §
OPINION
33.004(f), (g)(2).
Opinion by Justice FITZGERALD.
1 Cases that cite this headnote
Relators filed this mandamus proceeding after the trial judge
[6] Mandamus signed an order denying their motion for leave to designate
Modification or vacation of judgment or a responsible third party. We conclude the trial judge abused
order his discretion in doing so without granting leave to replead
For purposes of determining availability and relators have no adequate remedy by appeal. We therefore
of mandamus relief, appeal is ordinarily conditionally grant mandamus relief.
an inadequate remedy when a trial judge
erroneously denies a motion in tort action for
leave to designate a responsible third party I. BACKGROUND
without granting leave to replead. V.T.C.A.,
Civil Practice & Remedies Code § 33.004. Real party in interest Melvia Lewis sued relators for legal
malpractice. Lewis alleges the following facts. He was injured
4 Cases that cite this headnote in an auto accident when the vehicle in which he was riding
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
In re Smith, 366 S.W.3d 282 (2012)
was rear-ended by a vehicle driven by Edith Winfrey. Lewis party without giving the movant an opportunity to replead.
hired relators Houston M. Smith and his law firm, The Law See id. We held that this was an abuse of discretion that
Offices of Houston Smith, P.C., to represent him. Relators could not be adequately addressed by appeal. Id. Accordingly,
then erroneously sued Mary Winfrey, the mother of Edith we conditionally granted mandamus relief, directing the trial
Winfrey. Although Mary Winfrey owned the car that her judge to vacate the order denying the motion for leave and to
daughter was driving, she was not in the car at the time render a new order either granting the movant leave to replead
of the accident. Relators amended Lewis's petition within or granting the motion for leave to designate. Id. Thus, it
limitations to add Kristi McDowell, the driver of the vehicle appears that relators are entitled to the same relief in this case.
Lewis was a passenger in, as a defendant, but they never
joined Edith Winfrey as a defendant. After limitations ran, Lewis raises several arguments in opposition to relators'
Mary Winfrey filed a motion for summary judgment on the petition, and we consider each in turn.
ground that she was not in the car at the time of the accident,
and relators nonsuited Lewis's claims against Mary Winfrey.
Lewis eventually settled with McDowell. Lewis sued relators 1. The applicability of Chapter 33
for negligently investigating his case, failing to sue Edith [1] Lewis argues that Chapter 33 of the civil practice and
Winfrey in a timely fashion, and failing to obtain sufficient remedies code does not apply to this case at all. We disagree.
compensation for Lewis's injuries and medical needs. Chapter 33 applies to “any cause of action based on tort
in which a defendant, settling person, or responsible third
Relators moved for leave to designate Edith Winfrey as a party is found responsible for a percentage of the harm for
responsible third party. In their motion, they alleged that Edith which relief is sought.” TEX. CIV. PRAC. & REM.CODE
Winfrey was the driver of the vehicle involved in the auto ANN. § 33.002(a)(1) (West 2008). Lewis is suing relators—
accident and that she negligently caused or contributed to defendants—for legal malpractice, which is a tort. See Willis
cause Lewis's injuries and damages. Lewis filed a response in v. Maverick, 760 S.W.2d 642, 644 (Tex.1988) (“A cause of
opposition, in which he argued that Chapter 33 of the Texas action for legal malpractice is in the nature of a tort....”). Thus,
Civil Practice and Remedies Code did not apply at all and Chapter 33 applies.
that Edith Winfrey could not be a responsible third party
because she did not cause or contribute to cause the harm
2. Waiver and futility
for which Lewis was suing relators. After a hearing, the trial
Lewis also asserts that relators are not entitled to mandamus
judge signed an order denying relators' motion for leave to
relief because they did not ask the trial judge for an
designate Edith Winfrey as a responsible third party without
opportunity to replead. Factually, the mandamus record does
affording relators an opportunity to replead.
not show a specific request by relators for an opportunity
to replead. There is no reporter's record, and relators assert
without contradiction that no testimony was taken and the
II. ANALYSIS hearing was not transcribed by a court reporter. In their
motion for leave to designate a responsible third party,
A. Abuse of discretion relators prayed that Edith Winfrey be designated a responsible
We agree with relators that the trial judge lacked the third party and “for such other and further relief to which
discretion to deny their *285 motion for leave without Defendants may be justly entitled.” Lewis also contends that
first granting them leave to replead. Our recent decision it would be futile for us to require the trial judge to grant
in In re Oncor Electric Delivery Co. LLC, 355 S.W.3d relators an opportunity to replead.
304 (Tex.App.-Dallas 2011, orig. proceeding), is controlling.
Under section 33.004 of the civil practice and remedies code, We reject Lewis's arguments for the following reasons.
a trial judge may not deny a motion for leave to designate a
responsible third party without first giving the movant leave
to replead the facts concerning the alleged responsibility of a. Lewis did not demonstrate futility
the alleged responsible third party. Id. at 306 (construing [2] Lewis argues that relators were not entitled to an
TEX. CIV. PRAC. & REM.CODE ANN. § 33.004(a), (f), opportunity to replead because affording that opportunity
and (g)). 1 In In re Oncor, as in this case, the trial judge would have been futile. Lewis contends that, because Edith
denied a motion for leave to designate a responsible third Winfrey was not an attorney, there is no set of facts that
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
In re Smith, 366 S.W.3d 282 (2012)
relators *286 could plead that would make her a proper the sufficiency of relators' pleadings. Rather, Lewis referred
responsible third party in this legal-malpractice case. We to the pleading standard of section 33.004(g) only in a
disagree. footnote in his response, in which he stated:
One of Lewis's claims against relators is that relators Defendants cannot merely “contend”
negligently investigated Lewis's personal-injury case, thereby that Edith Winfrey caused or
leading them to sue the wrong defendant and to fail to sue contributed to “Plaintiff's alleged
the actual tortfeasor, Edith Winfrey, within limitations. Lewis injuries and damages.” They must
has not negated every set of facts that may show that non- plead specific facts concerning her
attorneys could have contributed to cause the resulting harm, alleged responsibility. TRCP [sic] §
that being the loss of Lewis's negligence claim against Edith 33.004(g). Defendants have failed to
Winfrey. We note that relators have pleaded the affirmative meet this burden because they have
failed to plead any specific facts
defense of contributory negligence against Lewis himself. 2
explaining how Edith Winfrey could
If relators made a similar allegation against Edith Winfrey
have committed legal malpractice
—that she somehow tortiously contributed to any error
upon Lewis.
committed by the relators—the fact that Edith Winfrey is
not an attorney would not necessarily mean she could not This bare assertion, buried in a footnote, was not sufficient
have tortiously contributed to cause the harm for which Lewis to satisfy Lewis's burden under section 33.004(g)(1) to
is suing relators. At this early stage in the proceedings, we establish that relators failed to meet their pleading burden.
cannot accept Lewis's contention that it would necessarily be See TEX.R.APP. P. 33.1(a)(1)(A) (stating that party must
futile to grant relators an opportunity to replead. state the grounds for *287 the ruling it sought from the trial
court “with sufficient specificity to make the trial court aware
[3] Moreover, section 33.004 does not contain a futility of the complaint, unless the specific grounds were apparent
exception to its rule that the movant must be given an from the context”); Odom v. Clark, 215 S.W.3d 571, 574
opportunity to replead. Thus, the trial judge does not have (Tex.App.-Tyler 2007, pet. denied) (stating that purpose of
the discretion to deny a motion for leave to designate a Rule 33.1(a) is “to ensure that the trial court has had the
responsible third party without first giving the movant an opportunity to rule on matters for which parties later seek
opportunity to replead. See In re Oncor Elec. Delivery Co., appellate review”); see also Lincoln v. Clark Freight Lines,
355 S.W.3d at 306. Inc., 285 S.W.3d 79, 84–85 n. 4 (Tex.App.-Houston [1st
Dist.] 2009, no pet.) (argument raised only by bare assertion
in footnote in appellate brief was waived); cf. Bever Props.,
b. Lewis's objection in the trial court was insufficient
L.L.C. v. Jerry Huffman Custom Builder, L.L.C., 355 S.W.3d
[4] We also reject Lewis's argument that relators waived the
878, 888 (Tex.App.-Dallas 2011, no pet.) (if no-evidence
right to replead. As the party opposing a motion for leave
motion for summary judgment fails to identify and challenge
to designate a responsible third party, Lewis bore the burden
specific elements, it is fundamentally defective and cannot
of establishing two elements: (1) that relators did not plead
support a judgment).
sufficient facts concerning Edith Winfrey's responsibility to
satisfy the general pleading requirements of the rules of civil
Because Lewis's response and objection to the motion for
procedure, and (2) that relators still failed to plead sufficient
leave to designate was insufficient under section 33.004(g),
facts after having been granted leave to replead. See TEX.
the response could not and did not shift any burden to relators
CIV. PRAC. & REM.CODE ANN. § 33.004(g). In the text
to request leave to replead.
of Lewis's written response to relators' motion for leave to
designate, he asserted three principal arguments: (1) that
Chapter 33 did not apply at all, (2) that Edith Winfrey was c. Relators bore no burden to request leave to replead
not a proper responsible third party because the damages [5] We also reject Lewis's waiver argument because it is
Lewis sought from relators were different from his auto- not consistent with the statutory scheme allocating burdens
accident damages, and (3) that relators could not use Chapter between the parties. If the movant seeking to designate a
33 to avoid their own responsibility by reviving limitations responsible third party timely files a motion for leave to
against Edith Winfrey. None of these arguments addressed designate, the trial court “shall grant leave to designate the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
In re Smith, 366 S.W.3d 282 (2012)
named person as a responsible third party unless another Our conclusion that relators did not bear the burden of seeking
party files an objection to the motion for leave on or leave to replead is reinforced by our opinion in In re Oncor.
before the 15th day after the date the motion is served.” That opinion contains no indication that the relator made
TEX. CIV. PRAC. & REM.CODE ANN. § 33.004(f). Under a separate request for an opportunity to replead, but rather
the Code Construction Act, the word “shall” “imposes a states only that the relator “moved to designate [a plaintiff]
duty” unless context necessarily requires a different meaning as a responsible third party.” In re Oncor Elec. Delivery
or express statutory text provides otherwise. TEX. GOV'T Co., 355 S.W.3d at 305. Nevertheless, we construed the
CODE ANN. § 311.016(2) (West 2005); see also Albertson's, statute to preclude the trial judge from denying a motion to
Inc. v. Sinclair, 984 S.W.2d 958, 961 (Tex.1999) (“We designate without granting the movant a chance to replead.
generally construe the word ‘shall’ as mandatory, unless See id. at 306 (“The statute requires the trial judge to grant
legislative intent suggests otherwise.”). So a trial judge relator leave to replead the facts concerning the alleged
must grant the motion for leave to designate if no timely responsibility of [the responsible third party] before denying
objection is filed. TEX. CIV. PRAC. & REM.CODE ANN. its motion for leave to designate him a responsible third
§ 33.004(f). Moreover, and of particular relevance to this party.”). We then granted mandamus relief, requiring the
original proceeding, section 33.004(g) provides that the trial trial judge either to grant leave to replead or to grant the
judge must grant the motion even if a timely objection is filed motion to designate a responsible third party. Id. It would be
unless the objecting party carries the burden of establishing inconsistent with In re Oncor to deny relators relief in this
two matters. The statute provides: case because they did not specifically request leave to replead.
We conclude that the trial judge was statutorily required to
(g) If an objection to the motion for leave is timely give relators an opportunity to replead before denying their
filed, the court shall grant leave to designate the person motion, regardless of whether they made a specific request
as a responsible third party unless the objecting party
for time to replead. 4
establishes:
(1) the defendant did not plead sufficient facts concerning In sum, the relief relators wanted was leave to designate a
the alleged responsibility of the person to satisfy the responsible third party, and by filing a timely motion for that
pleading requirement of the Texas Rules of Civil leave, they satisfied the threshold burden the statute placed on
Procedure; and them. Their motion shifted the burden onto Lewis to establish
that relators had been given an opportunity to replead before
(2) after having been granted leave to replead, the the trial judge could have any discretion to deny relators'
defendant failed to plead sufficient facts concerning motion. The only options lawfully available to the trial judge
the alleged responsibility of the person to satisfy the were to grant relators' motion for leave to designate or to grant
pleading requirements of the Texas Rules of Civil relators an opportunity to replead. Accordingly, we conclude
Procedure. that relators were not required to ask for leave to replead in
order to preserve error.
Id. § 33.004(g). Thus, under section 33.004(g)(2), Lewis
bore the burden of showing that relators were given leave to
replead before the trial judge could have discretion to deny B. No adequate remedy by appeal
relators' motion for leave to designate. The record contains no [6] [7] In our opinion in In re Oncor, we concluded,
indication that Lewis made that showing, nor any indication “An improper denial of leave to designate a responsible
that the trial judge gave relators an opportunity to replead. third party may not be adequately addressed by appeal,”
During oral argument in this Court, Lewis admitted that he and we granted mandamus relief. 5 In re *289 Oncor Elec.
had not met his burden *288 on this element. 3 Because Delivery Co., 355 S.W.3d at 306. Thus, we conclude that In
Lewis did not carry his burden, the trial judge's only options re Oncor stands for the proposition that appeal is ordinarily
were to grant relators' motion for leave to designate or to defer an inadequate remedy when a trial judge erroneously denies
ruling while giving relators an opportunity to replead. The a motion for leave to designate a responsible third party
judge abused his discretion by denying the motion for leave to without granting leave to replead. See id. The instant case
designate outright, regardless of whether relators specifically is thus indistinguishable from In re Oncor, and we are
asked for an opportunity to replead. obliged to follow it. See MobileVision Imaging Servs., L.L.C.
v. LifeCare Hosps. of N. Tex., L.P., 260 S.W.3d 561, 566
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
In re Smith, 366 S.W.3d 282 (2012)
(Tex.App.-Dallas 2008, no pet.) (“We may not overrule a Lewis's underlying personal injury lawsuit could be an RTP
prior panel decision of this Court absent an intervening in his subsequent malpractice lawsuit against his former
change in the law by the legislature, a higher court, or this attorneys. For the first time in their petition *290 for writ of
Court sitting en banc.”). mandamus, relators claim the trial court abused its discretion
by not allowing them the opportunity to replead facts; yet
Relators have shown that they have no adequate remedy by the facts related to the RTP designation were not disputed.
appeal, and thus they are entitled to mandamus relief. The parties' dispute is a legal issue. And while I agree that
counsel for real party in interest agreed at oral argument
that relators are entitled to replead, I would conclude they
did not preserve that right for purposes of their petition for
III. CONCLUSION
writ of mandamus and that they have an adequate remedy at
We express no opinion as to whether relators satisfied their law. Relators can file a motion with the trial court seeking
pleading burden under section 33.004(g)(1). We hold only reconsideration on the basis urged to this Court or ask for
that the trial judge abused his discretion by denying relators' leave to amend. Relators could have already repleaded at the
motion for leave to designate a responsible third party without trial court and re-addressed the merits of their substantive
granting them an opportunity to replead. See In re Oncor Elec. arguments as to the capacity of the driver in the underlying
Delivery Co., 355 S.W.3d at 306. personal injury lawsuit to be an RTP in this subsequent legal
malpractice lawsuit.
Accordingly, we conditionally grant relators' petition for
writ of mandamus. The writ will issue only if the trial The majority relies on our recent decision in In re Oncor
judge fails to vacate his October 27, 2011 “Order Denying Electric Delivery Co. LLC, 355 S.W.3d 304 (Tex.App.-
Defendants' Motion for Leave to Designate Edith Winfrey Dallas 2011, orig. proceeding), as controlling authority for
as a Responsible Third Party” and to render a new order the proposition that the trial court was required on its own
either granting relators leave to replead facts supporting the motion to allow relators leave to amend their petition under
designation or granting the motion for leave to designate. chapter 33. The opinion in that case, as noted by the majority,
is silent as to whether there was a request for leave to
replead. Notwithstanding that silence, which often is used to
distinguish cases, the majority assumes there was no request
MURPHY, J. dissenting. to replead in Oncor by concluding it “would be inconsistent
with Oncor to deny relators relief in this case because they did
Dissenting Opinion By Justice MURPHY. not specifically request leave to replead.” Chapter 33 no doubt
A prerequisite to presenting a complaint for appellate review contains mandatory language. Yet we have found waiver or
is a timely request, objection, or motion that states the lack of preservation in similar circumstances.
grounds for the ruling that the complaining party sought
from the trial court. TEX.R.APP. P. 33.1(a)(1)(A). This Court For example, an opposing party must have the opportunity
has cited or quoted this mandate repeatedly to emphasize to amend a summary judgment affidavit in response to an
that the trial court must have the opportunity to rule on objection to the form. See TEX.R. CIV. P. 166a(f); Hewitt
an issue or to correct an erroneous ruling before we can v. Biscaro, 353 S.W.3d 304, 307–08 (Tex.App.-Dallas 2011,
review the issue on appeal, much less mandamus a trial court no pet.). The trial court is required to give a party that
for a clear abuse of discretion. Yet we are conditionally opportunity to amend. TEX.R. CIV. P. 166a(f). For purposes
granting mandamus to require the trial court to allow relators of appeal, however, that right is waived if the proponent of the
the opportunity to replead facts relating to their motion to evidence fails to request a continuance or “otherwise assert
designate a responsible third party (RTP) when relators never its right to amend.” Brown v. Wong, No. 05–99–00706–CV,
asked the trial court for that opportunity and stated at oral 2000 WL 433973, at *3 (Tex.App.-Dallas Apr. 24, 2000,
argument that there is “no need to replead.” I respectfully pet. denied) (not designated for publication) (citing Eckmann
dissent. v. Des Rosiers, 940 S.W.2d 394, 400 (Tex.App.-Austin
1997, no writ)). Similarly, when a trial court sustains special
The only chapter 33 arguments before the trial court related exceptions, the court “must give the pleader an opportunity
to the merits of whether the driver of the vehicle in Melvia to amend the pleading”—the trial court has no discretion.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
In re Smith, 366 S.W.3d 282 (2012)
petition for writ of mandamus or on appeal. Similarly, we are
Friesenhahn v. Ryan, 960 S.W.2d 656, 658 (Tex.1998). The
empowered as an appellate court to address only those issues
complaining party must, however, prove “the opportunity
preserved for review. See TEX.R.APP. P. 33.1. Accordingly,
to replead was requested and denied to preserve the error
I respectfully dissent from the majority's decision to grant
for review.” Parker v. Barefield, 206 S.W.3d 119, 120
mandamus.
(Tex.2006) (per curiam); Cadle Co. v. Jenkins, 266 S.W.3d 4,
7 n. 5 (Tex.App.-Dallas 2008, no pet.).
All Citations
It is incumbent on counsel, when possible, to allow trial
judges and opposing parties the opportunity to consider 366 S.W.3d 282
new arguments before raising those for the first time in a
Footnotes
1 We said the same in a previous mandamus opinion arising from the same litigation: “A trial court that is presented with
a motion for leave to designate a responsible third party and an objection to the motion, as the trial court was here,
may either grant the motion or, should the objection to the motion be sustained, grant leave to replead sufficient facts to
allege the person's responsibility.” In re Oncor Elec. Delivery Co. LLC, No. 05–11–00188–CV, 2011 WL 989071, at *1
(Tex.App.-Dallas Mar. 22, 2011, orig. proceeding) (mem. op.).
2 At oral argument, relators stated that they relied on information provided by Lewis when they sued Mary Winfrey.
3 Based on Lewis's concession during oral argument, the dissent argues that relators could have already repleaded in the
trial court. We disagree. After oral argument, we asked the parties to advise us whether they had reached agreement
during argument that we should dismiss this original proceeding so that relators could replead in the trial court. Lewis
responded that no agreement was reached and that remand to the trial court to allow relators to replead was inappropriate
because relators did not seek such relief in the trial court or in this Court. Thus, it appears that Lewis would oppose any
attempt to replead by relators.
4 The dissent argues that relators bore the burden of seeking leave to replead in order to preserve error. The dissent relies
on cases involving formally defective summary-judgment evidence and special exceptions to deficient pleadings. These
cases are distinguishable. Under the unique scheme set forth in section 33.004, an opportunity to replead is an element
that must be proved by the party objecting to the motion for leave to designate a responsible third party. It would be
inconsistent with this statutory scheme to place any burden on the movant to request leave to replead.
5 Courts of appeals have disagreed about whether a party that is aggrieved by a trial judge's erroneous ruling on a
responsible-third-party issue has an adequate remedy by appeal. Some courts have granted mandamus relief. E.g., In
re Brokers Logistics, Ltd., 320 S.W.3d 402, 408 (Tex.App.-El Paso 2010, orig. proceeding); In re Arthur Andersen LLP,
121 S.W.3d 471, 485–86 (Tex.App.-Houston [14th Dist.] 2003, orig. proceeding [mand. denied] ). Others have denied
mandamus relief, holding that appeal is ordinarily an adequate remedy for such errors. E.g., In re Inv. Capital Corp., No.
14–09–00105–CV, 2009 WL 310899, at *2 (Tex. App.-Houston [14th Dist.] Feb. 4, 2009, orig. proceeding) (mem. op.); In
re Unitec Elevator Servs. Co., 178 S.W.3d 53, 63–64 (Tex. App.-Houston [1st Dist.] 2005, orig. proceeding); In re Martin,
147 S.W.3d 453, 459–60 (Tex.App.-Beaumont 2004, orig. proceeding, pet. denied).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
HH
Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (1999)
42 Tex. Sup. Ct. J. 818
Matters which might have been litigated
997 S.W.2d 203 Res judicata prevents parties and their privies
Supreme Court of Texas. from relitigating a cause of action that has
been finally adjudicated by a competent tribunal,
INGERSOLL–RAND COMPANY, et al., Petitioners, as well as claims or defenses that, through
v. diligence, should have been litigated in the prior
VALERO ENERGY CORPORATION, suit but were not.
et al., Respondents.
24 Cases that cite this headnote
No. 97–1168. | Argued Oct. 21,
1998. | Decided June 24, 1999. | [2] Judgment
Opinion On Rehearing Aug. 26, 1999. Splitting Cause of Action
| Rehearing Overruled Sept. 23, 1999. Res judicata doctrine is intended to prevent
causes of action from being split, thus curbing
Refinery owner sued contractor and subcontractor for
vexatious litigation and promoting judicial
damages arising out of construction project. The 117th
economy.
District Court, Nueces County, Robert M. Blackmon, J.,
granted defendants motions' for summary judgment asserting 10 Cases that cite this headnote
that indemnity provision barred owner's claim. Owner
appealed. The Corpus Christi Court of Appeals, 866 S.W.2d
252, affirmed. Defendants sought attorney fees and costs [3] Judgment
incurred in defending against owner's claims. The District Matters for defense in former action as
Court granted summary judgment for owner, and defendants cause of action in second
appealed. The Court of Appeals, affirmed. Petition for review Res judicata does not bar a former defendant
was filed. The Supreme Court, Enoch, J., held that: (1) who asserted no affirmative claim for relief in
indemnity claims for attorney fees against owner were not an earlier action from stating a claim in a later
compulsory counterclaims at time of initial action; (2) res action that could have been filed as a cross-claim
judicata doctrine did not bar indemnity claims for attorney or counterclaim in the earlier action, unless the
fees against owner after entry of take nothing judgment claim was compulsory in the earlier action.
against owner; (3) subcontractor's claim for attorney fees
15 Cases that cite this headnote
under indemnity clause did not accrue until date on which
trial court signed take nothing judgment; (4) contractor's
indemnity claim for attorney fees accrued, despite any [4] Set–Off and Counterclaim
anticipatory breach, when contractor made demand for Effect of failure to assert or claim;
indemnity and owner refused to perform; and, on rehearing, compulsory counterclaim
(5) refinery owner's amended petition asserting breach of Counterclaim is compulsory only if: (1) it is
contract claim in order to attack validity of indemnity within the jurisdiction of the court; (2) it is not
agreement was barred by doctrine of res judicata. at the time of filing the answer the subject of
a pending action; (3) the claim is mature and
Judgment of the Court of Appeal reversed and case remanded. owned by the defendant at the time of filing the
answer; (4) it arose out of the same transaction
or occurrence that is the subject matter of the
West Headnotes (14) opposing party's claim; (5) it is against an
opposing party in the same capacity; and (6) it
does not require the presence of third parties
[1] Judgment over whom the court cannot acquire jurisdiction.
Nature and requisites of former recovery as Vernon's Ann.Texas Rules Civ.Proc., Rule 97(a,
bar in general d).
Judgment
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (1999)
42 Tex. Sup. Ct. J. 818
was only a defendant in initial action and made
31 Cases that cite this headnote no affirmative claims, and its claim against
owner for attorney fees under indemnity clause
[5] Set–Off and Counterclaim was thus permissive rather than compulsory in
Effect of failure to assert or claim; relation to owner's initial action.
compulsory counterclaim
3 Cases that cite this headnote
Claim is mature, for purposes of determining
whether it is compulsory counterclaim, when it
has accrued. [9] Limitation of Actions
Indemnity
12 Cases that cite this headnote Indemnity claim does not accrue until all of the
potential liabilities of the indemnitee become
[6] Indemnity fixed and certain by judgment, and recovery for
Accrual of liability attorney fees component of potential liabilities
need not be pursued before and separate from
Broad language that holds an indemnitee
remaining components.
“harmless” against “all claims” and “liabilities”
evidences an agreement to indemnify against 24 Cases that cite this headnote
liability and thus entitles the indemnitee to
recover when the liability becomes fixed and
certain, as by rendition of a judgment, whether [10] Limitation of Actions
or not the indemnitee has yet suffered actual Indemnity
damages, as by payment of a judgment. Subcontractor's claim for attorney fees against
refinery owner under indemnity clause did not
25 Cases that cite this headnote accrue for purposes of statute of limitations
until date on which trial court signed summary
[7] Set–Off and Counterclaim judgment that refinery owner take nothing in
Effect of failure to assert or claim; its action against subcontractor. V.T.C.A., Civil
compulsory counterclaim Practice & Remedies Code § 16.004(a)(3).
Subcontractor's liabilities from refinery owner's 10 Cases that cite this headnote
suit against subcontractor did not become fixed
and certain until date of judgment that owner take
nothing, and thus, subcontractor's claim against [11] Limitation of Actions
owner for attorney fees under indemnification Breach of contract in general
clause was not mature until that date and did not Limitations may begin to run upon a promisor's
have to be asserted as compulsory counterclaim anticipatory repudiation, but only if the
at time of initial suit. Vernon's Ann.Texas Rules repudiation is adopted by the nonrepudiating
Civ.Proc., Rule 97(a, d). party.
12 Cases that cite this headnote 8 Cases that cite this headnote
[8] Judgment [12] Contracts
Matters for defense in former action as Renunciation
cause of action in second Effect of an anticipatory repudiation is to give
Doctrine of res judicata did not preclude the nonrepudiating party the option of treating
subcontractor from pursuing indemnity claim for the repudiation as a breach or ignoring the
attorney fees against refinery owner after entry repudiation and awaiting the agreed upon time of
of judgment in owner's initial action against performance.
subcontractor, in light of fact that subcontractor
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (1999)
42 Tex. Sup. Ct. J. 818
Valero 1 sued Kellogg 2 and Ingersoll–Rand 3 for damages
9 Cases that cite this headnote
caused by malfunctioning equipment. Kellogg and Ingersoll–
Rand installed the equipment during an expansion of
[13] Limitation of Actions Valero's oil refinery. Kellogg was the general contractor on
Demand for performance of contract the expansion, and Ingersoll–Rand was one of Kellogg's
Contractor's indemnity claim against refinery subcontractors. Both Kellogg and Ingersoll–Rand defended
owner for attorney fees accrued and statute by asserting that certain indemnification and hold-harmless
of limitations began to run when contractor provisions in the Valero–Kellogg contract applied. The
made demand for indemnity and owner trial court concluded that the contract's indemnification
refused to perform, even assuming owner's provisions were enforceable and granted interlocutory
initial petition against contractor acted as summary judgment for Kellogg and Ingersoll–Rand. The
unequivocal anticipatory repudiation, given that court then severed that part of the case, so that Valero could
contractor was entitled to ignore any anticipatory appeal the summary judgment. The court of appeals affirmed,
repudiation, await time of performance, and sue and that judgment is now final. 4
after actual breach of indemnity clause when
owner refused to pay. During that appeal, the trial court abated the remaining
claims. After the abatement was lifted, Kellogg and Ingersoll–
14 Cases that cite this headnote Rand moved for summary judgment, seeking attorney's fees
under the indemnity provisions upheld in Valero I. Valero
[14] Judgment filed its own motion for summary judgment, asserting that
Contracts in general Kellogg's and Ingersoll–Rand's claims for attorney's fees
Refinery owner's amended petition asserting were compulsory counterclaims barred by res judicata and
breach of contract claim to attack validity of by the statute of limitations. The trial court granted Valero
indemnity agreement was barred by doctrine summary judgment. The court of appeals affirmed. 5
of res judicata, where amended petition was
attempt to recast owner's prior tort challenge The pivotal question in this case is when does an indemnitee's
to indemnity agreement, upon which adverse contractual claim for indemnification mature for purposes
judgment already had been rendered, as contract of the compulsory counterclaim rule. We adhere to the
claim. Restatement (Second) of Judgments §§ longstanding rule that a claim based on a contract that
24, 25(1). provides indemnification from liability does not accrue until
the indemnitee's liability becomes fixed and certain. Applying
13 Cases that cite this headnote this rule, we conclude that Kellogg's and Ingersoll–Rand's
indemnity claims did not accrue until the trial court's rendition
of summary judgment in Valero I. Accordingly, neither res
judicata nor limitations bar Kellogg's and Ingersoll–Rand's
Attorneys and Law Firms claims. We reverse the court of appeals' judgment and remand
to the trial court for further proceedings.
*204 John B. Shely, Houston, Audrey Mullert Vicknair,
Roberta Shellum Dohse, Corpus Christi, Dimitri Zgourides,
Kendall M. Gray, Joseph A. Katarincic, Houston, Paul W.
Nye, Harvey Ferguson, Jr., Corpus Christi, for Petitioners. Valero I
*205 Thomas H. Watkins, C.A. Davis, Austin, Gilberto Valero sued Kellogg in 1986 over mechanical malfunctions
Hinojosa, Brownsville, James K. McClendon, Elizabeth G. allegedly resulting from Kellogg's flawed installation
Bloch, Austin, for Respondents. of refinery equipment. Valero pleaded fraudulent
misrepresentation, breach of contract, violations of the
Texas Deceptive Trade Practices Act, 6 breach of implied
Justice ENOCH delivered the opinion for a unanimous Court.
and express warranties, products liability, negligence, gross
negligence, and intentional misconduct. Valero added
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (1999)
42 Tex. Sup. Ct. J. 818
Ingersoll–Rand as a defendant in 1989, after a piece between the time summary judgment was entered and the time
of equipment supplied by Ingersoll–Rand exploded. The the severance order was entered, but more than five years
suit eventually came to include a host of cross-claims, after Valero first sued Kellogg. After the trial court dissolved
counterclaims, and third-party claims not at issue here. the abatement, Ingersoll–Rand initiated its own counterclaim
against Valero for attorney's fees and costs. This claim was
Kellogg and Ingersoll–Rand answered Valero's petition, raised more than five years after Valero added Ingersoll–Rand
asserting that the contract's indemnity provision barred as a defendant.
Valero's *206 claims. Both relied on the following contract
provision: Kellogg and Ingersoll–Rand filed a joint motion for summary
judgment asserting that the contract's indemnity provision,
6.8 OWNER [Valero] shall release, held enforceable in Valero I, entitled each to attorney's fees,
defend, indemnify and hold court costs, and litigation expenses incurred in Valero I.
harmless CONTRACTOR [Kellogg], Valero responded with a motion for summary judgment,
its subcontractors [Ingersoll–Rand] asserting two affirmative defenses: (1) Kellogg and Ingersoll–
and affiliates and their employees Rand's counterclaims were compulsory, had not been asserted
performing services under this in Valero I, and were therefore precluded by res judicata; and
Agreement against all claims, (2) the four-year statute of limitations for breach of contract
liabilities, loss or expense, including
barred the claims. 8
legal fees and court costs in connection
therewith, arising out of or in
Without specifying grounds, the trial court granted Valero's
connection with this Agreement or
motion for summary judgment, and denied Kellogg and
the Work to be performed hereunder,
Ingersoll–Rand's motion. The court of appeals affirmed,
including losses attributable to
holding that Ingersoll–Rand's counterclaim was compulsory
CONTRACTOR'S negligence, to
and barred by res judicata, and Kellogg's claim was barred
the extent CONTRACTOR is not
compensated by insurance carried by limitations. 9 Kellogg and Ingersoll–Rand each petitioned
under this ARTICLE.... for review.
Valero replied that the contract's indemnity provision was Because resolution of the issues we consider in Ingersoll–
unenforceable as against public policy. On this issue, each Rand's appeal disposes of issues presented by Kellogg's
side filed competing motions for summary judgment. appeal, we consider Ingersoll–Rand's appeal first.
The trial court granted Kellogg's and Ingersoll–Rand's
motions for summary judgment, denied Valero's motion,
Ingersoll–Rand's Appeal
and rendered judgment that Valero take nothing on its
claims against Kellogg and Ingersoll–Rand. That matter The court of appeals held that Ingersoll–Rand's claim for
was severed, and the remaining issues were abated pending attorney's fees was a compulsory counterclaim that Ingersoll–
appeal. Valero appealed, and the court of appeals affirmed the Rand should have brought in Valero I; and, therefore, res
trial court's judgment on June 30, 1993. 7 This Court denied judicata barred the claim in Valero II. We disagree.
Valero's application for writ of error on April 20, 1994, and
overruled its motion for rehearing of the application on June [1] [2] [3] Res judicata prevents parties and their privies
2, 1994. That judgment is final. from relitigating a cause of action that has been finally
adjudicated by a competent tribunal. 10 Also precluded
*207 are claims or defenses that, through diligence, should
Valero II have been litigated in the prior suit but were not. 11 The
doctrine is intended to prevent causes of action from being
One of the remaining abated claims was Kellogg's split, thus curbing vexatious litigation and promoting judicial
counterclaim for attorney's fees and costs incurred in
economy. 12 Res judicata, however, does not bar a former
defending against Valero. Kellogg filed the counterclaim
defendant who asserted no affirmative claim for relief in
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (1999)
42 Tex. Sup. Ct. J. 818
an earlier action from stating a claim in a later action that a liability indemnification clause does not accrue, and thus is
could have been filed as a cross-claim or counterclaim in the not mature, until the indemnitee's liability to the party seeking
earlier action, unless the claim was compulsory in the earlier damages becomes fixed and certain. 20
13
action. Here, the court of appeals concluded that Ingersoll–
Rand's claim was compulsory. [7] When Ingersoll–Rand was added as a defendant in
Valero I, it was entirely conceivable that Ingersoll–Rand
[4] But a counterclaim is compulsory only if: (1) it is within might sustain extensive liabilities because of Valero's claims
the jurisdiction of the court; (2) it is not at the time of filing for damages. And Ingersoll–Rand, presumably, would have
the answer the subject of a pending action; (3) the claim is sought indemnification for all such liabilities under the
mature and owned by the defendant at the time of filing the contract's indemnity provision. Any claim Ingersoll–Rand
answer; (4) it arose out of the same transaction or occurrence could have asserted, however, could not have accrued until
that is the subject matter of the opposing party's claim; (5) all of Ingersoll–Rand's potential liabilities to Valero became
it is against an opposing party in the same capacity; and (6) fixed and certain by rendition of a judgment.
it does not require the presence of third parties over whom
the court cannot acquire jurisdiction. 14 A claim having all In Valero I, the trial court rendered summary judgment for
of these elements must be asserted in the initial action and Ingersoll–Rand that Valero take nothing on its claims for
damages. That judgment was signed on October 25, 1991.
cannot be asserted in later actions. 15
Ingersoll–Rand's liabilities became fixed and certain at zero
for Valero's tort, DTPA, and contract damages plus the total
To meet its summary judgment burden on the affirmative
amount of attorney's fees and costs incurred in defending
defense that Ingersoll–Rand's claim was compulsory and
against Valero when summary judgment was rendered in
barred by res judicata, Valero had to prove that Ingersoll–
Rand's counterclaim satisfied each element above. Ingersoll– Valero I. 21 Because Valero demonstrated no time earlier than
Rand asserts that its indemnity claim for attorney's fees was the date of judgment in Valero I by which Ingersoll–Rand's
not compulsory because the claim could not have become liabilities became fixed and certain, the third element of the
mature before the trial court's rendition of summary judgment compulsory counterclaim rule—maturity of the claim—was
in Valero I. not satisfied.
Our reasoning is bolstered by commentary on the analogous
[5] [6] A claim is mature when it has accrued. 16 To
federal rule. The Texas compulsory counterclaim rule is based
determine the correct accrual date of an indemnity claim we
look to the contract's indemnity provision. There are two on Rule 13 of the Federal Rules of Civil Procedure. 22 In
types of indemnity agreements, those that indemnify against commenting on Federal Rule 13(a)'s condition that a claim
must be mature in order to be compulsory, Professors Wright
liabilities and those that indemnify against damages. 17 Broad
and Miller state:
language, like that in this contract, that holds the indemnitee
“harmless” against “all claims” and “liabilities” evidences an
agreement to indemnify against liability. 18 Such provisions This exception to the compulsory counterclaim
entitle the indemnitee to recover when the liability becomes requirement necessarily encompasses a claim that depends
fixed and certain, as by rendition of a judgment, whether or upon the outcome of some other lawsuit and thus does not
not the indemnitee has yet suffered actual damages, as by come into existence until the action upon which it is based
payment of a judgment. 19 has terminated. For example, ... a claim for contribution
cannot be compulsory in the action whose judgment is the
*208 Valero's suit presented the rather anomalous situation subject of the contribution suit. 23
of an indemnitor (Valero) acting concurrently as the plaintiff Likewise, an indemnity claim cannot be compulsory in the
seeking damages from the indemnitee (Ingersoll–Rand). action whose judgment is the subject of the indemnity suit.
The more common scenario for an indemnification dispute In a suit for either contribution or indemnity the injury upon
involves three separate and distinct parties: plaintiff (party which suit might be based does not arise until some liability
one), indemnitee (party two), and indemnitor (party three). is established. In this case, as in a contribution claim against a
Despite the unusual factual setting here, we find no persuasive joint tortfeasor, liability could not have been established until
reason not to apply the longstanding rule that a claim under judgment was rendered.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (1999)
42 Tex. Sup. Ct. J. 818
elements were not met by Ingersoll–Rand's potential claims
The court of appeals relied heavily on Getty Oil v. Insurance in Valero I. Thus, Ingersoll–Rand's claims in Valero II are not
Company of North America 24 in reaching a different barred.
conclusion. In Getty we stated:
As the court of appeals points out, and as we said in Getty,
we have held that an indemnitee may bring a claim against
*209 The contingent nature of these claims, however, an indemnitor before the judgment is assigned against the
does not preclude the operation of res judicata. We held in indemnitee. 28 That is indeed what Getty did. We allow such
Barr [v. Resolution Trust Corp.] that “[a] subsequent suit claims to be brought, in the interest of judicial economy, as
will be barred if it arises out of the same subject matter of a
an exception to the accrual rule for indemnity claims. 29 Such
previous suit and which, through the exercise of diligence,
claims are contingent on accrual. But we have never held
could have been litigated in a prior suit.” 837 S.W.2d at
that an indemnitee must state such claims in the initial suit to
631. Getty could have asserted its present claims in the
preserve them. As we specifically noted in Getty, such claims
[previous] suit, with their resolution being contingent on
are permissive. 30 None of the cases we cited in Getty, for
the plaintiffs' claims. 25
the *210 proposition that an indemnitee may file a claim
In all respects, we stand by Getty. But Getty's language cannot
for indemnification before judgment is rendered, stand for the
be applied without considering the case's factual context.
proposition that contingent indemnity claims must be brought
in the initial action. Rather, the cases cited in Getty hold that
In Getty we held that an indemnitee (Getty) was barred by
it is merely permissive for such claims to be brought before
res judicata from maintaining a claim against an indemnitor
(NL Industries), because Getty had sought the same relief judgment in the initial action. 31
under a different theory in an earlier suit. In the earlier
wrongful death suit Getty and NL were co-defendants, and The fact that attorney's fees and costs were the only liabilities
Getty chose to file a permissive cross-claim against NL based for which Ingersoll–Rand was eventually entitled to seek
on indemnification language in their contract. By taking this indemnity does not change our conclusion. It is true that
action Getty put itself in the same position, for purposes of res a counterclaim for attorney's fees will in most cases be
judicata, as a plaintiff filing a cause of action for damages. We compulsory. 32 We do not dispute the legal basis of such a
specifically held this to be so in Getty. 26 As the plaintiff for statement because a claim for attorney's fees will generally
res judicata purposes, Getty was subject to the general rule of satisfy the elements of the compulsory counterclaim rule.
res judicata that any cause of action that arises out of the same However, an indemnity claim based on an agreement to
subject matter should, if practicable, be litigated in the same indemnify against liabilities has different characteristics than
a simple claim for attorney's fees. The attorney's fees are
lawsuit. 27 In the second suit, Getty was the actual plaintiff.
certain to be incurred as soon as an attorney is retained, while
Its claim again involved asserting indemnity provisions as the
liabilities covered by an indemnity agreement in any given
basis for damages. Because Getty could have asserted those
case may never be incurred depending on the outcome of the
claims in the earlier action but did not, res judicata barred the
case. This difference is significant.
claims.
Consider Fidelity Mutual Life Insurance Company v.
[8] We face a different situation here. In relation to Valero,
Ingersoll–Rand was a defendant only and made no affirmative Kaminsky, 33 another case upon which the court of appeals
claims for relief in Valero I. Ingersoll–Rand, like Getty, could relied. In Kaminsky the court concluded that a contractual
have stated a permissive claim against Valero, but it did not. claim for attorney's fees, even though contingent on the
This fact is significant because of the rule we pointed out outcome of the suit, was mature and compulsory. 34
earlier: the doctrine of res judicata does not bar claims against The contractual provision on which Dr. Kaminsky relied
the plaintiff from an earlier suit by a defendant from the established his contractual right to attorney's fees contingent
earlier suit, unless the later claims were compulsory in the on the result of the suit, but it did not indemnify him against
earlier suit. Because Ingersoll–Rand, unlike Getty, made no other liabilities generally. It was not an indemnification
affirmative claims in the first suit, res judicata does not bar agreement. Thus, the general rule that a cause of action
Ingersoll–Rand's later claims unless they were compulsory. accrues when facts come into existence that authorize the
But, as we explained earlier, the compulsory counterclaim
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Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (1999)
42 Tex. Sup. Ct. J. 818
claimant to seek a judicial remedy applied in Kaminsky. 35 properly preserved through the severance order for later
Dr. Kaminsky's claim for attorney's fees accrued when he first adjudication, and res judicata does not bar it.
incurred fees.
As to Valero's statute of limitations defense, limitations could
[9] As we have explained, a specific accrual rule applies not have began to run before Kellogg's indemnity claim
to claims for indemnification: an indemnity claim does not became fixed and certain. Like Ingersoll–Rand, Kellogg's
accrue until all of the potential liabilities of the indemnitee claim did not become fixed and certain until judgment was
become fixed and certain. This specific rule is consistent with signed in Valero I. Kellogg filed its claim on November 20,
the general accrual rule. The facts that entitle an indemnitee 1991, less than a month after summary judgment was signed
to seek indemnification through suit come into existence in Valero I, and well within the four-year limitations period.
when the indemnitee's liabilities become fixed and certain by
judgment. [11] [12] [13] The court of appeals, however, held that
limitations began to run on Kellogg's indemnification claim
While attorney's fees will almost always be a component when Valero filed suit on July 11, 1986, because Valero's suit
of an indemnitee's total liabilities, we decline to hold that acted as a repudiation of the contract's indemnity provision.
recovery for the attorney's fees component of an indemnitee's It is true that limitations may begin to run upon a promisor's
potential liability must be pursued before and separate from anticipatory repudiation, but only if the repudiation is adopted
the remaining components. An indemnification claim does by the nonrepudiating party. 40 Valero contends that its
not accrue until all of the indemnitee's liabilities become fixed petition in Valero I was an unequivocal repudiation of its
and certain. duty to indemnify. However, the effect of such an anticipatory
repudiation is to give the nonrepudiating party the option of
Because we resolve Valero's res judicata claim by applying treating the repudiation as a breach or ignoring the repudiation
the compulsory counterclaim rule, we need not consider and awaiting the agreed upon time of performance. 41 Thus,
Ingersoll–Rand's assertion that Valero waived, by Rule 11 even if Valero's petition acted as an unequivocal repudiation,
agreement, 36 the right to assert res judicata. an issue we do not decide, Kellogg was still entitled to await
the time of performance and sue only after an actual breach
[10] Valero also asserted in its motion for summary of the indemnity clause. Valero did not breach its agreement
judgment that the four-year statute of limitations for contract to indemnify Kellogg until Kellogg made a demand for
claims barred Ingersoll–Rand's claims for attorney's fees. 37 indemnity, and Valero refused to perform. It was only at this
To prevail on the limitations affirmative defense, Valero had time that the statute of limitations began to run.
the burden of conclusively proving when the cause of action
The record reveals that Kellogg made its demand for
accrued. 38 Ingersoll–Rand's claim *211 did not accrue until
attorney's fees on November 20, 1991, and filed its claims
October 25, 1991, the date that the trial court signed summary
for attorney's fees on the same day. Thus, even if Valero
judgment in Valero I. 39 Because Ingersoll–Rand filed its repudiated the contract, Kellogg still satisfied the statute of
claim for attorney's fees on September 16, 1994, less than four limitations.
years after the trial court's judgment, the four-year statute of
limitations does not bar Ingersoll–Rand's claim.
Conclusion
Kellogg's Appeal Kellogg and Ingersoll–Rand's claims for attorney's fees were
not compulsory counterclaims and are not barred by res
Our conclusions above largely dispose of Valero's claims judicata. Further, the claims were filed within the applicable
against Kellogg. Like Ingersoll–Rand, Kellogg's claim for limitations period. Accordingly, we reverse the court of
attorney's fees did not accrue until summary judgment was appeals' judgment and remand to the trial *212 court for
rendered in Valero I. Consequently, Kellogg's claim was further proceedings consistent with this opinion.
not compulsory. In any event, Kellogg filed its claim one
month before severance in the original action while summary
judgment was still interlocutory. As such, the claim was
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (1999)
42 Tex. Sup. Ct. J. 818
Justice OWEN did not participate in the decision.
Valero's cross-point has no merit. Valero's late-filed amended
petition circumvents the trial court's adverse ruling in Valero
ON REHEARING I. In Valero I, Valero attacked the validity of the indemnity
agreement. By its late-filed amended petition, Valero recast
[14] Like Kellogg, which filed its claim for attorney's
its attack on the indemnity provision as a breach of contract
fees in Valero I after judgment was rendered but before
claim, which is classic claim-splitting. This, Valero cannot
severance was granted, Valero filed an amended petition.
Unlike Kellogg, which for the first time asserted a claim do. 3 The subject of the judgment in Valero I was Valero's
for affirmative relief, Valero repackaged its original tort liability under the indemnity provision; it cannot escape the
claim upon which the adverse judgment had been rendered effect of that judgment through a late-filed amended petition,
as a contract claim. Valero urged in the court of appeals whether there was a severance order or not. The trial court
by conditional cross-point that if res judicata did not bar properly concluded that Valero's “new” breach of contract
Kellogg's claim, then likewise, res judicata would not bar its claim is barred by res judicata.
breach of contract claim. The court of appeals, because of
its disposition of the appeal, did not consider Valero's cross- Our opinion and judgment of June 24, 1999 remain
unchanged.
point. 1 But because we are reversing and remanding this case
to the trial court, Valero, on motion for rehearing, reminds us
of its cross-point and we consider it now. 2 All Citations
997 S.W.2d 203, 42 Tex. Sup. Ct. J. 818
Footnotes
1 Valero Energy Corp. appears individually and as parent corporation of Valero Refining & Marketing Co. Valero Refining &
Marketing Co. (formerly known as Saber Energy, Inc.) appears individually and as parent corporation of Valero Refining
Co. Valero Refining Co. (formerly known as Saber Refining Co.) appears individually. We refer to these respondents
as “Valero.”
2 We refer to petitioners, M.W. Kellogg Co., M.W. Constructors, Inc., M.W. Kellogg Constructors, Inc., Kellogg Rust
Synfuels, Inc., and Henley/MWK Holdings, Inc., as “Kellogg.”
3 We refer to petitioners, Ingersoll–Rand Co., and Dresser–Rand Co., as “Ingersoll–Rand.”
4 See Valero Energy Corp. v. Kellogg Constr. Co., 866 S.W.2d 252 (Tex.App.—Corpus Christi 1993, writ denied) (“Valero
I ”).
5 See 953 S.W.2d 861 (“Valero II ”).
6 See TEX. BUS. & COM.CODE § 17.46.
7 See Valero I, 866 S.W.2d 252.
8 See TEX. CIV. PRAC. & REM.CODE § 16.004(a)(3).
9 953 S.W.2d at 866, 868.
10 See Getty Oil Co. v. Insurance Co. of N. Am., 845 S.W.2d 794, 798 (Tex.1992) (citing Barr v. Resolution Trust Corp.,
837 S.W.2d 627, 630 (Tex.1992)), cert denied, 510 U.S. 820, 114 S.Ct. 76, 126 L.Ed.2d 45 (1993); Gracia v. RC Cola–
7–Up Bottling Co., 667 S.W.2d 517, 519 (Tex.1984); Texas Water Rights Comm'n v. Crow Iron Works, 582 S.W.2d 768,
771–72 (Tex.1979).
11 See Barr, 837 S.W.2d at 629.
12 See id.; Jeanes v. Henderson, 688 S.W.2d 100, 103 (Tex.1985).
13 See TEX.R. CIV. P. 97(a); Valley Forge Ins. Co. v. Ryan, 824 S.W.2d 236, 238–39 (Tex.App.—Fort Worth 1992, no writ);
Lesbrookton, Inc. v. Jackson, 796 S.W.2d 276, 281 (Tex.App.—Amarillo 1990, writ denied); Swiss Ave. Bank v. Slivka,
724 S.W.2d 394, 396 (Tex.App.—Dallas 1986, no writ).
14 See TEX.R. CIV. P. 97(a) & (d); Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245, 247 (Tex.1988); see also Denbina v. City
of Hurst, 516 S.W.2d 460, 463 (Tex.Civ.App.—Tyler 1974, no writ) (“Under Sections (a) and (d) of [Rule 97] a party is
not required to file a counterclaim unless the claim is mature at the time the answer is due.”) (citing McDonald, Texas
Civil Practice, § 7.49, p. 285 (1970)).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (1999)
42 Tex. Sup. Ct. J. 818
15 See Wyatt, 760 S.W.2d at 247.
16 See, e.g., Ryan, 824 S.W.2d at 239; Stille v. Colborn, 740 S.W.2d 42, 44 (Tex.App.—San Antonio 1987, writ denied);
Gray v. Kirkland, 550 S.W.2d 410, 411 (Tex.Civ.App.—Corpus Christi 1977, writ ref'd n.r.e.).
17 See Tubb v. Bartlett, 862 S.W.2d 740, 750 (Tex.App.—El Paso 1993, writ denied); Russell v. Lemons, 205 S.W.2d 629,
631 (Tex.Civ.App.—Amarillo 1947, writ ref'd n.r.e.).
18 See, e.g., Tubb, 862 S.W.2d at 750; Bernard v. L.S.S. Corp., 532 S.W.2d 409, 410 (Tex.Civ.App.—Austin 1976, writ
ref'd n.r.e.).
19 See Tubb, 862 S.W.2d at 750; Russell, 205 S.W.2d at 631.
20 See Humana Hosp. Corp. v. American Med. Sys., Inc., 785 S.W.2d 144, 145 (Tex.1990); Pope v. Hays, 19 Tex. 375,
379–80 (1857); Tubb, 862 S.W.2d at 750; Holland v. Fidelity & Deposit Co., 623 S.W.2d 469, 470 (Tex.App.—Corpus
Christi 1981, no writ); Pate v. Tellepsen Constr. Co., 596 S.W.2d 548, 552 (Tex.Civ.App.—Houston [1st Dist.] 1980, writ
ref'd n.r.e.); Bernard, 532 S.W.2d at 410; Texas Auto Servs., Inc. v. Kemp, 478 S.W.2d 646, 648 (Tex.Civ.App.—Austin
1972, no writ); Russell, 205 S.W.2d at 631.
21 See, e.g., Pope, 19 Tex. at 379; Tubb, 862 S.W.2d at 750; Kemp, 478 S.W.2d at 648; Russell, 205 S.W.2d at 631.
22 See TEX.R. CIV. P. 97, Notes and Comments.
23 6 Charles Alan Wright and Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE § 1411, at 82–84 (2d ed.1990)
(footnotes omitted) (emphasis added).
24 845 S.W.2d 794 (Tex.1992).
25 Id. at 799.
26 See id. at 800 (“The cross-claimant [Getty] becomes a plaintiff for res judicata purposes, and is required to assert all
claims against the cross-defendant arising from the subject matter of the original cross-claim.”).
27 See Barr, 837 S.W.2d at 630.
28 See Getty, 845 S.W.2d at 799 (citing Gulf, Colo. & Santa Fe Ry. Co. v. McBride, 159 Tex. 442, 322 S.W.2d 492, 495
(1958); Mitchell's, Inc. v. Friedman, 157 Tex. 424, 303 S.W.2d 775, 779 (1957); K & S Oil Well Serv., Inc. v. Cabot Corp.,
491 S.W.2d 733, 739 (Tex.Civ.App.—Corpus Christi 1973, writ ref'd n.r.e.)).
29 See id. (“Forcing the indemnity suit to wait for judgment in the liability suit ‘would contravene the policy of the courts to
encourage settlements and to minimize litigation.’ ”) (citation omitted).
30 See id.
31 See id.
32 See, e.g., Fidelity Mut. Life Ins. Co. v. Kaminsky, 820 S.W.2d 878, 882 (Tex.App.—Texarkana 1991, writ denied).
33 Id.
34 Id.
35 See Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex.1990).
36 See TEX.R. CIV. P. 11.
37 See TEX. CIV. PRAC. & REM.CODE § 16.004(a)(3).
38 See KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999); Burns v. Thomas, 786
S.W.2d 266, 267 (Tex.1990); Willis v. Maverick, 760 S.W.2d 642, 646 (Tex.1988).
39 See City of San Antonio v. Talerico, 98 Tex. 151, 81 S.W. 518, 520 (1904); Koonce v. Quaker Safety Prod. & Mfg. Co.,
798 F.2d 700, 706–13 (5th Cir.1986) (discussing application of Texas law); see also Maurice T. Brunner, Annotation,
When Statute of Limitations Commences to Run Against Claim for Contribution or Indemnity Based on Tort, 57 A.L.R.3d
867, 875–76 (1974).
40 See Hubble v. Lone Star Contracting Corp., 883 S.W.2d 379, 382 (Tex.App.—Fort Worth 1994, writ denied).
41 See Murray v. Crest Constr., Inc., 900 S.W.2d 342, 344 (Tex.1995); Greenwall Theatrical Circuit Co. v. Markowitz, 97
Tex. 479, 79 S.W. 1069, 1071 (1904); America's Favorite Chicken Co. v. Samaras, 929 S.W.2d 617, 626 (Tex.App.—
San Antonio 1996, writ denied).
1 See 953 S.W.2d at 869.
2 See TEX.R.APP. P. 53.4.
3 See RESTATEMENT (SECOND) OF JUDGMENTS §§ 24, 25(1); Barr v. Resolution Trust Corp., 837 S.W.2d 627, 629–
31 (Tex.1992).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
II
Isern v. Watson, 942 S.W.2d 186 (1997)
submission,” is not mandatory. Vernon's
Ann.Texas Rules Civ.Proc., Rule 277.
KeyCite Yellow Flag - Negative Treatment
Distinguished by Reliance Steel & Aluminum Co. v. Sevcik, Tex., 2 Cases that cite this headnote
September 26, 2008
942 S.W.2d 186 [2] Appeal and Error
Court of Appeals of Texas, Nature of Error or Defect
Beaumont. Appeal and Error
Necessity of Timely Objection
Reuben A. ISERN, M.D., Appellant,
v. Physician waived any alleged error as to conflict
in jury findings in malpractice action, where
Helen WATSON and Rix Watson, Appellees.
physician failed to object to receipt of verdict or
No. 09–95–344 CV. | Submitted at time that any of jury's findings were in conflict
Dec. 5, 1996. | Decided March 20, 1997. before discharge of jury.
Patient brought medical malpractice against physician to 3 Cases that cite this headnote
recover for amputation of leg, after physician's alleged
negligence in failing to properly diagnose and treat patient, [3] Trial
or to seek consultation from specialist. Following remand, Failure to Answer Interrogatories or Make
782 S.W.2d 546, the 60th District Court, Jefferson County, Findings
Gary Sanderson, J., entered judgment for patient, reduced
Affirmative finding as to one question on verdict
award by patient's contributory negligence, and awarded
form which will sustain judgment can never
patient $3,091,495.43. Physician appealed and patient cross-
conflict with unanswered question.
appealed. The Court of Appeals, Ron Carr, J. (Assigned),
held that: (1) jury's findings were not in conflict; (2) patient's 1 Cases that cite this headnote
expert was entitled to testify that physician was negligent; (3)
whether physician was negligent in failing to perform test on
[4] Health
patient was question for jury; (4) expert testimony supported
Verdict and Findings
damage award of $5,500 in future medical expenses; (5)
patient's testimony supported damage award of $200,000 for Negative finding of jury question regarding
future physical pain or mental anguish; (6) patient's reference physician's alleged negligence in failure to obtain
to insurance during closing argument did not warrant grant of arteriogram, and affirmative finding of question
mistrial; (7) total damage award was not excessive; and (8) as to whether physician was negligent in failing
whether patient was contributorily negligent was question for to hospitalize patient for further diagnosis, tests,
jury. or medical evaluation did not create conflict of
jury answers in malpractice action; questions
Affirmed. did not involve same subject matter, but rather
related to two different negligence claims.
Cases that cite this headnote
West Headnotes (25)
[5] Health
[1] Trial Verdict and Findings
Form in General Jury's affirmative answer to question regarding
Submission of jury question that encompasses alleged negligence in physician's failure to
more than one independent ground of liability hospitalize patient and jury's refusal to find
in same question, known as “broad-form that physician was negligent in failing to have
patient's injury evaluated by cardiovascular
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Isern v. Watson, 942 S.W.2d 186 (1997)
specialists were not in conflict in malpractice Damage award of $5,500 in future medical
action. expenses to patient whose leg was amputated as
result of physician's negligence was supported by
Cases that cite this headnote expert testimony that patient would be confined
to wheelchair for life, that she would be deprived
[6] Courts of normal exercise and activities which could
Trial or Evidence, Rulings Relating To cause future problems, and she would require
“future follow-up.”
Determination in medical malpractice action that
fact issue existed as to whether physician was Cases that cite this headnote
negligent in failing to use doppler instrument,
and in failing to hospitalize patient for further
observation and further testing, was law of case [11] Damages
on retrial. Particular Cases
Health
Cases that cite this headnote Amount
Damage award of $200,000 for future physical
[7] Evidence pain or mental anguish to patient whose leg was
Matters Directly in Issue amputated as result of physician's negligence
Physician who testified as expert for patient in was supported by testimony of patient as to
medical malpractice action was provided with her ongoing pain and inability to do things she
proper legal definition of negligence, and thus formerly did, that she and her husband no longer
was entitled to testify that defendant physician had normal sex life, and fact that patient had 20
was negligent. years of life expectancy.
2 Cases that cite this headnote Cases that cite this headnote
[8] Evidence [12] Damages
Due Care and Proper Conduct Particular Cases
Medical expert evidence that is based on Pure mental anguish associated with loss of leg
reasonable medical probability, other than will support $200,000 damage award.
ultimate issue evidence, will support jury finding
Cases that cite this headnote
in malpractice action.
1 Cases that cite this headnote [13] Husband and Wife
Personal Injuries to Wife Resulting in Loss
[9] Health of Services or Consortium, Impairment of
Questions of Law or Fact and Directed Earning Capacity, or Expenses
Verdicts Husband and Wife
Whether physician was negligent in failing to Personal Injuries to Husband
perform test on 270–pound patient who hurt her Loss of services of spouse as homemaker,
leg when she fell down was question for jury in loss of marital rights, and loss of society and
patient's medical malpractice action. companionship do not all constitute loss of
consortium, but rather provide separate bases for
1 Cases that cite this headnote recovery of damages by spouse for harm to other
spouse.
[10] Evidence
Cases that cite this headnote
Damages
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Isern v. Watson, 942 S.W.2d 186 (1997)
Arguments and Conduct of Counsel
[14] Trial
In determining whether improper argument
In General; Duty of Court
caused improper verdict, appellate court must
Patient's reference to insurance during closing examine argument in light of whole case,
argument of medical malpractice action did beginning with voir dire and ending with
not cause rendition of improper verdict, and closing argument, looking at length of argument,
thus did not warrant grant of mistrial; at most whether it was repeated or abandoned, whether
reference was casual or inadvertent reference there was cumulative error, and probable effect
to insurance coverage and at least as having of argument on material finding.
different connotations. Rules App.Proc., Rule
81(b)(1). Cases that cite this headnote
1 Cases that cite this headnote
[18] Appeal and Error
Reference to Insurance or Other Indemnity
[15] Appeal and Error
Complaining party must establish that mere
Requests and Failure to Give Instructions
injection of word “insurance” in argument
Appeal and Error actually caused improper verdict to warrant
Necessity of Timely Objection mistrial or reversal; in absence of clear showing
Physician waived any error of objectionable that any reference to insurance resulted in any
argument from patient's reference to insurance harm or prejudice, refusal to declare mistrial is
in closing argument of malpractice action, where not error.
physician failed to timely object and request
instruction that jury disregard argument. 1 Cases that cite this headnote
Cases that cite this headnote
[19] Interest
Constitutional and Statutory Provisions
[16] Appeal and Error Tort Reform Act which required prejudgment
Arguments and Conduct of Counsel interest on future damages applied to medical
Appeal and Error malpractice action even though action was
At Trial or Hearing commenced prior to effective date, since action
Appeal and Error proceeded to retrial following appeal. Vernon's
Error Committed or Invited by Party Ann.Texas Civ.St. art. 5069–1.05, § 6.
Complaining
Cases that cite this headnote
Appeal and Error
Arguments and Conduct of Counsel
[20] Interest
To establish reversible error in jury argument,
Prejudgment Interest in General
appellant must prove argument was not invited
or provoked, was preserved by proper trial There exists no necessity to segregate past and
predicate such as objection, motion to instruct, future damages to award prejudgment interest on
or motion for mistrial, that error was not curable future damages.
by instruction, prompt withdrawal of statement,
Cases that cite this headnote
or reprimand from court, and that argument
constituted reversible harmful error.
[21] Constitutional Law
1 Cases that cite this headnote Tort or Financial Liabilities
Interest
[17] Appeal and Error Torts; Wrongful Death
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Isern v. Watson, 942 S.W.2d 186 (1997)
Prejudgment interest in tort cases does not
violate defendant's constitutional due process
safeguards. U.S.C.A. Const.Amend. 14.
Attorneys and Law Firms
Cases that cite this headnote
*189 Denice Smith, Houston, Jo Ben Whittenburg, Orgain,
Bell & Tucker, Beaumont, for appellant.
[22] Health
Amount John H. Holloway, Houston, for appellee.
Damage award in excess of $3.1 million was not Before BURGESS, STOVER and CARR, JJ.
excessive in medical malpractice action in which
patient suffered amputation of leg as result of
physician's negligence.
OPINION
Cases that cite this headnote
CARR, Justice 1 .
[23] Evidence This is a medical malpractice case which arises out of
Construction appellees Helen and Rix Watson's claim that appellant, Dr.
Counsel for physician who was defendant in Reuben A. Isern, was negligent in failing to properly diagnose
medical malpractice action did not make judicial and treat Mrs. Watson, or to seek a consultation from a
admission that patient was not contributorily specialist, during her visit to a hospital emergency room after
negligent when, during closing argument, he a fall. The Watsons claimed at trial that the alleged acts or
stated, “you haven't heard me claim anything omissions of Dr. Isern caused Mrs. Watson's leg to be later
about [patient] being negligent during this trial or amputated at the knee.
offer any evidence on that. That's up to you to --.”
This appeal is from a retrial of this case and is the second time
2 Cases that cite this headnote the case has been appealed to this Court. In the first trial, the
jury awarded zero damages to the Watsons and the trial judge
rendered judgment that the Watsons take nothing. Watson
[24] Evidence
v. Isern, 782 S.W.2d 546 (Tex.App.—Beaumont 1989, writ
Due Care and Proper Conduct
denied) (Brookshire, J., writing).
Jury was not bound by testimony of
expert witnesses as to whether patient was In the second trial, the jury found that Dr. Isern was negligent
contributorily negligent in medical malpractice in failing to hospitalize Mrs. Watson for further evaluation
action against physician. and negligent in failing to do a “Doppler” exam to assure
that there was no major damage to a blood vessel. The jury
1 Cases that cite this headnote
awarded Mrs. Watson $1,432,600 and Mr. Watson $9,000
in damages. With reduction of the damages by 35% for
[25] Health contributory negligence, the trial court rendered judgment
Questions of Law or Fact and Directed for damages, with prejudgment interest, in the amount of
Verdicts $3,091,495.43, plus post-judgment interest and cost.
Whether patient was contributorily negligent
in failing to return to emergency room or see Dr. Isern has appealed asserting eight points of error. The
other physician was question for jury in patient's Watsons, in five cross-points, have appealed the jury's 35%
medical malpractice action in which patient apportionate finding that Mrs. Watson was negligent in
alleged that physician was negligent, and that failing to return to the emergency room or seek other medical
negligence caused amputation of her leg. care prior to seeing another doctor on Tuesday, following her
injury on Saturday. We affirm.
2 Cases that cite this headnote
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Isern v. Watson, 942 S.W.2d 186 (1997)
below the knee, and there is a window of 6–8 hours from the
severance within which surgery must be performed to save
Evidence
the leg.
On May 1, 1982, Mrs. Watson fell and injured her right
leg. She weighed 270 pounds at the time. She arrived at the Dr. John Mayo, a board certified emergency room physician
emergency room of a Beaumont hospital at 11:50 p.m. where who has been in charge of the Baptist Hospital ER since
Dr. Isern saw her. She complained of pain in the right knee, 1987 or 1988, and who worked with both Dr. Isern and Nurse
lower leg and ankle. Lannelle (Hussey) Wilson at the Baptist Hospital ER at the
time of Mrs. Watson's ER visit, testified that in his medical
After X-raying her and finding that the leg was not broken, opinion, Dr. Isern treated Mrs. Watson correctly; and, in his
but finding that there was some damage to the knee joint area, medical opinion, based on reasonable medical probability,
Dr. Isern discharged Mrs. Watson. She was to remain in bed Mrs. Watson did not have a ruptured popliteal artery when Dr.
for two or three days, applying ice packs to the knee. Tylenol Isern treated her in the ER. Part of the basis for his opinion
pain medication was prescribed. was that a patient with a ruptured popliteal artery would have
an elevated pulse of at least 120, and Mrs. Watson's was 103;
The hospital records reflect her discharge at 1:50 a.m. Sunday that she would not have had a pulse in her foot, while Dr.
morning; it took her family about 30 to 40 minutes to get her Isern's medical records noted she did have a foot pulse; and,
into a car to go home. The Tylenol prescription was filled that her knee would have been gangrenous by the time she
early Sunday morning and she took it for pain, kept the ice was operated on at John Sealy on Wednesday, five days after
packs on her leg as instructed, and remained in bed except to her Saturday fall and a gangrenous leg is not reflected in the
be helped to the bathroom by her family. Sealy operative report of her first surgery.
Mr. Watson talked with Dr. Isern or his office early Monday Mrs. Watson's subsequent treating physician, Dr. Bessell
morning, and while Mrs. Watson could not detail the two- testified that there is no way to tell how long the severed
sided telephone conversation, it was her understanding she popliteal artery findings had been present. He could only
was to continue with the prescribed treatment by Dr. Isern. say that the injury had been present several hours. If Mrs.
Watson had a twisting fall with dislocation a day or even two
On Tuesday morning, Mrs. Watson called her orthopedic days after she left Dr. Isern's care in the ER, that would be
doctor, Dr. Shorkey. He was unavailable, so she went to consistent with what he and Dr. Gordon found.
see his partner, Dr. Alfred Bessell. Dr. Bessell referred Mrs.
Watson across the street to St. Elizabeth Hospital. At St. Dr. Mayo further testified that in his opinion, Dr. Isern's chart
Elizabeth, she was seen by a vascular surgeon, Dr. Gordon. of his physical exam revealed that he gave Mrs. Watson an
He referred her to John Sealy Hospital in Galveston where appropriate exam, and that Dr. Isern's recommendations of
she arrived on the evening of Tuesday, May 4, 1982. bed rest, elevating the knee, and ice packs were appropriate
for Dr. Isern's diagnosis.
Mrs. Watson spent almost a month at John Sealy. After
several procedures on her leg, the Galveston doctors finally Dr. Barbee, also a board certified emergency room physician,
removed it, because *190 of lack of proper blood supply due testified on Dr. Isern's behalf, that based upon his review of
to a ruptured popliteal artery. the medical records in the case and his personal knowledge,
training and experience as an emergency room physician, in
At trial, the Watsons contended that Mrs. Watson's ruptured his opinion Dr. Isern treated Mrs. Watson properly, did a
popliteal artery was a result of the fall on the night of May 1, proper examination of Mrs. Watson, and made proper records
1982, before she came to see Dr. Isern and that Dr. Isern was in the case. Dr. Barbee further testified that had Mrs. Watson
negligent in his examination, his diagnosis and treatment of been injured to the extent she claimed, it would have been
Mrs. Watson, and that it resulted in the loss of her leg. very apparent to Dr. Isern that Saturday night. Instead, Dr.
Barbee raised the issue of another possible fall.
Medical experts testified that when a popliteal artery is
severed, as Mrs. Watson's was found to be at the time of Additional factual details of this case will be stated in
her hospitalization at John Sealy, the blood supply is cut off connection with the points to which they pertain.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Isern v. Watson, 942 S.W.2d 186 (1997)
Also contrary to appellant's “mandatory” argument is the
holding by our Texas Supreme Court in H.E. Butt Grocery
Co. v. Warner, 845 S.W.2d 258, 260 (Tex.1992):
Appellant's Appeal
Because Warner tendered a proper
Dr. Isern's first point of error contends that the trial court
broad-form question with appropriate
erred in submitting jury question one 2 because (1) it was not instructions, the trial court should
submitted broad-form in violation of the TEX.R.CIV.P. 277, have granted her request. However, its
and (2) resulted in conflicting jury findings. failure to do so was not harmful error.
TEX.R.APP.P. 81(b)(1). Although
submitted in granulated form, the
Standard of Review jury questions contained the proper
elements of a premises liability action.
The standard of review for error in the court's charge is Because the charge fairly submitted
abuse of discretion. Texas Dept. of Human Services v. E.B., to the jury the disputed issues of fact
802 S.W.2d 647, 649 (Tex.1990). An abuse of discretion and because the charge incorporated
occurs when the trial court acts without reference to guiding a correct legal standard for the jury
principles. Id. to apply, we hold that the trial court's
refusal to submit Warner's tendered
Where error in the charge has occurred which caused question and instructions did not
the jury's finding to be in conflict, a legal question is amount to harmful error.
presented for the appellate court. Bender v. Southern Pacific
Transportation Co., 600 S.W.2d 257, 260 (Tex.1980), the We find that the trial court did not abuse its discretion is
Supreme Court explained the test for determining whether submitting jury question one and it did not amount to harmful
jury findings conflict: error.
*191 A court may not strike down
jury answers on the ground of conflict
if there is any reasonable basis upon Conflicting Jury Findings
which they may be reconciled....
We do not determine whether the [2] First, we note that Dr. Isern did not object to receipt of
findings may reasonably be viewed the verdict or make any objection at the time that any of the
as conflicting; to the contrary, the jury's findings were in conflict before discharge of the jury,
question is whether there is any thereby “waiving” any alleged error as to any conflict in the
reasonably possible basis upon which jury findings. See Ciba–Geigy Corp. v. Stephens, 871 S.W.2d
they may be reconciled. 317, 324 (Tex.App.—Eastland 1994, writ denied); Durkay
v. Madco Oil Co., 862 S.W.2d 14, 23 (Tex.App.—Corpus
Christi 1993, writ denied); Greater Houston Transp. Co. v.
Zrubeck, 850 S.W.2d 579, 586 (Tex.App.—Corpus Christi
Broad–Form Submission 1993, writ denied); Roling v. Alamo Group (USA), Inc., 840
S.W.2d 107, 109 (Tex.App.—Eastland 1992, writ denied).
[1] TEX.R.CIV.P. 277 does not support appellant's
argument that the practice of submitting a jury question that In any event, no conflict can exist between affirmative
encompasses more than one independent ground of liability and negative answers concerning two different claims of
in the same question, known as “broad-form submission”, negligence. See Robertson Transport Co. v. Hunt, 345 S.W.2d
is mandatory in Texas or that our trial courts have “no 293, 296 (Tex.Civ.App.—San Antonio 1961, no writ). A
discretion” in submission of the charge. Rule 277 specifically “No” answer to a special issue simply means that a party
directs that a broad-form submission be given only “whenever having the burden of proof failed to convince the jury as
feasible”. to such liability issue. Herbert v. Herbert, 774 S.W.2d 1
(Tex.App.—Fort Worth 1988, writ denied).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Isern v. Watson, 942 S.W.2d 186 (1997)
Mrs. Watson's injured right leg.” We hold that an affirmative
In order for conflicting findings to destroy each other, one finding which will sustain a judgment can never conflict with
finding must be such as would warrant a judgment for one of an “unanswered” question. See Stalder v. Bowen, 373 S.W.2d
the parties, and the other finding would warrant a judgment 824 (Tex.Civ.App.—Dallas 1963, writ ref'd n.r.e.).
for the other party. Grice v. Hennessy, 327 S.W.2d 629, 633
(Tex.Civ.App.—San Antonio 1959, no writ); Woodard v. [4] Doctor Isern next argues a conflict between a negative
Tatum, 277 S.W.2d 943, 945 (Tex.Civ.App.—Waco 1955, no finding and an affirmative finding. He asserts a conflict
writ). In addition, the existence of a claimed irreconcilable between the negative finding of Question 1(4), regarding
conflict between certain findings becomes immaterial if there negligence in failure to obtain an arteriogram, and the
“remains at least one finding supporting the judgment which affirmative finding of Question 1(6), that Dr. Isern was
is not in conflict with any other,” Gilcrease v. Hartford Acc. & negligent in failing to hospitalize Mrs. Watson for “further
Indem. Co., 252 S.W.2d 715 (Tex.Civ.App.—El Paso 1952, diagnosis, tests or medical evaluation in view of the possible
no writ). injuries she may have suffered ... as a result of the fall on May
1, 1982.” However, it is clear that the two questioned findings
Also, to present a conflict the jury findings must concern do not involve the same subject matter—but rather two
the “same subject matter.” Phipps v. City of Waco, 551 different negligence claims, i.e., one asking about the failure
S.W.2d 140 (Tex.Civ.App.—Waco 1977, writ ref'd n.r.e.); to obtain an “immediate arteriogram” and the other as to
Turner v. Victoria County Elec. Co-op. Co., 428 S.W.2d whether appellant was negligent in failing to hospitalize Mrs.
484 (Tex.Civ.App.—Waco 1968, no writ). When testing an Watson for further diagnosis, tests or medical evaluation.
alleged conflict, specific findings control over general or
ambiguous findings and if a conflict is apparent, the court will [5] The next alleged conflict is asserted on the basis that
disregard general or ambiguous findings to resolve it. Winn the failure to hospitalize affirmative finding to Question 1(6)
v. Ridgewood Dev. Co., 691 S.W.2d 832 (Tex.App.—Fort conflicts with the jury's refusal to find in Question 1(1) that
Worth 1985, writ ref'd n.r.e.). Dr. Isern was negligent in failing to have Mrs. Watson's
injury evaluated by cardiovascular specialists. We find the
Any apparent conflict in a jury's verdict should be reconciled findings are not in conflict. See Robertson, 345 S.W.2d at 296;
if it can be done reasonably in light of the pleadings, the Herbert, 774 S.W.2d at 3. For the reasons stated, appellant's
evidence, *192 the answers to other issues and the verdict first point of error is denied.
as a whole. In making such determination, the court must
consider the entire charge and all of the verdict. Cox v. Appellant's second point of error argues the negligence/
Huffman, 159 Tex. 298, 319 S.W.2d 295 (1958); Little Rock proximate cause liability findings against Dr. Isern on the
Furniture Mfg. Co. v. Dunn, 148 Tex. 197, 222 S.W.2d 985 basis of no evidence and insufficient evidence that Dr. Isern
(1949). was negligent (1) in failing to hospitalize Mrs. Watson or (2)
in not performing a Doppler exam under the circumstances
[3] With the foregoing in mind, Dr. Isern first complains to ensure that Mrs. Watson did not have a ruptured popliteal
about the partial verdict. He asserts the jury's affirmative artery.
finding to Question 1(6)(a) that Dr. Isern failed to exercise
ordinary care in failing to admit Mrs. Watson to the hospital
for further diagnosis, tests, or medical evaluation conflicts
Evidence Standards Review
with the jury's failure to reach a verdict to Question 1(5)(a) as
to whether Dr. Isern was negligent in failing to perform the When addressing a no evidence point, we must consider
necessary physical examination of Mrs. Watson's right leg to only the evidence and inferences tending to support the
diagnose or evaluate the nature and extent of possible vascular finding and disregard all evidence and inferences to the
injuries or damages to ligaments of the knee. Doctor Isern contrary. Lewelling v. Lewelling, 796 S.W.2d 164, 166
asserts a second conflict between Question 1(3) and 1(5), (Tex.1990); Alm v. Aluminum Co. of America, 717 S.W.2d
claiming that the failure of the jury to answer question 1(5) 588, 593 (Tex.1986); King v. Bauer, 688 S.W.2d 845, 846
conflicts with the jury's affirmative answer under question (Tex.1985); White v. Sullins, 917 S.W.2d 158 (Tex.App.—
1(3) that he was negligent in failing to use a Doppler Beaumont 1996, writ denied). Where there is no evidence
instrument to “diagnose or evaluate the vascular system of to support the jury's verdict, and the appellant has filed
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Isern v. Watson, 942 S.W.2d 186 (1997)
a motion for judgment n.o.v. as here, the case must be negligence cases to involve scientific, technical, specialized
reversed and rendered, and the plaintiff takes nothing. Id. and complicated knowledge, skills and standards that are
When reviewing an insufficient evidence point, however, we difficult or impossible for a jury to evaluate without the
consider and weigh all the evidence; and we set aside the guidance of medical expert testimony. See Hood v. Phillips,
verdict only if it is so contrary to the overwhelming weight 554 S.W.2d 160, 165–66 (Tex.1977); Hart v. Van Zandt, 399
of the evidence as to be clearly wrong and unjust. Dyson v. S.W.2d 791, 792 (Tex.1965).
Olin Corp., 692 S.W.2d 456, 457 (Tex.1985); Cain v. Bain,
709 S.W.2d 175, 176 (Tex.1986). If we sustain a factual In 1987, the Texas Supreme Court abandoned the prior
insufficiency point, we must “clearly state why the jury's “ultimate issue rule” which prevented experts in Texas cases
finding is factually insufficient or is so against the great from expressing an opinion on mixed law-fact issues prior to
weight and preponderance of the evidence as to be manifestly the adoption of TEX.R.CIV.EVID. 704. See Danell L. Keith,
unjust.” Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.1996), Medical Expert Testimony in Texas Medical Malpractice
quoting *193 Pool v. Ford Motor Co., 715 S.W.2d 629, Cases, 43 Baylor L.Rev. 1,17 (1991). In other words,
635 (Tex.1986). If we find factually insufficient evidence to experts, may now testify as to whether a defendant's conduct
support a jury's verdict, we must remand for a new trial. Id. constituted “negligence,” “gross negligence,” “proximate
cause,” or the like. See Louder v. DeLeon, 754 S.W.2d 148–
49 (Tex.1988); Birchfield v. Texarkana Memorial Hosp., 747
S.W.2d 361, 365 (Tex.1987). See also TEX.R.CIV.EVID.
Law of the Case
704.
[6] This Court held in Watson, 782 S.W.2d at 553–555,
that the evidence of Dr. Ivey and Dr. Wolma, the same However, this new era of freedom allowing experts to testify
evidence offered on retrial, raised a fact issue as to Dr. Isern's on the ultimate issue is not without bounds. The Supreme
negligence in failing to use the doppler instrument, and in Court has said that:
failing to hospitalize Mrs. Watson for further observation
Fairness and efficiency dictate that an
and further testing; and, that the failure to submit the above
expert may state an opinion on a mixed
two issues was error, and required reversal. Such holdings
question of law and fact as long as
constitute the “law of the case” to be applied on appeal
the opinion is confined to the relevant
following a second trial. The law of the case doctrine applies
issues and is based on proper legal
where the appellate court holds that there was evidence
concepts.
raising a fact issue for the jury, and in a second trial the
jury returned a verdict for the plaintiffs on almost identical Louder, 754 S.W.2d at 148–49, quoting Birchfield, 747
evidence. Lincoln National Life Insurance Co. v. Roosth, S.W.2d at 365 (emphasis supplied).
306 F.2d 110 (5th Cir.1962), cert. denied, 372 U.S. 912,
83 S.Ct. 726, 9 L.Ed.2d 720 (1963); Consolidated Casualty Accordingly, before a testifying expert's opinion can be
Ins. v. Smith, 309 S.W.2d 80 (Tex.Civ.App.—Houston 1958, rendered, a predicate must be laid showing that the expert
writ ref'd n.r.e.); Bingham v. Kimbrell, 285 S.W.2d 312 is familiar with the proper legal definition in question. E–Z
(Tex.Civ.App.—Austin 1955, writ ref'd n.r.e.). Mart Stores, Inc. v. Terry, 794 S.W.2d 63, 65 (Tex.App.—
Texarkana 1990, writ denied).
We deny appellant's second point of error based upon the “law
of the case doctrine”. However, in the interest of justice we [7] With the foregoing in mind, appellant first argues that
will address the conflicting evidence presented by both sides only Dr. Davies and Dr. Sibley testified to “the ultimate issue,
at retrial. i.e.”, that Dr. Isern was “negligent and/or grossly negligent”,
and because such testimony by both witnesses was not based
on proper legal concept in that neither was given a proper
Competence of Medical Expert Testimony legal definition of the “terms”, and, there is no evidence that
either was knowledgeable about such legal terms, there is
It is well-established that the plaintiff must offer medical no competent expert medical evidence to support the jury
expert testimony to prove a medical malpractice case findings against Dr. Isern of negligence or proximate cause.
against a physician because Texas law considers medical
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Isern v. Watson, 942 S.W.2d 186 (1997)
[8] We reject appellant's argument for two reasons. First, Doctor Martin Ivey, a treating Orthopedic Surgeon at John
our review of the record reflects that while Dr. Sibley did Sealy Hospital, when asked if a Doppler instrument would
testify as to negligence he was provided with a proper legal be “a better thing to utilize to test the sufficiency of a
definition of that term and appellant's *194 lack of legal popliteal artery than merely feeling it with your hand”,
concepts 3 argument so far as Dr. Sibley is concerned is answered, “Well, I've always had difficulty, personally,
without merit. Second, the “ultimate issue rule” is permissive feeling a popliteal artery directly in the back of the knee
and not mandatory and we find no authority to the contrary. because of the other structures and fatty tissue. I think a
We hold medical expert evidence that is based on reasonable Doppler is helpful in some cases to detect pulses in the foot
medical probability, other than, “the ultimate issue” evidence, area.”
will support a jury finding.
Lastly, Dr. Bessell testified that a Doppler is not a more
reliable tool if a pulse in the foot is palpable; that a Doppler
is only more reliable if the pulse is not palpable; and that a
“Doppler” 4 Liability Evidence physician might now use a Doppler for injuries, but back in
1982 in all reasonable medical probability a physician would
[9] Doctor Isern testified that he performed a thorough not have. Dr. Bessell further testified that in all reasonable
physical exam, and that he felt Mrs. Watson's pulses in the medical probability, if Mrs. Watson's popliteal artery had
foot. He further testified where the foot pulses are felt, a been ruptured, Dr. Isern would not have been able to feel the
“Doppler” exam is not necessary. pedal pulse.
Doctor George Sibley testified that a “Doppler exam” was
mandatory in Mrs. Watson's case because of her weight and
because it was an easy test to do. Evidence of Failure to Hospitalize
Mrs. Watson testified that Dr. Isern did not tell her of the
Doctor Sibley stated he was an Orthopedic Surgeon in 1986.
possibility of damage to the blood vessels, which might
He further testified that a total transection or disruption of the
require the leg to be amputated if surgery was not done; that
popliteal artery is unusual; that there are tests like a “Doppler”
a Doppler exam was available to test the blood supply to her
or an arteriogram, but that a physical examination should be
leg; that an arteriogram may be necessary; or tell her of any
sufficient; that you might check a pulse in the ankle if you
other risk which would directly or by inference advise her she
have a question about circulation as to whether the pulse is
stood a risk of amputation of her leg if her injury was not
present or faint. Doctor Sibley opined that an absent pulse is
properly diagnosed and treated.
the sort of finding that would lead a doctor to use a “Doppler.”
Dr. Isern testified that based upon the history of the patient's
Doctor Fred Wolma, a teaching Galveston Cardiovascular
fall that he did consider “she could have disrupted the
Surgeon, opined that at the time of her injury [fall] Mrs.
ligaments of the knee or that she could have suffered a
Watson most likely sustained an injury to the popliteal artery;
rupture or damage to the popliteal artery or *195 an artery
that at the time of Mrs. Watson's surgery it appeared her artery
or vein in the leg or any nerve in the leg.” Based upon the
had been totally “torn apart, disruptured, transacted”; and,
findings of a ruptured popliteal artery and disruption of the
that with that type of damage one would not be able to feel
cruciate and lateral ligaments in the surgery at Galveston,
a pulse in her foot.
Dr. Isern admitted the facts reveal that when he saw her
she had the “ultimate risk of losing her leg.” Doctor Isern
Doctor Al Davies, an Associate Professor at Baylor Medical
also admitted, based upon the assumption that the injury to
School, admitted that there would have been no need for a
Mrs. Watson's popliteal artery occurred at about 11:00 p.m.
“Doppler” exam if the patient's distal pulses were good; that
Saturday, that when he discharged her from the emergency
a “Doppler” exam is only used if there is some question as to
room at approximately 2:00 a.m. Sunday, three hours of
the patient's pulses; and, that failure to do one of two things
the “golden time” to repair the damage has already passed,
would fall below the standard of care of the profession, either
which involved a loss of one-half of the “ideal six-hour”
to examine Mrs. Watson's other leg or perform a Doppler, not
safety zone necessary to save the leg from amputation. Based
both.
upon a hypothetical “assumption” of facts favorable to Mrs.
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Isern v. Watson, 942 S.W.2d 186 (1997)
Watson's version of her injury and medical evaluation, Dr. described by Mrs. Watson is the “most likely time” of the
Isern admits he would not have discharged her from the rupture of the artery; and that based upon a reasonable
hospital based upon such facts or circumstances, and that medical probability, her leg would probably have been saved
he would have been alerted to the possibility of a ruptured if surgery had been performed within six hours following her
popliteal artery. He also admits he knew that the overall fall. Based upon a hypothetical question, Dr. Wolma testified
statistical literature reflects that 21 to 25% of dislocation that immediate hospitalization and immediate surgery is the
of the knee injuries will cause a rupture of the artery and proper treatment for a ruptured popliteal artery, and that a
that, using the patient's history of dislocation of her knee, patient should be advised of these facts.
coolness of the leg, and feeling of ants crawling on the leg, the
symptoms are those of “probably a popliteal artery rupture.” Doctor Bessell opined that Mrs. Watson had suffered a
“severe injury”; that if Mrs. Watson's vascular injury had been
Doctor Sibley testified that the “golden time” to repair a timely diagnosed, in all probability if the surgery had been
ruptured popliteal artery in order to prevent a loss of the leg done within 6–8 hours time the leg could have been saved;
is probably six hours and that “Beyond that time the chance and, that based upon the signs and symptoms reflected by the
of saving the leg is fairly remote; and if you get ten hours ... testimony of Mrs. Watson and the ER records, the emergency
in an adult I don't think you can save a usable leg.” Dr. Sibley room standard of care required the patient to be admitted to
testified that discharging the patient with the advice to go the hospital and further watched and evaluated.
home and put an ice pack on the knee, stay off her feet and
elevate the leg on a pillow, and to take Tylenol for pain is not *196 As reflected by the record, each side vigorously
appropriate treatment and involved an entire want of care for presented evidence in support of their respective positions
the patient. Doctor Sibley further testified it was negligence and at the time the evidence was conflicting, which is within
for Dr. Isern to discharge Mrs. Watson to go home with the the province of the fact finder to resolve. After reviewing
statement that she was to stay off her foot, put ice packs on the the entire record, we find that there is some evidence and
leg, and to take Tylenol; and, based upon the legal definitions sufficient evidence to support the jury finding regarding
of negligence and proximate cause, Dr. Isern's malpractice negligence by failure to use a “Doppler” and failure to
was a proximate cause of the amputation of Mrs. Watson's leg. hospitalize. Accordingly, we will not substitute our judgment
for that of the jury. Appellant's second point of error is denied.
Doctor Ivey testified that the “time frame” of 6 to 8 hours
is “usually held as a standard” for repair of a popliteal Appellant's third point of error makes a no evidence attack
artery in order to have a possibility of salvaging the leg; on the jury's award of (1) $200,000.00 for future pain and
that the probability of amputation is caused by delay in suffering and (2) $5,500.00 for future medical.
repair of the popliteal artery within the 6–8 hour time frame
after a traumatic injury because of “damage to the muscles
and nerves, loss of their blood supply, and death of those
Future Medical
structures”; that based upon a hypothetical question, the
damage found at surgery was, with a reasonable medical A jury may award future medical expenses based on the
probability, related to the fall described by Mrs. Watson on nature of the injuries, medical care rendered prior to trial,
the Saturday night before she was seen by Dr. Isern; that there and plaintiff's condition at trial. Harvey v. Culpepper, 801
was a reasonable medical possibility that her leg could have S.W.2d 596 (Tex.App.—Corpus Christi 1990, no writ); North
been saved if she had undergone surgery within 6 hours after Houston Pole Line Corp. v. McAllister, 667 S.W.2d 829
her injury; and, sending a patient home based upon such a (Tex.App.—Houston [14th Dist.] 1983, no writ).
history and findings would not be proper medical practice.
[10] Our record reflects expert testimony that Mrs. Watson
Dr. Wolma testified that based upon the condition of the will be confined to a wheelchair for life, that she will be
leg at surgery, “there's no question that four to six hours deprived of normal exercise and activities which could cause
would be essential to reestablish the circulation to that limb future problems, and she will require “future follow-up.”
in order to save it”; that with a loss of blood supply, there is Although Mrs. Watson testified that she was not currently
marked damage to the nerves and muscles that is irreparable, receiving any medical treatment for her leg amputation, she
and based upon the history and examination that the injury has had various medical treatments and problems since her
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Isern v. Watson, 942 S.W.2d 186 (1997)
injury and being confined to a wheelchair has its risks for
future injury. The undisputed facts are that Mrs. Watson's life has been
totally altered by the amputation of her leg, and she is
We find there is some evidence to support the jury's award of confined for her remaining lifetime to a wheelchair.
$5,500.00 in future medical.
Life expectancy is entrusted to the “common sense of a jury,”
and in this case it is *197 reasonable that Mrs. Watson
may live at least another 20 years. Using 20 years as her life
Future Pain and Mental Anguish
expectancy, the jury allocated $10,000 a year for physical
[11] Appellant's third point of error also attacks the jury's pain and mental anguish.
award of $200,000 to Mrs. Watson on the complaint that there
is no evidence that Mrs. Watson would, in reasonable medical
probability, suffer any future physical pain or mental anguish The Above Evidence
as a result of the loss of her leg.
We find there is some evidence to defeat appellant's “no
In addressing future damages, the law entrusts to the jury's evidence” attack on the jury's award of $200,000.00 for future
good sense what future damages would be fair and reasonable. physical pain and future mental anguish.
There is no need for expert speculation because doctors do
not have a crystal ball to guide them in deciding future pain [12] It must also be kept in mind that the award was
and mental anguish. for both future physical pain and future mental anguish.
The pure mental anguish associated with the loss of her
Mrs. Watson was 56 years old at time of trial, and she testified leg will support a $200,000.00 award. See Pipgras v. Hart,
that prior to her injury that she had been a “happy person” 832 S.W.2d 360 (Tex.App.—Fort Worth 1992, writ denied);
and content, with no problems with her life or family; she Pentes Design, Inc. v. Perez, 840 S.W.2d 75 (Tex.App.
was able to work and do the things she wanted to do; she still —Corpus Christi 1992, writ denied); Hicks v. Ricardo,
has the feeling that her leg is still there, although she tries to 834 S.W.2d 587 (Tex.App.—Houston [1st Dist.] 1992, no
ignore it, and has the mental awareness of “feeling of pain and writ); Gulf States Utilities Co. v. Dryden, 735 S.W.2d 263
discomfort in her leg”; that she continues to suffer quite a bit, (Tex.App.—Beaumont 1987, no writ). Appellant's third point
and mentally she suffers because she cannot do the things for of error is denied.
her grandchildren she should be able to do; that she cannot
go places without being pushed in her wheelchair, and has Appellant's fourth point of error claims the trial court erred in
problems getting in and out of a car, which she says, “it's just a allowing (1) impermissible elements of damages in the charge
misery to me”; that she experiences severe pain or discomfort and judgment and (2) triple recovery for Rix Watson.
from the leg that was amputated as an everyday thing; and,
that she has mental anguish about dying and having to go [13] In Question 5 the jury awarded Mr. Watson $3,000 for
before God without a leg, because everything in Heaven is each of the following three (3) separate elements of damages,
perfect: “So, me with one leg and I would have to face God a total of $9,000 for past and future losses: (1) loss of services
like this, that's hard on me.” of his wife as a housewife; (2) loss of marital rights; and (3)
loss of society and companionship.
Mr. Watson testified that his wife has been affected pretty
badly by the loss of her leg; that it “hurts her to her heart” Appellant's trial objection: to Question 5(1) was that Mr.
that she cannot do things she wants to do, including being Watson was entitled to “loss of household services,” but not
with her grandchildren; and, that she sometimes says that she “loss of services,” and that there was no definition of loss
is “happy but just don't feel right,” and that she is “just not of services; to Question 5(2) that Mr. Watson is not entitled
like other persons with a leg.” They had a normal sexual life to “loss of marital rights,” but only for “loss of consortium”
before she lost her leg, but now they do not, and it bothers his and that the question permits the jury to speculate as to
wife; and, the loss of her leg has effected her mentally and what damages are to be awarded; and to Question 5(3) that
she is “depressed” and seems “anxious and worried about her there was no definition of the term “loss of society and
problems and the loss of her leg.”
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Isern v. Watson, 942 S.W.2d 186 (1997)
companionship” and it would allow the jury to speculate upon We first reject appellees' argument that in the context of
an improper element of damage. the jury argument made the use of the word “insurance'
is solely synonymous with “ensure” and “assure”, i.e., that
Appellant's fourth point of error claims that Question Dr. Isern could have assured that Mrs. Watson would not
5(1) through (3) damages are impermissible because such suffer an amputation by his doing a simple, non-evasive
elements of damages “do not exist under Texas Law.” “Doppler” exam. Rather we would characterize the use of
Appellant admits that the husband is entitled to recover for the term “insurance” at most as a casual or inadvertent
loss of material rights or “consortium,” see Whittlesey v. reference to insurance coverage and at least as having
Miller, 572 S.W.2d 665 (Tex.1978); and is silent as to any different connotations.
authority regarding “loss of society and companionship.”
We also reject appellant's argument that the injection of
Without citing any authority, appellant also argues that all insurance in a personal injury trial is always reversible error.
three damage elements are all one and the same recoverable The “presumed harmful error” no longer exists under Texas
loss, i.e., loss of consortium, thus Mr. Watson was allowed law, being replaced by the “harmless error” rule which
a “triple recovery.” We also find no authority to support requires the complaining party to show the error caused an
appellant's argument and thus reject same by concluding improper verdict. TEX.R.APP.P. 81(b)(1).
that the trial court did not err in rendering judgment for the
damages to Mr. Watson. Appellant's fourth point of error is [15] Appellant did move for a mistrial after closing of the
denied. jury argument based upon a claim that plaintiff “injected
insurance into the case intentionally.” However, appellant
“waived” any error of objectionable argument by failing
to timely object and requesting an instruction that the jury
Jury Argument
disregard the argument. Ramirez v. Acker, 134 Tex. 647,
[14] Appellant's fifth point of error complains of the trial 138 S.W.2d 1054 (1940); Jenkins v. Chapman, 636 S.W.2d
court's refusal to grant a mistrial based on a claimed incurable 238 (Tex.App.—Texarkana 1982, writ dism'd); Travis v.
jury argument which injected insurance into the case. Vandergriff, 384 S.W.2d 936 (Tex.Civ.App.—Waco 1964,
writ ref'd n.r.e.); Maxwell v. Maxwell, 204 S.W.2d 32
During closing arguments, appellant's counsel addressed the (Tex.Civ.App.—Amarillo 1947, writ ref'd n.r.e.); Shaw v.
jury as follows: Porter, 190 S.W.2d 396 (Tex.Civ.App.—Fort Worth 1945,
writ ref'd w.m.). An objection is required because the
Now, she didn't walk in there with a little sign board opposing party has the “right to know” of any claimed error
hanging around her neck, ‘I tripped and I have a ruptured so that he can explain or withdraw it. In fact, upon insisting
popliteal artery.’ She didn't know anything about popliteal that the mere word insurance was prejudicial, the trial court
arteries. He did. She didn't have the sign around her neck, could have cured any error by an instruction that insurance
but he had the knowledge to put it there. He could have had nothing to do with the case to be decided and was to
hung a sign around her neck and said, ‘Take this lady in a be disregarded. See Patranella v. Scott, 370 S.W.2d 922
wheelchair right now and do an arteriogram. Before I let her (Tex.Civ.App.—Waco 1963, no writ).
go, I want to make sure that she doesn't lose her leg because
we have already lost three hours.’ Did you ever think about Instances in which jury argument results in incurable harm
insurance? We all buy insurance to protect our homes and are rare. Strahan v. Davis, 872 S.W.2d 828, 836 (Tex.App.
our property. You've heard the term since you were a little —Waco 1994, writ denied). Not every casual mention of
kid, ‘to insure.’ (sic ensure) One of the other words used is the word ‘insure’ requires either a mistrial or new trial. Id;
‘to assure,’ assure that something won't happen. Don't you Dennis v. Hulse, 362 S.W.2d 308 (Tex.1962); Trice Contract
think that this man owed her that obligation? She walked Carpets & Furniture Co. v. Gilson, 329 S.W.2d 476, 483
out of there, she was going to lose her leg. She was going (Tex.Civ.App.—Houston 1959, writ ref'd n.r.e.).
to lose her leg, and all he had to do was do a Doppler exam.
It would have taken him, *198 what, ten minutes at the [16] To establish reversible error in jury argument, appellant
most ... [emphasis added] must prove (1) the argument was not invited or provoked, (2)
was preserved by proper trial predicate such as an objection,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Isern v. Watson, 942 S.W.2d 186 (1997)
motion to instruct, or motion for mistrial, (3) that the error TEX.R.APP.P. 81(b)(1). For the reasons stated, appellant's
was not curable by instruction, prompt withdrawal of the fifth point of error is rejected.
statement, or reprimand from the court, and (4) that the
argument constituted “reversible harmful error.” Wells v.
HCA Health Services of Texas, Inc., 806 S.W.2d 850, 854
Prejudgment Interest on Future Damages
(Tex.App.—Fort Worth 1990, writ denied).
Appellant's sixth point of error contends the trial court erred
[17] Haryanto v. Saeed, 860 S.W.2d 913 (Tex.App.— in awarding prejudgment interest on the future damages
Houston [14th Dist.] 1993, writ denied), holds that where the awarded the Watsons.
complaining party complains of incurable harm he must show
that the alleged improper argument causing harm was greater [19] Appellant argues that Cavnar v. Quality Control
than the “probability that the verdict was based upon proper Parking, 696 S.W.2d 549 (Tex.1985), controls the
proceedings and evidence.” In making that determination, an prejudgment interest award in this case because the suit filed
appellate court must examine the argument in light of the in September 1983, asserts an injury in 1982, a time prior to
whole case, beginning with voir dire and ending with closing the Tort Reform Act which added section 6 to article 5069–
argument. The court must look at the length of the argument,
1.05 to require prejudgment interest on future damages. 5
whether it was repeated or abandoned; whether there was
However, article 5069–1.05 applies to actions commenced
cumulative error, and the probable effect of the argument on
after September 1, 1987, or “to new trials or retrials following
a material finding. Id. at 919.
an appeal in the action commenced before the effective date.
” Id.; Owens–Illinois, Inc. v. Estate of Burt, 897 S.W.2d 765,
[18] Moreover, it is essential that the complaining party
768 (Tex.1995). This case is such a retrial following such an
establish that the mere injection of the word “insurance”
appeal.
actually caused an improper verdict. Tripp v. Bloodworth,
374 S.W.2d 713, 717 (Tex.Civ.App.—Eastland 1964, writ
[20] Appellant also argues that because Mr. Watson's past
ref'd n.r.e.).
and future damages were not segregated, he is not entitled
to prejudgment interest. However, since enactment of the
In the absence of a clear showing that any reference to
prejudgment interest statute, there exists no necessity to
insurance resulted in any harm or prejudice, refusal to declare
segregate past and future damages. Missouri Pacific R. Co.
a mistrial is not error. Red Ball Motor Freight, Inc. v.
v. Lemon, 861 S.W.2d 501 (Tex.App.—Houston [14th Dist.]
Cordova, 332 S.W.2d 753 (Tex.Civ.App.—Beaumont 1960,
1993, writ dism'd by agr.) as suggested by appellant does
writ ref'd n.r.e.); Southwestern Freight Lines v. McConnell,
not control this case. Wal–Mart Stores, Inc. v. Berry, 833
269 S.W.2d 427, 430–31 (Tex.Civ.App.—El Paso 1954, writ
S.W.2d 587, 597 (Tex.App.—Texarkana 1992, writ denied),
ref'd n.r.e.). Mere mention of insurance *199 before a jury
held that the “clear language of the statute mandates awarding
does not result in an automatic mistrial or reversal. The
prejudgment interest to the full amount of judgments, whether
complaining party has an obligation to prove that it was
or not damages are segregated.” The court cites C.T.W. v.
prejudicial and reasonably calculated to create an improper
B.C.G., 809 S.W.2d 788, 795 (Tex.App.—Beaumont 1991,
verdict. TEX.R.CIV. EVID. 411; Beall v. Ditmore, 867
no writ), for its statement that our courts recognize that the
S.W.2d 791 (Tex.App.—El Paso 1993, writ denied).
statute makes no distinction between past and future damages,
and that presumptively, the Legislature was aware of Cavnar
In summary, we find the questioned jury argument was at
when it enacted the new statute.
most only a casual and incidental reference to insurance
which while we do not condone, does not rise to the level
In C & H Nationwide v. Thompson, 903 S.W.2d 315
of error; that in any event, error, if any, could have been
(Tex.1994), the Supreme Court specifically held that the
corrected and was waived by appellant's failure to object
Legislature did not intend to segregate past and future
and request an instruction to disregard; and in the light
damages in the award of prejudgment interest, and held that
of the whole case we cannot say that such jury argument
the statute modified Cavnar as to allow prejudgment interest
error amounted to such a denial of rights of appellant
on future damages.
as was reasonably calculated to cause and primarily did
cause rendition of an improper judgment in this case,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
Isern v. Watson, 942 S.W.2d 186 (1997)
[21] Lastly, appellant incorrectly asserts that Nationwide Appellant's eighth point of error remittitur argument is
holds that prejudgment interest in tort cases violates a rejected.
defendant's Constitutional “due process” of law safeguards.
To the contrary, the opinion holds that prejudgment interest
does not violate a defendant's due process of law safeguards
Appellees' Cross Appeal
since it meets the “rational relative test.”
In Question 2(3)(a)(b) the jury found that Mrs. Watson was
Appellant's sixth point of error is overruled. negligent in “failing to return to the emergency room at
Baptist Hospital or to contact a physician before May 4,
1982, when she saw Dr. Bessell” and that such negligence
Cumulative Error was proximate cause of injury. 7 The jury answered the
apportionment portion of Question 3 by finding Mrs.
Failing to have found reversible error in appellant's points of Watson's negligence was 35% in causing the amputation of
error one through six, we reject appellant's “cumulative error” her right leg and that Dr. Isern's negligence was 65% of the
argument in his seventh point of error. cause.
The trial court denied the Watson's motion to disregard
Remittitur for Excessive Damages the contributory findings and reduced the total damages of
$1,432,600 awarded to Mrs. Watson and $9,000 awarded to
[22] Appellant's final point of error argues that the jury Mr. Watson by 35% in entering judgment against Dr. Isern.
award to Mrs. Watson for the loss of her limb is excessive The court denied the Watson's motion for new trial asserting
because when pre-judgment interest is added, a judgment in she should be awarded full damages based upon no evidence,
excess of $3.1 million in this case “shocks the conscience.” legally insufficient evidence, judicial admission of defendant,
Appellant cites no *200 authority and we know of none and great weight points.
which supports such an argument for a remittitur based upon
“prejudgment interest” 6 , which is allowed by statute. In five cross-points of error, appellees contend that the trial
court erred in submitting contributory negligence issues to
An “abuse of discretion” test covers remittitur. Texaco, Inc. the jury; in refusing to disregard the jury's contributory
v. Pennzoil, Co., 729 S.W.2d 768 (Tex.App.—Houston [1st negligence findings; and, in disregarding the judgment
Dist.] 1987, writ ref. n.r.e.), certiorari dismissed, 485 U.S. damage award of 35% because such actions by the trial
994, 108 S.Ct. 1305, 99 L.Ed.2d 686 (1988). TEX.R.APP.P. court are contrary to the judicial admissions of Dr. Isern,
85 does provide for a suggested “remittitur” by the Court of unsupported by legally sufficient evidence, and are so
Appeals. However, we should not disturb the jury's award of contrary to the great weight and preponderance of the
damages “unless it is irrational or so excessive as to shock evidence as to be manifestly wrong and unjust.
the conscience of the court.” Clark v. Smith, 494 S.W.2d 192,
198 (Tex.Civ.App.—Dallas 1973, writ ref'd n.r.e.).
Judicial Admission
Based upon Mrs. Watson's permanent injuries there is nothing
to suggest a “run-away jury” or that the damages award was [23] Formal declarations in open court by a party's attorney
due to passion, prejudice, bias or improper jury deliberations. constitute judicial admissions, and include facts asserted by
Where the record does not show the jury was influenced pleading. Rosse v. Northern Pump Co., 353 S.W.2d 287
by passion and prejudice in awarding damages, the Court is (Tex.Civ.App.—Austin 1962, writ ref'd n.r.e.). Therefore,
without power to require a remittitur. Bluebonnet Exp., Inc. where submission of an issue is not supported by evidence
v. Foreman, 431 S.W.2d 45 (Tex.Civ.App.—Houston [14th or is contrary to judicial admissions in trial of the case,
Dist.] 1968, no writ); Pioneer Bus Co. v. Ward, 422 S.W.2d the jury's findings on such issues are not binding on either
550 (Tex.Civ.App.—Houston [14th Dist.] 1967, no writ); the trial court or appellate court. Thweatt v. Ocean Acc. &
Texarkana Bus Co. v. Carter, 301 S.W.2d 300 (Tex.Civ.App. Guarantee Corp., 62 S.W.2d 250 (Tex.Civ.App.—El Paso
—Texarkana 1957, writ ref'd n.r.e.). 1933, writ ref'd). The effect of a judicial admission is to
waive proof of matters admitted in favor of an opposing
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
Isern v. Watson, 942 S.W.2d 186 (1997)
[24] Because Mrs. Watson is an “ordinary person,” her
party, and the admitting party is bound by the admission.
conduct may be evaluated by the jury without the need for
Turner v. State, 850 S.W.2d 210, 213 (Tex.App.—Texarkana
medical or expert testimony. She is held to the standard
1993); Markwardt v. Harrell, 430 S.W.2d 1 (Tex.Civ.App.—
of ordinary care, i.e., that care of a person of reasonable
Eastland 1968, writ ref'd n.r.e.); Jones v. Underwood & Weld
prudence under the same or similar circumstances. Colvin
*201 Co., Inc., 406 S.W.2d 491 (Tex.Civ.App.—Beaumont
v. Red Steel Co., 682 S.W.2d 243, 245 (Tex.1984); Great
1966, no writ).
Atlantic & Pacific Tea Co. v. Evans, 142 Tex. 1, 175
S.W.2d 249, 250–51 (1943). The trier of fact may take
During closing jury argument, defense counsel addressed the
into consideration the “common experience of mankind,” to
jury as follows:
determine the care and diligence an ordinary prudent person
MR. WHITTENBURG: I'm not going to talk to you about would use to prevent injuries under the circumstances. Id. at
No. 2. I—you haven't heard me claim anything about 251, 175 S.W.2d 249. The testimony of the Watson experts
Mrs. Watson being negligent during this trial or offer any that she was not contributorily negligent is merely some
evidence on that. That's up to you to— evidence that she was not negligent, and the jury was not
bound by that testimony.
MR. HOLLOWAY: Your Honor, if that's true, then I ask
that that issue be withdrawn from the Court's charge if he's [25] In addition, each side vigorously presented evidence
not making that claim. He has pled it, and he has claimed it. in support of the proposition that she was or was not herself
negligent. The record reflects a number of instances of
MR. WHITTENBURG: I have not claimed it, your Honor.
conflicting testimony which required resolution of credibility
It's raised by the evidence, but I haven't claimed that.
issues. These are decisions within the province of the fact
THE COURT: All right. That's denied. finder.
The Watson's argue the trial court should have disregarded After reviewing the entire record, we find that there is some
the jury's contributory negligence and apportionment findings evidence to support the finding of contributory negligence.
because defense counsel's declaration amounted to a judicial Accordingly, we will not substitute our judgment for that of
admission regarding these issues. We find that the questioned the jury. Appellees' cross-points are denied.
jury argument does not rise to the level of a judicial
admission. Judgment is AFFIRMED.
All Citations
Contributory Negligence
942 S.W.2d 186
Footnotes
1 The Honorable Ron Carr, sitting by assignment pursuant to Tex.Gov't Code Ann. § 74.003(b) (Vernon 1988).
2 Jury question one with the jury answers is attached to this opinion as Exhibit A.
3 Appellant's brief mentions that Dr. Sibley was allowed to testify that “Dr. Isern was guilty of malpractice” over his
“inflammatory testimony” objection. No admission of evidence point of error or argument is made. Accordingly, we do
not address that issue.
4 A “Doppler” is an instrument used to amplify pulse signals within a blood vessel.
5 . TEX.REV.CIV.STAT.ANN. art. 5069–1.05, § 6 (Vernon Supp.1997).
6 We note “ prejudgment interest” in this case covers fifteen (15) years since date of injury.
7 The jury refused to find under Questions 2(1) and 2(2) that Mrs. Watson was negligent in failing to give an accurate
statement as to how she was injured or in failing to accurately state what her complaints or symptoms were at the time
of her fall or when seen in the Baptist Hospital, and refused to find proximate cause.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
JJ
J.C. Penney Co., Inc. v. Ruth, 982 S.W.2d 586 (1998)
Grounds in General
Department store did not have probable cause to
KeyCite Yellow Flag - Negative Treatment
prosecute customer for shoplifting, as required to
Distinguished by Airgas-Southwest, Inc. v. IWS Gas and Supply of
Texas, Ltd., Tex.App.-Hous. (1 Dist.), August 30, 2012 defeat customer's malicious prosecution claim,
where customer did not have stolen item in her
982 S.W.2d 586 bag or on her person, the security guard did not
Court of Appeals of Texas, see customer steal item, item was recovered from
Texarkana. bag of customer's companion, security guard
stated that he did not believe that customer had
J.C. PENNEY COMPANY, INC., Appellant,
stolen item, and only evidence that department
v. store had was an acknowledgment that customer
Kristen Ashley RUTH, Appellee. claimed she signed only because security guard
indicated that he would not allow her to call her
No. 06–98–00105–CV. | Submitted
mother until she signed the document.
Nov. 3, 1998. | Decided Nov. 25, 1998.
1 Cases that cite this headnote
Customer brought action against department store for false
arrest and malicious prosecution. The 136th Judicial District
Court, Jefferson County, Milton Shuffield, J., entered [3] Malicious Prosecution
judgment on jury verdict in favor of customer. Department Presumptions and Burden of Proof
store appealed. The Court of Appeals, Grant, J., held that: There is an initial presumption that the defendant
(1) department store did not have probable cause to prosecute in a malicious prosecution case acted reasonably
customer for shoplifting, and (2) there was sufficient evidence and in good faith and had probable cause to
that department store acted with malice when it prosecuted initiate the proceedings.
customer, as would support finding of malicious prosecution.
Cases that cite this headnote
Affirmed.
[4] Malicious Prosecution
Presumptions and Burden of Proof
West Headnotes (12) The presumption that the defendant in a
malicious prosecution case acted reasonably and
in good faith and had probable cause to initiate
[1] Malicious Prosecution the proceedings disappears once the plaintiff
Nature and Elements of Malicious produces evidence that the motives, grounds,
Prosecution in General beliefs, and evidence upon which the defendant
To prevail on a claim of malicious prosecution, acted did not constitute probable cause, and the
a plaintiff must establish the following: (1) burden then shifts to the defendant to offer proof
commencement of a criminal prosecution of probable cause.
against the plaintiff; (2) causation (initiation or
procurement) of the action by the defendant; (3) Cases that cite this headnote
termination of the prosecution in the plaintiff's
favor; (4) the plaintiff's innocence; (5) the [5] Malicious Prosecution
absence of probable cause for the proceedings; Probable Cause
(6) malice in filing the charge; and (7) damage
If the facts underlying the decision to prosecute
to the plaintiff.
are not disputed, whether probable cause existed
1 Cases that cite this headnote to prosecute is a question of law to be decided by
the trial court in malicious prosecution action.
[2] Malicious Prosecution
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
J.C. Penney Co., Inc. v. Ruth, 982 S.W.2d 586 (1998)
Cases that cite this headnote [10] Torts
Intent or Malice
[6] Malicious Prosecution Torts
Belief in Guilt of Accused Weight and Sufficiency
Probable cause to prosecute, precluding Malice is defined as ill will, evil motive, or gross
malicious prosecution claim, is defined as the indifference or reckless disregard of the rights
existence of such facts and circumstances as of others, and may be established by direct or
would excite belief in a reasonable mind, acting circumstantial evidence.
on the facts within the knowledge of the
2 Cases that cite this headnote
complainant, that the person charged was guilty
of the crime for which he was prosecuted.
[11] Torts
Cases that cite this headnote Intent or Malice
In order to show malice, a plaintiff is not required
[7] Malicious Prosecution to prove that the defendant acted with personal
Belief in Guilt of Accused spite but instead that the defendant committed
The determination of probable cause to wrongful acts in reckless disregard of another's
prosecute, precluding malicious prosecution rights and with indifference as to whether that
claim, asks whether a reasonable person would party would be injured.
believe that a crime had been committed,
3 Cases that cite this headnote
given the facts as the complainant honestly
and reasonably believed them to be before the
criminal proceedings were instituted. [12] Malicious Prosecution
Acts and Conduct Evidence of Malice
Cases that cite this headnote
There was sufficient evidence that department
store acted with malice when it prosecuted
[8] Malicious Prosecution customer, as would support malicious
Grounds in General prosecution claim, in light of the fact that,
In a malicious prosecution case based on a security guard who detained customer testified
criminal complaint, the complainant's failure to that he did not believe that she stole anything,
make a further investigation into the suspect's agents of department store stated by deposition
state of mind does not constitute lack of probable that the real reason for having customer sign
cause if all objective elements of a crime acknowledgment admitting the theft was to avoid
reasonably appear to have been completed. civil liability, and after failing to show for trial on
its first prosecution of case, store filed a second
Cases that cite this headnote complaint against customer two months after she
initiated her civil suit.
[9] Malicious Prosecution Cases that cite this headnote
Belief in Guilt of Accused
In order to prevail on malicious prosecution
claim, defendant must show that the evidence
could only be interpreted in such a way as to Attorneys and Law Firms
provide it with probable cause to believe that
plaintiff was guilty of the offense. *587 Michael Ray McGown, Law Office of Michael R.
McGown, Beaumont, for appellant.
Cases that cite this headnote
W. Don Bush, Beaumont, for appellee.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
J.C. Penney Co., Inc. v. Ruth, 982 S.W.2d 586 (1998)
testified that the officers told her if she signed the form she
Before CORNELIUS, C.J., and GRANT and ROSS, JJ. would be permitted to go home and call her mother. Cates
also testified that the officers told her and Ruth that they
must sign the form before they could leave and that it was
OPINION not an admission of guilt. The officers neither confirmed nor
denied this allegation. They also testified that they had been
GRANT, Justice. trained to inform the alleged shoplifters that the form was
for their own protection as well, because it would ensure that
Kristen Ruth sued J.C. Penney Company, claiming false
no additional items would be added to the allegedly stolen
arrest and malicious prosecution. Ruth prevailed at trial,
items listed on the form. The “acknowledgment,” despite
and a jury awarded her $20,000 in actual damages, $5,000
its name, constituted a confession of the crime of theft of
in attorney's fees, and $50,000 in exemplary damages.
the pantyhose. On that same date, Cates also signed another
J.C. Penney appeals from the denial of its motion for
document entitled “Texas–Civil Demand Notice,” agreeing
instructed verdict and the denial of its motion for judgment
that she had confessed to theft of merchandise and stating
notwithstanding the verdict on Ruth's malicious prosecution
that she understood that she might receive a letter seeking
claim.
recovery of civil monetary damages.
J.C. Penney raises several points of error concerning two
When the police arrived, they took both girls to jail, where
factual issues. J.C. Penney contends that Ruth presented no
Cates was shortly released, but where Ruth remained until her
evidence that J.C. Penney's agents acted either with malice
mother arrived at about 4:00 a.m.
or without probable cause. J.C. Penney contends that, in the
absence of such evidence, the court erred by denying its
J.C. Penney filed a criminal charge against Ruth in municipal
motion for an instructed verdict or, alternatively, erred by
court, but the charge was dismissed because J.C. Penney
submitting jury question 2 to the jury or, alternatively, erred
failed to appear for trial. After Ruth filed this lawsuit, J.C.
by overruling J.C. Penney's motion for j.n.o.v.
Penney refiled the same criminal charge, but when called
for trial, J.C. Penney failed to appear a second time, so the
The evidence shows that Kristen Ruth, age 17, and Cori Cates,
charges were dismissed again. Ruth filed suit against J.C.
age 17, went shopping at a J.C. Penney store. They were
Penney for false arrest and for malicious prosecution. The
carrying bags from other stores containing purchases made
jury found for her on both grounds. The trial court denied
by Cates that evening. Cates picked up a pair of pantyhose
J.C. Penney's motion for a directed verdict, but later granted
and took them with her to the lingerie department, where she
a motion for j.n.o.v. on the false arrest cause of action.
obtained and tried on a brassiere in a dressing room. She
asked Ruth to join her in the dressing room to see if she
J.C. Penney has raised several points of error involving
thought the brassierie would be appropriate to wear under a
whether there was any evidence that its agents acted with
prom dress. Ruth brought the bags and the pantyhose into
malice or had probable cause to prosecute Ruth.
the dressing area and stayed there briefly. While there, an
announcement was made that the store was closing. When
[1] To prevail on a claim of malicious prosecution, a plaintiff
they left the dressing room, Ruth was carrying her own purse,
must establish the following:
and Cates was carrying everything else. Cates went to the
counter and paid for the bra (about $43 to $45), but did not
pay for the pantyhose, (valued at $5.50) which were inside (1) commencement of a criminal prosecution against the
one of the other bags. plaintiff; (2) causation (initiation or procurement) of the
action by the defendant; (3) termination of the prosecution
After they left the store, they were stopped by security, in the plaintiff's favor; (4) the plaintiff's innocence; (5) the
who searched the bags carried by Cates and found the absence of probable cause for the proceedings; (6) malice in
pantyhose. Cates explained that because of their hurry she filing the charge; and (7) damage to the plaintiff. Richey v.
had forgotten the pantyhose. Both girls were then taken Brookshire Grocery Co., 952 S.W.2d 515, 517 (Tex.1997);
to a security office and *588 questioned for about forty Metzger v. Sebek, 892 S.W.2d 20, 41–42, 42 n. 10 (Tex.App.
minutes before the police were called. Both girls signed what —Houston [1st Dist.] 1994, writ denied).
J.C. Penney describes as an “acknowledgment” form. Ruth
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
J.C. Penney Co., Inc. v. Ruth, 982 S.W.2d 586 (1998)
[2] Malicious prosecution does not present a question of was wearing relatively tight-fitting clothing and was carrying
whether J.C. Penney had probable cause to stop Ruth and only a purse, while Cates was carrying multiple bags and her
question or arrest her. That issue is a part of the false arrest own purse, but this did not negate the possibility that Ruth
claim on which J.C. Penney obtained a j.n.o.v. The question had the item or that there had been collusion between the
is whether J.C. Penney had probable cause to prosecute Ruth. two. Thus, the trial court concluded that there was undisputed
Thus, J.C. Penney contends that there is no evidence that it evidence adequately justifying a stop and arrest, and rendered
had no probable cause to initiate the proceedings or that it had a j.n.o.v. as to the false arrest claim.
any malice in filing the charge.
When the security guard searched the bags, however, he
[3] [4] [5] We first review the record for any evidence found that Cates had the item inside one of her bags. Ruth
of probable cause. There is an initial presumption that the did not have the bag containing the pantyhose, and the
defendant in a malicious prosecution case acted reasonably guard did not see Ruth hide the item. It is clear from the
and in good faith and had probable cause to initiate the evidence that the bags and their contents belonged to Cates.
proceedings. Richey, 952 S.W.2d at 517; Metzger, 892 There was no evidence of Ruth's involvement except that
S.W.2d at 42. The presumption disappears once the plaintiff Ruth signed a document entitled “acknowledgment,” stating
produces evidence that the motives, grounds, beliefs, and that she admitted that she took “from the possession of the
evidence upon which the defendant acted did not constitute Company, without making payment, without the permission
probable cause. Richey, 952 S.W.2d at 518. The burden then of the Company, the following property of the Company: 1
shifts to the defendant to offer proof of probable cause. Id. If pantyhose.”
the facts underlying the decision to prosecute are not disputed,
whether probable cause existed is a question of law to be Ruth testified that she signed the document only because they
decided by the trial court. Id.; Burrows v. Neiman–Marcus would not let her call her mother unless she signed it, and
Group, Inc., 976 S.W.2d 784 (Tex.App.—Houston [1st Dist.] that the security guard told her that she was not admitting
1998, n.w.h.). guilt by so doing. Cates signed this same form document
and another document acknowledging that she had confessed
[6] [7] Probable cause is defined as the existence of to theft and acknowledging that she might receive a letter
such facts and circumstances as would excite belief in a requiring restitution to the company.
reasonable mind, acting on the facts within the knowledge
of the prosecutor [complainant], that the person charged was [9] In order for J.C. Penney to prevail, it must show that
guilty of the crime for which he was prosecuted. Richey, 952 this evidence could only be interpreted in such a way as
S.W.2d at 517. The probable-cause determination asks *589 to provide it with probable cause to believe that Ruth was
whether a reasonable person would believe that a crime had guilty of the offense. In this review, we look to see if J.C.
been committed, given the facts as the complainant honestly Penney conclusively proved that a reasonable person would
and reasonably believed them to be before the criminal believe that a crime had been committed, given the facts as
proceedings were instituted. Id. J.C. Penney honestly and reasonably believed them to be
before the criminal proceedings were instituted. Richey, 952
[8] In a malicious prosecution case based on a criminal S.W.2d at 517. In this case, J.C. Penney could reasonably
complaint, the complainant's failure to make a further rely on Ruth's signing of the acknowledgment that admitted
investigation into the suspect's state of mind does not participation in the theft.
constitute lack of probable cause if all objective elements
of a crime reasonably appear to have been completed. See However, that evidence does not stand alone. The security
Thomas v. Cisneros, 596 S.W.2d 313, 317–18 (Tex.Civ.App. guard who instituted the prosecution on behalf of J.C. Penney
—Austin 1980, writ ref'd n.r.e.); Carswell v. Southwestern testified that even at the time of the arrest he did not believe
Bell Tel. Co., 449 S.W.2d 805, 817 (Tex.Civ.App.—Houston that Ruth had stolen anything. Further, the objective evidence
[1st Dist.] 1969, no writ). shows only that Ruth took all the packages into the dressing
room, that the pantyhose were not visible while they were
In this case, the security guard watched Ruth and Cates leave both in the dressing room, and that the pantyhose were was
the store and had probable cause to believe that one of them ultimately found in Cate's possession. In that situation, even
was leaving without paying for an item. At that point, Ruth though J.C. Penney might reasonably believe that Ruth had
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
J.C. Penney Co., Inc. v. Ruth, 982 S.W.2d 586 (1998)
(Tex.Civ.App.—Fort Worth 1922, no writ). Further, Texas
participated in the theft because of her admission, the jury had
courts have long held that the jury may infer malice from the
before it evidence that the “acknowledgment” was obtained
proof of lack of probable cause. Biering v. First Nat'l Bank,
only through a form of mental coercion, based upon the
69 Tex. 599, 7 S.W. 90, 92 (1888); Apache Corp., 857 S.W.2d
girls' testimony that they were not permitted to contact their
at 690; Diamond Shamrock Corp. v. Ortiz, 753 S.W.2d 238,
parents until they signed the form. In addition, the guard
241 (Tex.App.—Corpus Christi 1988, writ denied).
stated that he had been instructed to inform detainees that
the “acknowledgment” was in part for their own protection—
We have previously discussed the evidence of probable
because it ensured that no J.C. Penney employee would later
cause, or the lack thereof. In addition, the guard testified
add more allegedly stolen items to the list on the form.
that he had told Ruth and Cates that signing the form was
for their protection, but other agents of J.C. Penney stated
Further, the security guard testified that he did not believe
by deposition that the real reason for having the girls sign
that Ruth stole anything and that he was only sure that one
the acknowledgment was to avoid civil liability. Indeed, as
of the girls had the pantyhose. He testified that Cates had
previously noted, the security guard, acting on behalf of
picked up the pantyhose, that she was carrying the bags, and
J.C. Penney, testified that he did not believe that Ruth stole
that the pantyhose were found in one of Cates's bags. As
anything.
shown by the undisputed evidence, when *590 they were
stopped, the pantyhose were in Cates's possession. As an
The timing of the second prosecution also raises serious
employee of J.C. Penney, the security guard's knowledge was
questions about the purpose of the prosecution. On March 22,
necessarily imputed to J.C. Penney. In addition, Cates signed
1995, the first prosecution ended when the complainant failed
the second “Texas–Civil Demand Notice” form discussed
to show for trial, and the State moved for a dismissal. Ruth
earlier in which she agreed that she had admitted to stealing
filed suit against J.C. Penney on June 2, 1995. Two months
the item.
later, J.C. Penney filed another complaint against Ruth, on
August 23, 1995, but J.C. Penney again failed to appear at
Even if we disregarded these factors, however, the evidence
trial, and the prosecution was dismissed for a second time.
also shows that the prosecution was re-instituted against
Further, the prosecution against Cates, the individual who
Ruth only—after it had been dismissed—but that Cates (the
actually possessed the property, had been dismissed also but
possessor of the stolen merchandise) was not prosecuted for
was not refiled.
her alleged crime. This is also some evidence from which
a jury might conclude that the prosecution was not brought
It would be possible for a jury to draw the conclusion that
because J.C. Penney believed that Ruth was guilty of the
the only reason the second complaint was filed was an effort
offense, but for some other reason. Thus, this no-evidence
to improve the company's legal position in Ruth's civil suit,
contention fails.
rather than the proper purpose of bringing an offender to
[10] [11] [12] J.C. Penney also contends that the evidence justice.
conclusively shows that it did not act with malice. Malice
Based upon these factors, we conclude that there is some
is defined as ill will, evil motive, or gross indifference
evidence that the jury could have taken as proof of malice.
or reckless disregard of the rights of others, and may be
Accordingly, the trial court did not err by denying the motion
established by direct or circumstantial evidence. Apache
for a directed verdict and the motion for j.n.o.v. Because
Corp. v. McLean, 857 S.W.2d 683, 690 (Tex.App.—Houston
of our conclusion on this issue, we need not address the
[14th Dist.] 1993, no writ); see Fisher v. Beach, 671 S.W.2d
conditional cross-point of error raised by Ruth.
63, 67 (Tex.App.—Dallas 1984, no writ); Dahl v. Akin,
645 S.W.2d 506, 515 (Tex.App.—Amarillo 1982), aff'd, 661
The judgment is affirmed.
S.W.2d 917 (Tex.1983). A plaintiff is not required to prove
that the defendant acted with personal spite but instead that
the defendant committed wrongful acts in reckless disregard
All Citations
of another's rights and with indifference as to whether that
party would be injured. Reed v. Lindley, 240 S.W. 348, 351 982 S.W.2d 586
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
KK
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee Inc., 381 S.W.3d 635 (2012)
[2] Appeal and Error
381 S.W.3d 635 Cases Triable in Appellate Court
Court of Appeals of Texas,
Court of Appeals reviews summary judgments
San Antonio.
and issues of statutory construction de novo.
JAY MILLER & SUNDOWN, INC. d/b/a Sundown
Cases that cite this headnote
Construction, Appellant and Cross–Appellee,
v.
CAMP DRESSER & McKEE, INC. d/b/ [3] Statutes
Plain Language; Plain, Ordinary, or
a CDM, Appellee and Cross–Appellant.
Common Meaning
No. 04–11–00056–CV. | Aug. 15, 2012. Statutes
Relation to plain, literal, or clear meaning;
Synopsis ambiguity
Background: General contractor on project to replace and
The plain meaning of the text is the best
improve parts of city's water distribution system brought
expression of legislative intent unless a different
action against city for breach of contract, violation of the
meaning is apparent from the context or the plain
Prompt Payment Act, and property damage due to negligence
meaning leads to absurd or nonsensical results.
in operation or use of water pumping equipment. Contractor
brought cross-claim against engineering firm that designed Cases that cite this headnote
project and provided related services, claiming tortious
interference with contract, negligent misrepresentation, and
fraud. The 83rd Judicial District Court, Val Verde County, [4] Torts
Carl Pendergrass, J., entered partial summary judgment in Constitutional, statutory, and local
favor of firm. Contractor appealed. regulation
Torts
Grounds and conditions precedent
[Holding:] The Court of Appeals, Steven C. Hilbig, J., held Section of Civil Practice & Remedies Code
that statute that required dismissal of action arising out of the that required dismissal with prejudice of action
provision of professional services by an engineering firm, if arising out of the provision of professional
an affidavit of merit was not filed with the complaint, did not services by an engineering firm, if an affidavit
apply. of merit was not filed with the complaint,
did not apply to general contractor's tortious
interference claim against engineering firm that
Reversed. designed city's water distribution system; the
legislative enactment that imposed the certificate
requirement on firms did not have the effect
of making the certificate of merit requirement
West Headnotes (5)
applicable to causes of action which accrued
before the effective date of the amendment.
[1] Judgment V.T.C.A., Civil Practice & Remedies Code §
Particular defenses 150.001.
As a defendant moving for summary judgment 1 Cases that cite this headnote
on the affirmative defense of the statute of
limitations, engineering firm had the burden to
conclusively establish the defense. [5] Action
Proceedings constituting commencement
1 Cases that cite this headnote An action is filed or commenced when the
original petition is filed.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee Inc., 381 S.W.3d 635 (2012)
2003, the City contracted with Sundown to be the general
1 Cases that cite this headnote contractor on the project. The contract required Sundown
to construct water lines throughout the city, install a
booster pump station, and construct an elevated storage tank.
Sundown began work in June 2003, and the contract required
Attorneys and Law Firms the project be substantially complete within 365 days and
be complete for final payment by July 8, 2004. The contract
*636 Bryan L. Kost, John C. Dulske, Law Offices of Dulske contained a liquidated damages clause and a provision that
& Florino, P.C., Jason Speights, Speights Law Firm, L.L.P., if the City, the project engineer or others performing work
San Antonio, TX, for Appellant.
for the City or for whom the City was responsible, delayed,
disrupted, or interfered with the performance or progress
Gregory P. Sapire, K & L Gates, LLP, Austin, TX, for
of the work, then Sundown was entitled to an equitable
Appellee.
adjustment in the contract price, the contract times, or both.
Sitting: CATHERINE STONE, Chief Justice, SANDEE CDM was not a party to the contract between Sundown and
BRYAN MARION, Justice, STEVEN C. HILBIG, Justice. the City, and Sundown did not have a separate contract with
CDM. The City terminated CDM's contract at the end of
2004. Because of numerous delays, the project was not finally
OPINION complete until January 2005.
Opinion by: STEVEN C. HILBIG, Justice. Sundown sued the City in February 2007 for breach of
contract and violation of the Prompt Payment Act. Sundown
Jay Miller & Sundown, Inc. (“Sundown”) appeals the alleged the City, through its employees and agents, delayed,
summary judgment granted in favor of Camp Dresser & disrupted, and interfered with performance of the work,
McKee Inc. (“CDM”) on the ground that Sundown's claim resulting in additional work, expense, and overhead and
for tortious interference with contract was barred by the significantly delaying the completion date. Sundown sought
statute of limitations. Sundown argues that the statute of unpaid sums due under the contract, including change orders
limitations was not available to CDM as a defense because and additional work, delay damages, interest, and attorney's
CDM was properly joined in the action as a responsible third fees. In October 2009, Sundown amended its petition to add
party pursuant to chapter 33 of the Texas Civil Practice and a claim under the Texas Tort Claims Act for property damage
Remedies Code. CDM contends that Sundown misinterprets caused by the City's negligent operation or use of water
and misapplies Chapter 33. CDM argues alternatively in a pumping equipment. Sundown alleged the City's improper
cross-point that the trial court erred in denying its motion operation of the water pumps that supplied pressure to water
to dismiss the suit pursuant to section 150.002 of the Civil lines caused some lines to burst, causing flooding of the
Practice and Remedies Code because Sundown did not file project site and damage to Sundown's work and property.
a certificate of *637 merit. We hold the trial court erred Sundown further alleged that had the City not improperly
in granting the summary judgment and that under the law interfered with and delayed the work, Sundown would have
applicable to Sundown's claim, no certificate of merit was progressed beyond the site of the flooding when the pipes
required. We therefore reverse the trial court's judgment and burst and its damages would have been less.
remand for further proceedings.
The City amended its answer, pleading that to the extent
Sundown's negligence allegations against the City were found
BACKGROUND to be true, CDM was a responsible third party within the
meaning of section 33.011(6) of the Texas Civil Practice
CDM is an engineering firm that contracted with the City and Remedies Code. At the same time, the City filed an
of Del Rio to provide design and construction administrative unopposed motion for leave to designate CDM a responsible
services for a project to replace and improve parts of the third party pursuant to section 33.004 of the Civil Practice
City's water distribution system. CDM designed the project, and Remedies Code. The trial court signed an order granting
managed the bidding process, and provided construction the motion. 1 In December 2009 and within sixty *638
administrative services after construction began. In April days of the designation, Sundown filed an amended petition,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee Inc., 381 S.W.3d 635 (2012)
joining CDM as a defendant, and alleging causes of action v. Pochucha, 290 S.W.3d 863, 867 (Tex.2009)). “The plain
against CDM for tortious interference with contract, negligent meaning of the text is the best expression of legislative intent
misrepresentation, and fraud. unless a different meaning is apparent from the context or the
plain meaning leads to absurd or nonsensical results.” Id.
Sundown later settled with and nonsuited the City. CDM
filed a motion to dismiss, alleging Sundown had not filed a Chapter 33 of the Civil Practice and Remedies Code
certificate of merit as required by chapter 150 of the Civil is the “complex statutory scheme for the comparative
Practice and Remedies Code. CDM also filed a motion for apportionment of responsibility among parties in most tort
summary judgment on the ground that Sundown's causes of actions in Texas.” Galbraith Eng'g, 290 S.W.3d at 868.
action were barred by the statute of limitations. The trial Among other things, it allows a tort defendant to designate
court heard arguments on the motions and took them under as a responsible third party a person who has not been sued
advisement. At the next hearing in the case, the trial court by the plaintiff, but who is alleged to have caused in any way
orally rendered its rulings granting summary judgment on the *639 harm for which the plaintiff seeks damages. See
the tortious interference claim, denying summary judgment TEX. CIV. PRAC. & REM.CODE ANN. § 33.004(a) (West
on the fraud and negligent misrepresentation claims, and Supp.2011), § 33.011(6) (West 2008). When such designation
denying CDM's motion to dismiss. On the same day, is made, subsection 33.004(e) authorizes the plaintiff to join
Sundown filed its fourth amended petition, naming CDM as the person as a defendant and, if joinder is sought within
the sole defendant and dropping the fraud and negligence sixty days of the designation, limitations cannot be raised as
claims. The court then signed a final judgment. a bar. See Galbraith Eng'g, 290 S.W.3d at 865. The relevant
statutory sections state:
Sundown appeals the summary judgment. CDM argues in a
cross-point that the trial court should have dismissed the suit § 33.011 Definitions
for failure to file a certificate of merit.
In this chapter:
(1) “Claimant” means a person seeking recovery of
STATUTE OF LIMITATIONS damages, including a plaintiff, counterclaimant, cross-
claimant, or third-party plaintiff....
The parties agree the statute of limitations on Sundown's
tortious interference claim is two years and that Sundown (2) “Defendant” includes any person from whom, at the
joined CDM as a defendant more than two years after time of the submission of the case to the trier of fact, a
CDM's last involvement in the project. CDM's motion for claimant seeks recovery of damages.
summary judgment asserted the claim is barred by limitations.
...
Sundown contends the trial court erred in granting the
motion because former section 33.004(e) 2 of the Texas Civil (6) “Responsible third party” means any person who is
Practice and Remedies Code authorizes it to pursue the claim alleged to have caused or contributed to causing in any
even though it would otherwise be barred by limitations. 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
Applicable law and standard of review activity that violates an applicable legal standard, or by
[1] [2] [3] As a defendant moving for summary judgment any combination of these. The term “responsible third
on the affirmative defense of limitations, CDM had the party” does not include a seller eligible for indemnity under
burden to conclusively establish the defense. See Rhone– Section 82.002.
Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999).
We review summary judgments and issues of statutory TEX. CIV. PRAC. & REM.CODE § 33.011 (West.2008).
construction de novo. Molinet v. Kimbrell, 356 S.W.3d 407,
411 (Tex.2011); Carreras v. Marroquin, 339 S.W.3d 68, § 33.004 Designation of Responsible Third Party
71 (Tex.2011). The court's “primary objective in construing
(a) A defendant may seek to designate a person as a
statutes is to give effect to the Legislature's intent.” Molinet,
responsible third party by filing a motion for leave to
356 S.W.3d at 411 (citing Galbraith Eng'g Consultants, Inc.
designate that person as a responsible third party. The
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee Inc., 381 S.W.3d 635 (2012)
motion must be filed on or before the 60th day before the tort damages sought against it, both in its pleadings and by
trial date unless the court finds good cause to allow the timely filing a motion to designate. See TEX. CIV. PRAC. &
motion to be filed at a later date. REM.CODE ANN. § 33.004(a). The City's pleadings asserted
that CDM was a responsible third party within the meaning of
... section 33.011(6) of the Texas Civil Practice and Remedies
Code because CDM's tortious conduct caused the harm for
(e) [repealed] If a person is designated under this section
which Sundown sought to recover damages from the City.
as a responsible third party, a claimant is not barred by
The trial court granted the unopposed motion for leave to
limitations from seeking to join that person, even though
designate CDM a responsible third party. See id. § 33.004(f).
such joinder would otherwise be barred by limitations, if
Within sixty days of the designation, Sundown joined CDM
the claimant seeks to join that person not later than 60 days
as a defendant in the suit. See id. § 33.004(e).
after that person is designated as a responsible third party.
(f) A court shall grant leave to designate the named person The third amended petition listed numerous acts and
as a responsible third party unless another party files an omissions of CDM that Sundown alleged delayed, disrupted,
objection to the motion for leave on or before the 15th day and interfered with Sundown's contract with the City.
after the date the motion is served. Sundown generally alleged CDM's acts and omissions
caused the project to be significantly delayed and that
Id. § 33.004 (West 2008; West Supp.2011). 3 Sundown incurred actual damages and loss as a result.
The petition alleged the delays and interruptions increased
Sundown's costs and expenses and damaged its relationship
Discussion with the City. The petition also alleged that the delays
Sundown argues the trial court erred in granting summary and interruptions caused Sundown to be working in the
judgment. Sundown contends that because all the statutory area flooded when the water lines burst, causing damage
procedural steps for designating and joining a responsible to both Sundown's personal property and to the work.
third party were precisely followed in this case, CDM's Sundown prayed broadly for recovery against CDM for its
limitations defense is defeated by section 33.004(e). We actual damages, consequential damages, incidental damages,
agree. compensatory damages, interest, fees, and costs.
Sundown's tort claim against the City alleged the City's The City's pleadings asserted CDM's tortious conduct caused
operation or use of motor-driven water pumps caused water or contributed to the property damage for which Sundown
lines to rupture, flooding areas in which Sundown was sought to recover against the City in its tort claim. See TEX.
working. Sundown alleged the flooding damaged its property, CIV. PRAC. & REM.CODE ANN. § 33.011(6)(definition
including construction work it had already performed and of “responsible third party”). The City complied with the
later had to repair. Sundown additionally alleged: statutory requirements for designating CDM a responsible
third party, and the court properly granted leave to so
Had the overall PROJECT schedule
designate CDM. See id. § 33.004(f) (court “shall” grant
not been delayed ..., Sundown would
leave absent timely objection by a party). Pursuant to section
have progress[ed] beyond those areas
33.004(e), Sundown was therefore “not barred by limitations”
ultimately *640 impacted by the
from joining CDM as a party defendant “even though such
flooding before the flooding occurred.
joinder would otherwise be barred by limitations.” Id. §
Consequently, the delays caused by
33.004(e); see Flack v. Hanke, 334 S.W.3d 251, 258–63
DEL RIO, by and through their
(Tex.App.-San Antonio 2010, pet. denied).
[sic] employees, agents and other
individuals for whom DEL RIO is
In response, CDM asserts that, construing Chapter 33 as
responsible, also contributed to the
a whole, subsection 33.004(e) “cannot revive a limitations-
amount of property damage incurred
barred tort claim unless the harm for which the plaintiff seeks
by Sundown as a result of the flooding.
recovery of damages against the responsible third party is the
After Sundown added this tort claim against the City, the same harm for which the plaintiff seeks recovery of damages
City timely designated CDM a responsible third party for the against the original, designating defendant.” CDM argues
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee Inc., 381 S.W.3d 635 (2012)
section 33.004(e) does not apply in this case and the trial
court properly granted summary judgment on its limitations In its post-submission brief, CDM argues for the first time
defense because (1) Sundown does not allege CDM caused that we should review the summary judgment in light of
or contributed to the property damage that was the basis of the allegations made in Sundown's fourth amended petition.
Sundown's tort claim against the City; (2) CDM was not We disagree. First, as discussed above, whether section
a legal cause of the property damages Sundown sought to 33.004(e) abrogates a limitations defense depends on whether
recover against the City; and (3) it would “lead to an absurd a responsible third party was properly designated and timely
result by making CDM a joint tortfeasor with [the City] for joined; it does not depend on the substance of the allegations
tort damages that Sundown did not seek to recover against in a subsequent petition against the joined defendant. Second,
[the City].” We address each of these arguments in turn. the record clearly establishes the summary judgment was
based on Sundown's third amended petition. The third
*641 CDM first argues the tortious interference claim is amended petition was its live pleading when the motion for
barred by limitations “because the harm for which Sundown summary judgment was filed, when it was heard by the trial
seeks recovery of damages against CDM is not the same harm court, and when the motion was taken under submission.
for which Sundown sought recovery of damages against Del When the case was next called for hearing over a month
Rio.” Initially, we note that CDM's argument focuses entirely later, the court announced it was ready to rule on the pending
on the substance of the allegations in Sundown's pleading motions, including the motion for summary judgment. The
against CDM—the claimant's allegations against the joined trial judge noted he had just received the fourth amended
defendant (the former responsible third party). However, as petition, which had been filed earlier in the day, but stated
the statute is written, whether the statute of limitations is he had not reviewed the amended petition in reaching its
waived is not dependent on the substance of the claimant's decision. Finally, our conclusion would not be different were
allegations against the joined defendant. Section 33.004(e) we to consider the fourth amended petition. Because the
provides that limitations does not bar the joinder if (1) the fourth amended petition was filed after the City was dismissed
person was designated under section 33.004 as a responsible as a defendant, it does not contain allegations relating to the
third party and (2) joinder was sought within sixty days of tort claim against the City and therefore does not expressly
the designation. Those two conditions were indisputably met allege that CDM's conduct contributed to the harm caused
in this case. Under a plain reading of the statute, no further by the City's tort. The fourth amended petition alleges the
inquiry is necessary to conclude that the statute of limitations numerous acts of interference and delay by *642 CDM that
may not be raised as a bar to Sundown's tortious interference caused harm and damage to Sundown and prays broadly for
with contract claim. See Flack, 334 S.W.3d at 258–60. actual damages, which could reasonably include the property
damages Sundown previously sought against the City.
Nevertheless, we also disagree with CDM's contention that
Sundown did not allege “acts or omissions that caused or CDM argues in its post-submission brief that the summary
contributed to causing the property damage forming the basis judgment should be affirmed because Sundown's allegations
of Sundown's claim against Del Rio under the Texas Tort of delay are “too attenuated to have ‘caused or contributed
Claims Act.” Against the City, Sundown sought to recover in any way to the harm for which’ Sundown sought damages
for the damage to its property, including the cost to repair against Del Rio,” and as a matter of law could not be a
the work in progress at the site of the flooding. Both the legal cause of Sundown's injuries. However, CDM did not
City and Sundown alleged that CDM's conduct in delaying move for summary judgment on the ground there was no
progress of the work caused or contributed to the damage evidence it proximately caused any of Sundown's damages.
caused by the flooding. Sundown's petition joining CDM Rather, it moved for and obtained summary judgment on
and Sundown's third amended petition, filed while the City an affirmative defense of limitations. Moreover, CDM is
remained a defendant in the case, clearly alleged that CDM's essentially contending that section 33.004(e) does not apply
tortious conduct contributed to causing the harm for which because it should not have been designated a responsible third
Sundown sued the City in tort. And, contrary to CDM's party. In Flack v. Hanke, this court held that Chapter 33
assertion that Sundown sought only economic damages from does not authorize a joined defendant to litigate its previous
it, Sundown's pleadings seeking “actual,” “consequential,” designation as a responsible third party. 334 S.W.3d at 261–
“incidental,” and “compensatory” damages are broad enough 63.
to encompass property damage.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee Inc., 381 S.W.3d 635 (2012)
In its final argument, CDM contends that Sundown's party and Sundown timely joined CDM as a defendant, the
interpretation of Chapter 33 would lead to an absurd result “by trial court erred by granting summary judgment based on the
making CDM a joint tortfeasor with Del Rio for tort damages statute of limitations. Whether the *643 purpose or language
that Sundown did not seek to recover against Del Rio.” CDM of Chapter 33 limits in any way the damages that Sundown
contends Sundown should not be allowed to use section can recover against CDM does not bear on whether the cause
33.004(e) to revive the tortious interference claim because the of action is barred by limitations and is not an issue before us.
tort allegedly caused economic losses substantially beyond
contributing to the harm caused by the City's tort, losses
which were completely unrelated to the flooding and which
CERTIFICATE OF MERIT
Sundown could not have recovered in a tort claim against the
City. However, nothing in Chapter 33 requires the original CDM cross-appeals the trial court's order denying its motion
defendant and the joined responsible third party be joint to dismiss pursuant to chapter 150 of the Civil Practice
tortfeasors with respect to all the damages sought in order for & Remedies Code. That chapter requires the trial court
section 33.004(e) to apply. We have previously recognized dismiss with prejudice a suit arising out of the provision of
that, although Chapter 33 is generally considered a defense- professional services by an engineering firm if an affidavit
oriented statute, the revival of limitations provision in section certifying the merit of the complaint is not filed with the
33.004(e) provides a benefit to plaintiffs that may be subject complaint. TEX. CIV. PRAC. & REM.CODE ANN. §§
to manipulation: 150.001(1), 150.002(a), (d) (West 2011). Sundown did not
file a certificate of merit, but contends its claim against CDM
Section 33.004(e) creates the potential
is governed by a prior version of Chapter 150, under which
to revive otherwise barred claims
no certificate of merit was required in a tortious interference
against a designated RTP. This
with contract suit against a corporation.
procedure may result in the plaintiff
collaborating with a defendant to join
We review a ruling on a motion to dismiss under section
additional tortfeasors. For example,
150.002 for abuse of discretion. Kniestedt v. S.W. Sound
section 33.004(e) allows a plaintiff
& Electronics, Inc., 281 S.W.3d 452, 454 (Tex.App.-
to sue a defendant with little or
San Antonio 2007, no pet.). However, construction of the
no liability, and that defendant may
statutory language is a question of law we review using
then designate the true tortfeasor as
the de novo standard. Entergy Gulf States, Inc. v. Summers,
an RTP. The plaintiff subsequently
282 S.W.3d 433, 437 (Tex.2009); JNY, L.P. v. Raba–Kistner
may join the true tortfeasor, avoid a
Consultants, Inc., 311 S.W.3d 584, 585 (Tex.App.-El Paso
limitations defense, and nonsuit the
2010, no pet).
original defendant.
Flack, 334 S.W.3d at 256 (citation omitted). In Flack, we When Chapter 150 was enacted in 2003, it applied only
rejected appellant's public policy argument that limitations to a claim of professional negligence against a “design
should not be revived because “their designation as professional,” which was defined as “a registered architect
responsible parties was “unrelated to the purpose of section or licensed professional engineer.” Act of June 2, 2003,
33.004 and ... nothing more than an attempt to manipulate 78th Leg., R.S., ch. 204, § 20.01, 2003 Tex. Gen. Laws
the process and circumvent statutory limitations.” Id. at 260. 847, 896 (amended 2005 and 2009) (current version at TEX.
Instead, we applied the plain language of the statute and CIV. PRAC. & REM.CODE ANN. §§ 150.001–.002) (“2003
held that “[b]ecause section 33.004 provides that a properly Act”). The 2003 Act was subsequently construed as applying
designated responsible third party may be joined regardless only to claims against individual architects and engineers, and
of limitations, the trial court erred in granting the motion [ ] not to claims against architectural or engineering corporations
for summary judgment based on limitations.” Flack, at 260; or firms. Raba–Kistner, 311 S.W.3d at 588; J.E. Saenz &
see also Villarreal v. Wells Fargo Brokerage Servs., LLC, 315 Assocs. v. Munoz, No. 13–10–00139–CV, 2011 WL 193113,
S.W.3d 109, 122 (Tex.App.-Houston [1st Dist.] 2010, no pet.) at *3 (Tex. App.-Corpus Christi–Edinburg Jan. 13, 2011, no
(rejecting public policy argument against reviving barred pet.).
claim and applying plain language of statute). Likewise,
because CDM was properly designated a responsible third
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee Inc., 381 S.W.3d 635 (2012)
The Legislature amended Chapter 150 twice in 2005. The Kistner, 311 S.W.3d at 586–87 (discussing amendments
first 2005 amendment changed some of the wording of the and legislative history). The 2009 Act also added registered
statute and added registered professional land surveyors to its landscape architects to its scope, detail regarding the
scope. See Act of May 12, 2005, 79th Leg., R.S., ch. 189, qualifications of the expert, and a new subsection specifying
2005 Tex. Gen. Laws 348 (amended 2009) (current version at the required contents of the certificate of merit affidavit. Id.
TEX. CIV. PRAC. & REM.CODE ANN. §§ 150.001–.002). The 2009 Act was effective September 1, 2009, and section
This amendment took effect immediately on the governor's 3 of the Act stated:
signature May 27, 2005. Id.
The change in law made by this Act
The second 2005 amendment was passed without reference to applies only to an action or arbitration
the changes made by the earlier 2005 amendment. See Act of filed or commenced on or after the
May 18, 2005, 79th Leg., R.S., ch. 208, 2005 Tex. Gen. Laws. effective date of this Act. An action
369 (amended 2009) (current version at TEX. CIV. PRAC. or arbitration filed or commenced
& REM.CODE ANN. §§ 150.001–.002) (“the second 2005 before the effective date of this Act
Act”). The second 2005 Act changed the definition of “design is governed by the law in effect
professional” to mean: immediately before the effective date
of this Act, and that law is continued
a licensed architect, licensed in effect for that purpose.
professional engineer, or any
firm in which such licensed Id. ch. 789 §§ 3, 4.
professional practices, including but
not limited to a corporation, CDM argues that the current 2009 version of Chapter 150
professional corporation, limited applies to Sundown's tortious interference claim because,
liability corporation, partnership, although Sundown's suit against the City was filed before
limited liability partnership, sole September 1, 2009, CDM was not joined as a defendant until
proprietorship, joint venture, or any December 2009. CDM argues the action against it therefore
other business entity. was not “filed or commenced” until after the effective date
of the 2009 Act. As Chapter 150 is currently written, a
Id. ch. 208, § 2. This amendment also made Chapter 150 certificate of merit must be filed in a tort suit against an
apply “[i]n any action or arbitration proceeding for damages engineering firm. See TEX. CIV. PRAC. & REM.CODE
arising out of the provision of professional services by a ANN. §§ 150.001–.002 (West 2011). Sundown responds that
design professional.” Id. The changes to Chapter 150 made the trial court correctly denied the motion to dismiss because
by the second 2005 Act applied “only to a cause of action this suit, filed before the 2009 Act, is governed by an earlier
that accrues on or after the effective date of this Act.” Id. version of Chapter 150.
ch. 208, § 4. The *644 Legislature further provided that
“[a]n action that accrued before the effective date of this Act [4] We agree with Sundown that the certificate of merit
is governed by the law applicable to the action immediately requirement does not apply to its claims against CDM in this
before the effective date of this Act, and that law is continued case. By its terms, the enabling provision in the 2009 Act
in effect for that purpose.” Id. The second 2005 Act became governs only the applicability of the “change in law” made by
effective September 1, 2005. Id. ch. 208, § 5. Thus, the second that Act. The controlling question in this case is whether the
2005 Act, which made the certificate of merit requirement change to section 150.001 made by the second 2005 Act that
applicable to suits against firms, applied only to causes of made Chapter 150 applicable to suits against firms, applies.
action that accrued on or after September 1, 2005. It is That provision of the law was not changed by the 2009
undisputed that Sundown's tortious interference claim against Act. The legislative enactment that imposed the certificate
CDM accrued before December 31, 2004, before the effective requirement on suits against firms expressly excluded causes
date of the second 2005 Act. of action such as Sundown's against CDM that accrued before
September 1, 2005. Act of May 18, 2005, 79th Leg., R.S., ch.
In 2009, the Legislature reenacted Chapter 150 to harmonize 208, § 4, 2005 Tex. Gen. Laws. 369, 370. We hold the 2009
the two 2005 amendments. Act of May 29, 2009, 81st Leg., amendments did not have the effect of making the certificate
ch. 789, 2009 Tex. Gen. Laws 1991 (“2009 Act”). See Raba– of merit requirement applicable to causes of action against
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Jay Miller & Sundown, Inc. v. Camp Dresser & McKee Inc., 381 S.W.3d 635 (2012)
affidavit, and the trial court did not abuse its discretion in
firms that accrued before the effective date of the second 2005
order denying CDM's motion to dismiss under Chapter 150
Act. The trial court therefore did not abuse its discretion by
of the Texas Civil Practice and Remedies Code. We therefore
denying CDM's motion to dismiss. 4
reverse the trial court's judgment and remand the cause to the
trial court for further proceedings.
*645 CONCLUSION
All Citations
[5] We hold the trial court erred in granting summary
judgment for CDM on statute of limitations grounds. We 381 S.W.3d 635
further hold CDM was not required to file a certificate of merit
Footnotes
1 CDM complains in its brief that it had no notice of the City's designation or motion and no opportunity to object to them.
CDM suggests this lack of notice violated its right to due process. However, CDM did not raise this complaint or seek a
ruling on it in the trial court. Accordingly, these issues are not before us.
2 In 2011, section 33.004 was amended to delete subsection (e) and to add a new subsection (d). Act of May 8, 1995,
74th Leg., R.S., ch. 136, § 1, 1995 Tex. Gen. Laws 971, 972, amended by Act of June 2, 2003, 78th Leg., R.S., ch.
204, art. 4, 2003 Tex. Gen. Laws 847, 855, amended by Act of May 25, 2011, 82nd Leg., R.S., ch. 203, §§ 5.01–5.02,
2011 Tex. Sess. Law Serv. ch. 203 (West) (current version at TEX. CIV. PRAC. & REM.CODE ANN. § 33.004 (West
Supp.2011)). The parties agree that former section 33.004(e) applies in this case. All references to section 33.004(e)
are to the now-repealed subsection.
3 See note 2, supra.
4 We also agree with Sundown and the Austin Court of Appeals that, as used in section 4 of 2009 Act, “an action” is “filed or
commenced” when the original petition is filed. See S & P Consulting Eng'rs, PLLC v. Baker, 334 S.W.3d 390, 395–398
(Tex.App.-Austin 2011, no pet.) (holding that, “for purpose of the effective date of the 2009 version of section 150.002,
an action commences when the original petition is filed. For this purpose, the action does not recommence with the filing
of an amended petition even if that petition names a new defendant for the first time”); but see Nangia v. Taylor, 338
S.W.3d 768, 770–71 (Tex.App.-Beaumont 2011, no pet.) (holding 2009 Act applies to claim against engineer joined in
suit in 2010, even though suit was filed in 2008).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
LL
Latham v. Castillo, 972 S.W.2d 66 (1998)
must be glaringly noticeable, flagrant, complete
and unmitigated. V.T.C.A., Bus. & C. § 17.45(5)
KeyCite Yellow Flag - Negative Treatment (A).
Distinguished by Kemp v. Jensen, Tex.App.-Eastland, December 2,
2010 7 Cases that cite this headnote
972 S.W.2d 66
Supreme Court of Texas. [2] Antitrust and Trade Regulation
Legal professionals; attorney and client
B. Mills LATHAM, Law Offices of B. Mills
Attorneys can be found to have engaged in
Latham, P.C., and Latham and Moss, Petitioners,
unconscionable conduct under Deceptive Trade
v.
Practices-Consumer Protection Act (DTPA) by
Ernest M. CASTILLO and Audona A. Castillo, the way they represent their clients. V.T.C.A.,
individually and as representatives of the Bus. & C. §§ 17.45, 17.50(a)(3).
Estate of Kay Castillo, deceased, Respondents.
13 Cases that cite this headnote
No. 96–0986. | Argued April 23,
1997. | Decided June 23, 1998. |
[3] Antitrust and Trade Regulation
Rehearing Overruled Aug. 25, 1998.
Questions of law or fact
Clients sued attorney who failed to timely file medical Whether attorney engaged in unconscionable
malpractice action claiming violation of Deceptive Trade conduct actionable under Deceptive Trade
Practices-Consumer Protection Act (DTPA), breach of Practices-Consumer Protection Act (DTPA) by
contract, and fraudulent misrepresentation. The trial court affirmatively misrepresenting to clients that he
granted directed verdict for attorney. Clients appealed. The had filed their medical malpractice claim when in
Corpus Christy Court of Appeals, reversed and remanded. fact he had not, and whether that conduct caused
Attorney filed application for writ of error. The Supreme clients to suffer mental anguish were questions
Court, Spector, J., held that: (1) whether attorney engaged for jury in clients' DTPA action against attorney.
in unconscionable conduct actionable under DTPA by V.T.C.A., Bus. & C. §§ 17.45, 17.50(a)(3).
affirmatively misrepresenting to clients that he had filed their
32 Cases that cite this headnote
medical malpractice claim when in fact he had not, and
whether that conduct caused clients to suffer mental anguish
were questions for jury, and (2) evidence did not support [4] Antitrust and Trade Regulation
fraudulent misrepresentation or breach of contract claims. Purpose and construction in general
Legislative intent in enacting the Deceptive
Court of Appeals' judgment affirmed in part and reversed in Trade Practices-Consumer Protection Act
part. (DTPA) was to provide plaintiffs a remedy
where the common law fails. V.T.C.A., Bus. &
Owen, J., filed concurring and dissenting opinion in which C. § 17.44.
Gonzalez, Hecht, and Enoch, JJ., joined.
3 Cases that cite this headnote
West Headnotes (9) [5] Antitrust and Trade Regulation
Legal professionals; attorney and client
Clients would not be required to prove
[1] Antitrust and Trade Regulation
they would have won underlying medical
In general; unfairness
malpractice action to recover on Deceptive Trade
Unconscionability under unfair advantage test Practices-Consumer Protection Act (DTPA)
of the Deceptive Trade Practices-Consumer claim against attorney based on attorney's
Protection Act requires that resulting unfairness affirmative misrepresentation that he had filed
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Latham v. Castillo, 972 S.W.2d 66 (1998)
their medical malpractice claim when in fact he
had not. V.T.C.A., Bus. & C. § 17.50(a)(3).
24 Cases that cite this headnote Attorneys and Law Firms
*67 Deborah R. Sunderman, Corpus Christi, Gaston M.
[6] Damages Broyles, Jr., Dallas, for Petitioners.
Nature of Injury or Threat in General
John Gano, Stephen M. Gano, Houston, Errlinda M. Castillo,
Mental anguish damages are recoverable under
Corpus Christi, for Respondents.
Deceptive Trade Practices-Consumer Protection
Act (DTPA) without first proving economic Opinion
injury. V.T.C.A., Bus. & C. § 17.50(a).
SPECTOR, Justice, delivered the opinion of the Court,
39 Cases that cite this headnote in which PHILLIPS, Chief Justice, Baker, Abbott and
Hankinson, Justices, join.
[7] Fraud
In this case, we consider whether an attorney's affirmative
Difference between actual and represented
misrepresentations to his clients that cause the clients to lose
value
their day in court can constitute unconscionable action under
Fraud the Deceptive Trade Practices–Consumer Protection Act. The
Difference between value and price paid court of appeals answered in the affirmative. We affirm the
Fraudulent misrepresentation plaintiff may court of appeals' remand of the DTPA claim, and we reverse
recover either the “out of pocket damages,” and render judgment that the Castillos take nothing on their
difference between the value of that which was remaining claims.
parted with and the value of which was received,
or the “benefit of the bargain damages,”
difference between the value represented and the
I.
value actually received, whichever is greater.
On January 3, 1986, Audona Castillo prematurely gave birth
10 Cases that cite this headnote
to twin daughters, Kay and Sara, at Taft Hospital. Born
with birth defects, the girls were immediately transferred
[8] Attorney and Client to Driscoll Foundation Children's Hospital where both
Pleading and evidence underwent surgery. Sara died approximately one week later.
Clients, who did not plead or prove either The Castillos then filed a medical malpractice suit against
out of pocket or benefit of the bargain Driscoll Hospital on Sara's behalf and received a $6,000,000
damages, could not prevail on fraudulent default judgment. Later, their attorney, Rene Rodriguez,
misrepresentation claim against attorney who settled the case for $70,000.
affirmatively misrepresented to clients that he
had filed their medical malpractice claim when Kay Castillo, the surviving twin, died on February 14,
in fact he had not. 1988. In December 1989, the Castillos hired B. Mills
Latham to file a legal malpractice claim against Rodriguez
6 Cases that cite this headnote for settling the default judgment and to pursue a medical
malpractice claim against Driscoll Hospital for Kay's death.
[9] Damages While Latham settled the legal malpractice claim against
Particular cases Rodriguez for $400,000, the statute of limitations ran on the
Castillos' medical malpractice claim on February 14, 1990
Mental anguish damages were not recoverable
without suit being filed. The Castillos then sued Latham
under a breach of contract cause of action.
for legal malpractice because Latham failed to file the
34 Cases that cite this headnote medical malpractice action for Kay's death within the two-
year statute of limitations. The Castillos also sued Latham
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Latham v. Castillo, 972 S.W.2d 66 (1998)
for unconscionable action under the DTPA because Latham on subsection (A) in asserting that Latham's actions were
affirmatively represented to them that he had filed and was unconscionable. To be actionable under subsection (A), the
actively prosecuting the medical malpractice claim. Finally, resulting unfairness must be “glaringly noticeable, flagrant,
the Castillos alleged that Latham wrongfully misrepresented complete and unmitigated.” Chastain v. Koonce, 700 S.W.2d
himself, breached the contract of employment, and was 579, 584 (Tex.1985).
negligent.
The Legislature's stated public policy in enacting the DTPA
After the Castillos presented their case to a jury, the trial court is to “protect consumers against false, misleading, and
granted a directed verdict for Latham that the Castillos take deceptive business practices [and] unconscionable actions.”
nothing. The court of appeals reversed and remanded, holding TEX. BUS. & COM.CODE § 17.44. To achieve that goal,
that the Castillos had presented some evidence to prevent a the Legislature has mandated that the Act shall be “liberally
directed verdict on their DTPA claim. The court of appeals construed and applied.” Id. Therefore, we must view Latham's
also remanded the “remaining theories of recovery”— actions with this legislative directive in mind.
fraudulent misrepresentation and breach of contract—without
discussion. The court of appeals affirmed the directed verdict [2] Attorneys can be found to have engaged in
on the negligence claim, however, because the Castillos did unconscionable conduct by the way they represent their
not present evidence that but for Latham's negligence, *68 clients. See, e.g., DeBakey v. Staggs, 605 S.W.2d 631, 633
the medical malpractice suit would have been successful. 1 . (Tex.Civ.App.—Houston [1st Dist.] 1980), writ ref'd n.r.e.
per curiam, 612 S.W.2d 924 (Tex.1981) (finding an attorney
The central question before us is whether the Castillos have unconscionably took advantage of a client to a grossly unfair
presented some evidence to support each element of their degree when the attorney knowingly failed to obtain in a
DTPA cause of action. We hold that they have done so. timely manner a name change for the client's minor child).
The Castillos assert that Latham acted unconscionably in
representing that he was actively prosecuting their medical
malpractice claim for Kay's death when in fact he was not.
II.
[3] The Castillos depended on Latham to file suit against
The trial court granted a directed verdict against the Castillos
the hospital for Kay's death. As Mrs. Castillo testified, “You
on all claims. Accordingly, we must view the evidence in the
trust in a professional because they know more than you.”
light most favorable to them and indulge every reasonable
The record reveals, and Latham's attorney conceded at oral
inference in their favor. Harbin v. Seale, 461 S.W.2d 591, 592
argument before this Court, that there is some evidence that
(Tex.1970). If reasonable minds could differ on controlling
Latham told the Castillos he had filed the medical malpractice
facts, the trial court errs in refusing to submit the issues to the
claim when in fact he had not. Although he affirmatively
jury. Collora v. Navarro, 574 S.W.2d 65, 68 (Tex.1978). We
represented to them that he was actively pursuing the claim,
consider the DTPA claim first. 2 Latham never did file the suit and limitations ran. As a result,
the Castillos lost the opportunity to prosecute their claim
against the hospital for Kay's death.
A.
*69 Viewing Latham's actions in the light we must, his
[1] The Castillos alleged Latham's conduct constituted an actions are similar to the attorney's conduct in DeBakey.
“unconscionable action or course of action” that violated the Latham took advantage of the trust the Castillos placed in him
DTPA. TEX. BUS. & COM.CODE § 17.50(a)(3). Under as an attorney. Therefore, the Castillos have presented some
section 17.45, “unconscionable action or course of action” evidence that they were taken advantage of to a grossly unfair
means “an act or practice which, to a person's detriment: (A) degree.
takes advantage of the lack of knowledge, ability, experience,
or capacity of a person to a grossly unfair degree; or (B) Latham argues, however, that the Castillos' DTPA claim is
results in a gross disparity between the value received and essentially a dressed-up legal malpractice claim. Therefore,
consideration paid, in a transaction involving transfer of he asserts, the Castillos must prove that they would have
consideration.” Id. § 17.45(5). The Castillos have relied only won the medical malpractice case for Kay's death in order to
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Latham v. Castillo, 972 S.W.2d 66 (1998)
recover. Because they did not present any evidence on this, and by analogy for knowing violations of certain statutes
Latham argues, the Castillos cannot recover. We disagree. such as the Deceptive Trade Practices Act.” City of Tyler v.
Likes, 962 S.W.2d 489, 495 (Tex.1997) (citations omitted).
[4] [5] The legislative intent in enacting the DTPA was Therefore, the Castillos do not have to first prove that they
to provide plaintiffs a remedy where the common law fails. have suffered economic damages in order to recover mental
See Woo v. Great Southwestern Acceptance Corp., 565 anguish damages. The Castillos have satisfied their burden on
S.W.2d 290, 298 (Tex.Civ.App.—Waco 1978, writ ref'd the damages element of a DTPA cause of action if they have
n.r.e.). Section 17.43 states that the remedies provided by presented some evidence of mental anguish.
the Act “are in addition to any other procedures or remedies
provided for in any other law.” TEX. BUS. & COM.CODE § In Parkway Co. v. Woodruff, 901 S.W.2d 434 (Tex.1995),
17.43 (emphasis added). Moreover, the Legislature mandates we established the evidentiary requirements for recovery
that the DTPA is to be “liberally construed and applied to of mental anguish damages. To survive a legal sufficiency
promote its underlying purposes.” Id. § 17.44. Recasting the challenge, plaintiffs must present “direct evidence of the
Castillos' DTPA claim as merely a legal malpractice claim nature, duration, and severity of their mental anguish, thus
would subvert the Legislature's clear purpose in enacting the establishing a substantial disruption in the plaintiffs' daily
DTPA—to deter deceptive business practices. *70 routine.” Id. at 444. If there is no direct evidence,
the Court will apply “traditional ‘no evidence’ standards to
If the Castillos had only alleged that Latham negligently determine whether the record reveals any evidence of ‘a high
failed to timely file their claim, their claim would properly degree of mental pain and distress' that is ‘more than mere
be one for legal malpractice. However, the Castillos alleged worry, anxiety, vexation, embarrassment, or anger’ to support
and presented some evidence that Latham affirmatively any award of damages.” Id. (citation omitted).
misrepresented to them that he had filed and was actively
prosecuting their claim. It is the difference between negligent The plaintiffs in Parkway alleged that they were “hot,” “very
conduct and deceptive conduct. To recast this claim as one for disturbed,” “not pleased,” and “upset.” Id. at 445. We held
legal malpractice is to ignore this distinction. The Legislature that these allegations were “mere emotions” that did not rise
enacted the DTPA to curtail this type of deceptive conduct. to a compensable level. Id.; see also Saenz v. Fidelity &
Thus, the DTPA does not require and the Castillos need not Guar. Ins. Underwriters, 925 S.W.2d 607, 614 (Tex.1996)
prove the “suit within a suit” element when suing an attorney (holding that plaintiff's allegations that she “worried ... a
under the DTPA. The Castillos have presented some evidence lot” did not rise to a compensable level under Parkway );
of unconscionable action. Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 342 (Tex.1995)
(Spector, J., concurring) (stating that plaintiff's allegations
It is not enough that the Castillos merely prove an that she was “very upset” by the offending conduct did not
unconscionable action or course of action by Latham, rise to the level of any evidence of compensable mental
however. Latham's unconscionable action must have been anguish required under Parkway ). In each of these cases,
the producing cause of actual damages. TEX. BUS. & the plaintiffs' evidence of mental anguish amounted to “mere
COM.CODE § 17.50(a). Latham argues that the Castillos emotions.” The mental anguish testimony in this record,
cannot recover mental anguish damages under the DTPA however, exceeds that in Parkway, Saenz, and Stoker.
without first proving an economic injury. We disagree.
For example, at trial Ernest Castillo testified that because
[6] Section 17.50(a) of the DTPA, as it appeared when this Latham told them he had filed the medical malpractice suit
suit was filed, indicated that “[a] consumer may maintain when in fact he had not:
an action where any of the following constitute a producing
cause of actual damages.” TEX. BUS. & COM.CODE A Well, it made me throw up.
§ 17.50(a) (emphasis added). 3 We have stated that the Q Made you sick?
term “actual damages,” as used in the DTPA, means those
recoverable at common law. Brown v. American Transfer A Sick, nervous, mad.
& Storage Co., 601 S.W.2d 931, 939 (Tex.1980). It is
axiomatic that mental anguish damages are actual damages Q Tell the jury how you felt about that, what it did to you.
recoverable at common law for “some common law torts ...,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Latham v. Castillo, 972 S.W.2d 66 (1998)
683 S.W.2d 369, 373 (Tex.1984)). A plaintiff may recover
A It just—it just hurt me a lot because I trusted in him and either the out of pocket or the benefit of the bargain damages,
I—and if I had known, I would have looked for more whichever is greater. Arthur Andersen & Co. v. Perry Equip.
lawyers. And he promised me he was going [to] do it, Corp., 945 S.W.2d 812, 817 (Tex.1997). The Castillos have
and I trusted him to do it. Because of what they had done not pleaded or proved either of these types of damages.
to my daughters, I would have never stopped; what the
doctors done, I would have never stopped. *71 The Castillos presented no evidence of the amount
they expected to recover on the medical malpractice claim
Audona Castillo testified at trial:
for Kay's death but for Latham's actions. See Cosgrove v.
A I—my heart was broken. I was Grimes, 774 S.W.2d 662, 665–66 (Tex.1989). Accordingly,
devastated, I felt physically ill. they presented no evidence to support benefit of the bargain
damages. The Castillos also did not demonstrate any out
In sum, there is some evidence that Latham's conduct caused of pocket expenses paid to Latham. Therefore, the Castillos
the Castillos a “high degree of mental pain and distress” have not presented any evidence of recoverable common-
that a jury could consider. We are confident that the trial law fraudulent misrepresentation damages, and the trial court
judge will instruct the jury to differentiate between the mental correctly granted a directed verdict on this claim.
anguish the Castillos suffered because of their daughters'
deaths, which is not compensable in this suit, and that they
may have suffered because of Latham's actions, for which the
C.
Castillos may be compensated.
[9] Finally, the Castillos have alleged a breach of contract
The Castillos have presented some evidence of each element claim against Latham for his failure to prosecute the medical
of their DTPA cause of action and the trial court erred in malpractice claim for Kay's death. However, because the only
directing a verdict against them on the DTPA claim. We damages alleged, mental anguish, are not recoverable under
therefore remand this claim to the trial court for a new trial. a breach of contract cause of action, this claim also fails.
See Stewart Title Guar. Co. v. Aiello, 941 S.W.2d 68, 72
(Tex.1997).
B.
The Castillos also complained in the court of appeals that
III.
the trial court erred in granting a directed verdict on their
fraudulent misrepresentation and breach of contract claims. We hold that the Castillos have presented some evidence
The court of appeals sustained these points of error without to support each element of their DTPA cause of action.
discussion and remanded them to the trial court. The court Therefore, we affirm the court of appeals' remand of the
of appeals erred by not discussing issues necessary to final DTPA cause of action. We nevertheless reverse and render
disposition of the appeal. See TEX.R.APP. P. 47.1. Upon our judgment that the Castillos take nothing on their fraudulent
consideration of these issues, we find no evidence to support misrepresentation and breach of contract claims.
these claims.
[7] [8] Under common law, two measures of damages
are available for fraudulent misrepresentation: (1) the “out of OWEN, Justice, joined by GONZALEZ, HECHT and
pocket” measure, which is the “difference between the value ENOCH, Justices, concurring in part and dissenting in part.
of that which was parted with and the value of that which was The unconscionability section of the DTPA is not a catchall
received”; and (2) the “benefit of the bargain” measure, which provision or an open-ended supplement to the laundry
is the difference between the value represented and the value list of specifically enumerated violations. Unconscionability
actually received. Formosa Plastics Corp. USA v. Presidio is something more than a misrepresentation. The statute
Eng'rs & Contractors, Inc., 960 S.W.2d 41, 49 (Tex.1998); requires that the act or practice take advantage of the
W.O. Bankston Nissan, Inc. v. Walters, 754 S.W.2d 127, 128 consumer “to a grossly unfair degree.” Until now this
(Tex.1988) (citing Leyendecker & Assocs., Inc. v. Wechter, Court has equated unconscionability with grossly unfair,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Latham v. Castillo, 972 S.W.2d 66 (1998)
flagrant, and unmitigated conduct. It is not grossly unfair agreed and held that evidence that a defendant “simply ...
or unmitigated conduct when an attorney fails to pursue a took unfair advantage” is not enough. Id. at 582. The resulting
meritless suit, even if the attorney represents to the client that unfairness must be “grossly unfair,” which means “glaringly
suit had been filed when it had not. While such conduct is not noticeable, flagrant, complete and unmitigated.” Id. at 584.
to be condoned and would subject the attorney to disciplinary
proceedings, it is not unconscionable within the meaning In its decision in this case, the Court seems to equate
of the DTPA. Nor is there any evidence that the Castillos “unconscionability” with “deception” when it says that
suffered actual damages as a result of Latham's conduct. Latham's misrepresentation “is the difference between
Even assuming that mental anguish damages, standing alone, negligent conduct and deceptive conduct.” 972 S.W.2d
would suffice under the DTPA prior to its amendment in 1995 at 69. But if every misrepresentation and deceptive act
in a case such as this, there is no evidence that the Castillos' could also constitute an unconscionable act, then the
mental anguish was referable to Latham's misrepresentation laundry list violations in section 17.46(b), which include
as distinguished from the mental anguish they suffered from numerous specific representations and deceptive acts, would
the deaths of their daughters and the fact that they blamed the be redundant. See TEX. BUS. & COM.CODE § 17.46(b)(1)-
hospital but had no proof that it was responsible. Accordingly, (25).
I dissent from that part of the Court's judgment that remands
the unconscionability claims. I concur in Parts I, II B, and II More than a decade ago, we held that not every
C of the Court's opinion. misrepresentation of fact, even an intentional one, constitutes
unconscionable conduct. See Chastain, 700 S.W.2d at 582–
83. We explained that “[a]lthough knowledge and intent
may make an act unconscionable, there must be some
I
other means of distinction as well.” Id. at 582. The test is
We indicated in Willis v. Maverick, 760 S.W.2d 642, 647 whether the consumer was taken advantage of to a grossly
(Tex.1988), that an attorney may be liable under the DTPA unfair degree. Id. “This should be determined by examining
for unconscionable conduct, citing DeBakey v. Staggs, 612 the entire transaction and not by inquiring whether the
S.W.2d 924 (Tex.1981). However, we did not define in Willis defendant intended to take advantage of the consumer or acted
or DeBakey what “unconscionable” meant in the context with knowledge or conscious indifference.” Id. at 583. The
of a suit against an attorney for professional malfeasance. misrepresentation in this case cannot be distinguished from
And in DeBakey, we reserved for future determination the those in Chastain, which we held were not unconscionable
“standard of care by which a legal malpractice claim is to be under the DTPA.
determined” in a DTPA case. 612 S.W.2d at 925.
The transaction between the Castillos and Latham did not take
The Court today places heavy reliance not on our decision in advantage of the Castillos and was not grossly unfair. Latham
DeBakey, but on that of the court of appeals in DeBakey, even certainly gained no advantage. There is no evidence that he
though we expressly called into question the precedential was ever paid a fee or that the Castillos agreed to pay a fee
value of the court of appeals' determination that the attorney's other than one contingent on the success of the suit against
misfeasance rose to the level of unconscionability. See id. the hospital. And how were the Castillos disadvantaged if
The holding today is contrary to prior decisions of this their claims against the hospital had no merit? While Latham's
Court that have more narrowly defined what is meant by conduct was wrong and unethical, it is not actionable under
“unconscionable action” within the meaning of the DTPA. section 17.45(5) of the DTPA because it is not grossly unfair
to represent that a suit that has no merit has been filed when
We had the opportunity in Chastain v. Koonce, 700 S.W.2d it has not.
579, 583 (Tex.1985), to consider what section 17.45(5) of the
DTPA means when it says that an act or practice must “take[ ]
advantage ... to a grossly unfair degree” to be unconscionable. II
In *72 Chastain, a jury had found that false statements and
threats made by sellers of land to purchasers and to residents As alluded above, the Castillos have failed to offer
in the area were unconscionable. The court of appeals any evidence that they were harmed by their attorney's
reversed, finding no evidence of unconscionable conduct. We misrepresentation. Harm is a prerequisite to recovery under
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Latham v. Castillo, 972 S.W.2d 66 (1998)
the DTPA. The pre–1995 version of the DTPA, under The Court's failure to require the Castillos to prove that they
which the Castillos sued, required a consumer to demonstrate lost a meritorious claim because of Latham's representation is
that the unconscionable act was “a producing cause of also at odds with overarching Legislative policy as expressed
actual damages.” 1 The definition of “unconscionable” also in other statutes. It seems incongruous to me that the
embodies a requirement that a loss result from the conduct: “ Legislature intended to authorize the recovery of damages and
‘Unconscionable action or course of action’ means an act or potential treble damages under the DTPA for failing to file a
practice which, to a person's detriment ... takes advantage ... to suit that had no merit, even if the attorney falsely stated that
a grossly unfair degree.” Former TEX. BUS. & COM.CODE suit had been filed. Legislative policy discourages the filing
of meritless suits, particularly medical malpractice suits.
§ 17.45(5) (emphasis added). 2 There is no evidence of actual
For example, the Legislature requires a plaintiff asserting
damages in this case. There is no evidence that, had the
a medical malpractice claim to come forward within 180
suit been timely filed as Latham represented that it had, the
days after suit is filed with an expert's report that sets forth
Castillos would have recovered. *73 The Castillos offered
the standard of care, how that standard was breached, and
no evidence that their claims against the hospital had any
causation. See TEX.REV.CIV. STAT. art. 4590i, § 13.01.
merit at all. To the contrary, the Castillos testified that they
The statute directs that the suit must be dismissed if a report is
had consulted numerous lawyers before they met with Latham
not filed, and the plaintiff is obligated to pay the other side's
and had been turned down by all of them. One of the attorneys
attorney's fees and court costs. See id. § 13.01(e). Although
they attempted to hire advised them in writing that the case
this statute was enacted after the events in this case took place
had no merit.
and would not have been applied to the Castillos' suit against
the hospital, it demonstrates that the Legislature demands that
The Castillos contend that the loss of a “day in court” was
there be some merit to a medical malpractice claim before
enough, and the Court implicitly accepts this argument when
it can be asserted. There is no indication that the Castillos'
it observes that the Castillos “lost the opportunity to prosecute
claims against the hospital had any merit at all. Yet, the Court
their claim against the hospital for Kay's death.” 972 S.W.2d
would allow the recovery of damages from Latham when the
at 68. The ability to have one's claim heard is a valuable right
suit he failed to file bordered on frivolous.
in our system of justice, but it does not follow that liability
and damages should be imposed in every case in which a
party is deprived of the opportunity to present a claim. If
there is no evidence that a claim had merit, failing to file a III
suit on that claim does not fall within the types of conduct
that the Legislature intended to reach under the DTPA. Even Lacking any evidence of actual damages, the Court concludes
when there is a tangible, measurable loss, not all improper that mental anguish damages alone will support a recovery
conduct falls within the ambit of the DTPA. For example, under the pre–1995 version of the DTPA and that there is
we have long recognized that “mere breach of contract, some evidence of compensable mental anguish damages. I
without more, does not constitute a ‘false, misleading or agree with the Court that actual damages within the meaning
deceptive act.’ ” Ashford Dev., Inc. v. USLife Real Estate of the DTPA means those available at common law. See 972
Servs. Corp., 661 S.W.2d 933, 935 (Tex.1983); see also S.W.2d at 69; see also Brown v. American Transfer & Storage
Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14 (Tex.1996) Co., 601 S.W.2d 931, 939 (Tex.), cert. denied, 449 U.S. 1015,
(holding misrepresentation that ad would be placed in yellow 101 S.Ct. 575, 66 L.Ed.2d 474 (1980). But the mental anguish
pages was mere breach of contract and not actionable under that the Castillos unquestionably suffered was not caused
the DTPA). by Latham's misrepresentation, and accordingly, I would not
reach the issue of whether, in this type of case, the Castillos
The “day-in-court” argument fails for an even more could recover mental anguish for Latham's conduct absent a
fundamental reason. The Castillos had the opportunity showing of actual damages. When the Castillos' testimony is
to prove in their suit against Latham that the hospital considered in context, it can be seen that their mental anguish
had committed professional malpractice or had otherwise stemmed from the unfortunate deaths of their daughters and
breached a duty to Kay that resulted in injury to her and the Castillos' desire to *74 hold the hospital accountable, not
ultimately in her death. They had their day in court. from Latham's misrepresentation.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Latham v. Castillo, 972 S.W.2d 66 (1998)
The Court has blurred the distinct line between the modicum
of anguish the Castillos suffered over what Latham said A Well, it made me throw up.
and did, which is not compensable under our decision in
Q Made you sick?
Parkway Co. v. Woodruff, 901 S.W.2d 434, 444 (Tex.1995),
and the mental anguish damages caused by the deaths of their A Sick, nervous, mad.
daughters that unquestionably would be recoverable in a suit
against one who had caused those deaths or in a suit against Q Tell the jury how you felt about that, what it did to you.
one who, through legal malpractice, prevented the Castillos
A [I]t just hurt me a lot because I trusted in him and I—and
from recovering for their anguish. The emotions aroused by
if I had known, I would have looked for more lawyers.
Latham's misrepresentation are of a wholly different character
And he promised me he was going [to] do it, and I trusted
from the mental anguish caused by the loss of their twins. We
him to do it. Because [of] what they had done to my
held in Parkway:
daughters, I would have never stopped; what the doctors
When a challenge is made to the sufficiency of the evidence done, I would have never stopped.
to go to the jury or to support the jury's finding, ...
[t]he reviewing court must distinguish between shades and
degrees of emotion. These distinctions are critical under
***
our substantive law because evidence of lesser reactions
cannot support an award of mental anguish damages. Q Did it make you nervous?
Under this admittedly nebulous definition and the A Made me nervous that I couldn't get my hands on
traditional standard of review, it is nevertheless clear that Driscoll [Hospital]. He let them go, and they did do
an award of mental anguish damages will survive a legal a lot of damage to my girls.
sufficiency challenge when the plaintiffs have introduced
direct evidence of the nature, duration, and severity of their
***
mental anguish, thus establishing a substantial disruption
in the plaintiffs' daily routine. A I love my kids so much. What those doctors done, they
shouldn't have done, and [Latham] knew it. I had told
Id. at 444.
him, and he said he knew it, too. He said, “I'll help you,
Ernest, I will help you,” and I trusted him to help me,
Latham's misrepresentation did not result in “a substantial
and he let it go.
disruption in the plaintiffs' daily routine.” Id. Nor did the
Castillos offer evidence of the “nature, duration, and severity Q. Did it break your heart?
of their anguish” from Latham's misrepresentation as required
by Parkway. Id. We held in Parkway that testimony by the A. Yes, sir. I lost two daughters.
plaintiffs that the flooding of their home changed their lives,
that the husband would become very quiet when he came Audona Castillo testified:
home, and that he was very disturbed over the flooding did not
Q How did this make you feel, that is, what effect did
surmount the evidentiary hurdle for legally sufficient proof of
this information have on you?
mental anguish damages. Id. at 445.
*75 A I—my heart was broken. I was devastated, I
When the record in this case is consulted, it is beyond dispute felt physically ill. After—excuse me. After running
that the only mental anguish that meets the Parkway standard around so many months in pursuit of a lawyer and
was not caused by Latham. It was caused by the deaths of the trying to beat the statute of limitations and having
Castillos' daughters and the nonexistence of any evidence that confided in this man and him having promised me
the hospital was responsible. Ernest Castillo testified: that he could handle it. And my daughter's death,
and her disabilities, and the pain she suffered by
Q When he told you that it was your fault, in effect, that
being blind and—and all the other damages, the
the statute of limitations had gone by, how did that make
seizures, and her very short life of two years; and
you feel? What effect did that have on you?
then he tells me that I don't have anything to hold
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Latham v. Castillo, 972 S.W.2d 66 (1998)
In construing the DTPA to allow recovery for Latham's
on to. And it's not as if he could bring her back, but
improper conduct, the Court has ignored well-established
I needed some justice, at least, and I still feel the
principles of law and the record in this case and has failed to
same way.
effectuate the intent of the Legislature.
The Castillos were distraught because they wanted a court
to determine that the hospital was responsible for the pain,
suffering, and deaths of their children. But if Latham had filed
suit, there is no evidence that a court would have found the *****
hospital responsible or even that there was a fact question for
the jury. There was no evidence that the Castillos' desire to I agree with the Court that because the Castillos failed to
establish the hospital's culpability and to require it to respond prove any proper measure of damages under their claims for
in damages for negligence would have been satisfied. Further, breach of contract and fraud, the court of appeals erred in
even assuming that all the Castillos wanted was to prove remanding those claims. But I would hold that the trial court
that the hospital was at fault rather than to recover damages did not err in directing a verdict against the Castillos on all of
from the hospital, the Castillos had the opportunity in this their claims, including unconscionability, and accordingly, I
suit against Latham to present the same case against the would reverse the judgment of the court of appeals and render
hospital that they would have presented had Latham filed suit. judgment that the Castillos take nothing.
The Castillos have not shown that Latham's failure to file
suit prevented them from vindicating their position that the
All Citations
hospital was to blame for their daughters' deaths.
972 S.W.2d 66
Footnotes
1 The Castillos have not appealed the court of appeals' disposition of the negligence cause of action and therefore, it is
not before this Court.
2 The Legislature amended the DTPA in 1995. Act of May 19, 1995, 74th Leg., R.S., ch. 414, 1995 Tex. Gen. Laws 2988.
Unless otherwise noted, all DTPA references will be to the pre-amendment provisions applicable when this suit was filed.
Under the amendments effective September 1, 1995, lawyers may not be sued under the DTPA unless they engage
in one of the following acts: (1) an express misrepresentation of a material fact that cannot be characterized as
advice, judgment, or opinion; (2) a failure to disclose; (3) an unconscionable action or course of action that cannot be
characterized as advice, judgment, or opinion; or (4) breach of an express warranty that cannot be characterized as
advice, judgment, or opinion. TEX. BUS. & COM.CODE § 17.49(c).
3 In 1995, the Legislature amended section 17.50(a) to provide that “[a] consumer may maintain an action where any of the
following constitute a producing cause of economic damages or damages for mental anguish: ... (3) any unconscionable
action or course of action by any person.” Act of May 19, 1995, 74th Leg., R.S., ch. 414, § 5, 1995 Tex. Gen. Laws 2988,
2992 (codified at TEX. BUS. & COM.CODE § 17.50(a)(3)).
1 Act of May 16, 1979, 66th Leg., R.S., ch. 603, § 4, 1979 Tex. Gen. Laws 1327, 1329 (amended 1995) (current version
at TEX. BUS. & COM.CODE § 17.50(a)(1)(3)).
The DTPA was amended in 1995 and now provides:
(a) A consumer may maintain an action where any of the following constitute a producing cause of economic damages
or damages for mental anguish:
***
(3) any unconscionable act or course of action by any person[.]
***
(b) In a suit filed under this section, each consumer who prevails may obtain:
(1) the amount of economic damages found by the trier of fact. If the trier of fact finds that the conduct of the defendant
was committed knowingly, the consumer may also recover damages for mental anguish, as found by the trier of fact,
and the trier of fact may award not more than three times the amount of economic damages....
TEX. BUS. & COM.CODE § 17.50.
2 Act of May 10, 1977, 65th Leg., R.S., ch. 216, § 1, 1977 Tex. Gen. Laws 600, 600 (amended 1995).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Latham v. Castillo, 972 S.W.2d 66 (1998)
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
MM
Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83 (2006)
50 Tex. Sup. Ct. J. 181
If a policy is procured from an eligible
surplus lines carrier without a licensed surplus
209 S.W.3d 83
lines agent, the premium tax applicable to
Supreme Court of Texas.
unauthorized insurance policies may be collected
LEXINGTON INSURANCE COMPANY, Landmark from the insurer. V.A.T.S. Insurance Code, art.
Insurance Company, and American International 1.14-1, § 11(a) (Repealed).
Specialty Lines Insurance Company, Petitioners,
5 Cases that cite this headnote
v.
Carole Keeton STRAYHORN, Comptroller of Public
[3] Insurance
Accounts of the State of Texas, and Greg Abbott,
Preemption; Application of State or Federal
Attorney General of the State of Texas, Respondents.
Law
No. 04–0429. | Argued Sept. 28, States
2005. | Opinion Delivered Dec. 1, 2006. Insurance
Insurance regulation and taxation is generally
Synopsis a state rather than federal matter. Insurance
Background: Eligible surplus lines insurers brought Regulation Act, § 2(a), 15 U.S.C.A. § 1012(a).
declaratory judgment action against Comptroller of Public
Accounts and Attorney General seeking refund of Cases that cite this headnote
unauthorized insurance premium tax. The 250th Judicial
District Court, Charles F. Campbell, J., entered summary
[4] Insurance
judgment in favor of insurers. Comptroller and Attorney
Surplus Lines
General appealed. The Austin Court of Appeals, Bea Ann
Smith, J., 128 S.W.3d 772, reversed and remanded. Insurers The only two conditions a surplus lines
petitioned for review. carrier must confirm to avoid the unauthorized
insurance premium tax are its own eligibility
and issuance through a licensed agent. V.A.T.S.
Insurance Code, art. 1.14-1, § 11(a) (Repealed).
[Holding:] The Supreme Court, Scott Brister, J., held that
unauthorized insurance premium tax could be collected from 3 Cases that cite this headnote
eligible surplus lines insurers on policies that were not placed
through licensed surplus lines agents.
Attorneys and Law Firms
Judgment of Court of Appeals affirmed and remanded.
*83 Cynthia Hollingsworth, Curtis L. Frisbie Jr., Randy D.
Gordon, Samuel Eugene Joyner Jr., Gardere Wynne Sewell
LLP, Dallas, Jeremy C. Martin, Irving, Anthony Icenogle,
West Headnotes (4)
Joseph C. Boggins, De Leon Boggins & Icenogle, Austin,
Chester J. Makowski, Royston Rayzor Vickery & Williams,
[1] Statutes L.L.P., Houston, for Petitioners.
Language
William E. Storie, Office of Atty. Gen. of Texas–Taxation,
In any case of statutory construction, court looks
Greg Abbott, Atty. Gen. of Texas, Barry Ross McBee,
first and foremost to the words of the statute.
Edward D. Burbach, Esteban H. Rodriguez, Office of Atty.
88 Cases that cite this headnote Gen., Austin, for Respondents.
Craig T. Enoch, Alexander J. Gonzales, Alejandro Sin
[2] Insurance Valdes, David Fowler Johnson, Winstead Sechrest & Minick
Surplus Lines
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83 (2006)
50 Tex. Sup. Ct. J. 181
P.C., Austin, for Amicus Curiae, American Insurance Insurance Code imposes a 4.85 percent premium tax on both
Association. unauthorized insurance and surplus lines policies. 6 Here,
because Lexington was not authorized to issue insurance
*84 Melvin L. Burner, Long Burner Parks & DeLargy, P.C.,
in Texas other than as an eligible surplus lines carrier, its
Austin, for Amicus Curiae, Scottsdale Insurance Company.
policies were subject to the 4.85 percent tax.
Alene Ross Levy, Haynes & Boone, L.L.P., Houston, for
Amicus Curiae, Varco International, Inc. *85 This suit is about who should pay that tax. On policies
issued by unauthorized insurers, the insurer must pay the
John Smithee, Templeton Smithee Hayes Heinrich & Russell, tax, and the insured must pay it if the insurer does not. 7 By
L.L.P., Amarillo, for Amicus Curiae, John Smithee. contrast, on surplus lines policies, the surplus lines agent must
James W. Paulsen, Houston, for Amicus Curiae, Yorkshire pay the tax after collecting it from the insureds; 8 insurers are
Ins. Co., Ltd. not liable for the tax. Thus, we must decide whether these
policies should be treated as surplus lines insurance (in which
Opinion case the insurers are not liable) or unauthorized insurance (in
which case they are).
Justice BRISTER delivered the opinion of the Court.
The Insurance Code provides that only licensed agents may
The Comptroller 1 assessed almost $7 million in premium
taxes against Lexington Insurance Company, Landmark issue surplus lines policies, 9 and requires that such policies
Insurance Company, and American International Specialty bear the agent's name and address. 10 In a 1998 audit of
Lines Insurance Company (collectively, “the insurers”) for records for the years 1992–95, the Comptroller could not
policies issued in the early 1990s. 2 After the insurers proved confirm whether licensed surplus lines agents placed many
that most of their policies were procured through surplus of the insurers' policies or paid taxes on them. Accordingly,
lines agents licensed in Texas, the Comptroller dropped 70 the Comptroller treated the policies as unauthorized insurance
and assessed the insurers almost $7 million in past-due
percent of her claim, 3 recognizing that in such cases the agent
premium taxes.
rather than the carrier was liable for the taxes. But because
the insurers could not prove the same as to the rest of their
Although the insurers argued they had no statutory obligation
policies, they paid almost $2 million in premium taxes under
to file or maintain records of those transactions, they
protest and sought a refund.
nevertheless tried to gather information showing that their
policies were in fact placed through licensed surplus lines
We agree with the insurers that the Texas Insurance Code
agents, who either paid or should have paid the taxes. These
distinguishes between eligible surplus lines carriers and other
efforts were largely successful, but because some agents
unlicensed insurers, and often treats the two quite differently.
were deceased, unavailable, uncooperative, or unhelpful, the
But we agree with the Comptroller that when it comes
insurers were unable to identify licensed agents who should
to collecting premium taxes, the Code treats the two the
have paid $1,973,352 in taxes. After administrative hearings
same if a surplus policy is not placed through a licensed
and requests for redetermination, the insurers paid the taxes
agent. Accordingly, we affirm the court of appeals' judgment
under protest and filed declaratory judgment actions seeking
remanding the case to the trial court.
refunds of the taxes, interest, and additional penalties.
The insurers moved for summary judgment on the ground
I that eligible surplus lines insurers cannot be liable for these
premium taxes, whether or not a licensed agent was used.
Texas law imposes a variety of taxes on insurance The trial court granted their motions, but the Third Court of
premiums. 4 Generally those taxes are imposed on and Appeals reversed and remanded for further proceedings. 11
paid by insurers licensed to do business in Texas. 5 But
premium taxes are assessed even if there is no licensed
insurer (as with surplus lines policies) to prevent giving
II
policies by unlicensed insurers an unfair advantage. Thus, the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83 (2006)
50 Tex. Sup. Ct. J. 181
insurers.” 15 Because “legislative history makes plain that the
A term ‘unauthorized’ refers to insurers who are unlicensed,”
we held that eligible surplus lines insurers would be included
[1] We begin with the premium tax on unauthorized “because by definition [they] are unlicensed.” 16 While we
insurance—the one the Comptroller seeks to collect. As in noted several distinctions between eligible surplus lines
any case of statutory construction, we look first and foremost
insurers and “ordinary unauthorized insurers,” 17 that holding
to the words of the statute. 12 constrains us from adopting the insurers' construction today.
Throughout the tax years here, the Insurance Code required The insurers point to the separate premium tax provision
unauthorized insurers to pay a tax on premiums, with certain in the surplus lines statute (imposed on insureds and paid
exceptions: by agents), and argue that the specific statute applicable to
surplus lines policies should prevail over the general statute
Except as to premiums on insurance procured by a licensed
surplus lines agent from an eligible surplus lines insurer as applicable to all unauthorized carriers. 18 But that rule of
defined in Article 1.14–2 and premiums on independently construction applies only when overlapping statutes cannot be
procured insurance on which a tax has been paid pursuant reconciled; 19 we believe these statutes can. *87 Here, one
to this Article or Article 1.14–2, every unauthorized insurer statute imposes a tax on insureds for surplus lines premiums;
shall pay to the comptroller, on a form prescribed *86 the other imposes a tax on insurers for unauthorized premiums
by the comptroller, before March 1 next succeeding the except when procured by a licensed agent from an eligible
calendar year in which the insurance was so effectuated, surplus lines carrier. Because a licensed agent and eligible
continued or renewed or another date as prescribed by the carrier are prerequisites for all surplus lines policies, 20 these
comptroller a premium receipts tax of 4.85 percent of gross two statutes can be reconciled by applying the former when
premiums charged for such insurance on subjects resident, both conditions are met, and the latter when one or both
located or to be performed in this state. 13 conditions are not.
While the full passage is somewhat cumbersome, the [2] We have recognized that the Legislature has amended
introductory exception is not—surplus lines premiums are these statutes several times “to clarify the distinction between
carved out if two conditions are met: (1) the insurance is eligible surplus lines insurers and unauthorized insurers.” 21
procured by a licensed surplus lines agent (2) from an eligible But that does not mean the Legislature intended to make the
surplus lines insurer. The insurers' argument that eligible two categories mutually exclusive, or to exclude the former
surplus lines carriers are always exempted from this tax
from treatment as the latter in all cases. 22 Accordingly, we
would effectively remove the first of these conditions. As the
agree with the Comptroller that the words of the unauthorized
statutory exception contains two conditions, we are not at
insurance statute appear to make its premium tax collectible
liberty to disregard one of them.
from an eligible surplus lines carrier if the policy was not
procured through a licensed surplus agent.
The insurers' primary argument is that this provision requires
only that “every unauthorized insurer” must pay the premium
tax, a class it asserts does not include eligible surplus lines
insurers. We disagree. First, the insurers' argument would B
render the introductory exception superfluous—if eligible
surplus lines carriers can never be “unauthorized insurers,” In construing these statutes, we may also consider the
there would be no need for an exception carving them purposes of the Insurance Code. 23 Both the surplus lines and
out. We must presume that the entire statute—including the unauthorized insurance statutes include among their purposes
introductory exception—was intended to be effective. 14 “protecting the premium tax revenues of this state.” 24 These
and other purposes of these statutes would be frustrated if we
Moreover, we concluded ten years ago in Mid–American were to treat all policies by eligible carriers as surplus lines,
Indemnity Insurance Co. v. King that “the general term whether procured through a licensed agent or not.
‘unauthorized insurers' does include eligible surplus lines
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83 (2006)
50 Tex. Sup. Ct. J. 181
The surplus lines statute relies heavily on licensed surplus
lines agents. It is the agent who determines and certifies
that coverage is unavailable from authorized insurers, thus
C
justifying surplus lines placement. 25 An agent must make
sure that a carrier meets eligibility requirements, and must Finally, in construing statutes we may also consider the
make a reasonable effort *88 to ascertain the carrier's consequences of a particular construction. 35 Here, the
26 insurers and several amici argue that treating surplus lines
soundness. It is the agent's duty to issue and deliver
the policy, file it with the State, and notify insureds of policies as unauthorized insurance will unfairly punish
any material changes. 27 The agent keeps a record of all insurers for *89 omissions by third parties, and impose
penalties that could destroy an important part of the Texas
transactions, and makes an annual report to the State. 28
insurance market.
Indeed, the State's effort to protect the public interest in
this area is almost entirely dependent on monitoring licensed
We recognize that whether a surplus lines policy complies
surplus lines agents. 29 with the Code is largely out of a surplus carrier's hands.
Surplus lines policies are initiated by insureds or local agents
The surplus lines premium tax is similarly dependent on when they cannot procure coverage from Texas-licensed
the involvement of a licensed agent. Agents must compute insurers. Agents are responsible for getting their own licenses,
the premium taxes (by allocating premiums to Texas risks), as well as properly placing, reporting, and keeping records
collect them from insureds, hold them in trust, and report and
of all transactions. 36 Agents are responsible for paying the
30
render them to the State. Agents are guilty of theft if the
premium tax after collecting it from insureds. 37 As a result,
31
taxes are not timely paid. If (as the insurers argue) the tax surplus lines carriers often will not know whether insurance
cannot be collected from eligible insurers when no licensed was available from a licensed insurer, whether the policy
agent participated, it is hard to see how it will be collected was properly reported, whether proper records were kept, or
at all. whether the premium tax was paid.
[3] This cannot simply be written off as a procedural defect We also recognize that the consequences of treating a policy
in the Insurance Code. Because insurance regulation and as unauthorized insurance can be severe. Anyone who assists
taxation is generally a state rather than federal matter, 32 in procuring unauthorized insurance is individually liable
states have long tried to make sure that insurers are not only for unpaid claims under the policy. 38 Violations of the
reliable but reachable—that local agents and records exist surplus lines statute may result in administrative penalties up
so that local regulations and taxes can be enforced. 33 By to $25,000, 39 but violations of the unauthorized insurance
definition, surplus lines insurers are not located in Texas, statute are punishable by felony conviction and fines up to
and have not applied for permission to do business here. By
$10,000 per day. 40 An unauthorized insurer cannot enforce
requiring that surplus lines insurance must be placed through
its policies, 41 while an eligible surplus line carrier may
a licensed Texas surplus lines agent, 34 the Code prescribes a
do so except in cases of a material and intentional Code
condition vital to the State's regulatory jurisdiction.
violations. 42 Unauthorized insurers cannot even defend
When policies are procured through both a licensed agent and themselves in Texas without filing a bond, while eligible
an eligible surplus lines carrier, state policy is fulfilled by surplus lines insurers can. 43
requiring the agent to collect the tax and pay the State. When
policies are procured through neither a licensed agent nor But we do not agree that these difficult fair notice, due
an eligible carrier, the policy is met by requiring the insurer process, and business impact problems are implicated by
to pay the tax. But when a policy is procured through an our decision today. For tax purposes, eligible surplus lines
eligible carrier but not through a licensed agent, exempting carriers that fail to use a licensed agent are treated like
the insurer may result in no one paying the tax—indeed, the unauthorized insurers only because of the two explicit
State may never even know the policy was written. Adopting conditions in the unauthorized insurance premium tax
the insurers' interpretation would leave a hole in the State's statute. 44 A similar exception with the same conditions does
insurance regulation and taxation plan. not appear in most other parts of the unauthorized insurance
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83 (2006)
50 Tex. Sup. Ct. J. 181
that the Legislature could never have intended the Insurance
statute, including the separate penalty provisions that punish
violations of each statute. Without any indication from the Code to mean what the Comptroller says it does, 48 because
Legislature that any particular violations of the surplus lines the Legislature has now made clear that this is precisely its
statute would make the unauthorized insurance penalties current intent.
apply, it is hard to see why violations of each statute would
not be limited to the separate penalties that each prescribes.
***
[4] Additionally, our holding today is limited to the two
conditions stated in the particular exception before us (i.e., Accordingly, we agree with the Comptroller that if a policy
eligible carrier and licensed agent). As this provision states is procured from an eligible surplus lines carrier without a
that it applies except when those two conditions are met, it licensed surplus lines agent, the premium tax applicable to
clearly does not apply if they are. While many other violations unauthorized insurance policies may be collected from the
of the surplus lines statute might occur beyond an eligible insurer. We affirm the court of appeals' judgment and remand
carriers' knowledge or control, the only two it must *90 to the trial court for further proceedings consistent with this
confirm to avoid the unauthorized insurance premium tax are opinion.
its own eligibility and issuance through a licensed agent. 45
Finally, we note that the Legislature amended the Insurance Chief Justice JEFFERSON did not participate in the decision.
Code in 2003 to make clear that eligible surplus lines carriers
must pay the 4.85 percent premium tax on unauthorized
All Citations
insurers unless an agent paid the tax. 46 The parties of course
disagree whether this was a clarification or change in the 209 S.W.3d 83, 50 Tex. Sup. Ct. J. 181
47
Code. But in either event, we must reject the argument
Footnotes
1 Suit was filed against both the Comptroller of Public Accounts of the State of Texas, Carole Keeton Strayhorn, and the
Attorney General of the State of Texas, Greg Abbott, but as their interests do not diverge, we refer to them jointly as
the “Comptroller.”
2 The Comptroller initially assessed taxes, interest and an additional penalty against Lexington, Landmark, and American
International, in the amounts of $6,303,394.91, $171,300.83, and $362,975.97, respectively.
3 The taxes and penalties against Lexington, Landmark, and American International were reduced to $1,596,196.63,
$36,174.92, $340,980.31, respectively.
4 See generally TEX. INS.CODE §§ 221–226.
5 See, e.g., id. § 221.002(a) (imposing 1.6 percent gross premiums tax on property and casualty insurers), § 222.003
(imposing up to 1.75 percent gross premiums tax on life, health, and accident insurers), § 223.003 (imposing 1.35 percent
gross premiums tax on title insurers).
6 See id. §§ 226.003, 225.004 (formerly codified at TEX. INS. CODE art. 1.14–1, § 11(a) (repealed 1999), 1.14–2, § 12(a)
(repealed 2003)). The Texas Insurance Code was recently recodified. When a cited provision has not materially changed
from that in effect during the time relevant to this dispute, citation will be to the current Code with the former provision
noted parenthetically.
7 See id. §§ 225.002–.003, 226.005(c) (formerly art. 1.14–1, § 11(a)).
8 See id. §§ 225.004, 225.006, 225.010 (formerly art. 1.14–2, § 12).
9 See id. § 981.020 (formerly art. 1.14–2, § 3).
10 See id. § 981.101(c) (formerly art. 1.14–2, § 7(a)).
11 Strayhorn v. Lexington Ins. Co., 128 S.W.3d 772 (Tex.App.-Austin 2004).
12 See PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P'ship, 146 S.W.3d 79, 83 (Tex.2004).
13 TEX.INS.CODE art. 1.14–1, § 11(a) (repealed 1999) (emphasis added). Before the 1993 amendment, the same section
provided that “every unauthorized insurer” shall pay the premium tax “[e]xcept as to premiums on lawfully procured
surplus lines insurance.” See Act of Apr. 27, 1967, 60th Leg., R.S., ch. 185, § 1, 1967 Tex. Gen. Laws 400, 401–14,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83 (2006)
50 Tex. Sup. Ct. J. 181
amended by Act of May 27, 1993, 73d Leg., R.S., ch. 999, § 6, 1993 Tex. Gen. Laws 4373, 4375, repealed by Act of Apr.
30, 1999, 76th Leg., R.S., ch 101, § 5, 1999 Tex. Gen. Laws 486, 538.
14 See TEX. GOV'T CODE § 311.021(1).
15 22 S.W.3d 321, 326 (Tex.1995) (emphasis added).
16 Id.
17 Id. at 323.
18 See TEX. GOV'T CODE § 311.026(b) (providing that if a “conflict between the general provision and the special or local
provision is irreconcilable, the special or local provision prevails as an exception to the general provision”); Sultan v.
Mathew, 178 S.W.3d 747, 751 (Tex.2005).
19 See TEX. GOV'T CODE § 311.026(a) (“If a general provision conflicts with a special or local provision, the provisions
shall be construed, if possible, so that effect is given to both.”).
20 See TEX. INS.CODE §§ 981.002(3), 981.004(a) (formerly art. 1.14–2, § 3(a)).
21 Mid–American Indem. Ins. Co. v. King, 22 S.W.3d 321, 325 (Tex.1995). Beginning in 1951, the Insurance Code referred
to both unauthorized and surplus lines carriers as “unauthorized insurers” and addressed them in one article. See Act of
June 7, 1951, 52d Leg., R.S., ch. 491, § 1, 1951 Tex. Gen. Laws 868, 1085–89, repealed by Act of Apr. 27, 1967, 60th
Leg., R.S., ch. 185, § 2, 1967 Tex. Gen. Laws 400, 408. In 1967, the two were separated into different articles of the
Insurance Code, See Act of Apr. 27, 1967, 60th Leg., R.S., ch. 185, § 1, 1967 Tex. Gen. Laws 400, 401–14, repealed
by Act of Apr. 30, 1999, 76th Leg., R.S., ch. 101, § 5, 1999 Tex. Gen. Laws 486, 538; Act of Apr. 27, 1967, 60th Leg.,
R.S., ch. 185, § 2, 1967 Tex. Gen. Laws 400, 409, repealed by Act of May 22, 2001, 77th Leg., R.S., ch. 1419, § 31(b)
(1), 2001 Tex. Gen. Laws 3658, 4208, but a surplus lines insurer was still defined as “an unauthorized insurer in which
an insurance coverage is placed or may be placed under this Article.” TEX. INS.CODE art. 1.14–2, § 2(b)(as added by
Act of Apr. 27, 1967, 60th Leg., R.S., ch. 185, § 2, 1967 Tex. Gen. Laws 400, 409) (repealed 2001)(emphasis added). In
1993, the Legislature changed “unauthorized insurer” in this definition to “unlicensed insurer.” TEX. INS.CODE art. 1.14–
2, § 2(b)(as added by Act of 1993, 73rd Leg., R.S., ch. 999, § 9, 1993 Tex. Gen. Laws 4373, 4377) (repealed 2001).
22 See Mid–American, 22 S.W.3d at 326.
23 See TEX. GOV'T CODE § 311.023 (“In construing a statute, whether or not the statute is considered ambiguous on
its face, a court may consider among other matters the: (1) object sought to be attained ...”); PPG Indus., Inc. v. JMB/
Houston Ctrs. Partners Ltd. P'ship, 146 S.W.3d 79, 84 (Tex.2004).
24 TEX. INS.CODE §§ 101.001(b), 981.001(b) (formerly art. 1.14–1, § 1, art. 1.14–2, § 1).
25 See id. § 981.216 (formerly art. 1.14–2, §§ 5, 6).
26 See id. § 981.211 (formerly art. 1.14–2, § 8(a)-(b)).
27 See id. §§ 981.103–.105, 981.213, & 981.216 (formerly art. 1.14–2, § 6(b), (c), & (e)).
28 See id. §§ 981.215, 981.216 (formerly art. 1.14–2, §§ 15, 16).
29 See id. § 981.004 (formerly art. 1.14–2, § 3(a)).
30 See id. §§ 225.006–.010 (formerly art. 1.14–2, § 12(a)-(b)).
31 See id. § 225.013 (formerly art. 1.14–2, § 12(b)).
32 See 15 U.S.C. § 1012(a) (“The business of insurance, and every person engaged therein, shall be subject to the laws of
the several States which relate to the regulation or taxation of such business.”).
33 See, e.g., Paul v. Virginia, 75 U.S. (8 Wall) 168, 170, 19 L.Ed. 357 (1868) (holding constitutional a state statute prohibiting
out-of-state insurers from issuing in-state policies without obtaining a license and posting bond).
34 See TEX. INS.CODE § 981.001(c) (formerly art. 1.14–2, § 3(a)(1), (3)).
35 See TEX. GOV'T CODE § 311.023(5).
36 See TEX. INS.CODE §§ 981.103–.105, 981.202–.203, 981.211, 981.213, & 981.216 (formerly art. 1.14–2, §§ 4, 5, 6(c),
7, 8, 12, 15, 15A, & 16).
37 See id. §§ 225.006–.010 (formerly art. 1.14–2, § 12).
38 See id. § 101.201 (formerly art. 1.14–2, § 8).
39 See id. §§ 981.006, 82.052, & 84.021–.022 (formerly art. 1.14–2, § 17).
40 See id. §§ 101.105, 101.106 (formerly art. 1.14–1, §§ 3(d) & 13).
41 See id. § 101.201 (formerly art. 1.14–1, § 8).
42 See id. § 981.005 (formerly art. 1.14–2, § 9(a)).
43 See id. §§ 101.352–.354 (formerly art. 1.36, § 11(a), (d)).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83 (2006)
50 Tex. Sup. Ct. J. 181
44 See id. former art. 1.14–1, § 11(a).
45 Licensed surplus lines agents may accept applications from other agents and share commissions with them. See id. §
981.212 (formerly art. 1.14–2, § 14).
46 See id. § 226.003 (assessing tax on premiums of all insurers—authorized, unauthorized, and eligible surplus lines—
and then excluding premiums on insurance procured from authorized insurers and from eligible surplus lines insurers
through a licensed agent).
47 See, e.g., In re C.O.S., 988 S.W.2d 760, 764 (Tex.1999) (holding that legislature's intent merely to clarify rather than
change existing law does not mean original legislature had the same understanding).
48 Cf. Bridgestone/Firestone, Inc. v. Glyn–Jones, 878 S.W.2d 132, 135 (Tex.1994) (Hecht, J., concurring) (“The real principle
at work here is this: in some circumstances, words, no matter how plain, will not be construed to cause a result the
Legislature almost certainly could not have intended.”)
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
NN
Litton Indus. Products, Inc. v. Gammage, 668 S.W.2d 319 (1984)
In personal injury action brought against
company which manufactured defective ratchet
KeyCite Yellow Flag - Negative Treatment adapter, the company, which had moved at trial
Declined to Extend by Hooks v. Samson Lone Star, Limited Partnership,
that judgment for amount of actual damages
Tex., January 30, 2015
found by jury be rendered against it, could not on
668 S.W.2d 319 appeal take a position inconsistent with that part
Supreme Court of Texas. of judgment.
LITTON INDUSTRIAL 15 Cases that cite this headnote
PRODUCTS, INC. et al., Petitioners,
v. [2] Appeal and Error
Earnest GAMMAGE, Respondent. Judgment
Defendant company in products liability suit
No. C–2003. | Jan. 11, 1984.
could not complain on appeal either that findings
Action was brought on basis of negligence, strict liability, and in support of actual damages had no support
for deceptive trade practices to recover for injuries sustained in evidence or that evidence was factually
by plaintiff, a diesel mechanic, when he fell backwards insufficient, where company had previously filed
due to failure of ratchet adapter tool manufactured by one motion that trial court render judgment on verdict
of the defendants. The District Court, Harris County, Wm. for the actual damages found by jury.
N. Blanton, J., entered judgment in favor of plaintiff, and
11 Cases that cite this headnote
defendants appealed. The Houston Court of Civil Appeals,
14th Supreme Judicial District, Miller, J., affirmed, 644
S.W.2d 170, and defendants brought error. The Supreme [3] Appeal and Error
Court, Pope, C.J., held that: (1) defendants did not, by filing Judgment
motion for entry of judgment on verdict for actual damages In personal injury action brought against
found by jury, waive their right to complain about trial company which manufactured defective ratchet
court's trebling the jury's damages award; (2) defendants adapter, the company, which had filed motion
could not reserve right to complain about judgment itself, that trial court render judgment on verdict for
after filing motion that trial court render judgment for actual actual damages found by jury, could not attack
damages found by jury, by accompanying the motion with jury findings concerning company's negligence
brief in which they took back what they urged in motion; (3) and its manufacture of a defective product.
defendants did not, by failing to file motion for new trial,
waive right to argue on appeal that there was no evidence or 4 Cases that cite this headnote
insufficient evidence to support finding that they had violated
Deceptive Trade Practices Act; and (4) there was no more [4] Appeal and Error
than a scintilla of evidence that defendants did any act or Judgment
practice after effective date of Deceptive Trade Practices Act;
In personal injury action brought against
thus, award of treble damages under the Act was error.
company which manufactured defective ratchet
adapter, the company did not, by filing motion
Affirmed in part, reversed in part.
urging trial court to render judgment on verdict
for actual damages found by jury, waive its right
to complain about trial court's action, grounded
West Headnotes (11) upon the Deceptive Trade Practices Act, in
trebling the jury's award. V.T.C.A., Bus. & C. §
17.41 et seq.
[1] Appeal and Error
Judgment 11 Cases that cite this headnote
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Litton Indus. Products, Inc. v. Gammage, 668 S.W.2d 319 (1984)
after effective date of Deceptive Trade Practices
[5] Appeal and Error Act, there must be more than scintilla of
Judgment evidence. V.T.C.A., Bus. & C. § 17.63.
Defendant company could not reserve right to
complain about judgment after filing motion 1 Cases that cite this headnote
urging trial court to render judgment for actual
damages found by jury, by accompanying [10] Evidence
motion with brief in which it took back what it Grounds
urged in motion.
When circumstances are consistent with either
15 Cases that cite this headnote of two facts and nothing shows that one is
more probable than the other, neither fact can be
inferred.
[6] Appeal and Error
Proceedings Included in General 50 Cases that cite this headnote
Trial briefs and memoranda of authorities should
not be included in transcript on appeal. Vernon's [11] Antitrust and Trade Regulation
Ann.Texas Rules Civ.Proc., Rule 376–a(a). Retroactive Operation
1 Cases that cite this headnote In personal injury action brought against
company which manufactured defective ratchet
adapter, there was no more than a scintilla
[7] Appeal and Error of evidence supporting deemed finding that
Review of Sufficiency of Evidence to manufacturing company did any act or practice
Sustain Verdict, Findings, or Judgment after, rather than before, effective date of
In personal injury action brought against Deceptive Trade Practices Act; thus, award of
company which manufactured defective ratchet treble damages pursuant to Deceptive Trade
adapter, the company, which failed to file motion Practices Act was error. V.T.C.A., Bus. & C. §
for new trial, did not waive right to argue 17.41 et seq.
on appeal that there was no evidence that it
had violated Deceptive Trade Practices Act. 5 Cases that cite this headnote
Vernon's Ann.Texas Rules Civ.Proc., Rule 324;
V.T.C.A., Bus. & C. § 17.41 et seq.
13 Cases that cite this headnote Attorneys and Law Firms
*321 A.J. Watkins, Butler, Binion, Rice, Cook & Knapp,
[8] Antitrust and Trade Regulation
Eugene A. Cook and Louis H. Salinas, Jr., Fletcher Etheridge,
Retroactive Operation
Houston, for petitioners.
Date of sale of tool is not determinative as to
whether manufacturing company did any act or Young, Cook, Pfeifer and Hampton, Russell L. Cook, Jr., and
practice after effective date of Deceptive Trade Phillip A. Pfeifer, Houston, for respondent.
Practices Act. V.T.C.A., Bus. & C. § 17.63.
Opinion
1 Cases that cite this headnote
POPE, Chief Justice.
[9] Antitrust and Trade Regulation Earnest Gammage sued and obtained a judgment against
Weight and Sufficiency Litton Industrial Products, Inc. (Litton) upon a jury verdict
While circumstantial evidence may of defendant's strict liability, negligence, and breach of
be considered in determining whether warranty. The judgment was for $705,852 actual damages
manufacturing company did any act or practice which the trial court trebled, pursuant to the terms of the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Litton Indus. Products, Inc. v. Gammage, 668 S.W.2d 319 (1984)
Deceptive Trade Practice Act as it was first enacted in 1973. by the jury, Litton could not, on appeal, take a position
The court of appeals affirmed the judgment of the trial court. inconsistent with that part of the judgment. Miner-Dederick
644 S.W.2d 170. We granted the application for writ of error Construction Corporation v. Mid-County Rental Service,
to review the holding of the court of appeals that Litton Inc., 603 S.W.2d 193 (Tex.1980). Litton could not complain
Industries had waived its right to complain that there was either that the findings in support of the actual damages had
no evidence and insufficient evidence that it did any act or no support in the evidence or that the evidence was factually
practice that violated the Deceptive Trade Practice Act after insufficient. Likewise, the jury findings concerning Litton's
its effective date. We reverse the judgment of the court of negligence and its manufacture of a defective product could
appeals in part and render judgment for actual damages only. not be attacked under our decision in Miner-Dederick, supra.
Earnest Gammage, a diesel mechanic, asked his employer, [4] Litton has not attacked on appeal the judgment for actual
Waukesha-Pearce Industries, Inc., to buy for him a ¾-inch damages. Litton's motion was not for a judgment grounded
ratchet adapter. As was the practice, Waukesha purchased upon the Deceptive Trade Practices Act; it was, in fact, made
the tool and charged it to Gammage. Gammage and the to avoid the treble damages allowed by that law. Litton has
other employees furnished their own hand tools. That Litton at all times during trial and appeal taken the stance that this
manufactured the ratchet adapter is not disputed. Gammage is not a suit for damages under the Deceptive Trade Practices
was putting the tool under load by pulling it toward himself Act. Its motion for judgment was consistent with, rather than
when it failed, causing him to fall backwards resulting in inconsistent with that posture. Litton did not waive its right
extensive personal injuries. The evidence was that the pawl, a to complain about the trial court's trebling the damages.
component of the adapter, had a chipped tooth, which caused
it to fail when Gammage put it under load. [5] [6] We disapprove, however, Litton's argument that it
reserved the right to complain about the judgment, because it
The jury made the following findings: the tool was defectively accompanied its motion for judgment with a brief in which it
manufactured which was a producing cause of the occurrence took back what it urged in its motion. Litton's trial brief that
in question; the tool was unfit for ordinary purposes for which accompanied its motion reserved the right to “challenge any
such tools are used; the unfitness was a producing cause of the adverse judgment based upon the verdict.” We disapprove a
occurrence; Litton failed to warn Gammage that the ratchet practice by which a party, by motion, induces the trial court
adapter would slip, which was negligence and a proximate on the one hand to render a judgment, but reserves in a brief
cause; Gammage was not contributorily negligent; and the the right for the movant to attack the judgment if the court
actual damages to Gammage were $705,852. Upon the basis grants the motion. Litton could not have it both ways. The
of those findings, Litton moved that judgment for the amount briefs that Litton filed in the trial court were brought forward
of actual damages found by the jury be rendered against it. in the transcript. This violates the provision of Rule 376–
The trial court did not, however, grant that motion. It instead a(a), Tex.R.Civ.P., that says trial briefs and memoranda of
rendered judgment for three times that amount. authorities shall not be included in the transcript. We arrive at
our decision in this case, however, that Litton did not waive
Litton urged on its appeal to the court of appeals that its right to complain about the treble damages, because the
plaintiff Gammage could not recover treble damages for an motion itself excluded a judgment for treble damages.
occurrence that preceded the effective date of the Deceptive
Trade Practices Act, May 21, 1973, and that there was no The court of appeals also erred in its holding that Litton
evidence and insufficient evidence that showed the date of waived its points that there was no evidence or insufficient
the occurrence. The court of appeals ruled that Litton had evidence that the act or practice occurred after May 21, 1973,
waived its points by its own motion that the trial court render the date the Deceptive Trade Practices Act became effective.
judgment for the actual damages and also by failing to file a That court held that Litton's failure to file a motion for new
motion for new trial. This court granted the application for trial urging these points amounted to a waiver. This case was
writ of error to review the holding that Litton had waived its tried in March 1981, shortly after this court had promulgated
points, and we conclude that it did not. a revised Rule 324, Tex.R.Civ.P., relating to motions for new
trial.
[1] [2] [3] By filing its motion that the trial court render
judgment on the verdict for *322 the actual damages found
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Litton Indus. Products, Inc. v. Gammage, 668 S.W.2d 319 (1984)
Prior to January 1978, Rule 324 had an express provision that to rule. The court then held that the fourth sentence of Rule
a motion for new trial was not required in a non-jury case 324, supra, that excused a motion for new trial predicate, was
or in a case where the appeal was based on some error of expressly limited to jury cases. It concluded that in a non-
the trial court arising after its action on the motion for new jury case, the revised rule required a motion for new trial
trial. It was settled under that rule that, in a non-jury case, as a predicate for a complaint on appeal about no evidence,
one could raise for the first time on appeal complaints that insufficient evidence, or that the finding was against the
attacked factual sufficiency of the evidence to support the overwhelming weight of the evidence. The holding was that a
trial court's expressed or implied findings of fact. Boswell v. motion for new trial was required as a predicate for complaint
Handley, 397 S.W.2d 213 (Tex.1965). There was at that time about no evidence in a non-jury case even though none had
an additional Rule 325 that required a motion for new trial to been required before the rule was amended.
complain about motions for continuance, change of venue, or
other preliminary motions. [7] Brown v. Brown, 590 S.W.2d 808 (Tex.Civ.App.—
Eastland 1979, no writ), recognized the logic of the court
Effective January 1, 1978, Rule 325 was repealed and Rule in Brock, but concluded that in a non-jury case, neither an
324 was amended to provide: attack upon the legal or factual sufficiency of the evidence
required a motion for new trial as a predicate to an attack
A motion for new trial shall not be a on appeal of the legal or factual sufficiency of the evidence.
prerequisite to the right to complain This court resolved this conflict by disapproving Brock v.
on appeal, in any jury or non-jury Brock, supra, and holding that the intent of Rule 324 was
case. A motion for new trial may to eliminate the requirement for motions for new trial in
be filed by any party, however, and either a non-jury or a jury case. Howell v. Coca-Cola Bottling
the omission of a point in such Company of Lubbock, Inc., 599 S.W.2d 801 (Tex.1980). We
motion shall not preclude the right hold, therefore, that at the time this case was tried, Howell v.
to make the complaint on appeal. Coca-Cola, had clearly held that a motion for new trial was
Notwithstanding the foregoing, it shall not required for Litton to urge that there was no evidence that
be necessary to file a motion for new it had violated the Deceptive Trade Practices Act.
trial in order to present a complaint
which has not otherwise been ruled
Rule 324 has again been amended, effective April 1, 1984. 1
upon. A complaint that one or more
The prior version of the rule created problems including
of a jury's findings have insufficient
the complaint that an appeal on points complaining *324
support in the evidence or are against
of errors that the trial court had not previously had an
the overwhelming preponderance of
opportunity to rule upon was resurrecting the rejected
the evidence as a matter of fact may be
fundamental error rule.
presented for the first time on appeal.
*323 Courts of appeals and the bar had trouble with the [8] [9] We also hold that there was no evidence that Litton
fourth sentence of Rule 324, quoted above. Brock v. Brock, did any act or practice after May 21, 1973, the effective date
586 S.W.2d 927 (Tex.Civ.App.—El Paso 1979, no writ), of the Act. Tex.Bus. & Comm.Code Ann. § 17.63 (Vernon
construed the rule to excuse a motion for new trial urging Supp.1982–83). Plaintiff Gammage did not allege the date of
no evidence or insufficient evidence in jury cases but not in or any particular act or practice that Litton did to violate the
non-jury cases. The third sentence of the above quoted rule, Act. He also failed to request an issue fixing the date of the
according to Brock, required a motion for new trial if the claimed act or practice, so the trial court deemed a finding
complaint had not otherwise been ruled upon. It held that “no in support of its judgment for treble damages. See Rule 279,
evidence” points could be ruled upon in a trial court by an Tex.R.Civ.P. The date of sale of the tool is not determinative.
order on a motion for instructed verdict, an objection to the Stagner v. Friendswood Development Company, Inc., 620
submission of a fact issue to the jury, a motion for judgment S.W.2d 103 (Tex.1981); Woods v. Littleton, 554 S.W.2d
notwithstanding the verdict, or a motion to disregard the jury's 662, 666 (Tex.1977). While circumstantial evidence may
answer. The court held that since none of those steps are be considered, Darryl v. Ford Motor Co., 440 S.W.2d 630
available for a ruling in a non-jury case, a motion for new (Tex.1969), there must be more than a scintilla of evidence.
trial was required so the trial court would have the chance Joske v. Irvine, 91 Tex. 574, 44 S.W. 1059 (1898).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Litton Indus. Products, Inc. v. Gammage, 668 S.W.2d 319 (1984)
[10] [11] We have in this case meager circumstantial
evidence giving rise to inferences which are equally
Richard C. Langdon, Director of Quality Control for a Litton
consistent with the proposition that Litton's act or conduct
affiliate, testified by deposition under the adverse witness
occurred before May 21, 1973, or after that date. When
rule that he had been working for Litton and its affiliate for
circumstances are consistent with either of the two facts and
twenty-three years. He said that the company manufactured
nothing shows that one is more probable than the other,
the ratchet adapter in batches of two to three hundred at
neither fact can be inferred. Texas Sling Co. v. Emanuel, 431
a time and that during the period around 1973, there were
S.W.2d 538 (Tex.1968); Continental Cas. Co. v. Fountain,
about 1,150 sales a year. He answered in the negative whether
257 S.W.2d 338 (Tex.Civ.App.—Dallas 1953, writ ref'd).
he could tell from an examination of the tool when it was
We conclude that there was no more than a scintilla of
manufactured and said that it was “possible that it could have
evidence supporting the deemed finding that Litton did an
been manufactured at any time before June 12, 1974, back to
act or practice after rather than before May 21, 1973. Warren
the time they were originally put into production.” The tool
Petroleum Corp. v. Martin, 153 Tex. 465, 271 S.W.2d 410
had been produced since 1970.
(Tex.1954).
There was some proof that Gammage's employer billed
We affirm those parts of the judgments below that rendered
Gammage for $20.14 for the new tool after it received the
judgment for Gammage in the sum of $705,852. We reverse
shipment on November 8, 1973. Plaintiff Gammage was
those parts of the judgments that trebled the damages, and we
uncertain about dates. He said he thought he ordered the
render judgment that plaintiff take nothing by way of treble
ratchet at the end of 1973 but did not actually pick it up until
damages.
sometime in 1974. There was no proof of the source from
which his employer acquired the tool. The witness Langdon
explained that Litton would sell the tools to a warehouse
All Citations
distributor who in turn would sell to a jobber who would sell
to the mechanic. 668 S.W.2d 319
Footnotes
1 Rule 324. Prerequisites of Appeal
(a) Motion for New Trial Not Required. A point in a motion for new trial is not a prerequisite to a complaint on appeal
in either a jury or a nonjury case, except as provided in subdivision (b).
(b) Motion for New Trial Required. A point in a motion for new trial is a prerequisite to the following complaints on appeal:
(1) A complaint on which evidence must be heard such as one of jury misconduct or newly discovered evidence or
failure to set aside a judgment by default;
(2) A complaint of factual insufficiency of the evidence to support a jury finding;
(3) A complaint that a jury finding is against the overwhelming weight of the evidence;
(4) A complaint of inadequacy or excessiveness of the damages found by the jury; or
(5) Incurable jury argument if not otherwise ruled on by the trial court.
(c) Judgment Notwithstanding Findings; Cross-Points.
When judgment is rendered non obstante veredicto or notwithstanding the findings of a jury on one or more special
issues, the appellee may bring forward by cross-point contained in his brief filed in the Court of Appeals any ground
which would have vitiated the verdict or would have prevented an affirmance of the judgment had one been rendered
by the trial court in harmony with the verdict, including although not limited to the ground that one or more of the jury's
findings have insufficient support in the evidence or are against the overwhelming preponderance of the evidence as
a matter of fact, and the ground that the verdict and judgment based thereon should be set aside because of improper
argument of counsel.
The failure to bring forward by cross-points such grounds as would vitiate the verdict shall be deemed a waiver thereof;
provided, however, that if a cross-point is upon a ground which requires the taking of evidence in addition to that
adduced upon the trial of the cause, it is not necessary that the evidentiary hearing be held until after the appellate
court determines that the cause be remanded to consider such a cross-point.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Litton Indus. Products, Inc. v. Gammage, 668 S.W.2d 319 (1984)
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
OO
Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
Gross negligence includes two elements: (1)
viewed objectively from the actor's standpoint,
KeyCite Yellow Flag - Negative Treatment the act or omission must involve an extreme
Distinguished by Diamond Shamrock Refining Co., L.P. v. Hall, Tex.,
degree of risk, considering the probability and
July 8, 2005
magnitude of the potential harm to others, and (2)
968 S.W.2d 917 the actor must have actual, subjective awareness
Supreme Court of Texas. of the risk involved, but nevertheless proceed in
conscious indifference to the rights, safety, or
MOBIL OIL CORPORATION, Petitioner, welfare of others.
v.
Anna Mae ELLENDER, Individually, and as 64 Cases that cite this headnote
Representative of the Estate of Eli Arnold
Ellender, Deceased, James G. Ellender, [2] Negligence
Dwain A. Ellender, Ricky Ellender, W. Craig Gross negligence
Ellender, Arnold Kent Ellender, Jr., and Evidence of simple negligence is not enough to
Florence Faye Ellender Hoyt, Respondents. prove either the objective or subjective elements
of gross negligence.
No. 96–1299. | Argued March
4, 1998. | Decided May 8, 1998. 3 Cases that cite this headnote
Surviving family members and administrator of estate of
[3] Negligence
contractor who died of leukemia brought action against
Gross negligence
chemical company, alleging that exposure to benzene at
company‘s facility caused contractor's death. The 58th “Extreme risk” element of gross negligence is
District Court, Jefferson County, Michael J. Bradford, J., not a remote possibility of injury or even a
entered judgment on jury verdict awarding $622,888.97 high probability of minor harm, but rather the
in compensatory damages and $6,000,000 in punitive or likelihood of serious injury to the plaintiff.
exemplary damages, and applied punitive damages “cap” to
34 Cases that cite this headnote
reduce award. Chemical company appealed. The Beaumont
Court of Appeals, 934 S.W.2d 439, affirmed in part and
reversed in part. Chemical company petitioned for writ of [4] Negligence
error. The Supreme Court, Baker, J., held that: (1) there was Gross negligence
legally sufficient evidence of gross negligence; (2) court of Actual awareness of risk, as element of gross
appeals should not have recalculated cap on punitive damages negligence, means that the defendant knew about
when that issue was not appealed; (3) chemical company met the peril, but its acts or omissions demonstrated
its burden of proving amount of family members' settlement that it did not care.
with other defendants, as basis for credit; and (4) family
members had burden to show what portion of settlement was 19 Cases that cite this headnote
non-creditable punitive damages.
[5] Negligence
Affirmed in part, reversed in part, and remanded with Direct or circumstantial evidence in general
instructions.
Negligence
Heightened degrees of negligence
Circumstantial evidence is sufficient to prove
West Headnotes (22) either objective or subjective element of gross
negligence.
[1] Negligence 9 Cases that cite this headnote
Gross negligence
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
Whether corporation's acts can be attributed to
[6] Corporations and Business Organizations the corporation itself, and thereby constitute
Exemplary damages corporate gross negligence, is determined by
A corporation may be liable in punitive damages reasonable inferences the factfinder can draw
for gross negligence only if the corporation itself from what the corporation did or failed to do
commits gross negligence. and the facts existing at relevant times that
contributed to a plaintiff's alleged damages.
10 Cases that cite this headnote
5 Cases that cite this headnote
[7] Corporations and Business Organizations
Exemplary damages [11] Negligence
A corporation is liable for punitive damages if it Gross negligence
authorizes or ratifies an agent's gross negligence An appellate court must sustain a gross
or if it is grossly negligent in hiring an unfit negligence finding if legally sufficient evidence
agent. shows both that the complained of act or
omission was likely to result in serious harm and
17 Cases that cite this headnote that the defendant was consciously indifferent to
the risk of harm.
[8] Corporations and Business Organizations
7 Cases that cite this headnote
Exemplary damages
A corporation is liable for punitive damages
if it commits gross negligence through the [12] Appeal and Error
actions or inactions of a vice principal, which Findings and conclusions
encompasses: (a) corporate officers; (b) those If there is no legally sufficient evidence of
who have authority to employ, direct, and either gross negligence's objective or subjective
discharge servants of the master; (c) those elements, appellate court must reverse a gross
engaged in the performance of nondelegable or negligence finding.
absolute duties of the master; and (d) those to
whom the master has confided the management 6 Cases that cite this headnote
of the whole or a department or a division of the
business. [13] Appeal and Error
Total failure of proof
20 Cases that cite this headnote
In evaluating legal sufficiency of evidence,
appellate court determines whether the proffered
[9] Corporations and Business Organizations evidence as a whole rises to a level that would
Exemplary damages enable reasonable and fair-minded people to
In determining whether acts are directly differ in their conclusions.
attributable to the corporation, the reviewing
court does not simply judge individual elements 9 Cases that cite this headnote
or facts; instead, the court should review all
the surrounding facts and circumstances to [14] Negligence
determine whether the corporation itself is Premises Liability
grossly negligent.
There was legally sufficient evidence that
5 Cases that cite this headnote chemical company's conduct in failing to
warn contract workers about benzene exposure
or protect them from it, viewed objectively
[10] Corporations and Business Organizations from chemical company's point of view when
Exemplary damages contractor worked at its facility, involved an
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
extreme degree of risk to contract workers, as considering five factors: (1) nature of the wrong;
element of gross negligence, in light of evidence (2) character of conduct involved; (3) degree
of widespread knowledge that benzene was of culpability of wrongdoer; (4) situation and
dangerous and presented risk of leukemia, of sensibilities of parties concerned; and (5) extent
extent of contractor's exposure, and of chemical to which such conduct offends public sense of
company's failure to take sufficient precautions. justice and propriety.
14 Cases that cite this headnote 4 Cases that cite this headnote
[15] Negligence [18] Appeal and Error
Heightened degrees of negligence Modification as to Amount of Recovery
There was legally sufficient evidence that Court of appeals could not include actual
chemical company vice principals had actual damages awarded to contract workers' estate
awareness of extreme risk benzene exposure in its punitive damages recalculation, in suit
involved, but nevertheless proceeded in by estate and family members against chemical
conscious indifference to rights, safety or company for failure to protect contract worker
welfare of contract workers, as element of gross from benzene exposure, where family members
negligence, in light of evidence that chemical did not appeal trial court's exclusion of estate's
company had warning and monitoring policy actual damages in its calculation of punitive
for its own workers, but chose to disregard that damages cap. V.T.C.A., Civil Practice &
policy when dealing with contract workers. Remedies Code § 41.007.
43 Cases that cite this headnote Cases that cite this headnote
[16] Appeal and Error [19] Appeal and Error
Form and requisites Power to modify judgment or order
Court of appeals properly reviewed factual A court of appeals cannot modify a judgment
sufficiency of punitive damages award, in suit without a point of error asking it to do so.
against chemical company by contractor's estate
and family members for gross negligence in 1 Cases that cite this headnote
allowing contractor's exposure to benzene, even
if court did not accurately state proper punitive [20] Damages
damages review throughout its opinion, where it Reparation by wrongdoer
provided abbreviated version of detailed review
Damages
of all relevant evidence undertaken in its review
Weight and Sufficiency
of gross negligence finding, it applied relevant
By placing uncontested settlement amount in
punitive damages factors, and it explained why
record, nonsettling defendant met its burden of
evidence supported the punitive damages award.
proof on settlement amount, and was entitled to
7 Cases that cite this headnote credit against damages, though it did not present
judicial admission, stipulation, judicial notice,
or properly admitted documents or testimony to
[17] Appeal and Error
establish amount, where nonsettling defendant
Form and requisites
informed trial court of settlement amount when
When conducting factual sufficiency review plaintiffs announced settlement in open court,
of punitive damages award amount, court of and plaintiffs did not contest settlement amount.
appeals must detail all relevant evidence in its V.T.C.A., Civil Practice & Remedies Code §
opinion, and must explain why evidence does 33.002(a).
or does not support punitive damages amount
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
In this appeal, Mobil Oil Corporation asserts that the court of
38 Cases that cite this headnote appeals erred by: (1) affirming the punitive damages awarded
against Mobil because there is legally insufficient evidence
[21] Damages of gross negligence and malice; (2) improperly reviewing
Reparation by wrongdoer the factual sufficiency of the punitive damages award; (3)
recalculating the punitive damages award to include an extra
To limit a nonsettling defendant's dollar-for-
$91,555.58; and (4) denying Mobil a $500,000 settlement
dollar settlement credit to amount of settlement
credit. We hold that: (1) there is legally sufficient evidence
representing actual damages, plaintiff must
of gross negligence to support Mobil's liability for punitive
tender a valid settlement agreement allocating
damages; (2) the court of appeals properly reviewed the
between actual and punitive damages to trial
factual sufficiency of the punitive damages award; (3) the
court before judgment; otherwise, nonsettling
court of appeals improperly added $91,555.58 to the punitive
party is entitled to a credit equaling entire
damages amount; and (4) the court of appeals improperly
settlement amount. V.T.C.A., Civil Practice &
denied Mobil's request for a settlement credit.
Remedies Code § 33.002(a), (c)(2).
45 Cases that cite this headnote Therefore, we affirm the court of appeals' judgment that there
is legally sufficient evidence of Mobil's gross negligence and
we *920 affirm the court of appeals' factual sufficiency
[22] Evidence
review of the punitive damages award. We reverse the court
Nature and Extent of Liability
of appeals' erroneous $91,555.58 award in extra punitive
Because requiring settling plaintiffs to tender damages and its denial of a settlement credit. We remand
valid settlement agreement allocating between to the trial court and instruct the trial court to provide
actual and punitive damages, in order to limit the Ellenders an opportunity to prove whether there was
credit against damages payable by nonsettling any allocation between actual and punitive damages in the
defendant, was a new rule, plaintiffs in present settlement agreement. We further instruct the trial court to
case, and in any case in which a settlement allow a settlement credit consistent with this opinion, to
was reached before effective date of decision recalculate punitive damages, excluding the estate's actual
announcing rule, would be permitted to prove damages, and to recalculate prejudgment interest.
allocation through extrinsic evidence.
30 Cases that cite this headnote
I. BACKGROUND
Eli Ellender worked periodically as an independent contractor
millwright at Mobil's Beaumont refinery and chemical plants
Attorneys and Law Firms
between 1963 and 1977. As a millwright, Ellender repaired,
*919 Lori Meghan Gallagher, Houston, Michael L. Baker, serviced, and cleaned pumps, product lines, and other
Beaumont, Mark L. Carlton, Fairfax, VA, Laura B. Rowe, equipment. While working at Mobil, Ellender was exposed
Elizabeth A. Wiley, Mariann Sears, Houston, for Petitioner. to benzene. He was diagnosed with acute myelogenous
leukemia and died in 1989. Ellender's surviving family,
Paul F. Ferguson, Darren Brown, Beaumont, Stephen D. individually and on behalf of his estate, sued Mobil and
Susman, Charles R. Eskridge, Houston, James A. Holmes, other defendants, alleging that exposure to benzene caused
Dallas, J. Keith Hyde, Beaumont, Otto D. Hewitt, III, Alvin, Ellender's leukemia and subsequent death. Specifically, the
Mark C. Hall, Lubbock, for Respondents. Ellenders alleged that Mobil was negligent, grossly negligent,
and malicious in: (1) failing to warn Ellender about his
Opinion exposure to benzene on Mobil's premises and the risks
associated with it, and (2) failing to protect Ellender from
BAKER, Justice, delivered the opinion of the Court, in which
those risks. Just before trial, all defendants, except Mobil,
PHILLIPS, Chief Justice, GONZALEZ, HECHT, ENOCH,
agreed to settle. Before the trial court submitted the case to the
SPECTOR, ABBOTT, and HANKINSON, Justices, join.
jury, Mobil elected a dollarfor-dollar settlement credit. See
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Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
TEX. CIV. PRAC. & REM.CODE § 33.014. The jury found Mobil first argues that there is legally insufficient evidence to
that Mobil's conduct was grossly negligent and malicious and support the jury's findings that Mobil's conduct was grossly
awarded the Ellenders $622,888.97 in compensatory damages negligent and malicious. The jury's answer to the punitive
and $6,000,000 in punitive damages. damages question was conditioned on a finding of gross
negligence or of gross negligence and malice. The jury found
After the jury verdict, the Ellenders and the settling both and awarded punitive damages. We conclude that there
defendants executed a settlement agreement. The Ellenders is legally sufficient evidence of gross negligence to uphold
received $500,000 in exchange for releasing all claims for the punitive damages award against Mobil. Because Mobil
actual and punitive damages against the settling defendants. relies solely on its gross negligence arguments to support its
The agreement did not allocate the settlement amount malice arguments, and because the gross negligence finding
between actual and punitive damages. Mobil opposed the alone will support the punitive damages award in this case, we
Ellenders' motion for judgment, arguing that the proposed need not consider Mobil's argument that no evidence supports
judgment did not reduce the actual damages award by the the jury's malice finding.
$500,000 settlement amount.
The trial court rendered judgment on the jury's verdict. The
A. APPLICABLE LAW
trial court denied Mobil a settlement credit, finding that Mobil
did not prove its right to a settlement credit. Mobil moved to
modify the judgment, filed a verified copy of the settlement 1. Gross Negligence
agreement, and again requested the settlement credit. The
[1] [2] [3] [4] [5] Gross negligence includes two
trial court again refused to credit Mobil with the settlement
elements: (1) viewed objectively from the actor's standpoint,
amount.
the act or omission must involve an extreme degree of risk,
considering the probability and magnitude of the potential
The court of appeals affirmed the trial court's denial of
harm to others, and (2) the actor must have actual, subjective
settlement credit, holding that Mobil had not met its burden
awareness of the risk involved, but nevertheless proceed in
to prove the settlement amount. The court of appeals did not
conscious indifference to the rights, safety, or welfare of
reach the Ellenders' second argument that Mobil's failure to
others. See Transportation Ins. Co. v. Moriel, 879 S.W.2d
prove the allocation between actual and punitive damages
was an additional reason to deny a settlement credit. The 10, 23 (Tex.1994). 2 Evidence of simple negligence is not
court of appeals also affirmed the gross negligence and enough to prove either the objective or subjective elements
malice findings and the punitive damages award. However, of gross negligence. See Universal Servs. Co. v. Ung, 904
the court of appeals held that the trial court erroneously S.W.2d 638, 641 (Tex.1995); Moriel, 879 S.W.2d at 22–
added prejudgment interest to actual damages before applying 23. Under the first element, “extreme risk” is not a remote
possibility of injury or even a high probability of minor harm,
the statutory punitive damages cap. 1 The court of appeals
but rather the likelihood of serious injury to the plaintiff. See
recalculated punitive damages and modified the trial court's
Ung, 904 S.W.2d at 641; Moriel, 879 S.W.2d at 22. Under the
judgment accordingly. In its recalculation, the court of
second element, actual awareness means that the defendant
appeals sua sponte included the estate's actual damages of
knew about the peril, but its acts or omissions demonstrated
$22,888.97 in the total actual damages amount, so that it
that it did not care. See Wal–Mart Stores, Inc. v. Alexander,
equaled $622,888.97. Therefore, when the court of appeals
868 S.W.2d 322, 326 (Tex.1993). Circumstantial evidence is
reapplied the statutory cap by multiplying $622,888.97 by
sufficient to prove either element of gross negligence. See
four, the punitive damages awarded totaled $2,491,555.88.
Moriel, 879 S.W.2d at 22–23; Wal–Mart Stores, 868 S.W.2d
This amount was $91,555.88 ($22,888.97 x 4) over what the
at 327.
punitive damages would have been had the court of appeals
not included the estate's actual damages.
2. Punitive Damages—Corporate Liability
*921 II. LEGAL SUFFICIENCY [6] [7] A corporation may be liable in punitive damages
—GROSS NEGLIGENCE for gross negligence only if the corporation itself commits
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Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
gross negligence. See Fort Worth Elevators, Co. v. Russell, that the complained of act or omission was likely to result
123 Tex. 128, 70 S.W.2d 397, 406 (1934), overruled in serious harm and that the defendant was consciously
on other grounds by Wright v. Gifford–Hill & Co., 725 indifferent to the risk of harm. See Moriel, 879 S.W.2d at
S.W.2d 712 (Tex.1987). Because a corporation can “act only 22, 24. If there is no legally sufficient evidence of either
through agents of some character,” Fort Worth Elevators, gross negligence's objective or subjective elements, this Court
70 S.W.2d at 402, this Court has developed tests for must reverse a gross negligence finding. See Ung, 904
distinguishing between acts that are solely attributable to S.W.2d at 642 (reversing the court of appeals' judgment and
agents or employees and acts that are directly attributable rendering judgment that plaintiffs take nothing because there
to the corporation. See Hammerly Oaks, Inc. v. Edwards, was no evidence of gross negligence's objective element).
958 S.W.2d 387 (Tex.1997). A corporation is liable for In evaluating legal sufficiency, we determine whether the
punitive damages if it authorizes or ratifies an agent's gross proffered evidence as a whole rises to a level that would
negligence or if it is grossly negligent in hiring an unfit enable reasonable and fair-minded people to differ in their
agent. See King v. McGuff, 149 Tex. 432, 234 S.W.2d conclusions. See Moriel, 879 S.W.2d at 25 (citing William
403, 405 (1950) (adopting the RESTATEMENT OF TORTS Powers, Jr. & Jack Ratliff, Another Look at “No Evidence”
section 909); Purvis v. Prattco, Inc., 595 S.W.2d 103, 104 and “Insufficient Evidence,” 69 TEX. L.REV. 515, 522, 523
(Tex.1980) (citing the RESTATEMENT (SECOND) OF (1991)).
TORTS section 909, *922 which is unchanged from the
original RESTATEMENT OF TORTS section 909).
B. ANALYSIS
[8] A corporation is also liable if it commits gross
negligence through the actions or inactions of a vice principal.
See Hammerly Oaks, 958 S.W.2d at 389. “Vice principal” 1. Gross Negligence—Objective Element
encompasses: (a) corporate officers; (b) those who have
[14] Mobil asserts that there is legally insufficient evidence
authority to employ, direct, and discharge servants of the
of an extreme risk to Ellender of serious injury from
master; (c) those engaged in the performance of nondelegable
benzene exposure at Mobil's facilities. Mobil argues that the
or absolute duties of the master; and (d) those to whom
trial court and the court of appeals improperly relied on
the master has confided the management of the whole or a
evidence of Mobil's conduct and the resultant risks arising
department or a division of the business. See Hammerly Oaks,
after Ellender worked at Mobil. We conclude that legally
958 S.W.2d at 391.
sufficient evidence shows that, viewed objectively from
[9] [10] In determining whether acts are directly Mobil's standpoint when Ellender worked at Mobil, Mobil did
not warn contract workers about benzene exposure or protect
attributable to the corporation, the reviewing court does not
them from it and this failure involved an extreme degree of
simply judge individual elements or facts. Instead, the court
risk to those workers.
should review all the surrounding facts and circumstances
to determine whether the corporation itself is grossly
There is evidence that, from Mobil's viewpoint during the
negligent. See McPhearson v. Sullivan, 463 S.W.2d 174, 176
period Ellender worked at Mobil in the 1960s and 1970s, the
(Tex.1971). Whether the corporation's acts can be attributed
extreme degree of risk associated with benzene exposure was
to the corporation itself, and thereby constitute corporate
common knowledge in the petrochemical industry. As early
gross negligence, is determined by reasonable inferences the
as 1926, the National Safety Council reported that “[t]he most
factfinder can draw from what the corporation did or failed
characteristic pathological effect of [benzene] is perhaps its
to do and the facts existing at relevant times that contributed
destructive influence upon the cells of the blood and the blood
to a plaintiff's alleged damages. See Bowman v. Puckett, 144
forming organs.” Mobil stipulated NSC membership dating
Tex. 125, 188 S.W.2d 571, 574 (1945).
back to 1922. In 1948, the American Petroleum Institute
reported that benzene could cause leukemia and that the only
absolutely safe concentration for benzene was zero. The API
3. Standard of Review report also warned that a person should avoid all contact
with benzene if possible, but that if the hands must contact
[11] [12] [13] An appellate court must sustain a gross
the solvent, then a person should use neoprene gloves or
negligence finding if legally sufficient evidence shows both
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Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
protective creams. Mobil stipulated API membership dating David B. Dunham, a Mobil industrial hygienist, testified that
back to 1919. although Mobil monitored its employees, it had an “unwritten
practice or policy” not to monitor contract workers and that
Dr. R.J. Potts, Mobil's medical director for the Western region when he attempted to monitor contract workers, he was told
(including Beaumont) from 1960 to 1983, testified that he not to. Ellender's co-workers testified that they never saw
believed Mobil had knowledge of benzene hazards in the any signs warning them of benzene hazards at Mobil and
1950s. The record shows other petrochemical companies had that Mobil did not monitor them for exposure or provide
knowledge of benzene *923 hazards. For example, Conoco's them with protective gear when they worked around benzene.
1953 Employee Safety Manual included information from Moreover, Mobil did not include any reference to benzene
the 1948 API report and warned that the only safe level of or other chemicals in its 1967 pamphlet entitled “Mobil
benzene exposure was zero. Conoco also warned that workers Safety and Security Regulations for Contract Workers.” Dr.
should use air masks in case of benzene leaks and neoprene Josh Esslinger, a former medical consultant for Mobil in
gloves in case of hand contact. In 1948, Exxon noted a definite Beaumont, testified that he knew workers washed their hands
correlation between benzene and cancer. A 1943 report to in benzene and that such a practice indicated that workers
Shell warned that prolonged exposure to low concentrations were not adequately warned of benzene hazards. Dr. Dement
of benzene may be very dangerous. testified that Mobil's industrial hygiene program was poor
and practically nonexistent for contractors. This is evidence
There is evidence that Ellender's benzene exposure was from which the jury could reasonably infer that Mobil had
dangerously high. Mobil's own benzene samples, taken at a company policy of not monitoring contract workers for
the olefins and aromatic plant where Ellender periodically benzene exposure, not warning them of the dangers of such
worked in the 1960s and 1970s, showed dangerous levels exposure, and not providing them with protective gear and
of benzene exposure between 1976 and 1978. These levels that this policy involved an extreme degree of risk to those
were many times more than levels the Occupational Safety workers. See generally McPhearson, 463 S.W.2d at 174.
and Health Administration considered dangerous in 1977. Thus, there is evidence that acts and omissions of Mobil itself
Roy Gatlin, one of Ellender's co-workers, testified that on involved an extreme degree of risk to contract workers like
many occasions he and Ellender steam-cleaned equipment Ellender.
containing benzene and inhaled benzene. Gatlin and other co-
workers also testified that workers used benzene, furnished by Relying on Ung, Mobil argues that it is not grossly negligent
Mobil, to wash their tools and hands as often as daily. Russell for not taking all the precautions it could have. See Ung, 904
Witzke, an industrial hygienist at Mobil from 1973 to 1976 S.W.2d at 641–42. Specifically, Mobil claims that it complied
admitted that benzene was always being spilled on the ground with the industrial standards for benzene exposure that existed
when piping equipment was connected and disconnected. when Ellender worked at Mobil and that Mobil took steps
to protect employees and contract workers from benzene
Dr. Eula Bingham, a toxicologist specializing in exposure. Mobil essentially argues that the Court should
environmental occupational health, reviewed testimony overturn the jury's gross negligence finding because there is
about Ellender's exposure to benzene and described it as evidence that Mobil's conduct was not grossly negligent.
“substantial.” Dr. John M. Dement, a industrial hygienist and
epidemiologist, reviewed the same testimony and described Mobil's argument is flawed. As this Court made clear in
Ellender's exposure as “significant lifetime exposure that Burk Royaltyand Moriel, the fact that a defendant exercises
would have put him at increased risk for leukemia.” some care *924 does not insulate the defendant from gross
negligence liability. See Moriel, 879 S.W.2d at 20 (discussing
Mobil counters that because there is no evidence that a vice cases before Burk Royalty that erroneously focused on “entire
principal's conduct involved an extreme degree of risk to want of care” part of the gross negligence definition in
contract workers like Ellender, Mobil cannot be liable for reasoning that “some care” defeated a gross negligence
gross negligence. However, in reviewing all the facts and finding); Burk Royalty Co. v. Walls, 616 S.W.2d 911, 921–
circumstances, we conclude that there is evidence that Mobil's 922 (Tex.1981). Therefore, Mobil's reference to evidence of
own acts and omissions involved an extreme degree of risk to some care does not affect our legal sufficiency review of the
contract workers like Ellender. jury's gross negligence finding.
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Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
We conclude that there is legally sufficient evidence that likely source of benzene intoxication and that continuous
Mobil's conduct, viewed objectively from Mobil's point of exposure to benzene affects the formation of red-blood cells
view when Ellender worked at Mobil, involved an extreme in bone marrow. This circumstantial evidence is legally
degree of risk to contract workers like Ellender. sufficient evidence that Mobil vice principals knew that not
providing protective gear, not monitoring and not warning
workers about benzene exposure was an extreme risk to
contract workers, like Ellender, who routinely came into
2. Gross Negligence—Subjective Element
contact with benzene at Mobil.
[15] Mobil also asserts that there is legally insufficient
evidence of gross negligence's subjective element. Mobil Furthermore, there is probative evidence that despite this
argues that the court of appeals erred in relying on evidence knowledge, Mobil proceeded in conscious indifference to the
of general knowledge of some benzene exposure risks to rights, safety or welfare of contract workers like Ellender.
affirm the finding of actual awareness of an extreme risk. Contrary to Mobil's policy of warning, monitoring, and
Mobil further argues that there is no evidence that a Mobil protecting its employees, Mobil did not warn, monitor, or
vice principal knew of an extreme risk to contract workers. protect contract workers from benzene exposure. Dunham
We conclude that there is legally sufficient evidence that admitted that personal monitoring and medical surveillance
Mobil vice principals had actual awareness of the extreme are the only sure ways to assess a worker's exposure to
risk benzene exposure involves, but nevertheless proceeded benzene. Yet, Dunham testified that Mobil had an “unwritten
in conscious indifference to the rights, safety or welfare of practice or policy” not to monitor contract workers and
Ellender and other contract workers. that when he attempted to monitor contract workers, he
was told not to. Ellender's co-workers testified that they
Dr. Potts, Mobil's regional medical director from 1960 to were not warned about benzene hazards or provided benzene
1983, testified that even before he became medical director protective equipment and that Mobil actually furnished
he knew that benzene caused, among other diseases, aplastic benzene for workers to wash their tools. Dr. Dement testified
anemia. He knew that washing hands and tools in benzene that Mobil's failure to inform workers *925 about benzene
was hazardous. He further testified that he and Dr. Stewart, exposure reflected Mobil's conscious disregard for worker
a physician working directly under him at the Beaumont safety. Evidence that Mobil had a policy of monitoring and
refinery, implemented a plan “to see that noxious agents protecting its own employees but chose not to do the same for
[including benzene] were not being used in a manner that was contract workers provides additional facts and circumstances
deleterious to employee health.” Dr. Esslinger testified that for the jury to infer that Mobil knew the risks of benzene
Mobil had a policy to conduct blood and urine tests on its own exposure yet proceeded with conscious indifference toward
employees for benzene exposure and that he carried out that the rights, safety or welfare of contract workers vis-a-vis that
policy. risk.
Dunham testified that Mobil had a fleet of industrial hygiene Because there is legally sufficient evidence that Mobil was
monitors who monitored employees for benzene, among grossly negligent, we affirm the jury's finding of gross
other chemicals, and who sent their results to Mobil's negligence against Mobil.
corporate medical director. Some of these samples, including
one sample of a Mobil maintenance mechanic doing work
identical to the work Ellender periodically did, showed III. FACTUAL SUFFICIENCY REVIEW
excessive levels of benzene exposure. Further, in 1969, —PUNITIVE DAMAGES AWARD
Mobil's Employee Relations Division established “a medical
and industrial hygiene program designed to protect the health [16] Mobil argues that the court of appeals did not properly
of those employees who handle benzene and benzene related review the factual sufficiency of the punitive damages award.
products.” The program directed Mobil doctors, hygienists, Specifically, Mobil argues that the court did not properly
and other personnel to monitor employees for benzene detail all the evidence in light of the Kraus 3 factors. We
exposure, to furnish them benzene protective gear, and to disagree.
instruct employees on proper benzene handling. The program
recognized that long-term benzene inhalation is the most
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Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
[17] When conducting a factual sufficiency review of a the guidelines enumerated in Kraus.
punitive damages award amount, irrespective of whether the The only feasible means of doing so is
court of appeals ultimately affirms or reverses the award, though a restatement of the evidence
the court must detail all relevant evidence in its opinion. supportive of gross negligence. It shall
See Ellis County State Bank v. Keever, 915 S.W.2d 478, also become necessary to restate such
479 (Tex.1995)(remanding to the court of appeals to detail evidence yet a third time under the
all the evidence instead of just the evidence supporting the discussion of ‘why.’
punitive damages award); Moriel, 879 S.W.2d at 31. The
court of appeals must explain why the evidence does or does 934 S.W.2d at 457 (emphasis added). Finally, the court of
not support the punitive damages amount considering five appeals properly applied the Kraus factors and explained
factors: (1) the nature of the wrong; (2) the character of why the evidence supported the punitive damages award.
the conduct involved; (3) the degree of culpability of the Accordingly, we conclude that the court of appeals' factual
wrongdoer; (4) the situation and sensibilities of the parties sufficiency review of the punitive damages award, despite the
concerned; and (5) the extent to which such conduct offends a *926 court's occasional misleading language, was proper.
public sense of justice and propriety. See Keever, 915 S.W.2d
at 479; Kraus, 616 S.W.2d at 910; see also TEX. CIV. PRAC.
& REM.CODE §§ 41.011 and 41.013 (requiring courts of IV. PUNITIVE DAMAGES
appeals, in reviewing evidence of punitive damages amounts, AWARD—RECALCULATION
to consider the evidence or lack of evidence with specificity
in light of the Kraus factors). [18] [19] Mobil also argues that the court of appeals erred
by including, sua sponte, the estate's actual damages in its
The court of appeals misdefined factual sufficiency review punitive damages calculation, thereby adding $91,555.58 to
of punitive damages awards as detailing “the evidence the punitive damages award. We agree. A court of appeals
supportive of the punitive damage award under Kraus ” and cannot modify a judgment without a point of error asking it
“the evidence relating to why the evidence supports such to do so. See Texas Nat'l Bank v. Karnes, 717 S.W.2d 901,
award.” 934 S.W.2d at 458 (emphasis added). Nevertheless, 903 (Tex.1986)(holding that the court of appeals erred in
the court of appeals recognized its duty to review “the modifying the judgment to include attorneys fees when the
evidence supportive of an affirmative finding of gross trial court's refusal to grant attorneys fees was not the subject
negligence and apply such evidence, along with any other of a point of error).
evidence, in determining whether or not the exemplary
damages awarded [were] reasonable.” 934 S.W.2d at 456 Here, the jury charge asked the jury to apportion the punitive
(emphasis added). damages award, if any, between the individual plaintiffs,
excluding Eli Ellender's estate. Accordingly, the trial court's
Further, while the court of appeals may not have accurately judgment excluded the estate's actual damages award in its
stated the proper punitive damages review throughout its punitive damages calculation. The Ellenders did not complain
opinion, it complied with the Kraus, Moriel, and Keever about the trial court's punitive damages calculation.
requirements. Although the court of appeals' Kraus analysis
seems to restate only the evidence supporting the punitive The court of appeals recalculated punitive damages to exclude
damage award, the court of appeals painstakingly detailed prejudgment interest. For no apparent reason, the court's
all relevant evidence in its exhaustive review of the gross recalculation included the estate's actual damages and thus,
negligence finding. Therefore, its Kraus analysis is simply an resulted in $91,555.58 more punitive damages than the trial
abbreviated version of its gross negligence review of all the court's award. Because the Ellenders did not appeal the
evidence. The court of appeals stated: trial court's exclusion of the estate in its punitive damages
calculation, the court of appeals erred in including the estate's
Explaining “why” the evidence either actual damages in its punitive damages recalculation. See
does or does not support the punitive Karnes, 717 S.W.2d at 903.
damages requires revisiting gross
negligence evidence on a factual
sufficiency standard. In compliance,
we consider relevant evidence through
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Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
REM.CODE § 32.012(b). The only question left is by what
amount the trial court should reduce the judgment.
V. SETTLEMENT CREDIT—BURDEN OF PROOF
Lastly, Mobil argues that the court of appeals erred in Section 33.014 provides:
affirming the trial court's refusal to grant Mobil a $500,000
If a claimant has settled with one or
settlement credit. The court of appeals held that Mobil did
more persons, an election must be
not meet its burden to prove the settlement amount. The
made as to which dollar credit is to
Ellenders argue that even if Mobil did prove the settlement
be applied under Section 33.012(b).
amount, Mobil's failure to allocate the settlement amount
This election shall be made by any
between actual and punitive damages is an additional reason
defendant filing a written election
to affirm the denial of settlement credit. We disagree with
before the issues of the action are
both the court of appeals' holding and the Ellenders' allocation
submitted to the trier of fact and, when
argument.
*927 made, shall be binding on all
defendants. If no defendant makes this
election or if conflicting elections are
A. SETTLEMENT AMOUNT made, all defendants are considered
to have elected Subdivision (2) of
[20] Chapter 33 of the Texas Civil Practice and Remedies Section 33.012(b).
Code governs settlement credit in this case. See TEX. CIV.
PRAC. & REM.CODE § 33.002(a) (“[T]his chapter applies to TEX. CIV. PRAC. & REM.CODE § 33.014. Thus, for
any cause of action based on tort in which a defendant, settling a dollar-for-dollar settlement credit, Chapter 33 requires a
person, or responsible third party is found responsible for a written dollar-for-dollar credit election before the case is
percentage of the harm for which relief is sought.”). Section submitted to the factfinder. See TEX. CIV. PRAC. & REM
33.012(b) provides: CODE § 33.014. Because the statute is silent on which
party has the burden to prove the settlement amount, we
If the claimant has settled with one or more persons, the refer to the common law. See First Title Co. v. Garrett, 860
court shall further reduce the amount of damages to be S.W.2d 74, 78 (Tex.1993)(relying on common law principles
recovered by the claimant with respect to a cause of action for settlement credit determination because Chapter 32 of
by a credit equal to one of the following, as elected in the Civil Practice and Remedies Code does not consider
accordance with Section 33.014: settlement credit).
(1) the sum of the dollar amounts of all settlements; or
At common law, a defendant seeking a settlement credit has
(2) a dollar amount equal to the sum of the following the burden of proving its right to such a credit. See First
percentages of damages found by the trier of fact: Title, 860 S.W.2d at 78. This burden includes proving the
settlement credit amount. A party can meet this burden by
(A) 5 percent of those damages up to $200,000; placing the settlement agreement or some evidence of the
settlement amount in the record. See First Title, 860 S.W.2d at
(B) 10 percent of those damages from $200,001 to
79. If a party fails to meet this burden, the party is not entitled
400,000;
to a dollar-for-dollar credit and the trial court is limited to
(C) 15 percent of those damages from $400,001 to using section 32.012(b)(2) to reduce the judgment.
500,000;
Here, the court of appeals held that Mobil did not meet its
(D) 20 percent of those damages greater than burden to prove the settlement amount because Mobil did
$500,000. not prove the amount by a judicial admission, a stipulation,
judicial notice, or properly admitted documents or testimony.
TEX. CIV. PRAC. & REM.CODE § 33.012(b). When there However, neither Chapter 33 nor existing case law demands
is a settlement covering some or all of the damages awarded such proof. For a dollar-for-dollar settlement credit, Chapter
in the judgment, section 33.012 requires the trial court to 33 requires only a written election before the case is submitted
reduce the judgment accordingly. See TEX. CIV. PRAC. & to the factfinder. See TEX. CIV. PRAC. & REM.CODE §
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Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
33.014. And, First Title requires only that the record show, in settlement agreement itself allocated between actual and
the settlement agreement or otherwise, the settlement credit punitive damages. See Hill, 383 S.W.2d at 81. When the
amount. See First Title, 860 S.W.2d at 74. nonsettling *928 defendant claimed a credit equaling the
entire settlement amount, the court of appeals held that the
The record here shows that Mobil first informed the trial settlement agreement was conclusive proof of the proper
court of the $500,000 settlement amount when the Ellenders' allocation. See Hill, 383 S.W.2d at 83. Therefore, the court
attorneys announced the settlement in open court during trial. limited the defendant's settlement credit to that part of the
Later, Mobil's written opposition to the Ellenders' motion settlement amount expressly representing actual damages.
for judgment included the settlement amount. The Ellenders See Hill, 383 S.W.2d at 83.
did not contest the $500,000 settlement amount. Thus, we
conclude that by placing the uncontested settlement amount In Texas Gen. Petroleum Corp. v. Leyh, 52 F.3d 1330, 1340
in the record, Mobil met its burden of proof on the settlement (5 th Cir.1995), the court placed the burden on plaintiffs to
amount. show that a settlement does not involve a double recovery.
See also United States Indus. v. Touche Ross & Co., 854 F.2d
1223, 1262 (10 th Cir.1988). Plaintiffs can meet this burden
B. ALLOCATION OF SETTLEMENT AMOUNT by offering into evidence a written settlement agreement
specifically allocating damages to each cause of action. See
[21] The court of appeals did not consider the Ellenders' Leyh, 52 F.3d at 1340 (reasoning that a plaintiff that is a
argument that Mobil was obligated to allocate between actual party to the settlement agreement is in a better position than a
and punitive damages in the settlement amount. We have nonsettling defendant to allocate damages in the settlement).
the option to consider the Ellenders' allocation argument to While Leyh is not directly on point, it is analogous. In cases
determine if it will support the court of appeals' judgment involving allocation between actual and punitive damages,
denying Mobil a settlement credit or to remand the issue to settling plaintiffs are in a better position than nonsettling
the court of appeals. See First Baptist Church v. Bexar County defendants to insure that the settlement award is allocated
Appraisal Review Bd., 833 S.W.2d 108, 111 (Tex.1992). To between actual and punitive damages.
serve judicial economy, we choose to consider the allocation
argument. Here, unlike in Hill, the settlement agreement released
the Ellenders' actual and punitive damages claims without
A defendant cannot receive credit for settlement amounts allocating between them. Without an allocation, Mobil, who
representing punitive damages. See TEX. CIV. PRAC. & was not a party to the settlement, had almost no ability
REM.CODE § 33.002(c)(2) (“This chapter does not apply to prove which part of the settlement amount represented
to ... a claim for exemplary damages included in an action actual damages. Nonsettling parties should not be penalized
to which this chapter otherwise applies.”); see also Hill v. for events over which they have no control. See Sisters of
Budget Fin. & Thrift Co., 383 S.W.2d 79, 81 (Tex.Civ.App.— Charity of the Incarnate Word v. Dunsmoor, 832 S.W.2d
Dallas 1964, no writ) (holding that a defendant cannot receive 112, 117 (Tex.App.—Austin 1992, writ denied) (holding
credit for settlement amounts representing punitive damages, that prejudgment interest is based on the amount of the
which are not common damages but are individual in nature); judgment, not the total amount of damages awarded by
Howard v. General Cable Corp., 674 F.2d 351, 358 (5 th the jury, because nonsettling defendants have no control
Cir.1983) (citing Hill, 383 S.W.2d at 79); Paschall v. Peevey, over settlement negotiations and should not be forced to
813 S.W.2d 710, 712 (Tex.App.—Austin 1991, writ denied) pay prejudgment interest on settling defendants' parts of a
(citing Hill, 383 S.W.2d at 79). Chapter 33 does not specify damages award). When the settlement agreement does not
which party has the burden of proving the allocation between allocate between actual and punitive damages, requiring a
actual and punitive damages in a settlement amount. Again, nonsettling party to prove the agreement's allocation before
common law provides the general rule. receiving a settlement credit not only unfairly penalizes
the nonsettling party but also allows settling parties to
In Hill, the court of appeals held that the party seeking abrogate the one satisfaction rule. See Hess Oil Virgin Islands
the settlement credit has the burden to prove the allocation Corp. v. UOP, Inc., 861 F.2d 1197, 1208 (10 th Cir.1988);
of the settlement amount between actual and punitive United States Indus., 854 F.2d at 1262. Settling parties
damages. See Hill, 383 S.W.2d at 81–82. In Hill, the could prevent nonsettling parties from receiving settlement
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
8, 1998, and to all other cases currently in the judicial process
credit by refusing to allocate between actual and punitive
in which the issue has been preserved. For valid settlements
damages in settlement agreements. See United States Indus.,
agreements reached before May 8, 1998, plaintiffs can prove
854 F.2d at 1262. The better rule is to require a settling party
through extrinsic evidence whether, when the settlement was
to tender to the trial court, before judgment, a settlement
reached, the parties allocated between actual and punitive
agreement allocating between actual and punitive damages as
damages.
a condition precedent to limiting dollar-for-dollar settlement
credits to settlement amounts representing actual damages.
Accord Howard, 674 F.2d at 351 (holding that the defendant
was entitled to a credit equaling the full amount of the VI. CONCLUSION
settlement when the plaintiff conceded that the agreement did
not indicate whether it covered punitive damages). We affirm the court of appeals' holding that there is legally
sufficient evidence to support the trial court's judgment
Therefore, we hold that to limit a nonsettling party's dollar- against Mobil for gross negligence. We affirm the court of
for-dollar settlement credit to an amount representing actual appeals' factual sufficiency review of the punitive damages
damages, the settling party must tender a valid settlement award. We reverse the court of appeals' erroneous $91,555.58
agreement allocating between actual and punitive damages to award in extra punitive damages, and its denial of settlement
credit. In the interest of justice, we remand the case to
the trial court before judgment. 4 Otherwise, the nonsettling
the trial court and instruct the court to afford the Ellenders
party is entitled to a credit equaling the entire settlement
an opportunity to prove whether there was any allocation
amount.
between actual and punitive damages in the settlement
agreement. We further instruct the trial court to grant
[22] Because we announce a new proposition of law today,
a settlement credit in accordance with this opinion, to
we remand this action to the trial court to allow the Ellenders
recalculate punitive damages, excluding the estate's actual
an opportunity to prove what allocation between actual and
damages, and to recalculate prejudgment interest.
punitive damages, if any, was agreed to when they settled with
the other defendants. The issue is not what the parties *929
would have agreed to, but what if anything they did agree to.
The trial court should allow the Ellenders to prove allocation OWEN, Justice, did not participate in the decision.
through extrinsic evidence. Furthermore, our holding limiting
plaintiffs' ability to prove allocation to that which is expressly All Citations
stated in a valid settlement agreement applies to all cases in
968 S.W.2d 917, 41 Tex. Sup. Ct. J. 763
which a valid settlement agreement is reached on or after May
Footnotes
1 See former TEX. CIV. PRAC. & REM.CODE § 41.007, Act of June 3, 1987, 70 th Leg., 1 st C.S., ch. 2, § 2.12, 1987 Tex.
Gen. Laws 37, 94, amended and renumbered by Act of April 6, 1995, 74 th Leg., ch. 19, § 1, 1995 Tex. Gen. Laws 108.
2 In 1995, after this case was tried, the Legislature substituted malice for gross negligence as the prerequisite for punitive
damages in cases like this one. However, the Legislature also redefined “malice” as:
(A) a specific intent by the defendant to cause substantial injury to the claimant [or]
(B) an act or omission
(i) which when viewed objectively from the standpoint of the actor at the time of its occurrence involves an extreme
degree of risk, considering the probability and magnitude of the potential harm to others; and
(ii) of which the actor has actual, subjective awareness of the risk involved, but nevertheless proceeds with
conscious indifference to the rights, safety, or welfare of others.
See TEX. CIV. PRAC. & REM.CODE § 41.001(7). The malice definition in section 41.001(7)(B) mirrors this Court's
definition of gross negligence inTransportation Ins. Co. v. Moriel, 879 S.W.2d 10, 23 (Tex.1994). Therefore, this
opinion's legal sufficiency review of gross negligence is relevant to legal sufficiency review of malice as redefined by
section 41.001(7)(B).
3 See Alamo Nat'l Bank v. Kraus, 616 S.W.2d 908 (Tex.1981).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (1998)
41 Tex. Sup. Ct. J. 763
4 Notably, this Court has held that Texas Rule of Civil Procedure 11 applies to settlement agreements. See Padilla v.
LaFrance, 907 S.W.2d 454 (Tex.1995); Kennedy v. Hyde, 682 S.W.2d 525 (Tex.1984). Accordingly, the plaintiff may
either offer a written and signed settlement agreement into the record, or the agreement may be made in open court
and entered of record. See TEX.R. CIV. P. 11. An allocation completed in either form is enough to meet the plaintiff's
burden of proof.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
PP
Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
Warranties actionable under Deceptive Trade
Practices-Consumer Protection Act (DTPA),
KeyCite Yellow Flag - Negative Treatment both express and implied, must be recognized
Declined to Extend by Excel Corp. v. Reyes, Tex.App.-Amarillo,
by common law or created by statute. V.T.C.A.,
October 17, 2000
Bus. & C. § 17.50(a)(2).
901 S.W.2d 434
Supreme Court of Texas. 32 Cases that cite this headnote
The PARKWAY COMPANY, Parkway [2] Contracts
Company of Texas, Inc. and Sugar Services
Creek Corporation, Petitioners,
Implied service warranty is common law
v. creation.
Ray WOODRUFF and Constance Woodruff
Presley, Mickelson & Klein, Inc., and Vansickle, 17 Cases that cite this headnote
Mickelson & Klein, Inc., Respondents.
[3] Antitrust and Trade Regulation
No. D–4185. | Argued Sept. 21,
Other particular subjects
1994. | Decided June 15, 1995. |
No implied warranty to perform future
Rehearing Overruled July 21, 1995.
development services would be imposed in
Homeowners brought action against developer for damages in connection with real estate developer's sale of
connection with flooding of their home caused by developer's lot to homebuilder, as no services were included
allegedly negligent activities resulting in diversion of surface in sales transaction; developer's use of phrase
water across their property. The 268th District Court, Fort “planned community” to describe development
Bend County, Brady G. Elliott, J., rendered judgment for could fairly be construed as representation as
homeowners against developer, and developer appealed. The to form of common interest ownership, not
Houston First Judicial District Court of Appeals, 857 S.W.2d implied promise to provide future development
903, affirmed as reformed. On application for writ of error, the services, and scale model of development did
Supreme Court, Cornyn, J., held that: (1) there was no implied not represent implied promise to never adversely
warranty that developer's postsale development services affect lot, which was flooded allegedly because
would be performed in good and workmanlike manner, of developer's negligence. V.T.C.A., Bus. & C.
so as to support claim under Deceptive Trade Practices- § 17.50(a)(2).
Consumer Protection Act (DTPA); (2) developer did not
20 Cases that cite this headnote
act unconscionably, so as to violate DTPA; (3) allowing
award of both cost of repairs and of diminution in value of
home improperly gave homeowners double recovery; and (4) [4] Antitrust and Trade Regulation
evidence did not demonstrate compensable “mental anguish” Housing sales
of homeowners. Real estate developer did not act
“unconscionably” in connection with
Modified and affirmed as reformed. development activities allegedly responsible for
flooding of lot owners' home, thus barring
Gammage, J., filed dissenting opinion. imposition of liability under Deceptive Trade
Practices-Consumer Protection Act (DTPA)
on unconscionability theory; homeowners
advanced no theory as to how developer's alleged
West Headnotes (13)
advantage in exclusively controlling drainage on
adjacent lots was exploited at time of sale to
[1] Antitrust and Trade Regulation homebuilder, and there was no evidence that
Warranties and Service Contracts developer, at time of sale, did anything to cause
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
gross disparity between value of home and what When prevailing party fails to elect between
owners paid for it. V.T.C.A., Bus. & C. § alternative measures of damages, court should
17.45(5). render judgment affording greatest recovery.
16 Cases that cite this headnote 3 Cases that cite this headnote
[5] Antitrust and Trade Regulation [10] Damages
In general; unfairness Nature and theory of compensation
“Unconscionability,” for purposes of Deceptive Damages for diminution in value and for cost
Trade Practices-Consumer Protection Act of repairs are not always duplicative; diminution
(DTPA), requires that seller take advantage in value does not duplicate cost to repairs if
of special skills and training at time of sale. diminution is calculated based on comparison of
V.T.C.A., Bus. & C. § 17.45(5). original value of property and value after repairs
are made.
9 Cases that cite this headnote
8 Cases that cite this headnote
[6] Antitrust and Trade Regulation
Completion of transaction [11] Damages
For purposes of determining “unconscionability” Mental suffering and emotional distress
under Deceptive Trade Practices-Consumer Award of mental anguish damages will survive
Protection Act (DTPA), time for evaluating legal sufficiency challenge when plaintiffs have
disparity between value received and introduced direct evidence of nature, duration
consideration paid is time of sale. V.T.C.A., Bus. and severity of their mental anguish, thus
& C. § 17.45(5). establishing substantial disruption in their daily
routine; such evidence, whether in form of
2 Cases that cite this headnote plaintiffs' own testimony, that of third parties or
that of experts, is more likely to provide fact
[7] Damages finder with adequate details to assess mental
Nature and theory of compensation anguish claims, and absence of such evidence
justifies close judicial scrutiny of other evidence
Homeowners bringing action in connection with
offered on that element of damages.
flooding of their home received improper double
recovery when they were allowed award of both 260 Cases that cite this headnote
costs of repairs and diminution in value of home,
as diminution was calculated assuming that no
repairs had been made. [12] Appeal and Error
Particular Cases and Items
15 Cases that cite this headnote When claimants fail to present direct evidence
of nature, duration or severity of their anguish,
[8] Damages Supreme Court applies traditional “no evidence”
Nature and theory of compensation standard to determine whether record reveals
any evidence of high degree of mental pain and
Law does not permit double recovery.
distress that is more than mere worry, anxiety,
9 Cases that cite this headnote vexation, embarrassment or anger to support any
award of damages.
[9] Damages 297 Cases that cite this headnote
Construction and operation
[13] Damages
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
conclude that the homeowners received a double recovery
Mental suffering and emotional distress
for their property damage, and delete the duplicative part
Evidence did not demonstrate that homeowners
of the award. We affirm the remainder of the judgment for
suffered compensable “mental anguish” in
negligence-based damages, which were not challenged by the
connection with flooding of their home;
developer, and for out-of-pocket expenses. Finally, we agree
homeowners' statements, “I was hot,” “It was
with those parts of the court of appeals' opinion that find no
just upsetting,” and “I was just upset” showed
evidence to support the mental anguish damages awarded and
anger, frustration or vexation, but did not
that affirm the directed verdict rendered on Parkway's claims
support conclusion that those emotions rose to
against its engineers.
compensable level.
145 Cases that cite this headnote
I. Facts
The Sugar Creek Corporation and its successor-in-interest,
Attorneys and Law Firms the Parkway Company (collectively, Parkway), created a real
estate development known as Sugar Creek on the south side
*436 Randall D. Wilkins, Edward J. Hennessy, Houston, for of Houston. Parkway prepared the land for homebuilding by
petitioners. platting, surveying, regrading, building roads, and dealing
with local regulatory and utility authorities. The Sugar Creek
Amy Dunn Taylor, Linda Foreman Clark, Michael T. Powell, community was developed over a period of years, and
Houston, for respondents. included plans for retail and recreational areas.
Opinion
In 1977 Harrington Homes purchased the lot at issue, in
Justice CORNYN delivered the opinion of the Court, joined section 24 of the development, and built a house on it. After
by Chief Justice PHILLIPS, Justice GONZALEZ, Justice Harrington Homes sold it to the original occupants, the house
HIGHTOWER, Justice HECHT, Justice ENOCH, Justice was resold and occupied by another homeowner before Ray
SPECTOR and Justice OWEN. and Constance Woodruff bought it and moved in during April
1981.
We decide in this case whether a real estate development
company violated the Texas Deceptive Trade Practices In 1983 Parkway began to develop Sugar Creek section 34,
—Consumer Protection Act (DTPA), TEX.BUS. & which lies immediately to the east of the Woodruffs' lot and
COM.CODE § 17.41–.63, when it sold a vacant lot in a the Kaneb tract, a large commercial tract that lies to the north
master-planned community and years later negligently caused of the Woodruffs' lot and the rest of section 24. During the
a home built on that lot to be flooded. The homeowners course of its work in early 1983, Parkway began constructing
argue that the developer breached an implied warranty that its a wall along the line dividing section 34 from the Kaneb tract
future development services would be performed in a good and section 24.
and workmanlike manner and that it acted unconscionably.
Because we reject both of these theories of DTPA liability in
this case, we reform the judgment of the court of appeals to *437
delete any award of damages based on the DTPA. We also
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Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
The Woodruffs filed suit in 1984 for negligence, gross
Ray Woodruff, who holds an engineering degree, advised
negligence, nuisance, trespass, and Water Code violations.
Parkway by letter on February 3, 1983, that the wall might
They also alleged that Parkway was liable under the DTPA
alter drainage patterns on his lot. Six days later, during
for: (1) unconscionable conduct; (2) false, misleading, or
a heavy rainstorm, the Woodruffs observed that regrading
deceptive acts or practices; and (3) the knowing breach of
activities on section 34 had diverted runoff from the Kaneb
an implied warranty to perform “development services” in “a
tract onto their land.
good and workmanlike manner.” Parkway, in turn, filed third-
party claims against its engineers, the owners of the Kaneb
After investigation, Parkway's engineers proposed a new
tract, and Harrington Homes. The Woodruffs later amended
drainage system, but Mr. Woodruff objected to the proposal
their petition to sue directly these additional parties.
because it called for the construction of an earthen berm
across the back of his lot. Instead Woodruff installed
At trial, the district court granted a directed verdict in
another type of drainage system. Parkway offered to pay for
favor of Harrington Homes and Parkway's engineers. On the
Mr. Woodruff's drainage system on the condition that the
remaining claims, a jury found that Parkway was negligent
Woodruffs release Parkway from any future liability. The
but that the owners of the Kaneb tract were not. The jury
Woodruffs objected to the release, however, and covered the
also found that Parkway violated the Water Code, that it
construction costs themselves. Parkway finished the wall in
knowingly breached an implied warranty, and that it acted
July 1983.
unconscionably. The jury declined, however, to find that
Parkway was grossly negligent, that it engaged in any
When Hurricane Alicia struck the Texas coast on August 18,
false, misleading, or deceptive acts or practices, or that it
1983, run-off from the Kaneb tract flooded the Woodruffs'
intentionally caused a trespass of the Woodruffs' property.
sun room. The house flooded again in 1986, 1987, and 1989.
The court rendered *438 judgment for actual damages of
As a result, the house suffered a cracked foundation and other
$220,000, including $120,000 for diminution in value and
structural damage.
$100,000 for repairs to the Woodruffs' house. Based on the
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Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
DTPA findings, the trial court also rendered judgment for judicial recognition of an implied warranty was justified
the Woodruffs for “additional” damages, a percentage-based in light of existing remedies available to the patient. In
award of attorney's fees, and mental anguish damages. denying recovery under an implied warranty theory, the Court
concluded: “It is not necessary to impose an implied warranty
The court of appeals affirmed most of the trial court's theory as a matter of public policy because the plaintiff patient
judgment, but deleted any damages for mental anguish, and has adequate remedies to redress wrongs committed during
added $14,000 in out-of-pocket expenses claimed by the treatment.” Id. at 96.
Woodruffs. 857 S.W.2d 903.
*439 Two years later, in Melody Home, this Court first
recognized a limited implied warranty relating to services.
Without retreating from its holding in Dennis v. Allison,
II. DTPA Violations
the Court recognized “an implied warranty to repair or
The Woodruffs allege that Parkway violated the DTPA by modify existing tangible goods or property in a good and
breaching an implied warranty to perform future development workmanlike manner.” 741 S.W.2d at 354.
services in a good and workmanlike manner, or alternatively,
by committing an unconscionable act. Assuming that the At least two principles from Dennis and Melody Home apply
in this case. First, an implied warranty will not be judicially
Woodruffs are consumers under the DTPA, 1 we analyze
imposed unless there is a demonstrated need for it. Second,
each basis for DTPA recovery.
the Melody Home implied warranty extends only to services
provided to remedy defects existing at the time of the relevant
consumer transaction. 5
A. Implied Warranty
[3] These preliminary issues aside, we view the issue
[1] [2] The DTPA prohibits the breach of an express or
presented here to be whether consumers who are injured by
implied warranty, see TEX.BUS. & COM.CODE § 17.50(a)
substandard services can recover under an implied warranty
(2), but it does not create warranties. The warranties, both
theory when they neither sought nor acquired the services
express and implied, actionable under the DTPA must be
about which they complain. The requirement that a consumer
recognized by the common law or created by statute. See La
urging an implied warranty for services seek or acquire that
Sara Grain Co. v. First Nat'l Bank, 673 S.W.2d 558, 565
specific service flows from the historical definition of a
(Tex.1984). Unlike the implied warranties imposed on certain
warranty:
sales transactions under the Uniform Commercial Code, 2
the implied service warranty is a common law creation. See A warranty is an express or implied
Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 353 statement of something with respect
(Tex.1987) (“An implied warranty arises by operation of law to the article sold, which the seller
when public policy so mandates.”). Before it was adopted by undertakes shall be part of a contract
the court of appeals, the implied warranty to perform future of sale; and though part of the contract,
development services was unknown to Texas jurisprudence. yet collateral to the express object of it.
The question presented for our decision, then, is whether such
ARTHUR BIDDLE, A TREATISE ON THE LAW
an implied warranty 3 should be recognized under the facts
OF WARRANTIES IN THE SALE OF CHATTELS 1
of this case.
(Philadelphia, Kay & Brother 1884) (emphasis added). 6
The judicial recognition of implied warranties in service Therefore, to determine whether an implied warranty to
transactions in Texas has had a short and somewhat uneven provide future development services should be extended
to the Woodruffs, we must first identify an underlying
history. 4 Until 1987 this Court had never recognized a
transaction upon which an implied warranty might be
cause of action for breach of an implied warranty relating
imposed. The parties identify three possible underlying
to services. In Dennis v. Allison, 698 S.W.2d 94 (Tex.1985),
transactions: the sale of the lot from Parkway to the
we declined to recognize an implied warranty in connection
homebuilder, the purchase of the home by the Woodruffs, and
with medical services when a patient was sexually assaulted
and beaten by her psychiatrist. The Court considered whether
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
the regrading and drainage work performed by Parkway in ownership. 8 In the Sugar Creek development, Parkway
1983. established a homeowners' association to maintain common
area improvements, imposed similar deed restrictions on
Of these three options, we find the last one the least all homes within the development, and created the formal
persuasive. In the 1983 negotiations, no contract was development plan required for a planned unit development.
formed, and no goods or services were sold. The second These features distinguished Sugar Creek as a “planned
alternative, the Woodruffs' purchase of the home in 1981, community,” as the term is used in the real estate industry.
is also problematic. Parkway was not involved at all in this Parkway's use of the term to describe its development can be
transaction and did not sell any goods or offer or agree fairly construed as a representation about the form of common
to perform any particular services in connection with the interest ownership, not an implied promise to provide future
sale. That leaves the initial sale of the lot by Parkway to development services of the type at issue here.
the homebuilder as the only remaining transaction upon
which a service-related implied warranty could be imposed. The only other evidence relied on by the Woodruffs to
The Woodruffs' claim hinges on whether any services were support their implied warranty claim is a scale model of the
conveyed or promised as a part of this transaction. The sale development displayed in Parkway's information center. We
clearly conveyed goods, 7 but our focus is on whether the sale recognize that models can create express warranties about
had a service element as well. the qualities of goods sold: when a model is displayed prior
to sale, the goods delivered must conform to the model.
We find no reasonable basis under these facts for concluding TEX.BUS. & COM.CODE § 2.313(a)(3). But the Woodruffs'
that Parkway impliedly agreed to perform future development argument confuses a statutorily created express warranty with
services for the Woodruffs' benefit. The court of appeals a judicially-created implied warranty. The testimony about
pointed to Parkway's claim that Sugar Creek was a “master Parkway's model was to the effect that it was intended to
planned community” as evidence of an implied promise to show “where everything was eventually going to be within
provide these services. The court reasoned that this term the community.” Neither our past holdings nor sound logic
support the conclusion that such a model represents an
certainly suggests to a potential implied promise to never adversely affect the Woodruffs'
purchaser that each aspect of the property.
development would be undertaken
with concern for the rest of the Accordingly, we hold that no implied warranty to perform
development, that the subdivision future development services should be imposed in this
would not be built piecemeal, and that case. Because no services were included in the transaction,
the construction of one section would no service-related warranty was breached. Moreover, the
not, as happened here, be allowed Woodruffs have not met their burden under Dennis v. Allison
to adversely affect another section. to show why damages for negligence do not provide an
The concept of “master planning” “adequate remed[y] to redress wrongs committed,” see 698
also implies provision of continued S.W.2d at 96, and thus have not demonstrated a compelling
competent development including case for recognition of an implied warranty under these
flood control, drainage, management, circumstances. To the extent the judgment relied on this
and maintenance services. breach of warranty theory, it cannot stand.
857 S.W.2d at 911.
In reaching this conclusion, the court of appeals equated B. Unconscionability
the use of the term “master *440 planned community”
with an implied promise to never “adversely affect” any [4] The Woodruffs also contend that Parkway violated
homeowner in the community. We do not believe that the DTPA by acting unconscionably. The DTPA defines an
these terms should be given such an expansive meaning. “unconscionable action or course of action” as one which:
“Master planned community” and “planned community”
are terms of art, specifying a particular form of common
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
any remedy predicated on the DTPA. This includes the
A. takes advantage of the lack of knowledge, ability, discretionary award of damages for a knowing violation of
experience, or capacity of a person to a grossly unfair the DTPA and the award of attorney's fees. In the absence of
degree; or recovery under the DTPA, there is no basis for the recovery
B. results in a gross disparity between the value received of attorney's fees in this case. 9 See First City Bank v. Guex,
and consideration paid, in a transaction involving 677 S.W.2d 25, 30 (Tex.1984).
transfer of consideration.
TEX.BUS. & COM.CODE § 17.45(5). The Woodruffs did
III. Double Recovery
not specify whether they sought to show unconscionability
under Part A or B of this definition, and both parts were [7] Parkway also alleges that the judgment gives the
included in the jury charge. Although the jury found that Woodruffs a double recovery for the damages to their home.
Parkway committed an unconscionable act, the court of Parkway claims that the court of appeals erred by allowing
appeals did not address unconscionability because it affirmed an award of both the cost of repairs and the diminution in
the trial court's DTPA judgment on the theory of implied the value of the home, because the diminution was calculated
warranty, which we have rejected. Because unconscionability assuming that no repairs had been made. We agree.
is an alternative theory of DTPA liability upon which the
court of appeals judgment might be affirmed, we must address [8] [9] Texas law does not permit double recovery.
it. Parkway challenges the legal sufficiency of the evidence Southern Co. Mut. Ins. Co. v. First Bank & Trust, 750 S.W.2d
under both definitions. 170, 173–74 (Tex.1988). When the prevailing party fails to
elect between alternative measures of damages, the court
[5] Under Part A, the Woodruffs argue that Parkway's should render the judgment affording the greatest recovery.
exclusive control over the *441 drainage on the adjacent See, e.g., Kish v. Van Note, 692 S.W.2d 463, 468 (Tex.1985)
lots deprived them of the “ability or capacity” to protect (rendering judgment for each separate element of damages in
their own interests. The Woodruffs overlook the fact that order to give the plaintiffs complete compensation for their
unconscionability requires that the seller take advantage of losses).
special skills and training at the time of the sale. See Chastain
v. Koonce, 700 S.W.2d 579, 584 (Tex.1985) (rejecting [10] Damages for diminution in value and damages for cost
allegations of unfairness based on events occurring one year of repairs are not always duplicative. Diminution in value
after the sale). The Woodruffs advance no theory as to how does not duplicate the cost of repairs if the diminution is
this advantage was exploited at the time of the sale of the calculated based on a comparison of the original value of the
property from Parkway to the homebuilder, and there is no property and the value after repairs are made. See Ludt v.
evidence that would support such a finding. McCollum, 762 S.W.2d 575, 576 (Tex.1988). As the court
of appeals recounted, however, the Woodruffs' appraiser
[6] Under Part B, the Woodruffs argue that the flooding calculated the diminution in value by comparing the original
created a gross disparity between the value of their home value of the house to the value of the unrepaired house:
and what they paid for it. Again, the time for evaluating
the disparity in value is the time of sale. Diminution in The Woodruffs' expert appraiser
value caused by later events cannot support a claim of testified that he had done two
unconscionability. As there is no evidence that Parkway appraisals of market value as of
did anything to cause a gross disparity in value at the September 19, 1983, one assuming
time of sale, the Woodruffs' claim under this definition of the flooding, and attendant damages
unconscionability also fails. of a cracked slab, had occurred and
one assuming it had not. The house
was worth $240,000 before it flooded
and without being subject to flooding.
C.
After it flooded and with the damages
Because we conclude that the Woodruffs cannot recover cause[d] by the flooding, it was worth
under the DTPA, we reform the judgment to delete $120,000.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
the body as the bones and muscles, and an injury to the
857 S.W.2d at 913 (emphasis added). The Woodruffs also body included the whole, and its effects were not separable.”
sought, and the jury awarded, $100,000 for the cost to repair Connell v. Western Union Tel. Co., 116 Mo. 34, 22 S.W. 345,
the slab of the house. The Woodruffs were required to choose 349 (1893).
between the diminution in market value of the house and
the cost of repair; they cannot recover both. Accordingly, we Similarly, once particularly disturbing events were proved
reduce the judgment for actual damages by $100,000. by reference to objective phenomena or conditions, the
law generally allowed the claimant's mental suffering to
be presumed to flow from such events. See Nancy Levit,
*442 IV. Mental Anguish Ethereal Torts, 61 GEO.WASH.L.REV. 136, 142 (1992)
(noting that recovery for mental anguish “depended on proof
The Woodruffs challenge the court of appeals' deletion of of an independent tort”). The oldest examples of this category
their award for mental anguish based on legal insufficiency. of cases are those involving assault, slander, and other
The court of appeals concluded that “the evidence simply intentional torts. See, e.g., I. de S. v. W. de S., Y.B. 22 Edw. III,
does not demonstrate mental anguish as that term is defined fo. 99, pl. 60 (1348) (allowing tavern-keeper to recover when
by law.” 857 S.W.2d at 916. We agree with the court of the defendant threw a hatchet at the tavern-keeper's wife).
appeals.
Although limiting mental anguish damages to cases with
At the outset, we emphasize the limited nature of our present either physical impact or disturbing events avoided many
inquiry: we are focusing only on the type of evidence required evidentiary problems, the limitations were admittedly
to support an award of mental anguish damages in cases in arbitrary: some claimants with relatively minor mental
which recovery is allowed. Nonetheless, we find it helpful to anguish recovered, while others who might have suffered
begin with a historical overview of mental anguish damages significant anguish were precluded from any recovery. As
before addressing the legal sufficiency of the Woodruffs' a result, many of these limitations were first relaxed and
evidence of their mental anguish. later abandoned. The requirement of a physical impact was
relaxed, and recovery for mental anguish was permitted
The history of mental anguish damages in Anglo–American so long as the anguish manifested itself physically. See
jurisprudence is convoluted and complex. Mental anguish James G. Curenton, The Twilight Zone of Danger: Negligent
claims have long been distrusted by the common law, and Infliction of Emotional Distress as an Actionable Tort, 15
an early general rule developed that mental anguish damages CUMB.L.REV. 519, 522 n. 23 (1985) (listing 39 jurisdictions
were not recoverable. See Lynch v. Knight, 11 Eng.Rep. 854, that abandoned the physical impact rule between 1890 and
863 (H.L.1961). The inherently subjective nature of mental 1983). But see Consolidated Rail Corp. v. Gottshall, 512 U.S.
anguish and the concomitant potential for false claims were 532, ––––, 114 S.Ct. 2396, 2406, 129 L.Ed.2d 427 (1994)
two of the most commonly cited reasons for skepticism about (noting that at least five states continue to adhere to the
such claims. See, e.g., Battalla v. State, 10 N.Y.2d 237, physical impact test). Abandonment of the physical impact
219 N.Y.S.2d 34, 37–39, 176 N.E.2d 729, 731–32 (1961); requirement led the way to recovery for mental injuries
Knaub v. Gotwalt, 422 Pa. 267, 220 A.2d 646, 647 (1966). suffered by bystanders in the “zone of danger,” see id. (noting
Exceptions to the general rule gradually emerged, falling into that 14 states have expanded recovery for mental anguish
roughly two categories. Recovery for mental anguish was to this point and no further); and even to specified parties
permitted when the mental suffering was: (1) accompanied beyond this zone. See, e.g., Dillon v. Legg, 68 Cal.2d 728,
by a physical injury resulting from a physical impact, or (2) 69 Cal.Rptr. 72, 80, 441 P.2d 912, 920 (1968) (allowing
produced by a particularly upsetting or disturbing event. recovery for mental anguish by a witness to the injury of
a close relative). In *443 recent years, several states have
Once the threshold requirements of physical injury and eliminated the physical manifestation requirement altogether.
impact or of particularly disturbing events were met, recovery See, e.g., Schultz v. Barberton Glass Co., 4 Ohio St.3d 131,
of mental anguish damages was not hard to justify. Mental 447 N.E.2d 109, 112 (1983); Johnson v. Ruark Obstetrics &
suffering could be inferred from the fact of physical injury. Gyn. Assocs., 327 N.C. 283, 395 S.E.2d 85, 97 (1990).
The Missouri Supreme Court, for example, justified this
inference by reasoning that “the mind is as much a part of
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Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
Over time, the disturbing events exception also yielded to Wyatt, 442 S.W.2d 904, 907 (Tex.Civ.App.—Houston [14th
pressure to provide compensation in more routine cases. Dist.] 1969, writ ref'd n.r.e.).
Courts took cognizance of mental anguish injuries not only
in cases of malicious intentional wrongs, but also in cases The physical manifestation requirement was first excused
involving violations of statutes. See, e.g., Johnson v. Alaska under exceptional circumstances, and then abandoned
State Dep't of Fish & Game, 836 P.2d 896, 915 (Alaska completely in 1987. See St. Elizabeth Hosp. v. Garrard, 730
1991) (allowing recovery of mental anguish damages caused S.W.2d 649, 654 (Tex.1987), overruled on other grounds,
by violation of a discrimination statute). But cf. Gallagher Boyles v. Kerr, 855 S.W.2d 593 (Tex.1993). Similarly, the
v. Bituminous Fire & Marine Ins. Co., 303 Md. 201, 492 types of culpable conduct for which mental anguish damages
A.2d 1280, 1284 (1985) (refusing to permit recovery of were allowed expanded to include more commonplace
mental anguish damages caused by the intentional violation misconduct, such as knowing misrepresentations in a
of a statute when the statute merely required the payment of consumer transaction. See Luna v. North Star Dodge Sales,
money). Some jurisdictions came to recognize a distinct legal Inc., 667 S.W.2d 115 (Tex.1984).
duty to avoid even the negligent infliction of emotional harm
itself. See, e.g., Taylor v. Baptist Med. Ctr., Inc., 400 So.2d As mental anguish damages have became more readily
369 (Ala.1981); Montinieri v. Southern New Eng. Tel. Co., available, members of this Court have voiced concerns
175 Conn. 337, 398 A.2d 1180 (1978); Rodrigues v. State, about the potential for over-compensation and even
52 Haw. 283, 472 P.2d 509 (1970); Gammon v. Osteopathic double recovery. See Moore v. Lillebo, 722 S.W.2d 683,
Hosp. of Maine, Inc., 534 A.2d 1282 (Me.1987); Johnson 688–692 (Tex.1986) (Spears, J., joined by Gonzalez,
v. Supersave Markets, Inc., 211 Mont. 465, 686 P.2d 209 J., dissenting) (arguing that elimination of physical
(1984); Bass v. Nooney Co., 646 S.W.2d 765 (Mo.1983); manifestation requirement for recovery of mental anguish
Johnson v. Ruark Obstetrics & Gyn. Assocs., 327 N.C. 283, damages would allow damages for non-compensable sorrow,
395 S.E.2d 85 (1990); Schultz v. Barberton Glass Co., 4 Ohio anger, worry, and fear, and in a wrongful death case,
St.3d 131, 447 N.E.2d 109 (1983). would duplicate those damages already allowed for loss of
companionship and society); see also Birchfield v. Texarkana
Texas law has generally followed the same ad hoc pattern of Memorial Hosp., 747 S.W.2d 361, 368–69 (Tex.1987)
development. We initially allowed mental anguish damages (disallowing recovery for “shock and emotional trauma” as
only in cases in which there was a physical injury. See Hill duplicative *444 of award for mental anguish). Genuineness
v. Kimball, 76 Tex. 210, 13 S.W. 59, 59 (1890) (“Probably of a claim of mental anguish has never been the solitary basis
an action will not lie when there is no injury except the for judicial concerns about this species of recovery. Rather,
suffering of the fright itself....”). At the turn of the century, the variability and thus unpredictability of such awards,
we allowed recovery for mental anguish unaccompanied by due to the broad discretion routinely afforded juries when
physical impact injury, provided the mental anguish had a awarding mental anguish damages, helps to explain some of
physical manifestation. See Hill, 13 S.W. at 59; Gulf, C. & the artificial constraints historically placed on the recovery
S.F. Ry. Co. v. Hayter, 93 Tex. 239, 54 S.W. 944, 945 (1900). of such damages. The early requirements for establishing the
We eased the physical impact rule even further when we recoverability of mental anguish damages served primarily
adopted the bystander rule from Dillon v. Legg in Freeman v. as proxies for direct evidence of mental injury. When, for
City of Pasadena, 744 S.W.2d 923, 923–24 (Tex.1988). example, evidence of a physical manifestation of a mental
injury was required, evidence tended to be directed at
Texas courts have also struggled to distinguish between proving the manifestation, rather than proving the amount of
the disturbing events that justify mental anguish damages actual anguish. Similarly, when recovery of mental anguish
and those that do not. Unwilling to confine mental anguish damages was limited to cases of especially culpable conduct,
damages to intentional torts, our courts have allowed mental the focus of the evidence tended to be on the nature of the
anguish damages for such things as failing to deliver a malfeasance, rather than on the extent of anguish. See, e.g.,
telegraph relating to death or last illness, see Stuart v. Western Texas & Pac. Ry. Co. v. Armstrong, 93 Tex. 31, 51 S.W.
Union Tel. Co., 66 Tex. 580, 18 S.W. 351, 353 (1885); 835 (1899) (devoting a significant portion of the opinion
sending a passenger to the wrong destination, see Texas & to the details of the railroad's mistaken issuance of a ticket
Pac. Ry. Co. v. Armstrong, 93 Tex. 31, 51 S.W. 835, 836 to the wrong destination, but only a single sentence to the
(1899); and mishandling a corpse. See Pat H. Foley & Co. v. passenger's reaction).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
or procured by the plaintiff, justifies close judicial scrutiny of
The erosion of these proxies as a substitute for proof of other evidence offered on this element of damages.
mental anguish has created a vacuum of sorts, in which the
only guidance given by trial courts to juries is a confounding [12] [13] When claimants fail to present direct evidence
definition of mental anguish, of which the following is of the nature, duration, or severity of their anguish, we apply
typical: traditional “no evidence” standards to determine whether the
record reveals any evidence of “a high degree of mental
The term “mental anguish” implies a pain and distress” that is “more than mere worry, anxiety,
relatively high degree of mental pain vexation, embarrassment, or anger” to support any award of
and distress. It is more than mere damages. See J.B. Custom Design & Bldg. v. Clawson, 794
disappointment, anger, resentment S.W.2d 38, 43 (Tex.App.—Houston [1st Dist.] 1990, no writ).
or embarrassment, although it may In applying this standard to the record before us, we conclude
include all of these. It includes a that the jurors here were left to speculate about the existence
mental sensation of pain resulting from of compensable mental anguish in this case.
such painful emotions as grief, severe
disappointment, indignation, wounded *445 Only two passages of the testimony directly addressed
pride, shame, despair and/or public the Woodruffs' mental state. Ray Woodruff testified:
humiliation.
I was hot. I was very disturbed about that, and called him
Trevino v. Southwestern Bell Tel. Co., 582 S.W.2d and said, “I would like to sell you a house. I think you have
582, 584 (Tex.Civ.App.—Corpus Christi 1979, no just flooded my property, I think you have messed up my
writ). This definition requires a jury to distinguish house.” I begged the guy not to.
between disappointment and severe disappointment, between
embarrassment and wounded pride, between anger and Constance Woodruff made the following statements in one
indignation. It is little wonder that courts and juries passage of her testimony (which is reprinted in full in the court
have found this and similar definitions of mental anguish of appeals' opinion):
“somewhat unwieldy.” Sanchez v. Guerrero, 885 S.W.2d
487, 494 (Tex.Civ.App.—El Paso 1994, no writ). [I]t's just not pleasant walking around on cement floors.
....
When a challenge is made to the sufficiency of the evidence
to go to the jury or to support the jury's finding, the same type Well, [our life] changed. It just—I don't know, it's a hard
of problem persists. The reviewing court must distinguish feeling to describe, unless you go through it. It was just
between shades and degrees of emotion. These distinctions upsetting, Ray would come home and he would become
are critical under our substantive law because evidence of very quiet. He was—I guess we both were. It caused some
lesser reactions cannot support an award of mental anguish friction between us because I wanted to just get it done
damages. and get over with and things couldn't move as quickly as
I wanted them to.
[11] Under this admittedly nebulous definition and the
traditional standard of review, it is nevertheless clear that ....
an award of mental anguish damages will survive a legal
Afraid? I wasn't afraid. I guess I was—I was just upset that
sufficiency challenge when the plaintiffs have introduced
it changed our life style. We were all very happy, and since
direct evidence of the nature, duration, and severity of their
I lived at home quite—well, most of the time, it meant a
mental anguish, thus establishing a substantial disruption in
lot to me. I'm a very private person, and I really maybe
the plaintiffs' daily routine. Such evidence, whether in the
depended upon my house a little more than other people.
form of the claimants' own testimony, that of third parties, or
that of experts, is more likely to provide the fact finder with
These statements show that the Woodruffs felt anger,
adequate details to assess mental anguish claims. Although
frustration, or vexation, but they do not support the conclusion
we stop short of requiring this type of evidence in all cases in
that these emotions rose to a compensable level. For the most
which mental anguish damages are sought, the absence of this
part, the quoted testimony does nothing but cite the existence
type of evidence, particularly when it can be readily supplied
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Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
of “mere emotions”: “I was hot,” “It was just upsetting,” and majority, however, that the Woodruffs do not have a cause of
“I was just upset.” It does not support the conclusion that the action under the DTPA.
Woodruffs suffered compensable mental anguish.
The majority maintains that the Woodruffs do not have
Not only is the record devoid of direct evidence of the nature, a cause of action under the DTPA based upon either
duration, or severity of the Woodruffs' mental anguish, there implied warranty or unconscionability theories. I believe the
is also no circumstantial evidence other than the fact of Woodruffs do present facts giving rise to a cause of action for
the flooding itself to support any award of mental anguish. Parkway's breach of an implied service warranty.
As we have noted, historically, some types of disturbing
or shocking injuries have been found sufficient to support As the majority notes, this Court has recognized an implied
an inference that the injury was accompanied by mental warranty “to repair or modify existing tangible goods or
anguish. As a general matter, though, qualifying events have property in a good and workmanlike manner” in Melody
demonstrated a threat to one's physical safety or reputation Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 354 (Tex.1987)
or involved the death of, or serious injury to, a family (emphasis added). The court of appeals correctly held that the
member. While the flooding of the Woodruffs' home certainly applicability of an implied warranty is not negated because
disrupted their lives temporarily, under our substantive the Woodruffs did not purchase their home from the builder.
law this type of disruption will not support an inference An implied warranty of good and workmanlike construction
that compensable mental anguish occurred. 10 Evidence of from a builder/vendor extends to the remote purchaser. Gupta
Parkway's negligence and the resulting property damage v. Ritter Homes, Inc., 646 S.W.2d 168 (Tex.1983); see also
cannot alone support the mental anguish damages. Nobility Homes of Texas, Inc. v. Shivers, 557 S.W.2d 77, 78
(Tex.1977).
We therefore affirm the court of appeals' holding that the
evidence of mental anguish damages was legally insufficient. The majority concludes, however, that Parkway did not
impliedly agree to perform future development services “for
the Woodruffs' benefit.” But the issue is not whether Parkway
agreed to provide development services for the Woodruffs'
V. Conclusion benefit; it is whether Parkway impliedly agreed to conduct
its future development in a manner not detrimental to the
The judgment of the court of appeals is hereby modified to
Woodruffs and consistent with the scheme of the master-
delete any recovery under the DTPA, for attorney's fees, and
planned community. When the Woodruffs purchased their
for the double recovery of damages, and as reformed the court
house, they contracted not only for a house but also for
of appeals' judgment is affirmed. Regarding Parkway's point
a master-planned community—a developed neighborhood.
of error challenging the directed verdict on its claims against
They were forced to rely on Parkway for its expertise on
the engineers, we agree with the court of appeals' that there
the technical aspects of building a housing development,
was no expert testimony of the applicable standard of care or
including its skills in providing adequate drainage for all lots,
any basis for finding a breach of that standard. 857 S.W.2d at
because the Woodruffs lacked the knowledge and ability to
919. Accordingly, we affirm the court of appeals' judgment
do so themselves.
for the engineers.
As the court of appeals notes, “a homebuyer/
consumer cannot, by reasonable examination, discern or
Justice GAMMAGE, dissenting. anticipate irresponsible or defective subdivision development
I dissent to that part of the majority opinion which refuses activities.” 857 S.W.2d 903, 911. It is reasonable for a
to recognize an implied *446 warranty cause of action consumer to expect that when he or she buys into a housing
in this case. I agree that the Woodruffs were awarded community under development the developer will conduct its
a double recovery when they received both the cost of future development activities without affirmatively damaging
repairs and the diminution in value of the home which was their property. Certainly no reasonable homebuyer would
calculated assuming no repairs were made. I also agree that purchase a house with the expectation that the neighborhood's
the Woodruffs presented insufficient evidence to support an developer would take affirmative action to damage the
award for mental anguish damages. I do not agree with the buyer's property. A developer or builder selling property in a
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
ensure that its construction on lots adjoining the Woodruffs'
development community may not be impliedly warranting for
would not result in property damage to other lots and homes
future development services, but equity demands that he does
in the area. As a professional developer, Parkway impliedly
warrant to not in the future violate the development's master
warranted that it would competently furnish development
plan in such a way as to interfere with purchasers' reasonably
services. By intentionally flooding developed lots and homes,
anticipated use and enjoyment of their property.
Parkway breached the implied warranty to repair or modify
existing property in a good or workmanlike manner.
Service provided in a good and workmanlike manner
means “that quality of work performed by one who has
I would find Parkway liable under the DTPA for breach of
the knowledge, training, or experience necessary for the
the implied warranty to repair or modify existing property in
successful practice of a trade or occupation and performed in
a good *447 and workmanlike manner. This cause should
a manner generally considered proficient by those capable of
be remanded for trial under alternative theories of negligence
judging such work.” Melody Home, 741 S.W.2d at 354. As
and DTPA. I respectfully dissent.
this Court pointed out in Melody Home, “a service provider is
in a much better position to prevent loss than is the consumer
of the service.... [A] consumer should be able to rely upon
All Citations
the expertise of the service provider.” Id. at 353. In this
case, Parkway, as the developer, was in the better position to 901 S.W.2d 434, 38 Tex. Sup. Ct. J. 828
Footnotes
1 Parkway argues that the Woodruffs are not consumers under the DTPA. See generally TEX.BUS. & COM.CODE
§ 17.45(4) (defining “consumer”); see also Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 539 (Tex.1981)
(summarizing judicial interpretations of this definition). Because we conclude that Parkway did not violate the DTPA, we
do not address the issue of consumer status. See Delaney Realty, Inc. v. Ozuna, 593 S.W.2d 797 (Tex.Civ.App.—El
Paso), writ ref'd n.r.e. per curiam, 600 S.W.2d 780, 782 (Tex.1980).
2 Chapter 2 of the Texas Business and Commerce Code establishes three implied warranties in sales transactions: (1)
the warranty of title, TEX.BUS. & COM.CODE, § 2.312; (2) the warranty of merchantability, TEX.BUS. & COM.CODE, §
2.314; and (3) the warranty of fitness for a particular purpose, TEX.BUS. & COM.CODE § 2.315. None of these warranties
applies to a strictly service transaction.
3 “Warranty” was defined in the charge as an implied promise that services sold or offered for sale by Sugar Creek to the
Woodruffs would be performed in a good and workmanlike manner.
4 Traditionally, commentators rejected the idea that warranties applied to services at all. See, e.g., BARKLEY CLARK &
CHRISTOPHER SMITH, THE LAW OF PRODUCT WARRANTIES at 2–16 (1984) (characterizing the implied warranty
of workmanlike performance as “merely another label for negligence”). The advent of enhanced remedies in consumer
protection statutes like the DTPA has provided an incentive to characterize what have previously been regarded as simple
negligence actions into breach of implied warranty claims actionable under the DTPA.
5 In Archibald v. Act III Arabians, 755 S.W.2d 84, 85 (Tex.1988), the Court considered whether “horse training services
fall within the scope of the implied warranty enunciated in Melody Home.” A divided court answered that question in the
affirmative, characterizing horse training as the modification of an existing tangible good, and viewing the case as fitting
squarely within its decision in Melody Home. Id. at 86.
6 Biddle wrote his treatise before service-related warranties were recognized, but the same reasoning applies to them.
7 The DTPA includes land in its definition of goods. See TEX.BUS. & COM.CODE § 17.45(1).
8 Master planned communities are typically residential developments zoned as planned unit developments with a
homeowners' association to maintain common area improvements and to enforce other covenants and restrictions
after the initial development stage. See Wayne S. Hyatt & Jo Anne P. Stubblefield, The Identity Crisis of Community
Associations: In Search of the Appropriate Analogy, 27 REAL PROP.PROB. & TRUST J. 589, 641–45 (1993). The owners
of the individual units hold title to the unit, but the association holds title to the common amenities. See UNIF.COMMON
INTEREST OWNERSHIP ACT, prefatory note, 7 U.L.A. 231 (1982). Membership in the association is mandatory for all
owners of individual units. Id.
9 Although the Woodruffs have established their entitlement to actual damages under theories of negligence and Water
Code violations, neither of these theories confers a right to recover attorney's fees.
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Parkway Co. v. Woodruff, 901 S.W.2d 434 (1995)
38 Tex. Sup. Ct. J. 828
10 Although the jurors apparently concluded that the flooding was an event from which mental anguish may be inferred,
this conclusion is at odds with the very definition of mental anguish. Homes flood with such frequency—from leaky roofs,
clogged toilets, and bursting pipes—that flooding cannot be said to be beyond the vicissitudes of daily life. Had the
Woodruffs presented additional evidence, for example, that the flooding jeopardized their personal safety, our conclusion
today would likely be different. In the absence of such evidence, the jury's verdict is necessarily based on sympathy or the
juror's personal experiences, considerations which are not permitted under Texas law. See Callejo v. Brazos Elec. Power
Co-op., 755 S.W.2d 73, 75 (Tex.1988); see also TEX.R.CIV.P. 226a (approved instructions) pt. II, para. 7 & pt. III, para. 1.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
QQ
Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
(DuPont); and ConocoPhillips f/k/a Conoco, Inc. (Conoco).
We will affirm the trial court's judgment.
2012 WL 310505
Only the Westlaw citation is currently available.
SEE TX R RAP RULE 47.2 FOR Background Facts
DESIGNATION AND SIGNING OF OPINIONS.
In November 1991, Parsons retained Windle Turley and
MEMORANDUM OPINION Windle Turley, P.C. (collectively, Turley) to represent him
Court of Appeals of Texas, in wrongful death and survival actions in connection with
Fort Worth. the death of his wife (the DuPont litigation). A jury
returned a verdict for Parsons, awarding him $4.75 million in
Roger K. PARSONS, Appellant
damages and also awarding punitive damages. The trial court
v.
granted judgment notwithstanding the verdict on the punitive
Robert M. GREENBERG; Legal Services P.C.,
damages but signed a $4.75 million judgment for Parsons.
Robert M. Greenberg, Attorney; Robert E.
Motsenbocker; Shafer, Davis, O'Leary & Stoker, Inc. In July 1996, Parsons retained Robert Greenberg to sue
f/k/a Shafer, Davis, McCollum, Ashley, O'Leary & Turley for legal malpractice (the Turley litigation) relating to
Stoker, Inc.; E.I. Du Pont de nemours and company; Turley's representation of him in the DuPont litigation. Later,
and ConocoPhillips f/k/a Conoco, Inc., Appellees. Parsons also hired Motsenbocker at Greenberg's suggestion.
Turley moved for summary judgment on limitations grounds
No. 02–10–00131–CV. | Feb. 2, 2012. because Turley was not served with citation prior to the
| Rehearing Overruled April 19, 2012. | expiration of the statute of limitations. The trial court granted
Reconsideration En Banc Overruled April 19, 2012. summary judgment for Turley, and the Dallas Court of
Appeals affirmed the summary judgment. See Parsons v.
From the 17th District Court of Tarrant County, Melody Turley, 109 S.W.3d 804, 808–10 (Tex.App.-Dallas 2003, pet.
Wilkinson, Judge. denied).
Attorneys and Law Firms
While Parsons appealed the summary judgment, he
Christopher Nygaard, Plano, TX, for appellant. retained a new attorney, Kevin Queenan, and filed the
instant suit against Greenberg and Motsenbocker for their
Jim Ross, Jim Ross & Associates, P.C., Plano, TX, Joseph representation in the Turley litigation. Parsons alleged claims
W. Spence, M. Keith Ogle, Monika T. Cooper, Shannon, of misrepresentation and fraud, breach of fiduciary duty,
Gracey, Ratliff & Miller, L.L.P., Fort Worth, TX, Steven D. negligence, gross negligence, and violations of the Deceptive
Sanfelippo, Martin E. Rose, Tammy H. Cole, Rose Walker, Trade Practices Act against the attorneys. Greenberg and
L.L.P., Dallas, TX, for appellees. Motsenbocker filed motions for summary judgment on all
but the legal malpractice claims. The trial court granted the
PANEL: WALKER, McCOY, and GABRIEL, JJ.
motions.
Queenan later withdrew as Parsons's counsel, and Parsons
MEMORANDUM OPINION 1 continued pro se, adding Conoco and DuPont as defendants in
his third amended petition. Parsons alleged claims for unjust
LEE GABRIEL, Justice. enrichment and conspiracy to defraud against Conoco and
DuPont, sought the imposition of a constructive trust against
*1 This appeal arises from a legal malpractice suit by
them, and sought a declaration that Conoco and DuPont were
Appellant Roger K. Parsons against Appellees Robert M.
vicariously liable for the fraudulent acts of Greenberg and
Greenberg; Legal Services P.C.; Robert M. Greenberg,
Motsenbocker.
Attorney (collectively, Greenberg); Robert E. Motsenbocker;
Shafer, Davis, O'Leary & Stoker, Inc. f/k/a Shafer, Davis,
Conoco and DuPont specially excepted to Parsons's fourth
McCollum, Ashley, O'Leary & Stoker, Inc. (collectively,
amended petition, and the trial court ordered Parsons to
Motsenbocker); E.I. du Pont de Nemours and Company
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Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
replead his claims against Conoco and DuPont. After Parsons was negligent in not arguing that the limitations period should
filed his fifth amended petition, Conoco and DuPont specially have been calculated from a later date, thus making service
excepted again and moved to dismiss. The trial court granted of citation on Turley timely.
Conoco and DuPont's special exceptions and dismissed the
claims against them. In his brief, Parsons does not direct us to, nor have we found,
any evidence presented at trial that Motsenbocker knew or
Parsons proceeded to trial on the claims of legal malpractice should have known that lost punitives were not available in
against Greenberg and Motsenbocker. The jury found that a legal malpractice case, or that he pursued them despite this
Greenberg had been negligent in handling the Turley knowledge. An appellate court is not required to search the
litigation, that Motsenbocker had not been negligent, and it appellate record, with no guidance from the briefing party, to
awarded Parsons $0 in damages. Parsons appealed. determine if the record supports the party's argument. 3 Hall v.
Stephenson, 919 S.W.2d 454, 466–67 (Tex.App.-Fort Worth
1996, writ denied). The only evidence that Parsons does
Discussion point to pertains to Motsenbocker's general responsibility
to research Parsons's claims. This is not evidence that lost
I. The claims against Greenberg and Motsenbocker punitives were not available, that Motsenbocker pursued
them regardless of their unavailability, or that he was
A. Sufficiency of the evidence negligent in pursuing them.
*2 In his first issue, Parsons argues that two of the jury's
findings are against the great weight and preponderance of Likewise, Parsons does not direct us to, nor have we found,
the evidence. When reviewing an assertion that the evidence any evidence presented at trial that Motsenbocker should
is factually insufficient to support a finding, we set aside have argued in the Turley litigation that the limitations period
the finding only if, after considering and weighing all of the should have been calculated from a later date. Parsons cites
evidence in the record pertinent to that finding, we determine only to a bench conference in the reporter's record that makes
that the credible evidence supporting the finding is so weak, no mention of the statute of limitations or any deadlines, and
or so contrary to the overwhelming weight of all the evidence, to two briefs written by Motsenbocker and Greenberg that do
that the answer should be set aside and a new trial ordered. not address a second accrual date. This is not evidence that
Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986) there was another way to calculate the limitations period or
(op. on reh'g); Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986); that Motsenbocker was negligent in failing to argue for it.
Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). When Parsons's own testimony at trial referred to the 1996 date as
the party with the burden of proof appeals from a failure to the correct start of the limitations period for his claims against
find, the party must show that the failure to find is against Turley. He testified,
the great weight and preponderance of the credible evidence.
Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001); *3 And what Ms. Reggio says in her memorandum—
Cropper v. Caterpillar Tractor Co., 754 S.W.2d 646, 651 and I'll show you hopefully after lunch here—is that there
(Tex.1988). is a two-year statute of limitations on legal malpractice
claims that begin to run—it is—the starting time is the date
that mandate issued in the—in the appeal of Parsons v.
1. The jury's finding that Motsenbocker was not DuPont.So that was back in 1996, July the 18th, 1996.
negligent
In the first subpart of his first issue, Parsons claims that So two years from that date—or between that time,
Motsenbocker was negligent under three theories and that the between 19—July the 18th, 1996, and July the 18th, 1998,
jury's finding that he was not negligent was against the great is when you have to file a lawsuit; otherwise, your case
weight and preponderance of the evidence. 2 will be thrown out for reasons of not timely perfecting your
claims against—against the party, in this case Mr. Turley
and his law firm.
a. Lost punitives and statute of limitations deadlines
Parsons argues that Motsenbocker was negligent in pursuing Parsons later mentions that an opinion in the Turley litigation
damages against Turley when he either knew or should have from the Fifth Circuit Court of Appeals noted that there was
known that they were not available and that Motsenbocker a second, later appeal in the underlying DuPont litigation
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Parsons v. Greenberg, Not Reported in S.W.3d (2012)
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that possibly could have tolled the limitations period, but for all pre-trial procedures. 4 In fact, when asked whether
there was no evidence presented that Motsenbocker should Parsons had any knowledge that Motsenbocker had made an
have argued for it or that he was negligent in failing to agreement to withhold service of citation to Turley, Parsons
do so. Thus, the jury's finding that Motsenbocker was not responded, “No. I have no evidence of that, no.”
negligent under these theories is not against the great weight
and preponderance of the evidence. *4 The undisputed evidence is that Greenberg filed the
petition and delayed service of citation, a practice he had
done “lot[s] of times.” Motsenbocker was never tasked
b. Failure to serve citation
with issuing or serving the citation, and his name was
Parsons argues that, as his attorney, Motsenbocker was
not on the petition. Parsons did not plead or argue any
negligent in failing to serve Turley with citation. The parties
sort of vicarious liability that Motsenbocker might have
do not dispute that Parsons and Motsenbocker had an
had for Greenberg's actions. See Tex. Disciplinary Rules
attorney-client relationship; they disagree as to the duties
Prof'l Conduct R. 5.01 cmt. 1, reprinted in Tex. Gov't
that that relationship imposed upon Motsenbocker. A plaintiff
Code Ann., tit. 2, subtit. G, app. A, art. 10 § 9 (West
in a legal malpractice suit must prove that (1) the attorney
Supp.2011) (noting the “general principle that a lawyer is
owed the plaintiff a duty, (2) the attorney breached that duty,
not vicariously subjected to discipline for the misconduct
(3) the breach proximately caused the plaintiff's injuries,
of another person”); see also Tex. Disciplinary Rules Prof'l
and (4) damages occurred. Peeler v. Hughes & Luce, 909
Conduct R. 7.01 cmt. 1 (noting that the prohibition against
S.W.2d 494, 496 (Tex.1995); Stancu v. Stalcup, 127 S.W.3d
naming a law firm “in any manner suggesting such an
429, 432 (Tex.App.-Dallas 2004, no pet.). Parsons argues
ongoing professional relationship” because it would “create
that Motsenbocker did not present evidence affirmatively
the false impression that the lawyers named have assumed
showing that he had declined the duty of overseeing timely
a joint professional responsibility for clients' legal affairs”).
service of citation. We are mindful that it was first Parsons's
He presented no evidence that when two or more lawyers
burden to present evidence that Motsenbocker owed Parsons
take on representation of a client, each lawyer is responsible
that duty. See Peeler, 909 S.W.2d at 496.
for overseeing the other's work. See Dear v. Scottsdale
Ins. Co., 947 S.W.2d 908, 918 (Tex.App.-Dallas 1997, writ
Parsons's expert Michael Quinn testified at trial that
denied) (noting that one of the law firms representing the
Motsenbocker did not use due diligence in having citation
plaintiff did not participate in or control the prosecution of his
issued and service achieved on Turley. Then when asked
counterclaims when another law firm was hired to prosecute
whether he knew if Greenberg was the one who made the
those claims and maintained exclusive control over them). As
decision to delay service, Quinn testified that he did not
Motsenbocker explained,
know but that it would not surprise him. Motsenbocker's
expert Roland Johnson testified that Motsenbocker was not If you enter—if you're asked to
negligent in “the role that he had at the time of filing of the become co-counsel in a case that's
lawsuit.”Johnson explained, “When multiple people work on already under progress, by two other
things, people have different roles.”At the time of filing the very fine lawyers, and they ask you
original petition, Johnson believed that Motsenbocker's role to do a specific task, that does not
did not include making sure that citation was served. impose, in my opinion, a duty on me to
go look at all of the work those lawyers
Parsons argues that Johnson's testimony was not evidence have done for two years to find out if
because it conflicts with the undisputed facts. But contrary they might have made a mistake. I did
to Parsons's assertion, the evidence at trial was not that what I was asked to do and I did it
Greenberg was “completely dependent on Motsenbocker with reasonable prudence and [Parsons
when it c[a]me[ ] to pre-trial procedure.”Greenberg testified was] satisfied with the results of my
that he was “not ... very good” at legal writing and research work.
and so solicited the help of others in drafting petitions
and other motions practice. But neither Greenberg nor any
Both sides presented expert witnesses to support their
other witness ever testified that Greenberg and Motsenbocker
positions, and the jury was free to give each expert's testimony
had agreed that Motsenbocker alone would be responsible
the weight it felt was appropriate. See Sears, Roebuck &
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
Co. v. Black, 708 S.W.2d 925, 927 (Tex.App.-Eastland even if the jury could have sifted through eight years of bills
1986, no writ) (noting that the jury was free to believe and determined which tasks were related to defending against
one expert's testimony and to reject that of another when the summary judgment motion on failure to diligently serve
both sides presented expert witnesses). Johnson testified that citation, Parsons would still fail to meet his burden under
he had reviewed documents and “satisfied [himself] about Akin, Gump.
the particular activity of Mr. Motsenbocker, as it related to
the filing and the service issues in this lawsuit that we're In Akin, Gump, the plaintiff NDR sued its attorneys for failing
here today about.”Parsons's expert Quinn testified that he to request certain jury instructions in the underlying trial
had not reviewed documents or testimony that described against Panda. 299 S.W.3d at 111.The supreme court held
Motsenbocker's role in the Turley litigation other than the that NDR could not recoup any of the attorneys' fees it paid
testimony presented at trial before he took the stand. Quinn to Akin Gump in appealing its loss at trial because it did not
stated he only heard portions of Parsons's testimony. He present evidence that it would not have otherwise had to pay
acknowledged that other than the trial testimony that he heard, some appellate fees. Id. at 123.It said,
he had no basis for rendering an opinion as to Motsenbocker's
alleged negligence. The jury was free to believe Johnson's There is no evidence that if NDR
testimony and disbelieve Quinn's. Its determination that had recovered a favorable judgment
Motsenbocker was not negligent in his duties to Parsons is not in the Panda suit, it would not have
against the great weight and preponderance of the evidence. paid appellate fees to defend the
judgment. The evidence does not
show that if NDR had obtained a
2. The jury's finding of $0 damages favorable judgment, Panda would not
*5 In the second subpart of his first issue, Parsons have appealed the case or that NDR
claims that the jury's finding that he suffered zero damages would not have defended its judgment
was against the great weight and preponderance of the on appeal if Panda appealed.
evidence. “[A] malpractice plaintiff may recover damages
for attorney's fees paid in the underlying case to the extent Id. Under the reasoning of Akin, Gump, Parsons could only
the fees were proximately caused by the defendant attorney's have met his burden by presenting evidence that if Greenberg
negligence.”Akin, Gump, Strauss, Hauer & Feld, L.L.P. had diligently served Turley and the case had proceeded, there
v. Nat'l Dev. & Research Corp., 299 S.W.3d 106, 122 would have been no other appeal in the case for which Parsons
(Tex.2009). Parsons was therefore required to prove what would have paid attorneys' fees. It is not enough to show that
amount he paid to Greenberg and Motsenbocker that he Parsons would not have had to pay attorneys' fees for the
would not have had to pay but for Greenberg's negligence. appeal of the summary judgment based on lack of diligence
“Causation must be proved, and conjecture, guess, or in serving citation. And while we agree with Parsons that it
speculation will not suffice as that proof.”Id. is a difficult burden to bear, it is nonetheless the burden that
Parsons had to meet and he did not meet it.
Parsons's evidence at trial on damages consisted of bills
from various entities and checks that he wrote throughout *6 Because there was no evidence of the amount of damages
the course of the Turley litigation. Parsons did not present proximately caused by Greenberg's negligence, the jury's
evidence as to which bills were proximately caused by award of $0 damages is not against the great weight and
Greenberg's negligence, or conversely, what bills he would preponderance of the evidence. We overrule Parson's first
have had to pay regardless of any negligence. See id.(citing issue. 5
Thomas D. Morgan, Lawyer Law: Comparing the ABA Model
Rules and the ALI Restatement (Third) of the Law Governing
Lawyers 98 (2005) (distinguishing malpractice from fee B. Procedural errors
forfeiture and noting that the “key distinction” is that a fee In his second issue, Parsons argues that the trial court
forfeited “need have no relation to actual damages suffered by committed three procedural errors that prejudiced the jury
the client”)). He argues that even if the evidence were unclear against Parsons.
as to precisely how much damage Parsons actually suffered,
the jury “could have arrived at a number of plausible damages
awards” and thus, the award of zero damages is illogical. But
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Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
is admitted before the jury without the necessity of repeating
1. The trial court did not err by allowing evidence of those objections.”Id. However, as stated above, there is no
Parsons's conspiracy theories to be admitted. ruling on the record. Therefore, Parsons has not preserved this
The morning of voir dire, Parsons filed a supplemental motion complaint for our review.
in limine, which is not in the record, seeking to exclude all
references to any conspiracy theories Parsons might have had.
The defendants objected that the motion was untimely, and 2. The trial court did not err in its instructions to
the trial court declined to hear it. Parsons regarding admission of evidence.
*7 Parsons argues that the trial court “[a]ctively
Five hours later, during voir dire, Lisa Blue 6 asked the jurors, obscure[red]” evidentiary issues, “played ‘hide the ball,’
“ and allowed opposing counsel to “bully” Parsons by
not providing Parsons with more guidance in his attempts
Roger Parsons with an S, has anyone ever Googled Mr. to admit evidence. Numerous times during trial, opposing
Roger Parsons? Anybody ever Googled him? Is there counsel objected to Parsons's offers of evidence on the
anybody on the jury, just raise your hand quickly, now, this grounds that the evidence lacked foundation. In most
is confusing, George Bush, the father, ... how many of you instances, the trial court asked Parsons if he would like
think George Bush, the father, did a good job, raise your to continue in attempting to establish a foundation for
hand? admission. The trial court admitted some of Parsons's
Parsons objected, saying, “I would like to object, Your evidence over objections but excluded other evidence.
Honor. May we approach and discuss this?”A bench
conference was held off the record after which Blue Parsons's argument on appeal contains no authority
returned to voir dire. supporting his contention that the trial court's instructions
Parsons argues that Blue's line of questioning during voir and rulings were improper; thus, it is inadequately briefed.
dire was prejudicial. Normally, to preserve a complaint for SeeTex.R.App. P. 38.1(i) (requiring an appellant's brief
appellate review, a party must have presented to the trial court to contain clear and concise arguments “with appropriate
a timely request, objection, or motion that states the specific citations to authorities”); see also Fredonia State Bank v.
grounds for the desired ruling, if they are not apparent from Gen. Am. Life Ins. Co., 881 S.W.2d 279, 284–85 (Tex.1994)
the context of the request, objection, or motion. Tex.R.App. (discussing the “long-standing rule” that a point may be
P. 33.1(a); see alsoTex.R. Evid. 103(a)(1). If a party fails to waived due to inadequate briefing). We also note that it is not
do this, error is not preserved, and the complaint is waived. the court's responsibility to school a pro se litigant in legal
Bushell v. Dean, 803 S.W.2d 711, 712 (Tex.1991) (op. on terminology and procedure. 7 See, e.g., Rymer v. Lewis, 206
reh'g). Parsons argues that he preserved his complaint because S.W.3d 732, 736 (Tex.App.-Dallas 2006, no pet.)(noting that
the grounds for his objection were apparent from the context. public policy demands that a trial judge act with absolute
SeeTex.R. Evid. 103(a)(1). However, it is not clear from impartiality and not act as an advocate for any party). Parsons
the record what Parsons's objection was, whether he argued elected to represent himself, and he was bound to the same
that the question was prejudicial, or whether he objected on standards as licensed attorneys. See Cheng v. Wang, 315
some other grounds. The questions to which Parsons objected S.W.3d 668, 672 (Tex.App.-Dallas 2010, no pet.)(noting
did not include any references to conspiracy theories, and that pro se litigant's difficulties with the technicalities of a
later when Blue did mention Parsons's belief in a conspiracy, trial do not constitute grounds for reversal) (citing Mansfield
Parsons did not object. The same information also came in State Bank v. Cohn, 573 S.W.2d 181, 184–85 (Tex.1978)
at trial when Motsenbocker questioned Parsons regarding (“There cannot be two sets of procedural rules, one for
conspiracy theories and George H.W. Bush. Parsons objected litigants with counsel and the other for litigants representing
but stated no basis for his objection, and it was overruled. themselves.”)).
Parsons argues that he did not have to renew his objections
under rule 103(a)(1) of the rules of evidence. SeeTex.R. 3. The trial court did not err by submitting the question
Evid. 103(a)(1).Rule 103(a)(1) states, in part, “When the on damages to the jury.
court hears objections to offered evidence out of the presence Parsons argues that the jury charge regarding damages was
of the jury and rules that such evidence be admitted, such worded such that it “proximately caused” the jury to award
objections shall be deemed to apply to such evidence when it zero damages. Parsons did not object to the question before
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
the charge was read to the jury, as required by the rules of exclude Parsons's proposed expert testimony on matters
civil procedure. SeeTex.R. Civ. P. 272. During the charge pertaining to lost punitives. The August 11, 2008 order
conference, the only reference Parsons made to Question 3 granted Motsenbocker's motion stating,
was
On July 11, 2008, the Court heard [Motsenbocker's]
Regarding Question 3, I've—I would “Motion to Exclude Testimony of Plaintiff's Designated
like to have an additional Question 4 Experts”.... [T]he Court hereby finds and orders as follows:
that similarly worded, but instead of
regarding the damages—I mean, the By Order entered June 6, 2008, the Court has previously
amounts paid by Roger Parsons would granted [Motsenbocker's] Motion for Partial Summary
be the amounts lost by Roger Parsons Judgment and has ordered that Plaintiff take nothing on his
by the loss of the legal action that claims for lost punitive damages. Based upon that ruling,
the defendants were hired to handle the Court finds that the only alleged damages the Plaintiff
named Parsons v. Turley.Those are my is entitled to recover in this case are the attorneys['] fees
objections, Your Honor. and expenses that he paid to the Defendants and all other
expenses Plaintiff paid to others, including, but not limited
Parsons's statement does not appear to be an objection to to, expert witness fees and investigator fees and expenses
Question 3 at all, much less the same objection that he in pursuing his claims against Windle Turley. Based upon
now attempts to make on appeal. See Banda v. Garcia, 955 the Court's rulings, insofar as the proffered testimony of
S.W.2d 270, 272 (Tex.1997) (noting that the complaint on Plaintiff's proposed experts are not relevant to Plaintiff's
appeal must be the same as that presented in the trial court). claims against these Defendants, such testimony should be
Parsons argues that he objected to Question 3 in his motion excluded at the trial of the case.
for new trial. This is not sufficient to preserve error without
an objection during the charge conference. See Kirkpatrick v. IT IS THEREFORE ORDERED, ADJUDGED AND
Mem'l Hosp. of Garland, 862 S.W.2d 762, 769 (Tex.App.- DECREED that the testimony of [Parsons's proposed
Dallas 1993, writ denied) (“Objections to the charge in a experts on lost punitive damages], all as set forth in their
motion for a new trial are untimely and preserve nothing reports offered into evidence in this hearing, be excluded
for review.”). Because Parsons did not timely object, he has from the trial of this case in their entirety.
waived his objection. SeeTex.R. Civ. P. 272; Tex.R.App. P.
IT IS FURTHER ORDERED, ADJUDGED AND
33.1. We overrule Parsons's second issue.
DECREED that any testimony of Michael Quinn relating
to his opinion as to any breaches of duty of Windle
C. The August 11, 2008 order Turley constituting negligence, gross negligence, breaches
*8 In his third issue, Parsons argues that the trial court of fiduciary duties, or other matters related to the DuPont
issued an order sua sponte that incorrectly limited Parsons's or Conoco litigation, and the amount of compensatory
recovery to a regurgitation of fees paid to Greenberg and damages or punitive damages that could have been
Motsenbocker. awarded in the DuPont and/or Conoco litigation is hereby
excluded in the trial of this case.
We first note that the August 11, 2008 order was not sua
sponte but an order on the defendants' motion to exclude Parsons argues on appeal that the August 11, 2008 order was
expert testimony. In May 2008, Motsenbocker filed a motion overbroad and incorrectly limited his recovery to the fees
(joined by Greenberg) for partial summary judgment on he paid the attorneys because he had other live causes of
Parsons's claim for lost punitive damages (that is, the punitive action at the time of the order, including a claim for gross
damages Parsons alleged he would have recovered from negligence, for which other damages are recoverable. Parsons
Turley but for Greenberg and Motsenbocker's negligence). received a copy of the proposed order at the hearing and asked
Motsenbocker argued that lost punitive damages in a legal for “a couple of days to respond” to the proposed wording.
malpractice action were barred as a matter of law. The There is nothing in the record showing that, in the month
trial court granted Motsenbocker's motion, and because between the hearing and the date the trial judge signed the
Parsons would not be allowed to seek lost punitives at order, Parsons ever objected to the language as overbroad, nor
trial, Motsenbocker (joined by Greenberg) then moved to is there any evidence that Parsons made an objection to the
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Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
trial court after the order was signed. Because Parsons never (1959)). Parsons's constitutional argument is not properly
made an objection to the trial court, he has waived the issue before us and we will not address it. See id.(refusing to
on appeal. 8 SeeTex.R.App. P. 33.1(a); Bushell, 803 S.W.2d address constitutional arguments not asserted in the trial
at 712. court). We overrule Parsons's third issue.
*9 Even if he had preserved the error, two partial summary
D. Partial summary judgments
judgments ordered that Parsons take nothing on his other,
In Parsons's fourth through seventh issues, he complains of
non-negligence claims prior to trial. Because we will uphold
partial summary judgments dismissing his claims against
those summary judgments, Parsons has suffered no harm by
Greenberg and Motsenbocker for fraud, unjust enrichment,
the limiting of his recovery in the August 11, 2008 order.
breach of fiduciary duty, and gross negligence. We review
SeeTex.R.App. P. 44.1(a) (noting that the appellate court
a summary judgment de novo. Travelers Ins. Co. v.
may not reverse a judgment unless the error caused harm
Joachim, 315 S.W.3d 860, 862 (Tex.2010). We consider
to the appellant); Romero v. KPH Consolidation, Inc., 166
the evidence presented in the light most favorable to the
S.W.3d 212, 225 (Tex.2005). Parsons's argument that the
nonmovant, crediting evidence favorable to the nonmovant if
August 11, 2008 order erroneously prevented the trial judge
reasonable jurors could, and disregarding evidence contrary
from considering evidence on damages related to Parsons's
to the nonmovant unless reasonable jurors could not. Mann
gross negligence and fraud claims when she ruled on the
Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d
defendant's motion for summary judgment was also never
844, 848 (Tex.2009). We indulge every reasonable inference
presented to the trial court and thus was waived. See Bushell,
and resolve any doubts in the nonmovant's favor. 20801, Inc.
803 S.W.2d at 712.Further, none of the parties argued in their
v. Parker, 249 S.W.3d 392, 399 (Tex.2008). A defendant
motions for summary judgment that Parsons's claims should
who conclusively negates at least one essential element of
be dismissed because Parsons could not present evidence of
a cause of action is entitled to summary judgment on that
damages beyond the fees he paid. Thus, it could not have been
claim. Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494,
the ground on which summary judgment was granted. See
508 (Tex.2010); seeTex.R. Civ. P. 166a(b), (c). When a
State Farm Lloyds v. Page, 315 S.W.3d 525, 532 (Tex.2010)
party moves for summary judgment on both no-evidence
(noting that a court cannot grant summary judgment on
and traditional grounds, we will first review the trial court's
grounds not presented in the motion); Timpte Indus., Inc. v.
judgment under the no-evidence standard. Ford Motor Co. v.
Gish, 286 S.W.3d 306, 310 (Tex.2009). In fact, in the hearing
Ridgway, 135 S.W.3d 598, 600 (Tex.2004). If the appellant
on the attorneys' motions for summary judgment, Parsons
failed to produce more than a scintilla of evidence under
stated,
that burden, then there is no need to analyze whether the
We don't have a ruling that this appellees' summary judgment proof satisfied the less stringent
is a legal malpractice case. We've rule 166a(c) burden. Id.
had a ruling that the Motsenbocker
defendants and Greenberg defendants
1. Fraud
have joined in [a] motion for summary
*10 In his fourth issue, Parsons argues that the trial court
judgment as to damages as to what—
erred by granting summary judgment for Motsenbocker and
whether I can collect punitive damages
Greenberg on Parsons's claim for fraud. The only theory
in this case, lost punitive damages.
of fraud that Parsons argues on appeal is that the attorneys
And all the Court said is, [”]No, you
researched and prepared a claim against Turley for fraud on
can't.[”]
the court but never filed it. Motsenbocker argues that this
specific theory of fraud was not alleged in the live pleading
In his reply brief on appeal, Parsons also appears to make a at the time of the summary judgment. We cannot determine
due process argument. Parsons did not make this argument whether the theory was or was not pleaded in Parsons's fourth
to the trial court (or in his opening brief on appeal). As a amended petition because the petition does not appear in the
rule, a claim, including a constitutional claim, must have record before us. However, we do not need to supplement
been asserted in the trial court in order to be raised on the record with the relevant pleading because even if Parsons
appeal.Dreyer v. Greene, 871 S.W.2d 697, 698 (Tex.1993) pleaded this theory, he failed to produce any evidence that the
(citing Wood v. Wood, 159 Tex. 350, 320 S.W.2d 807, 813
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
attorneys committed fraud by failing to file the fraud-on-the- plaintiff or benefit to the defendant as
court claim against Turley. a result of the defendant's breach.”
To prevail on his fraud claim, Parsons must prove that: (1) *11 Lindley v. McKnight, 349 S.W.3d 113, 124 (Tex.App.-
Greenberg and Motsenbocker made a material representation Fort Worth 2011, no pet.)(quoting Lundy v. Masson, 260
that was false; (2) they knew the representation was false S.W.3d 482, 501 (Tex.App.-Houston [14th Dist.] 2008, pet.
or made it recklessly as a positive assertion without any denied)).
knowledge of its truth; (3) they intended to induce Parsons
to act upon the representation; and (4) Parsons actually and Parsons claims that it was a breach of fiduciary duty for the
justifiably relied upon the representation and thereby suffered attorneys (1) to bill Parsons for work on his fraud-on-the-
injury. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 court claim when they had no intention of filing it; and (2)
S.W.3d 573, 577 (Tex.2001). To support his claim, Parsons to handle the appeals of the dismissal of the Turley litigation
points to his affidavit, which stated that Greenberg and themselves “without telling Parsons that their error was the
Motsenbocker told him that there was enough evidence to reason for the dismissal” and when reversal of the dismissal
support a fraud-on-the-court claim against Turley and that “was more likely with another attorney.”First, as we stated
the attorneys never filed the claim. This is not evidence that above, there is no evidence that the attorneys never intended
the attorneys never intended to file the claim or that they to file the fraud-on-the-court claim. Second, Parsons cites to
told Parsons they would file the claim with no intention no evidence that supports his contention that the attorneys
never told Parsons the reason for the dismissal or that reversal
to do so. 9 Because Parsons did not produce evidence on
would be “more likely” with different appellate counsel.
every element of his fraud claim, the trial court did not err
He argues without support that the attorneys “insisted” on
by granting summary judgment in favor of Greenberg and
handling the appeals in the Turley litigation. This is not
Motsenbocker on the fraud claim. See Frost Nat'l Bank, 315
evidence that the attorneys breached any fiduciary duty to
S.W.3d at 508.We overrule Parsons's fourth issue.
Parsons that they may have had. We overrule Parsons's sixth
issue.
2. Unjust enrichment
On appeal, Parsons's argument regarding the dismissal of his
4. Gross negligence
claim of unjust enrichment contains no authority and thus, it is
In his seventh issue, Parsons argues that the attorneys
inadequately briefed. SeeTex.R.App. P. 38.1(i) (requiring an
committed gross negligence by pursuing a claim against
appellant's brief to contain clear and concise arguments “with
Turley for lost punitive damages without conducting the
appropriate citations to authorities”); see also Fredonia State
proper research. The factor that “lifts ordinary negligence
Bank, 881 S.W.2d at 284–85 (discussing the “long-standing
into gross negligence is the mental attitude of the
rule” that a point may be waived due to inadequate briefing).
defendant....”Burk Royalty Co. v. Walls, 616 S.W.2d 911,
Further, Parsons asserted in the trial court that he did not
922 (Tex.1981). That is, Parsons was required to demonstrate
sue Greenberg and Motsenbocker for unjust enrichment. We
that Greenberg and Motsenbocker were “consciously, i.e.,
overrule Parsons's fifth issue.
knowingly, indifferent to his rights, welfare and safety.”Id.
3. Breach of fiduciary duty As evidence of Greenberg and Motsenbocker's failure to
In his sixth issue, Parsons argues that the trial court erred by properly research the claim, Parsons points to the fact that
granting summary judgment in favor of the attorneys on his the attorneys successfully defended against a claim for lost
claim for breach of fiduciary duty. punitives when Parsons asserted it against them in the present
case. That the state of the law in 2008—when the attorneys
The elements of a breach of fiduciary moved for partial summary judgment on Parsons's claim for
duty claim are: (1) a fiduciary lost punitive damages—was such that the attorneys argued
relationship between the plaintiff and that lost punitives were barred as a matter of law does
defendant, (2) a breach by the nothing to demonstrate that the law was so in 1998, when the
defendant of his fiduciary duty to attorneys filed the Turley litigation. Further, as Parsons noted
the plaintiff, and (3) an injury to the in the trial court, Texas law had at one point provided for
the recovery of punitive damages as compensatory damages
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
in a legal malpractice case. See Patterson & Wallace v. error, claiming only that because Parsons was not allowed
Frazer, 93 S.W. 146, 148 (San Antonio 1906), rev'd on to seek lost punitives against Greenberg and Motsenbocker,
other grounds,100 Tex. 103, 94 S.W. 324 (1906). Parsons DuPont and Conoco unjustly benefitted somehow. Parsons's
also noted in the trial court that he had found no case argument on appeal is entirely without citation to authority,
explicitly overruling Patterson.Nor have we. Greenberg and is inadequately briefed, and is thus waived. Fredonia State
Motsenbocker made a policy argument in their defense Bank, 881 S.W.2d at 284–85.We overrule Parsons's ninth
with which the trial court agreed. That is not evidence that issue.
Greenberg and Motsenbocker knew ten years earlier that
pursuing lost punitive damages was a worthless endeavor.
Parsons cites to no other evidence except for a paragraph from B. Special exceptions
one of his affidavits which was objected to and excluded by In Parsons's tenth issue, he argues that the trial court
the trial court. Parsons did not complain of the exclusion on erroneously granted Conoco and DuPont's special exceptions
appeal. Thus, Parsons has presented no evidence to support and erred by granting their motion to dismiss. Special
his claim of gross negligence. We overrule Parsons's seventh exceptions may be used to challenge the sufficiency
issue. of a pleading. Friesenhahn v. Ryan, 960 S.W.2d 656,
658 (Tex.1998). A special exception must point out a
*12 Because we hold there is no evidence to support particular pleading and “intelligibly and with particularity
Parsons's claims of fraud, unjust enrichment, breach of the defect, omission, obscurity, duplicity, generality, or other
fiduciary duty, or gross negligence, we do not reach his insufficiency in the allegations in the pleading excepted
argument that the claims were not impermissible fracturing of to.”Tex.R. Civ. P. 91. When the trial court sustains special
his legal malpractice claim. See Ridgway, 135 S.W.3d at 600 exceptions, it must give the pleader an opportunity to amend
(noting that there is no need to analyze summary judgment the pleading. Friesenhahn, 960 S.W.2d at 658.If a party
arguments under the traditional summary judgment burden of refuses to amend, or the amended pleading fails to state a
proof if the appellant failed to produce more than a scintilla of cause of action, then summary judgment may be granted. Id.
evidence under the no-evidence summary judgment burden); We review a trial court's decision to sustain special exceptions
see alsoTex.R.App. P. 47.1. under an abuse of discretion standard. Mowbray v. Avery,
76 S.W.3d 663, 678 (Tex.App.-Corpus Christi 2002, pet.
denied).
II. The motion to disqualify
Parsons's argument on his eighth issue—that it was error for *13 In his third amended petition, Parsons added claims
the trial court to refuse to hear his motion to disqualify a judge against DuPont and Conoco. Parsons alleged that DuPont
after he retired—is comprised of two sentences, with no cites and Conoco were unjustly enriched by Greenberg and
to supporting authority, other than to rule of civil procedure Motsenbocker's alleged fraud and breach of fiduciary duty
18b and rule of appellate procedure 16, with no explanation to Parsons, and he sought the imposition of a constructive
of how these rules apply to the issue here. 10 An inadequately trust over funds that “should have been rightfully paid” to
briefed issue may be waived on appeal. Hall, 919 S.W.2d him had Greenberg and Motsenbocker filed a fraud-upon-the-
at 467;see also Fredonia State Bank, 881 S.W.2d at 284– court cause of action. DuPont and Conoco specially excepted,
85.Parsons has waived this issue on appeal, and we overrule arguing that (1) unjust enrichment is not an independent cause
his eighth issue. of action, and (2) Parsons did not identify the funds that would
be subject to a constructive trust. The trial court sustained the
special exceptions and granted Parsons leave to file a fifth
III. The claims against DuPont and Conoco amended petition to replead his claims against DuPont and
Conoco. 11
A. Partial summary judgment
Parsons presents his ninth issue as a complaint that the
trial court erred by granting partial summary judgment in Parsons filed his amended petition, 12 which included new
favor of Greenberg and Motsenbocker on the issue that lost allegations that unjust enrichment is an independent cause
punitives are not recoverable against a legal malpractice of action; that DuPont and Conoco were unjustly enriched
defendant. However, his argument on this issue does not by Greenberg and Motsenbocker's actions as well as the
attempt to demonstrate why the summary judgment was in actions of “such other entity or person(s) that [Parsons] may
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
all grounds on which the dismissal could have been based);
demonstrate at trial”; and identified the res of the constructive
Britton v. Texas Dep't of Criminal Justice, 95 S.W.3d 676,
trust as DuPont and Conoco's insurance policy. DuPont and
681 (Tex.App.-Houston [1st Dist.] 2002, no pet.)(affirming
Conoco specially excepted again, arguing that Parsons's new
granting of a plea to the jurisdiction because the plaintiff
allegations still did not state a cause of action against them.
did not attack all grounds supporting the grant). We overrule
After a hearing on the motion, the trial court granted the
Parsons's tenth issue.
special exceptions and dismissed Parsons's causes of actions
against DuPont and Conoco. The trial court's order also
stated that the claims against DuPont and Conoco for unjust
enrichment and constructive trust were not ripe. Conclusion
On appeal, Parsons does not address the dismissal grounds Having overruled all of Parsons's issues on appeal, we affirm
that his claims against DuPont and Conoco were not ripe. the judgment of the trial court.
Because he has not attacked ripeness, we affirm the dismissal
on that ground. See Gross v. Carroll, 339 S.W.3d 718,
All Citations
723 (Tex.App.-Houston [1st Dist.] 2011, no pet.)(affirming
dismissal of plaintiff's claims because he failed to challenge Not Reported in S.W.3d, 2012 WL 310505
Footnotes
1 SeeTex.R.App. P. 47.4.
2 Parsons argues that Greenberg is also negligent under these theories, but because Parsons does not appeal the jury's
finding that Greenberg was negligent, we do not address Parsons's arguments pertaining to Greenberg's actions.
3 This case includes a reporter's record spanning forty-one volumes and a clerk's record of fifty-nine volumes.
4 If the evidence had shown such an agreement, it would have disproven any finding of negligence against Greenberg.
5 Parsons also appears to argue that the trial court erred by entering judgment for Greenberg and Motsenbocker consistent
with the jury's findings because the trial court was aware of information outside the record that, according to Parsons,
demonstrated negligence by the attorneys. To the extent that Parsons argues that the trial court should have considered
information not in evidence, we overrule that argument. See Pool, 715 S.W.2d at 635 (noting that the appellate court
reviews a factual sufficiency challenge based on the evidence in the record); see also K–Mart No. 4195 v. Judge, 515
S.W.2d 148, 155 (Tex.Civ.App.-Beaumont 1974, writ dism'd) (“[I]t would seem most inappropriate for the court to consider
evidence outside its own record notwithstanding prior precedent supports such practice.”).
6 Blue represented Greenberg for the purposes of voir dire. Blue, as the executrix of the estate of Frederick M. Baron, and
Baron & Budd, P.C. were also defendants in this case. The trial court granted summary judgment for them, which was
upheld on appeal. See Parsons v. Baron, No. 02–09–00380–CV, 2011 WL 3546617, at *1 (Tex.App.-Fort Worth Aug.
11, 2011, no pet. hist.) (mem.op.).
7 We further note that Parsons appeared to understand what it means to “lay the foundation” for the admission of evidence,
as shown in this exchange during trial,
MR. PARSONS: Okay. Thank you. Your Honor, I offer Plaintiff's Exhibit No. 31 as—
MR. ROSS: Objection, lacks foundation.
THE COURT: Mr. Parsons, would you like to lay a foundation for this exhibit?
MR. PARSONS: Yes, ma‘am. I thought I had just done that in the trial.
....
MR. ROSS: Your Honor, we'd like to withdraw our objection. I have no objection to this document coming in.
THE COURT: Thank you, Mr. Ross. Hearing no objection to Plaintiff's Exhibit No. 31, that exhibit is admitted into
evidence at this time.
8 We also note that contrary to his position on appeal, in the hearing on Parsons's motion for leave of court to amend his
petition for the sixth time, Parsons argued that Greenberg and Motsenbocker misinterpreted the August 11, 2008 order
and stated that the order “was limited to really saying that you could not recover punitive damages in a legal malpractice
case.”
9 Parsons argues that the trial court erroneously struck two paragraphs from one of his affidavits. Parsons's first complaint,
that the trial court erroneously struck a description of hiring an investigator, is immaterial because it is not evidence that
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Parsons v. Greenberg, Not Reported in S.W.3d (2012)
2012 WL 310505
the attorneys never intended to file the claim. Parsons's second complaint, that the trial court erroneously struck an entire
paragraph when only some of it was speculative, is devoid of any citation to authority and thus, inadequately briefed.
SeeTex.R.App. P. 38.1(i); see also Fredonia State Bank, 881 S.W.2d at 284–85.
10 We further note that neither the motion nor the order was found in the record before us.
11 There is presumably a fourth amended petition but it does not appear in the record before us.
12 The fifth amended petition also does not appear in the record except as an exhibit to DuPont and Conoco's special
exceptions and motion to dismiss.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
RR
Patterson & Wallace v. Frazer, 100 Tex. 103 (1906)
94 S.W. 324
of E.F., an unmarried woman, “the F. girls need
not be talking about H. for at any time they want
KeyCite Yellow Flag - Negative Treatment to it can be proved that the child born in S. is
Declined to Follow by Ferguson v. Lieff, Cabraser, Heimann &
not Mrs. D.'s child, but E.F. is its mother,” and
Bernstein, Cal., June 9, 2003
proof that M. said “the F. girls need not trouble
100 Tex. 103 or talk about H.'s affairs, and that the people said
Supreme Court of Texas. that E.F. was the mother of a child Mrs. D. was
raising in A.”; the gist of the slander being that
PATTERSON & WALLACE E.F., an unmarried woman, had given birth to a
v. child.
FRAZER.
1 Cases that cite this headnote
June 21, 1906.
[3] Libel and Slander
Error to Court of Civil Appeals of Fourth Supreme Judicial
Damages
District.
For the court, in an action for slander, where
Action by Ella Frazer against Patterson & Wallace. Judgment the testimony was that M. said of plaintiff, an
for plaintiff, affirmed by Court of Civil Appeals (93 S. W. unmarried woman, that “the people said” she
146). Defendants bring error. Reversed and remanded. was the mother of a certain child, to state in the
charge on actual and exemplary damages that the
undisputed testimony showed that M. said that
it “could be proved at any time” that plaintiff
West Headnotes (3) had given birth to a child, was error, as the jury
may have thereby been led to have exercised
[1] Attorney and Client their discretion against defendant in the matter of
Trial and Judgment damages, especially exemplary damages.
Refusal of the instruction, in an action by a 2 Cases that cite this headnote
client against her attorneys for allowing an action
begun by them for her to be dismissed for want
of a bond for costs, that, “in order for plaintiff
to recover in this case on account of negligence
Attorneys and Law Firms
or ignorance of defendants, you must believe
that such negligence or ignorance on defendant's *103 **325 Beall & Kemp, Maury Kemp, and Denman,
part was gross ignorance or gross negligence,” is Franklin & McGown, for plaintiffs in error.
not error; there being nothing in such charge to
assist the jury in determining whether defendants S. P. Weisiger and Seymour Thurmond, for defendant in
had been guilty of such negligence as would error.
render them responsible, and a charge clearly and
Opinion
explicitly stating the standard by which the jury
should determine the liability of defendants as BROWN, J.
attorneys at law having been given.
For the purposes of this opinion the following statement of the
7 Cases that cite this headnote case will be sufficient: On or about the 1st day of February,
1901, Ella Frazer employed a firm of lawyers, Patterson
[2] Libel and Slander & Wallact, composed of the plaintiffs in error, who were
Variance practicing as partners in the city of El Paso, to institute in the
district court of Reeves county a suit in her name against John
There is a substantial agreement between the
Moore and Ellen Moore, husband and wife, for damages on
allegation of the petition for slander that M. said
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Patterson & Wallace v. Frazer, 100 Tex. 103 (1906)
94 S.W. 324
account of these slanderous words, spoken by Ellen Moore It is unnecessary for the disposal of this case, as we view
of and concerning the said Ella Frazer, to wit: ‘The Frazer it, to state the pleadings or evidence more explicitly than we
girls need not be talking about Marie Howard (or Stone), have done, except that in her petition against the defendants
for at any time they want to it can be proven that the child Ella Frazer presented her cause of action with proper and
born in San Antonio is not Mrs. Durrell's child; but Ella necessary allegations, alleging the charge as made in the
Frazer is its mother.’ The language was alleged to have been original petition. Proof of the words spoken by Mrs. Moore
uttered by the said Ellen Moore on the-day of May, 1900. was made by Mrs. Shertz that ‘Mrs. Moore said that the Frazer
The plaintiffs in error accepted the employment, and Miss girls need not trouble or talk about Marie Stone's affairs, and
Frazer paid them a cash fee of $250, which was to compensate that the people said that Ella Frazer was the mother of a
them for all of their services as attorneys in the said case child Mrs. Durrell was raising in Alpine, Tex.’ Mrs. Shertz
through all of the courts to which it might be carried. Patterson Stated this matter several times with slight variation in the
& Wallace instituted the suit in Reeves county in favor of language, but containing substantially the same matter in
Ella Frazer against John and Ellen Moore by filing a petition each statement. It is unnecessary for us to discuss the many
which contained all the necessary and appropriate allegations questions which are presented by the application for writ of
to present to the court the case of the said plaintiff, and in the error, and we shall confine ourselves in this opinion to three
petition is was sought *104 to recover of the Moores the sum of the errors assigned in this court.
of $5,000, actual damages, and $5,000, exemplary damages,
charged to have been occasioned to the said Ella Frazer by The objection that the proof which was made of the
the slanderous words uttered by Mrs. Moore. Service was slanderous words charged to have been uttered by Mrs. Moore
had in due time upon the defendants, and, upon a motion varied from the allegations of the petition is not well taken.
filed by the clerk of the said district court, the judge of the The gist of the slander spoken by Mrs. Moore of Miss
court entered an order during the first term of 1900 requiring Frazer was that the latter, being an unmarried woman, had
the said plaintiff to give bond for cost of the said suit on given birth to a child. The words proved embodied fully that
or before the first day of the nest term as required by law. charge, and the other words proved did not modify or qualify
Patterson & Wallace had notice of this rule entered by the the slanderous charge. Courts have justly been very liberal
judge for the bond for cost, and assured Miss Frazer that in permitting the proof of words spoken which constitute
they would attend to the matter and see that the bond was slander, for the reason that *105 it is almost impossible to
filed. Ella Frazer called frequently upon the attorneys for reproduce by witnesses the exact words used. A substantial
instructions about giving the bond, and from time to time agreement between the allegation and the proof is all that the
wrote to them, urging the matter upon their attention. It is law requires. Newell on Slander & Def. p. 804, § 50; Id. p.
unnecessary to state the facts in full upon this subject, but 808 (2), ‘Variance Immaterial.’
it is sufficient to say that she was unusually diligent with
regard to the matter, and the evidence justifies the finding Plaintiffs in error requested the court to give to the jury
that the attorneys were negligent in failing to attend to the the following charge: ‘In order for the plaintiff to recover
filing of the bond. At the September term in the year 1900 in thes case **326 on account of negligence or ignorance
the district court convened, and, no bond having been given, of the defendants, you must believe that such negligence
on the second day of the term, when the docket was called, or ignorance on defendants' part were gross negligence or
the clerk of the court and the defendant John Moore called gross ignorance.’ This charge would have given the jury no
the court's attention to the requirement to give bond, and the assistance in determining whether the defendants had been
fact that none had been given, whereupon the judge entered guilty of such negligence as would render them responsible to
an order dismissing the case. Patterson & Wallace were not the plaintiff for the loss of her case. The district court gave to
present in court at the time, but afterwards made a motion to the jury a charge which very clearly and explicitly stated the
have the case reinstated, which was overruled by the court, standard by which they would determine the liability of the
which ruling was affirmed by the Court of Civil Appeals. defendants as attorneys at law. There was no error in refusing
Miss Ella Frazer's cause of action against the Moores was the charge requested by the defendants below.
barred by the statute of limitations, and she brought this suit
in the district court of El Paso county against Patterson & The application assigns as error the giving of the following
Wallace to recover of them the damages sustained by her by instruction by the court: ‘You are instructed that the said
reason of the dismissal of her suit through their negligence. language uttered by Mrs. Ellen Moore concerning the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Patterson & Wallace v. Frazer, 100 Tex. 103 (1906)
94 S.W. 324
plaintiff, Ella Frazer, in the month of May, 1900, to Mrs. responsibility, while in the testimony of the witness the case
Louis Shertz, in substance, as follows: ‘That the Frazer girls is presented as being stated as a matter of rumor among the
need not talk about Marie Stone's affairs, for at any time they people; that is, the witness testified that Mrs. Moore purported
want to it can be proven that the child born in San Antonio is to be repeating that which she had heard. It is true that in either
not Mrs. Durrell's child, but Ella Frazer's'-was slanderous in case the gist of the charge is that Ella Frazer had given birth to
law, and the undisputed evidence showing that such language a child, and, whether spoken as of her own knowledge or as a
was uttered by Mrs. Moore, you are instructed would have repetition of a common report, was slanderous and would give
entitled the plaintiff, Ella Frazer, to have recovered against a right of action. The injury to the defendants lies, in this; that
Mrs. Moore and John Moore, her husband, in damates in under the testimony as it was actually given the jury might, in
such an amount as may be shown from the evidence she had mitigation of damages, have taken into consideration the fact
sustained, if any, by reason of the utterance of said slanderous that the slanderous words were repeated, and not originated
language by Mrs. Moore on the occasion above named, and by Mrs. Moore. Marker v. Dunn, 68 Iowa, 720, 28 N. W. 38;
if said slanderous language was uttered maliciously by Mrs. Galloway v. Courtney, 10 Rich. Law (S. C.) 418; McKinnis
Moore and actual damages in any sum had been found in favor v. Freeman, 38 Iowa, 364; Evans v. Smith, 5 T. B. Mon.
of the said plaintiff, Ella Frazer, then in the discretion of the (Ky.) 364, 17 Am. Dec. 74; Calloway v. Middleton, 2 A.
court or jury assessing such damages Ella Frazer could have K. Marsh. (Ky.) 372, 12 Am. Dec. 406. In Calloway v.
recovered also such sum in exemplary damages as would have Middleton, treating of a similiar question, the court expressed
constituted an adequate punishment to Mrs. Moore for the the rule of law applicable to this case in this language: ‘But
utterance of such slanderous language.’ This charge, in effect, malice is the gist of the action of slander, and the degree of
informs the jury that the undisputed evidence establishes that responsibility of one who publishes slanderous words must
Mrs. Moore uttered to Mrs. Shertz this language: ‘That the be proportioned to the malignity of the motives with which
Frazer girls need not talk about Marie Stone's affairs, for at he is actuated in making the publication. Whatever, therefore,
any time they want to it can be proven that the child born tends to diminish the malignity of the person who utters a
in San Antonio is not Mrs. Durrell's child, but Ella Frazer's.’ slander, though not evidence of its truth, must lessen the
The record shows that Mrs. Shertz, the only witness who degree of his responsibility; and, most indisputably, one who
testified to the language used, said upon the stand: ‘Mrs. only gives currency to a report already in existence cannot be
Moore said that the Frazer girls need not trouble or talk about guilty of the same degree of malignity as one who is the prime
Marie Stone's affairs, and that people said that Ella Frazer author or original fabricator of the slander.’
was the mother of a child Mrs. Durrell was raising in Alpine,
Tex.’ It is plain that the court did not correctly state the The charge excluded testimony which the jury might have
testimony of the witness, and the question is, does it appear considered in mitigation of damages, and placed the case
that the variance between the charge and the testimony is so before them as being a slander originated and published by
immaterial that it did not mislead the jury to the injury of the Mrs. Moore, which deprived the defendants of the benefit
defendants. Hudson v. Morriss, 55 Tex. 610. that they might have derived from the exercise of discretion
by the jury in assessing a smaller amount against **327
The effect of the charge of the court is to construe for the jury Mrs. Moore, especially in the matter of exemplary damages.
the testimony of Mrs. Shertz as establishing the language used It appears to us that there could be no reasonable doubt that
in the charge, which is the same as that alleged in the petition. the jury may have been led by charge of the court to consider
The principal difference *106 between the language stated the case in the harshest light that could have been presented
in the charge and that to which Mrs. Shertz testified is that against Mrs. Moore. The defendants were entitled to stand just
the charge makes it an undisputed fact that Mrs. Moore said where Mrs. Moore would have stood in the trial of the suit
that the fact that Ella Frazer had given birth to a child ‘could against her, and to have before the jury every fact that tended
be proved at any time,’ which necessarily implies that she, to lessen the damages.
Mrs. Moore, claimed to know the fact to be true, and that she
knew of the witnesses who could establish the truth of her We are of opinion that the giving of the charge above quoted
statement. The testimony of Mrs. Shertz in this particular is to constituted such error against the plaintiffs in error as requires
the effect that ‘people said that Ella Frazer was the mother of that this court shall reverse the judgment and remand the
the child.’ In other words, the one presents a case in which a cause; and it is accordingly so ordered.
statement is made as upon Mrs. Moore's own knowledge and
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Patterson & Wallace v. Frazer, 100 Tex. 103 (1906)
94 S.W. 324
All Citations
100 Tex. 103, 94 S.W. 324
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
SS
Patterson & Wallace v. Frazer, 93 S.W. 146 (1906)
Cases that cite this headnote
KeyCite Red Flag - Severe Negative Treatment
Reversed by Patterson & Wallace v. Frazer, Tex., June 21, 1906
[3] Appeal and Error
93 S.W. 146 Instructions Understood or Followed
Court of Civil Appeals of Texas. It is presumed that the jury followed instructions.
PATTERSON & WALLACE 1 Cases that cite this headnote
v.
FRAZER. * [4] Attorney and Client
In General; Limitations
Jan. 31, 1906. | Rehearing
In an action against an attorney for negligence
Denied Feb. 28, 1906.
whereby plaintiff lost a right of action for
Appeal from District Court, El Paso County; J. M. Goggin, slander, the damages were not too remote to
Judge. support the action, even though a part of the
judgment which might reasonably have been
Action by Ella Frazer against Patterson & Wallace. From a expected to be recovered might have been for
judgment in favor of plaintiff, defendants appeal. Affirmed. exemplary damages.
2 Cases that cite this headnote
West Headnotes (13)
[5] Attorney and Client
Pleading and Evidence
[1] Trial In an action against an attorney for negligence
Construction and Operation whereby plaintiff lost a right of action for
In an action against an attorney for negligence slander, the petition alleged that plaintiff might
whereby plaintiff lost a right of action for reasonably have recovered $5,000 actual and
slander, the petition did not claim exemplary $5,000 exemplary damages, and concluded with
damages as against defendant, and the verdict a prayer for $10,000, which it was alleged she
was a certain sum for “actual damages” and was entitled to and “might reasonably have
another sum for “exemplary damages.” Held, expected and would have recovered,” had her
that the verdict was not erroneous, on the theory action not been lost. Held, that the petition
that it awarded exemplary damages against did not claim exemplary damages as against
defendant; it appearing from the pleadings and defendant.
evidence and instructions that it must have been
3 Cases that cite this headnote
intended to indicate the amount of the actual
and exemplary damages that plaintiff would have
recovered in her action for slander. [6] Attorney and Client
Trial and Judgment
2 Cases that cite this headnote
In an action against an attorney for negligence
in failing to attend to the filing of a cost bond,
[2] Appeal and Error whereby plaintiff's cause was dismissed and her
Instructions in General right of action lost, the court instructed that
A party cannot complain of an instruction which contributory negligence means some negligent
is the same, or to the same effect, as one asked act or omission on the part of the plaintiff which,
by him. concurring or co-operating with some negligent
act on the part of defendant, is the proximate
cause of the injury. Held, that there was no error,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Patterson & Wallace v. Frazer, 93 S.W. 146 (1906)
on the ground that, if plaintiff was guilty of
contributory negligence, it must necessarily have [12] Libel and Slander
been the proximate cause of the dismissal; the Publication
court having stated in another instruction that, if In an action for slander, it was proper to admit
plaintiff was guilty of negligence in failing to file testimony of plaintiff that a person told her that
a bond herself, she could not recover. defendant had uttered the words alleged where
the jury were instructed that they could only
1 Cases that cite this headnote consider the testimony as showing that plaintiff
had been informed of the utterance of the words.
[7] Husband and Wife
3 Cases that cite this headnote
Torts
Community property is subject to a judgment
founded on the wife's torts, even though it [13] Libel and Slander
includes exemplary damages. Exemplary
A husband is liable for exemplary as well as
1 Cases that cite this headnote actual damages for slanderous words uttered by
the wife.
[8] Libel and Slander
Cases that cite this headnote
Implied
Where words are actionable per se, the law
presumes malice.
Cases that cite this headnote Attorneys and Law Firms
*147 Beall & Kemp and Maury Kemp, for appellant. S. P.
[9] Libel and Slander Weisiger and A. Seymour Thurmond, for appellee.
Want of Chastity or Sexual Crimes in
General Opinion
Words imputing unchastity are actionable per se. NEILL, J.
Cases that cite this headnote This is the second appeal from a judgment in favor of appellee
in this case. The opinion of this court on the first appeal will
[10] Libel and Slander be found in 79 S. W. 1077, and in 9 Tex. Ct. Rep. 1004,
Rumors, Other Publications, and Reputation where will be found a full statement of the nature of the
of Person Defamed action, which need not be repeated. In the opinion referred
to many of the questions of law presented here were, after
The fact that a slanderous statement was a rumor
thorough and mature consideration, disposed of; and since,
repeated by defendant was no justification.
upon reconsidering them on this appeal, our opinion on none
1 Cases that cite this headnote has undergone any change, we will, in this opinion, without
discussing such questions, simply state the conclusions we
then reached. The judgment now appealed from is for $2,100,
[11] Libel and Slander
of which $1,050 are actual, and $1,050 exemplary, damages.
Variance
In an action for slander, it is not necessary to
Conclusions of Fact.
prove the exact words used as alleged, but proof
of the use of words substantially the same in The evidence in the transcript of the record is reasonably
meaning as those charged is sufficient. sufficient to warrant the following conclusions: On or about
February 1, 1901, the appellee, Ella Frazer, an unmarried
1 Cases that cite this headnote
woman, employed appellants, C. B. Patterson and George
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Patterson & Wallace v. Frazer, 93 S.W. 146 (1906)
E. Wallace, composing the firm of Patterson & Wallace, said loss. That had appellee's cause of action not been lost by
attorneys at law, to institute and prosecute in the district the negligence of appellants as aforestated, and had her suit
court of Reeves county, Tex., a suit in her name and for embracing said cause of action been managed and prosecuted
her benefit against John Moore and his wife, Ellen, for the by them with that degree of care, diligence, knowledge, and
sum of $10,000 damages occasioned appellee for slanderous skill a practicing lawyer of ordinary skill, prudence, and
language uttered and published of and concerning her by knowledge of the law would have exercised in cases of
Ellen Moore, the wife of John, on the ------ day of May and like character under like circumstances, the appellee would
June 19, 1900, she (plaintiff) paying them (defendants) a cash have recovered in said suit against Moore and wife, and
fee of $250, for which they agreed to institute and prosecute collected from them, a judgment for $1,050 actual and $1,050
to final termination such suit. That suit, on plaintiff's cause exemplary damages, which sums, amounting in the aggregate
of action against John Moore and wife, which she employed to $2,100 she has lost by the negligence of appellants, which
defendants as attorneys at law to institute and prosecute, proximately caused such loss and damage to her.
was on February 18, 1901, in pursuance of their contract of
employment, instituted by defendants by filing in the district
Conclusions of Law.
court of Reeves county, Tex., an original petition for plaintiff
against Moore and wife for $10,000 damages by reason of The first assignment of error claims that the damages sought
the alleged slanderous language uttered by Mrs. Moore of and to be recovered in this suit are too remote to support an
concerning plaintiff, upon which said suit was based, it being action, and for this reason appellants' special exception to
as follows: “The Frazer girls need not be talking about Marie appellee's petition based upon this ground should have been
Howard, for at any time they want to it can be proven that sustained. In passing upon a phase of the case involving this
the child born in San Antonio is not Mrs. Durrell's child, but question on the prior appeal, it was said: “In an action for
Ella Frazer is its mother.” The undisputed evidence shows tort, the injured party is entitled to recover such damages
that such language was uttered in the presence and hearing as will compensate him for the injury received, so far as
of one Mrs. Shertz by Mrs. Moore in May, 1900, of and it might reasonably have been expected to flow from the
concerning appellee, Ella Frazer, an unmarried woman. Such circumstances, such as, according to common experience
language was false, was maliciously uttered, and imputed that and the usual course of events, might have been reasonably
appellee had been guilty of the offense of fornication. That anticipated. He who is responsible for a negligent act must
after said suit had been instituted against Moore and wife, answer for all injurious results which flow therefrom by
appellants represented to appellee and induced her to believe ordinary, natural sequence, without the interruption of any
that it was unnecessary for her to file a cost bond in the other negligent act or overpowering force. The damage is
case, and afterwards promised her that they would attend to not too remote, if, according to the usual experience of
filing the cost bond when it became necessary; appellee being mankind, the result was to be expected, If, therefore, plaintiff
ready and able to make such bond. Appellants, after a rule had a cause of action against Moore and wife for slander,
for costs had been entered against appellee, negligently failed which is a question of fact, for which suit was pending,
to attend to having such bond filed in time, and by reason the loss of her action would inevitably follow from the
of such negligence and their representations to appellee, she negligence of her counsel causing the dismissal of her suit,
having failed *148 to make and file said bond, her cause when barred by limitations, and, after its dismissal, in so
was dismissed under the rule for costs; the appellants having negligently preparing and presenting a motion to reinstate
negligently failed to appear before the court when the order the suit as would not authorize the court to grant it. If,
of dismissal was made. After said cause was dismissed by then, were it not for such negligence, it can be reasonably
the court for want of a cost bond, appellants negligently shown that she would have recovered judgment and collected
failed to present a proper motion to the court containing the anything on it, she has lost by such negligence of defendants
necessary and proper allegations to have said cause reinstated, what she would have otherwise collected; and the fact that
and made no effort on said motion to show that appellee had a a part of the judgment which might reasonably have been
meritorious cause of action against Moore and wife. Upon the expected to be recovered and collected might have been
dismissal of said case, appellee's cause of action for damages for exemplary damages would make no difference. It is
against the defendants therein, being barred by the statute known that judgments for damages, actual and exemplary,
of limitation, was by reason of said negligence of appellants are recovered and collected for slander, and it will not do
lost to appellee; said negligence being the proximate cause of to say that attorneys at law are not liable to their clients for
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Patterson & Wallace v. Frazer, 93 S.W. 146 (1906)
negligence in managing such cases, because of the difficulty a special damages arising therefrom.” This answer we take as
jury may have in arriving at the damages occasioned by such settling the question raised by this assignment.
negligence, for this would absolve them from all liability for
negligence in such cases.” See Lynch v. Munson (Tex. Civ. It is further contended by appellants that their special
App.) 61 S. W. 141; T. & W. Tel. Co. v. Mackenzie (Tex. exception challenging the sufficiency of the petition to entitle
Civ. App.) 81 S. W. 582; Fraser v. Mining Co., 9 Tex. Civ. appellee to recover exemplary damage against them should
App. 210, 28 S. W. 714; Joske v. Pleasants, 15 Tex. Civ. App. have been sustained. As we read the petition, exemplary
433, 39 S. W. 586; McLane v. Maurer, 66 S. W. 693. To damages are not alleged nor sought against the defendants
deny an injured party the right to recover actual damages in in this case. The petition in this case charges that, had it
cases of this character, because they are of a nature that cannot not been for the alleged negligence of defendants, she might
be certainly measured, would be to enable the defendants have reasonably recovered from Moore and wife $5,000
to profit by and speculate upon their own wrongs. Allison actual and $5,000 exemplary damages, and concludes with a
v. Chandler, 11 Mich. 555; Gilbert v. Kennedy, 22 Mich. prayer for $10,000 which she says “she was entitled to, and
129. That the cases in which damages have been recovered might reasonably have expected, and would have recovered
against attorneys for negligently failing to prosecute suits against John Moore and wife,” had her action, which was
of their clients are generally where the cause of action was lost by defendants' negligence, been conducted properly.
a liquidated demand does not limit the right of the client's This demonstrates that the petition was not obnoxious to the
recovery of damages on account of the attorney's negligence exception. But in disposing of the assignment our attention
to such cases. The law cannot, when holding all others liable was brought to the form of the verdict, which, after stating
for damages proximately caused by their negligence (though the style and number of the case, is in these words: “We, the
difficult of ascertainment), justly exempt attorneys from the jury in the above-styled case, find for the plaintiff as follows:
operation of the rule by which it measures the damages $1,050 actual damages and $1,050 exemplary damages; total
consequent on the wrongs of others. This also disposes of the $2,100.” This verdict is against the appellants in this case,
twentieth assignment of error, which complains of the court's for it could have been against nobody else. Half of it is for
refusal to give a special charge, requested by appellants, to the exemplary damages. While no objection was urged to it in
effect that the damages sued for are too remote, speculative, the court below, nor in this court, it would seem, unless a
and conjectural to be recovered. construction can be given it from the record different from
its apparent meaning, that, as to the exemplary damages, it
It is urged by the second assignment of error that the alleged cannot support the judgment. For an error more egregious
defamatory language is not actionable per se, and, for that than a verdict for exemplary damages against a defendant,
reason, the court should have sustained appellant's special when no such damages are alleged or prayed for by the
exception to appellee's petition, no special damages flowing plaintiff, can hardly be conceived. It is evident, however,
from such language to plaintiff having been alleged. The from the pleadings of the parties, the evidence adduced
same point was insisted upon on the prior appeal and decided upon the trial, the charge of the court, and the whole record
adversely to appellants. This decision was expressly based before us, that it was intended to indicate by the verdict the
upon the causes of Zeliff v. Jennings, 61 Tex. 467, and King v. amount of actual and exemplary damages appellee would
Sassaman (Tex. Civ. App.) 54 S. W. 304, 64 S. W. 937, which have recovered against Moore and wife, had their cause of
we observed, broke away from the common law-the rule of action not been lost by appellants' negligence, and find in
decision in this state. In the case of Hatcher v. Range (Tex. favor of plaintiff the aggregate amount of such damages. This
Sup.) 81 S. W. 239, the question whether language *149 we think was the construction placed upon the verdict by the
orally uttered imputing the want of chastity to an unmarried trial judge, as well as counsel for the parties; and relieves it
female is actionable per se being involved, the Court of of any error that could be noticed by this court, in the absence
Appeals of the Second District, being unable to adopt the view of any objection on the part of appellants.
expressed in the case of King v. Sassaman, followed by us
in our former opinion, that the decision in Zeliff v. Jennings The following testimony of the appellee was introduced
changed the common-law rule, certified the question to the in evidence, over the objection of appellants that it was
Supreme Court, and it was answered: “That, under the law incompetent and hearsay: “Mrs. Shertz came and told me
as it now exists in this state, words spoken or written, which what Mrs. Moore said about me. Mrs. Shertz said Mrs.
‘falsely and maliciously, or falsely and wantonly’ impute to Moore said: ‘The Frazer girls need not be talking about Marie
a female want of chastity, are actionable without showing Howard, for at any time they want to, it can be proven that the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Patterson & Wallace v. Frazer, 93 S.W. 146 (1906)
child born in San Antonio is not Mrs. Durrell's child, but Ella also, Wigmore on Evidence, § 2097; Hume v. Arrasmith, 4
Frazer is its mother’-which child is my sister's child, who was Am. Dec. 626; Logan v. Steele, 4 Am. Dec. 659; Desmond
married and lives in Alpine. I was not married.” When this v. Brown, 4 Am. Rep. 194. As is observed by counsel for
testimony was offered in evidence plaintiff's counsel stated appellee in their brief: “The gravamen of the slander set out in
to the court and jury that it was not offered to prove the appellee's petition was that the appellee, being an unmarried
utterance of slanderous words, but to show that plaintiff had woman, was the mother of a child. * * * The testimony
been informed that they had been uttered. In admitting the objected to substantially met the allegations in the petition,
testimony, the court instructed the jury that it was admitted and was not subject to the objection urged. The fact that
only for the purpose stated by appellee's counsel, and that Mrs. Moore said, ‘the people said that Ella Frazer was the
they must not consider it for any other purpose whatsoever. mother of the child,’ could make no difference. ‘One who
It could as well be contended, that when a man has been shot publishes a defamatory statement made by another cannot
at, he cannot prove the bullet hit him as to say that when justify by proving that the other made the statement. By
defamatory words against a woman's character have been let publishing it, he becomes responsible for his own act in so
loose by a malicious tongue, she cannot prove that she was doing, and, if he seeks to justify, he must prove the truth of
stricken and wounded by them. Conscious of her innocence, the charge published.”’ Dement v. Houston Printing Co. (Tex.
the plaintiff might have been happy, had she nothing known Civ. App.) 37 S. W. 986; Branstetter v. Dorrough, 81 Ind. 530;
of the vicious assault upon her character. But, when known, Holmes v. Jones (N. Y.) 41 N. E. 409, 49 Am. St. Rep. 646.
her peace and tranquility of mind, her content and happiness,
were gone, and she felt that she had become “a fixed figure In the case of Nicholson v. Rust (Ky.) 52 S. W. 933, which
for the time of scorn to point its slow unmoving finger at.” is a case very similar to the one that the appellee had against
Such are the wounds which a known slander inflicts. If not Moore and wife, the defamatory words being, “One of Mrs.
allowed to prove the slander was known, the wounds could Nicholson's twins had twins, so I heard,” which were spoken
not be shown. We think that the testimony was admissible as of a young unmarried woman, the Court of Appeals of
evidence to show that appellee suffered from the defamation. Kentucky, after holding it actionable per se to impute want
As the court expressly charged the jury in writing to disregard of chastity to a female, without allegation or proof of special
the testimony, the admission of which is complained of in damages, said: “Nor is it any justification for a repetition of
the fifth assignment of error, it must be presumed, in the the slander that it had been reported in the neighborhood, or
absence of anything to the contrary, that the jury obeyed the that appellant, at the time he communicated the slander, gave
instruction, and were not influenced in their verdict by the the party to whom he related it the name of the person from
admission of such testimony. whom he learned said report, or that he informed him at the
time that he did not believe said report to be true; and it cannot
The testimony complained of in the sixth, seventh, and be relied on by way of justification that he did not intend to
eighth assignments is not obnoxious to the objections urged charge appellant with the offense of fornication. This court, in
by appellants to its admission in evidence. In proving the the case of Parker v. McQueen, 8 B. Mon. 18, says: ‘The fact
slanderous utterances upon which an action of slander is that the defendant had heard from another the charge which
based, it is only required to show that the words spoken he himself afterwards circulates and gives credit to does not
were substantially as alleged. Zeliff v. Jennings, 61 Tex. 465; repel the implication of malice arising from the falsehood and
Townshend on Slander, 364, 365. In Newell on Slander and unnecessary publication of the charge by him. It may, in the
Libel, 804, it is said: “In an action for slander the plaintiff estimation of the jury, mitigate the damages, but cannot, of
need not prove all the words in the declaration, unless it takes itself, operate as a bar to the action’ (referring to Williams v.
all of them to constitute her cause of action; nor will the proof Greenwade, 3 Dana, 432). This same doctrine was announced
of additional *150 words defeat his right of recovery, unless by Judge Cooley, in the great leading case of Burt v. McBain,
they so qualify the meaning as to remove the slander; but reported in 29 Mich. 260; and Mr. Newell, in his work on
he must prove enough of the words laid to amount to the Defamation, Slander, and Libel (pages 354, 355), says: ‘It will
substance of the charge, and this must be done by proof of afford no justification in any action for oral slander that the
the identical words laid.” While the evidence complained of defamatory matter had been previously published by a third
shows that more was said than alleged, yet, as the identical person, or that the defendant, at the time of his publication,
words laid were proven, and the additional words do not so disclosed the name of that third person, and believed all of
qualify their meaning as to remove the slander, there was the statements to be true.’ In Kelley v. Dillon, 5 Ind. 426, the
no variance in the language alleged and that proven. See, court said: ‘Let it be understood that a bare rumor is sufficient
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Patterson & Wallace v. Frazer, 93 S.W. 146 (1906)
to justify the retailing of slander, and character would be at and the plaintiff's negligence, if found by the jury, was
the mercy of the artful and designing, as such defenses could made an absolute bar to her recovery. In submitting another
be manufactured before hand to suit any emergency.’ Odgers, phase of the issue of contributory negligence, in a charge
Lib. & Sland. p. 100, says: ‘Every repetition of a slander is given at appellants' request “proximate cause” was likewise
a willful publication of it, rendering the speaker liable to an eliminated from the issue, and the jury were instructed to find
action. Tale bearers are as bad as tale makers.”’ In cases of for defendants if plaintiff was guilty of such negligence. But
slander, where there is a denial that the slanderous statement if the charge upon this issue had been subject to the objection
was uttered, the issue on such denial of uttering the statement urged, appellants would be in no attitude to complain of it;
is not whether the libelous statement is true, but whether the for special charge No. 7, which was given at their request,
statement was really made. The making of the statement is and relates to the same issue, instructs the jury in event they
the principal fact in issue. Testimony by one that heard the should find that plaintiff was negligent in failing to see that
statement uttered is not hearsay, but original evidence of the a good and sufficient cost bond was filed in said case and
fact in dispute. It is evidence within the personal knowledge such negligence on her part was the direct and proximate
of the witness, and has nothing to do with the hearsay rule. cause of said suit being dismissed to find for the defendants.
Elliott, Ev. § 323. The Court of Civil Appeals, in the case of It is thus seen that the special charge requested by defendants
Frazer v. Moore, 67 S. W. 427, in which the sufficiency of the themselves embodies the very objection that they urge and
application made by these appellants to require the trial court which the main charge in its application to the issue is free
to set aside the judgment of dismissal was in question, having from. If error, such error was invited by appellants, and the
held that the motion was insufficient, it was not error for the court, in accepting the invitation, did not extend it beyond its
court to instruct the jury, as is complained of in the eleventh express terms. Our conclusions of fact and what we have said
assignment of error, that such motion was insufficient to in disposing of previous assignments dispose of the thirteenth
require the judge to set aside said judgment of dismissal, and assignment of error adversely to appellants.
then charge the jury that it was for them to determine from the
evidence whether or not the defendants Patterson & Wallace The twelfth paragraph of the charge does not, as is contended
were guilty of negligence in not presenting said motion with under the fourteenth assignment of error, assume as a matter
other or additional allegations, or in not supporting said of law that the facts, or any of them, submitted by that
motion with evidence. paragraph constitute negligence. But the question as to
whether such matters, or any of them, if proven, constitute
The twelfth assignment of error complains that the court negligence is expressly submitted to the finding of the jury.
erred in defining contributory negligence as follows: “By If correct, in our former opinion on the former appeal,
contributory negligence is meant some negligent act or it was not error to submit the question to the jury as to
omission on the part of plaintiff, which, concurring or co- whether exemplary damages could have been recovered
operating with some negligent act or omission on the part of against Moore and wife in the suit brought by appellee against
the defendants, is the proximate cause of the loss or injury them, and to instruct the jury if such damages would have
complained of.” The objection urged being that, under the been recovered, to the extent of such recovery, appellants,
facts and circumstances of the case, if the plaintiff was guilty if negligent, etc., would be liable. As has been shown, the
of negligence, which contributed to the failure to file a proper words of Mrs. Moore spoken of and concerning appellee were
cost bond, such negligence must necessarily have been the actionable per se, because, if false, the law imputes malice;
proximate cause of the dismissal of her suit. The definition for such words are drops of venom from a malicious tongue,
is abstractly correct: and if it were error to apply it to the which can only come from a depraved heart, bent on blighting
issue as to whether appellee *151 was negligent in failing to the character of a pure and innocent woman. No other proof
make and file a cost bond in her suit against Moore and wife, of malice than such words carry with them need be shown.
the court was guilty of no such error. For by the thirteenth
paragraph of its charge the jury were instructed as follows: “If As is said in Zeliff v. Jennings, supra, “a husband is liable for
you believe from the evidence that the plaintiff was guilty of his wife's acts, when liable at all, to the same extent as if she
negligence in failing to make up and file a good and sufficent alone were answerable.” That a husband is liable for his wife's
cost bond herself in the district court in her case against John torts, as well as she, is too well settled to admit of discussion,
Moore and wife before the dismissal of her suit, then, and in or require citation of authorities. For slander, she is liable for
that event, your verdict should be for the defendants.” Thus exemplary, as well as actual, damages; and the husband being
it is seen, as to this issue, “proximate cause” was ignored, liable to the same extent as if she alone were answerable, he
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Patterson & Wallace v. Frazer, 93 S.W. 146 (1906)
such was her damages for which appellants, if negligent, were
is likewise liable for exemplary damages. Besides, it is to be
liable.
presumed, in the absence of evidence to the contrary, that
the assets that Moore and wife had on hand, out of which What we have said, in connection with our former opinion,
the judgment which would have been obtained against them, we believe, disposes of all the questions raised by the
had it not been for appellants' negligence, could have been assignments of error, and brings us to an affirmance of the
satisfied, was community property and, as such, would have judgment. In affirming it, it is needless to say what would
been subject to a judgment founded on the wife's torts, even have been the findings of this court had the facts been
though it carried exemplary damages. The difficulty of trying presented to us in the first instance. Suffice it to say that, in
two cases in one involved in this case, is more apparent than our opinion, there is evidence tending to support the findings
real. For the jury trying the case had only to put itself in the of the jury, which places it beyond our power to invade its
place of a jury in the Frazer-Moore Case, and determine what province. And yet, it is not without regret that it becomes our
would have been its verdict, in order to ascertain what would duty to affirm a judgment, on grounds of negligence, against
probably have been the verdict had such case been tried. What attorneys known by the court to be competent, diligent, and
would have been its verdict is a safe criterion in determining faithful in the discharge of their duties to their clients.
what would have been the verdict of another jury in such
case. Having in this manner determined what such verdict Affirmed.
would have been, they would, then, only have to ascertain
what amount could have been collected on a judgment entered
All Citations
on such verdict, and then find for plaintiff such amount; for
93 S.W. 146
Footnotes
* Writ of error granted by Supreme Court.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
TT
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
1 Cases that cite this headnote
848 S.W.2d 833
Court of Appeals of Texas,
Houston (14th Dist.). [3] Attorney and Client
Acts and omissions of attorney in general
Christopher D. RHODES, Appellant, Acts of attorney hired by client to defend her
v. against tax assessment, in signing form which
Ione A. BATILLA, Appellee. consented to assessment of responsible person
tax against her even though client had instructed
No. A14–92–00154–CV. | Feb. 18, him to show Internal Revenue Service (IRS) that
1993. | Rehearing Denied March 18, 1993. she was not responsible person, advising client
to get “paper divorce” to thwart IRS collection
Client brought legal malpractice suit against tax attorney.
attempts, and neglecting to discuss consent form
The 334th District Court, Harris County, Russell T. Lloyd,
with client were sufficient to be negligence
J., entered judgment on jury verdict awarding client actual
on part of attorney; additionally, even after he
and exemplary damages, and attorney appealed. The Court
signed consent form, attorney never told client
of Appeals, Sears, J., held that: (1) acts of attorney hired by
about consenting to assessment, and attorney
client to defend her against tax assessment were sufficient
terminated relationship with client leaving her in
to be negligence on part of attorney; (2) award of $125,000
ignorance of status of her case and without taking
in exemplary damages was not excessive; and (3) client's
any steps to protect her interest.
response to attorney's interrogatories revealed that client had
personal knowledge of facts relevant to lawsuit, and thus, her Cases that cite this headnote
testimony was not required to be excluded on grounds that she
was not properly identified as fact witness in interrogatories.
[4] Attorney and Client
Affirmed. Trial and judgment
Additional instructions tying issues in legal
malpractice suit to proper prosecution of case
by attorney were not warranted, where client
West Headnotes (34) did not suffer damages because attorney failed
to properly prosecute case, but instead claimed
[1] Attorney and Client damage because attorney failed to defend case,
Trial and judgment he advised getting a “paper divorce,” and he
secretly consented to assessment of tax against
Generally, determination of negligence,
her; instructions submitted to jury satisfied four
causation and damages in legal malpractice
elements of duty, breach of duty, proximate
action are questions of fact for jury.
cause, and damages. Vernon's Ann.Texas Rules
1 Cases that cite this headnote Civ.Proc., Rule 277.
Cases that cite this headnote
[2] Attorney and Client
Trial and judgment
[5] Attorney and Client
After jury makes its factual determinations in Pleading and evidence
legal malpractice suit, court then determines
Evidence was sufficient to support jury's
legal question of whether facts found by jury are
finding that negligent conduct by attorney, who
professional misconduct; if trial court determines
represented her in connection with responsible
that facts constitute professional misconduct,
person tax assessed by the Internal Revenue
then it enters judgment in favor of plaintiff.
Service (IRS), caused client's damage; evidence
indicated that attorney signed form consenting
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
to assessment without telling client, advised
client to get “paper divorce” to thwart collection 1 Cases that cite this headnote
attempts, and terminated relationship without
taking any steps to protect her interest. [10] Attorney and Client
Trial and judgment
Cases that cite this headnote
Jury instructions describing defendant attorney
as “tax attorney” and client as “layman” were
[6] Attorney and Client not abuse of discretion, in legal malpractice suit;
Acts and omissions of attorney in general attorney held himself out as tax attorney, and
Failure of client to appeal final assessment client was layperson.
of responsible person tax by the Internal
Revenue Service (IRS) did not preclude her from Cases that cite this headnote
establishing malpractice by attorney, who signed
form consenting to assessment on client's behalf [11] Attorney and Client
without client's knowledge, despite defendant's Damages and costs
contention that client should be compelled to
Facts of malpractice by attorney, who signed
exhaust administrative or judicial remedies; no
consent to responsible person assessment
administrative agency within IRS or elsewhere
without knowledge of client and who advised her
should have considered malpractice claim prior
to obtain “paper divorce,” offended public sense
to filing suit in trial court.
of justice and propriety sufficient to support
Cases that cite this headnote award of exemplary damages, and award of
$125,000 was not excessive, in light of actual
damages award of $125,500.
[7] Administrative Law and Procedure
Exhaustion of administrative remedies Cases that cite this headnote
Generally, exhaustion of remedies doctrine is
utilized to prevent plaintiff from litigating issue [12] Damages
in court which should have been first considered Grounds for Exemplary Damages
by administrative agency.
Factors to consider when reviewing exemplary
Cases that cite this headnote damages are: nature of wrong; character of
conduct involved; degree of culpability of
wrongdoers; situation and sensibilities of parties
[8] Attorney and Client concerned; and extent to which conduct offends
Acts and omissions of attorney in general public sense of justice and propriety.
Attorney, who according to his own testimony
was tax expert, was properly held to standard of Cases that cite this headnote
care which should be exercised by reasonably
prudent tax attorney. [13] Damages
Actual damage or compensatory damages;
2 Cases that cite this headnote
relationship and ratio
Amount of exemplary damages awarded must
[9] Attorney and Client be reasonably proportioned to amount of actual
Skill and care required damages awarded.
Generally, standard of care for attorney is that
which would be exercised by reasonably prudent Cases that cite this headnote
attorney, based on information attorney had at
time of alleged act of negligence. [14] Attorney and Client
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
Damages and costs
2 Cases that cite this headnote
Evidence of attorney's net worth was factually
sufficient to support jury's award of exemplary
damages of $125,000, in malpractice suit; [18] Attorney and Client
attorney testified about rental property from Trial and judgment
which he received income, acreage he owned, First attorney's requested “new and independent
office furniture and equipment, accounts cause” instruction, based on client's hiring new
receivable, and sporting equipment, but claimed attorney, was not supported by evidence, which
that none of items had much value and that law indicated that second attorney represented her for
practice had zero value. period of only three or four months in connection
with federal tax matter, that tax debt had already
Cases that cite this headnote
been assessed against client due to first attorney's
execution of consent to assessment, and that
[15] Attorney and Client second attorney succeeded in having stopped
Pleading and evidence collection activities.
Evidence of attorney's conscious indifference
Cases that cite this headnote
in investigating and presenting facts to Internal
Revenue Service (IRS), which claimed client
was liable for responsible person tax, in [19] Negligence
failing to investigate or correct misleading In general; foreseeability of other cause
information he sent to IRS, in failing to “New and independent cause” is separate or
recognize effects of signing form consenting to independent act that destroys causal connection
assessment, and in terminating his relationship between defendant's negligence and plaintiff's
with client without informing her of status of injury, thereby becoming immediate cause of
case was sufficient to support finding of “gross such injury.
negligence” on attorney's part, as required for
awarding exemplary damages. 1 Cases that cite this headnote
1 Cases that cite this headnote
[20] Negligence
Proximate Cause
[16] Damages
In order for trial court to submit instruction
Mental suffering and emotional distress
on new and independent cause, there must
Client, who testified that she suffered severe be some evidence that independent act, rather
emotional distress relating to mishandling of than defendant's negligence, was responsible for
her federal responsible person tax defense, plaintiff's injuries; additionally, trial court does
dissolution of marriage, and negative affects not err in refusing such instruction where act
on her credit by federal tax lien after attorney alleged to be new and independent cause is
consented to assessment without knowledge of dependent on defendant's negligent act.
client, presented sufficient evidence to support
award of damages for emotional distress. Cases that cite this headnote
Cases that cite this headnote
[21] Appeal and Error
Exclusion of evidence
[17] Damages
Tax attorney was precluded from complaining
Mental Suffering and Emotional Distress
upon appeal in malpractice suit about trial court's
In certain circumstances award of emotional exclusion of evidence of client's motion for
distress damages in legal malpractice case is enforcement and clarification, filed by client's
appropriate. husband about a year after divorce, where
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
attorney never offered to trial court for admission more prejudicial than probative and because
into evidence. client did not sufficiently state in her answers
to interrogatories facts about which witness
Cases that cite this headnote had knowledge, were not preserved for appeal;
attorney objected to testimony on basis that it
[22] Trial was hearsay, extraneous, and irrelevant. Rules of
Cumulative evidence in general Civ.Evid., Rules 402, 403, 802.
Trial court, which admitted client's divorce 3 Cases that cite this headnote
decree as evidence that she did get her divorce
in malpractice suit against attorney who had
represented her in tax matter, could refuse [25] Evidence
to admit into evidence divorce petition or Acts and Statements Accompanying or
motion for temporary restraining order by Connected with Transaction or Event
husband, as cumulative of evidence elicited in Testimony by client's codefendant in Internal
attorney's cross-examination of client; attorney Revenue Service (IRS) collection action on
was allowed to establish that petition alleged responsible person tax regarding circumstances
that grounds for divorce were cruel treatment by of meeting with attorney and circumstances of
husband and that she knew that papers had to be client's filling out forms IRS official gave her at
filed in order to obtain divorce. meeting was part of res gestae and not hearsay,
and was admissible, in malpractice suit brought
Cases that cite this headnote against attorney. Rules of Civ.Evid., Rule 402.
Cases that cite this headnote
[23] Privileged Communications and
Confidentiality
Impeachment or rehabilitation of witnesses [26] Pretrial Procedure
Privileged Communications and Sufficiency; option to produce business
Confidentiality records
Waiver of privilege Client's response to attorney's interrogatories in
Trial court could allow client, who had presented malpractice suit revealed that client had personal
evidence of her divorce in malpractice suit knowledge of facts relevant to lawsuit, and thus,
brought by her against tax attorney, to assert her testimony was not required to be excluded on
attorney-client privilege as to communications grounds that she was not properly identified as
with divorce attorney; client did not put in issue fact witness in interrogatories.
any advice given her by her divorce attorney,
Cases that cite this headnote
and tax attorney was allowed to extensively
attack client's credibility regarding her divorce
on cross-examination without delving into [27] Pretrial Procedure
privileged matters. Rules of Civ.Evid., Rule 503; Identity and location of witnesses and
Vernon's Ann.Texas Rules Civ.Proc., Rule 166b, others
subd. 3. Pretrial Procedure
Time, place, and mode of inspection;
Cases that cite this headnote
copying, photographing, and testing
Client, who produced names and addresses of
[24] Appeal and Error two witnesses and documents complained of by
Objections to evidence and witnesses defendant attorney more than 30 days before
Claims by defendant attorney in malpractice trial and several days before discovery deadline,
suit that testimony of client's witness should was entitled to have documents and witnesses'
have been excluded on grounds that it was testimony admitted, despite attorney's contention
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
that such evidence should have been excluded as producing document as soon as it came into her
discovery sanction. possession, and thus, notice was not required to
be excluded, in legal malpractice suit.
Cases that cite this headnote
Cases that cite this headnote
[28] Pretrial Procedure
Request, notice, or motion and response or [32] Appeal and Error
objection Discovery and depositions
Defendant in attorney malpractice suit Pretrial Procedure
specifically waived any objection to production Dismissal or default judgment
of document, by stating at trial that he did not Determination of good cause for admission of
believe he complained to plaintiff that she failed late produced evidence is within sound discretion
to timely produce documents in question. of trial court and can only be set aside if that
discretion is abused.
Cases that cite this headnote
Cases that cite this headnote
[29] Pretrial Procedure
Request, notice, or motion and response or [33] Interest
objection Torts; wrongful death
Client was under no duty to produce personal Trial court's determination that prejudgment
income tax returns, where attorney never interest on award in malpractice suit against
requested returns in any request for production, tax attorney should accrue from April 25, 1988,
in legal malpractice suit. was supported by evidence; evidence indicated
that by that date client had paid attorney $500
Cases that cite this headnote
retainer fee, had learned that attorney had
sent Internal Revenue Service (IRS) incorrect
[30] Appeal and Error information, had obtained “paper divorce” on
Particular cases advice of attorney, and had retained new counsel
Client's letter to Internal Revenue Service (IRS) to salvage her case, and that attorney had agreed
requesting abatement, which was produced four to tax assessment against client without client's
days before trial of malpractice suit against knowledge.
tax attorney, was admitted only for purpose of
2 Cases that cite this headnote
showing that client had tried to help herself and
was cumulative of other evidence establishing
such point, and thus, admission of such evidence [34] Attorney and Client
was harmless, even though letter was produced Damages and costs
only four days before trial and well after Attorney in legal malpractice suit failed to show
discovery deadline. Rules App.Proc., Rule 81(b) that deposition copy was not a cost incurred
(1). by client pursuant to civil rule, and thus, cost
of deposition copy was required to be paid by
1 Cases that cite this headnote
attorney, as the losing party in malpractice suit.
Vernon's Ann.Texas Rules Civ.Proc., Rules 131,
[31] Pretrial Procedure 133, 140.
Request, notice, or motion and response or
objection 1 Cases that cite this headnote
Client, who produced to attorney's counsel loan
rejection notice within 48 hours of receipt,
satisfied duty to supplement discovery by
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
a 100% penalty against her, i.e., essentially collecting the
Attorneys and Law Firms unpaid company taxes from her. Batilla called her CPA,
Jim Orick (Orick), and told him about the call from the
*837 W. Stephen Rodgers, Charles Escher, Houston, for
IRS. Orick officed in the same building as appellant, and he
appellant.
referred Batilla to appellant for advice. Orick indicated to
David A. Furlow, Houston, for appellee. Batilla that appellant was a tax expert and could represent
her. On January 27, 1986, Batilla called appellant, told him
Before J. CURTISS BROWN, C.J., and SEARS and ELLIS, that Orick had referred her, and asked if appellant could help
JJ. her. Batilla testified appellant assured her he could help. She
told appellant of the phone call from Mr. Bean and that the
IRS had requested a personal interview. Appellant told Batilla
OPINION to “go down and talk to Mr. Bean and then come and see
him after [she] spoke with Mr. Bean.” She testified appellant
SEARS, Justice. further advised her “he would call Mr. Bean” and he indicated
that “everything would be all right.” Further testimony shows
Ione A. Batilla (Batilla), appellee, brought suit for legal
appellant told her there would be a $500 retainer fee and
malpractice against Christopher D. Rhodes, appellant. Trial
“that he would help” her. They set an appointment for early
was to a jury which found gross negligence in appellant's
February to meet in person. The same day as this initial
handling of Batilla's tax defense from the Internal Revenue
telephone consultation, January 27, 1986, appellant filled out
Service (IRS). Judgment was entered on the verdict in favor
a time-slip charging one-half hour to Batilla's account for
of Batilla, awarding her $125,500 in actual, and $125,000 in
“several telephone conferences with client [and] [t]elephone
exemplary, damages. Appellant raises 22 points of error. We
call to Mr. Beene of IRS.” On January 28, 1986, appellant
affirm.
filled out a time-slip for Batilla's account reflecting one hour
for “[p]reparation of Power of Attorney and letter to Mr.
Batilla's tax liability arose in connection with her employment
Beene.” At trial, however, appellant testified he really was not
at Randolph Office Furniture (ROF). Batilla was employed
retained to represent Batilla, and did not know “whether [he]
by ROF in January 1980 and left the company in December
actually transcribed” the letter.
1984. While she was with ROF she was employed as
controller. She did the company books, worked with a
*838 A couple of days after Batilla received the call from
company called ADP to issue payroll checks, and oversaw the
the IRS, Larry Owens (Owens), a past president of ROF,
purchasing department. Batilla, however, had no authority to
also received a call from Mr. Bean about the unpaid taxes.
sign company checks, even on the payroll account, without
Batilla and Owens agreed to meet and go see the IRS agent
the owner's approval. In 1984 and 1985, the company was
together on February 6, 1986. Owens testified he did not
having financial trouble and eventually went into Chapter
want “to go to the IRS without professional help,” and he
7 bankruptcy. During this time period, the owner, George
asked his long-time friend Joe Hart (Hart), a CPA, to go
Randolph (Randolph), refused to approve any checks to pay
with him. When they got to the IRS building, Hart told them
the company's FICA payroll taxes. At first, ADP would
they would have to sign a power of attorney before he could
automatically send the payroll taxes to the IRS. However,
go into the meeting with them. Owens and Batilla signed a
after two of these drafts bounced, ADP notified Randolph
power of attorney on the trunk of the car. Hart went in with
it would not handle the payroll taxes and would not be
them and the meeting was a very unpleasant experience. Mr.
responsible for non-payment of these taxes. Thereafter, on
Bean was “intimidating and rather rough,” and treated them
the advice of the company attorney, Batilla had someone
as guilty until proven innocent. He refused to let them leave
witness her tender of checks for the taxes to Randolph for his
the office until they filled out and signed a Form 4180. Batilla
signature. Randolph would either refuse to sign the checks or
testified that Mr. Bean explained that this form “was not an
tear them up. As a result, the ROF payroll taxes were not paid.
admission of guilty, but just that [they] had showed up for the
meeting.” However, Mr. Bean told Batilla if she did not fill
In January 1986, Batilla received a call from Mr. Bean with
out the form he would assess all of the penalty against her.
the IRS regarding ROF's unpaid FICA taxes for 1984 and
They were not allowed to take the documents with them, get
the first quarter of 1985. Mr. Bean wanted to determine if
professional help in filling them out, or make any phone calls
Batilla was a “responsible person” for purposes of assessing
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
to get assistance. Further, they were not allowed to talk to from Randolph had not resulted in payment. The letter went
each other while filling them out. Batilla was extremely upset, on to state the IRS proposed to assess all of the penalty against
nervous, “scared to death,” and crying during this process. Batilla, and if she agreed to the assessment she was to sign the
attached Form 2751. Batilla called appellant and told him she
On February 13, 1986, Batilla and Owens met appellant. “was not going to sign anything.” She informed appellant “he
Batilla took a copy of her Form 4180 with her to the meeting. needed to call them up and *839 take care of it and give them
She went over it with appellant explaining that in the stress the facts that he had not given them.” Appellant indicated that
of the moment she had made some mistakes on the form. he would take care of it.
The most glaring mistake was that she claimed employment
at ROF for 1985, while in reality she was not employed Appellant's time-slips indicate no further activity until June 6,
there during 1985. She and Owens gave appellant the facts 1986 when he charged Batilla 1.3 hours for “[p]reparation of
and explained that neither one was a “person responsible” Letter of Protest [and] [r]eview of notice received regarding
for the payment of ROF's payroll taxes. They provided him 100% penalty,” and 2.0 hours for “[p]reparation of protest
with the names, addresses and phone numbers of witnesses [and] [r]eview of files for L'Lani corporation.” When Batilla
who could verify these facts. They discussed the various got a copy of the protest letter which appellant sent to the IRS,
company bank accounts and they specified on which accounts she immediately called appellant to tell him the information
Batilla and Owens could and could not sign. Batilla explained in the letter was incorrect and that he needed to give them
to appellant that the unpaid FICA taxes came out of the the true facts. Appellant told her he would take care of it.
operating account and that she never had signature power on However, appellant never corrected any of the facts in the
that account. She further told appellant how Randolph would protest letter, and testified at trial he was not concerned that
refuse to sign, or would tear-up, the checks to the IRS for the the letter contained totally inaccurate information “because it
payroll taxes. Appellant, however, testified he did not reduce was to the best of [his] knowledge at that time.”
these facts to writing in order to follow up and investigate,
even though this information was vital to Batilla's defense. In In 1986, appellant also gave Batilla advice on protecting her
fact, appellant took absolutely no notes of this or any other family from tax liability. Mr. Bean had told Batilla he would
conversation with Batilla, and stated at trial that he did not garnish her wages and her husband's wages. In response,
think it was important to take notes in order to get the facts appellant told Batilla the only way she could prevent the IRS
straight. from taking her money was to get a “paper divorce,” give
her assets to her husband, and put any equity that she had
At this initial meeting, appellant told them he was a “tax in a trust fund for her son. Batilla followed this advice even
specialist.” That he had extensive experience with 100 percent though her husband was against the idea. Due to the stress
penalty cases and that he was an expert in that area. He of the tax problems and her husband's unhappiness over the
explained that his hourly rate was $125 an hour, and had divorce, their “paper divorce” became a real divorce.
Batilla and Owens each sign a power of attorney. He told
Batilla that she had a defendable case. He further indicated After the protest letter was sent, appellant's time-slips reflect
she would win, but the case might have to go to trial and that no further activity on behalf of Batilla until January 20, 1987.
would cost $7,000 to $10,000. Batilla told him at that time In 1987, appellant had several telephone conferences with
she did not have the money to go to court and she wanted him IRS representatives, met with Larry Fagen (Fagen) of the IRS,
to present the facts to the IRS so they would know she was talked to Batilla once, talked to Owens at least twice, spent a
not a “person responsible” for the taxes. Appellant told both maximum of three hours researching the law, and sent a letter
Batilla and Owens he would keep them informed and send to Fagen. At the meeting with Fagen, appellant was requested
them copies of any letters he wrote. to bring “facts, arguments, and legal authority” to support
Batilla's position. Any statements appellant brought to the
Appellant filled out time-slips that same day, charging .4 of meeting were to be “in affidavit form or signed under penalty
an hour to Batilla for “[p]reparation of Form 2848,” and 1.5 of perjury.” However, appellant presented an argument to
hours for “[c]onference with client.” Batilla and Owens were Fagen at the meeting unsupported by any facts or legal
subsequently each sent a bill for the $500 retainer fee, which authority. He took no case authority with him to the meeting,
they both paid to appellant. In May 1986, Batilla received a and he failed to obtain affidavits from Batilla or any of the
letter from the IRS indicating that efforts to collect the taxes witnesses, therefore he had no statement of facts to present to
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
the IRS. The obvious result was that the meeting was of zero all documents and correspondence in the file. He still failed
value to Batilla. If the true facts had been given to the IRS, it to inform Batilla he had agreed to 100% assessment of the
would have been apparent Batilla had zero liability. taxes against her.
Appellant's time-slips also indicate he had a telephone In February 1988, Batilla received a bill from the IRS for
conference in 1987 with a “witness;” however, none of the $32,124.31 in unpaid FICA taxes for ROF. Batilla went to the
witnesses had ever heard from or spoken to appellant. On June IRS in an attempt to clear up the mistake. She was advised to
18, 1987, Fagen sent appellant a letter indicating he had tried write out the facts of her case and get affidavits from people
to contact appellant and follow up on this matter on March with personal knowledge of the events. On March 29, 1988,
27, 1987, April 8, 1987, April 27, 1987, and May 20, 1987, Batilla prepared a letter stating the facts of her case, supported
but all of these attempts had failed. A copy of this letter from by five affidavits. In early April 1988, Batilla presented her
Fagen was also sent to Batilla. She was extremely upset when letter and affidavits to the collection officer, Mr. Amdexter
she received the letter, and immediately called appellant. (Amdexter), who refused to listen to anything she had to say.
Batilla was concerned that the IRS still did not know the He told her he could seize any asset she had to satisfy the debt.
truth of the matter, i.e., Batilla was not a “responsible person”
and in fact had no authority to issue checks for payroll Batilla was subsequently referred to Ben Stevens (Stevens),
deductions. Appellant told her he previously had several and she retained him in April 1988 to represent her in this tax
conversations with Fagen and that he would submit further matter. In late April 1988, Stevens discovered that appellant
information to Fagen. On June 25, 1987, appellant sent had signed the Form 2751, and agreed to the assessment of the
Fagen a letter indicating he had received the letter of June 100% penalty against Batilla. Stevens immediately informed
18, 1987 and would be submitting further information by her of the agreement. On May 11, 1988, the IRS filed a
July 8, 1987. Appellant took no action, and never gave the Federal Tax Lien against Batilla. She began payment on the
IRS the correct facts. Obviously, the IRS assumed Batilla tax lien. In January 1989, Batilla retained Mary Heafner to
was a “responsible person” for the ROF taxes, and initiated represent her in this malpractice action against appellant.
collection procedures.
In points of error one and two, appellant complains the trial
Sometime in 1987, appellant signed the same Form 2751 that court erred in not making a ruling regarding any “legal errors”
Batilla told him she would not sign, and in doing so appellant he committed, and in rendering judgment for Batilla. He
agreed to the assessment of the 100% penalty against Batilla. alleges the trial court should not have submitted questions to
This form was executed without her knowledge or consent. the jury about his conduct generally, because an evaluation of
When he signed the form, he drew a line across the bottom his acts or omissions as “legal errors” should have been made
and put an asterisk to the right of the line. Then across by the court as a matter of law. Appellant also contends that
the middle of the form next to another asterisk he wrote because his acts or omissions are in uncertain areas of law,
“[t]axpayer retains the option of filing claim and suit for they cannot be negligence.
refund.” Appellant *840 never obtained Batilla's consent,
never informed her he had signed this form on her behalf, and [1] [2] Generally, the determination of negligence,
never sent her a copy of the signed form. causation and damages in a legal malpractice action are
questions of fact for the jury. Millhouse v. Wiesenthal, 775
On November 27, 1987, the IRS sent Batilla a letter stating S.W.2d 626, 627 & n. 2 (Tex.1989). In the professional
the case was closed “on the basis agreed upon” and the file misconduct case cited by appellant, the court made it clear
was to be sent to the service center for account adjustment the jury is to determine these factual issues. Hebisen v.
and interest computation. Batilla frantically tried to contact State, 615 S.W.2d 866, 867–68 (Tex.Civ.App.—Houston
appellant. After several phone calls, she finally tracked him [1st Dist.] 1981, no writ). After the jury makes its
down in December 1987. She told him about the letter from factual determinations, the court then determines the legal
the IRS, and appellant told her he had done “everything he question of “whether such facts found by the jury constitute
could” for her. He stated the case was closed, there was professional misconduct.” Id. at 868 (citing Howell v. Texas,
nothing else he could do for her, and she would have to get 559 S.W.2d 432 (Tex.Civ.App.—Tyler 1977, writ ref'd
another attorney. Batilla asked if appellant had sent her copies n.r.e.)). If the trial court determines the facts constitute
of everything in his files, and he assured her she had copies of
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
professional misconduct, it then enters judgment in favor of The Texas Supreme Court in Cosgrove stated that “[a]n
the plaintiff. See id. at 867–68. attorney malpractice action in Texas is based on negligence.”
Cosgrove v. Grimes, 774 S.W.2d 662, 664 (Tex.1989). There
[3] Appellant opines that the effect of signing the Form are four elements which must be established by the plaintiff
2751 is uncertain and requires numerous judgment calls, in a negligence action: 1) “that there is a duty owed to [her]
however, this fact does not prevent the jury from finding him by the defendant,” 2) “a breach of that duty,” 3) “that the
negligent in his handling of the case. The fact of the matter breach proximately caused the plaintiff injury” and 4) “that
is that Rhodes was hired to defend Batilla against the tax damages occurred.” Id. at 665 (citing McKinley v. Stripling,
assessment, and instead he signed a form against her interest 763 S.W.2d 407 (Tex.1989)).
which consented to the assessment of the tax against her. He
signed this form in contravention of his client's instructions Under Texas' broad form submission rule, the definitions,
that he show the IRS she was not a person responsible for instructions, and questions submitted to the jury in this case
the payment of the tax. Rhodes failed to go to the IRS satisfy the four elements of negligence. See TEX.R.CIV.P.
meeting with the facts and affidavits which would have 277. The jury found Rhodes to be negligent and that
relieved Batilla of all *841 liability. In fact he presented his negligent conduct proximately caused Batilla $125,500
incorrect information to the IRS. He advised Batilla to get a in actual damages. The jury further found Rhodes to be
“paper divorce” to thwart IRS collection attempts, something grossly negligent and awarded Batilla $125,000 in exemplary
a first year law student would have known better than to damages.
do. Further, Rhodes failed to appreciate the consequences
of signing a Form 2751 before he executed the form. He There was no need for additional questions tieing the issues
neglected to discuss this form with Batilla or get her consent to the “proper prosecution of the suit,” as appellant contends.
before he signed it on her behalf. Additionally, even after he The Court in Cosgrove stated the damages issues in that case
signed the form, Rhodes never told Batilla about consenting should have been asked in terms of “what would the plaintiff's
to the assessment. Finally, Rhodes terminated his attorney- damages have been if the suit had been properly prosecuted?”
client relationship with Batilla leaving her in ignorance of In this case, Batilla did not suffer damages because of
the status of her case and without taking any steps to protect Rhodes' failure to properly prosecute the case, instead she
her interests. These acts are sufficient to constitute negligence incurred damages because of his failure to defend the case,
on the part of Rhodes. See Montfort v. Jeter, 567 S.W.2d his advice on getting a “paper divorce,” and his secretly
498 (Tex.1978); Intercoastal Warehouse Corp. v. Clear Lake consenting to the assessment of the tax against her. Thus,
Nat'l Bank, 795 S.W.2d 294, 295 (Tex.App.—Houston [14th her damages questions were properly tied to the underlying
Dist.] 1990, writ dism'd w.o.j.); Southwestern Bell Tel. Co. case by determining Iwhat damages Batilla incurred as a
v. Vidrine, 610 S.W.2d 803, 805 (Tex.Civ.App.—Houston result of Rhodes' negligent conduct, for example, his failure
[1st Dist.] 1980, writ ref'd n.r.e.); Beck, Legal Malpractice in to properly defend the case. We overrule appellant's point of
Texas, 43A BAYLOR L.REV. 1, 21, 51 (1991) (citing Smith error three.
v. Lewis, 13 Cal.3d 349, 118 Cal.Rptr. 621, 627, 530 P.2d
589, 595 (1975)). We overrule appellant's points of error one [5] In points of error four and five, appellant complains the
and two. trial court erred in overruling his motion for directed verdict,
motion for judgment non obstante veredicto and motion for
[4] In point of error three, appellant contends the trial new trial. He alleges the evidence was legally and factually
court erred in overruling his objections to the jury charge insufficient to establish that a different result would have been
because it did not contain the controlling questions or obtained with the IRS “but for” his acts or omissions, and that
instructions necessary to support a recovery for Batilla. he proximately caused Batilla damage.
Appellant attempts to add questions which Batilla should
have asked the jury in order to be entitled to a recovery. He Appellant's allegation that the evidence is legally insufficient
relies heavily on the issues set out in Cosgrove v. Grimes, is a “no evidence” complaint. In reviewing a no evidence
which, unlike this case, was an attorney malpractice case complaint we must consider only the evidence and inferences
brought by a plaintiff whose lawsuit had not been properly which tend to support *842 the jury's findings, and disregard
prosecuted. all contrary evidence and inferences. Best v. Ryan Auto
Group, Inc., 786 S.W.2d 670, 671 (Tex.1990). After such
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Rhodes v. Batilla, 848 S.W.2d 833 (1993)
a review, if we find any evidence of probative force to litigating an issue in court which should have first been
support these findings, then the findings must be upheld. considered by an administrative agency. See, e.g., Weinberger
Responsive Terminal Sys., Inc. v. Boy Scouts of Am., 774 v. Salfi, 422 U.S. 749, 766, 95 S.Ct. 2457, 2467, 45 L.Ed.2d
S.W.2d 666, 668 (Tex.1989). See Southern States Transp., 522 (1975); McKart v. United States, 395 U.S. 185, 193, 89
Inc. v. State, 774 S.W.2d 639, 640 (Tex.1989). When there S.Ct. 1657, 1662, 23 L.Ed.2d 194 (1969); Myers v. Bethlehem
is a challenge to the factual sufficiency of the evidence, Shipbuilding Corp., 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638
we must review all of the evidence and determine if the (1938); Gulf Oil Corp. v. United States Dep't of Energy,
weight of the record supports the jury's findings that Rhodes' 663 F.2d 296 (D.C.Cir.1981). We know of no administrative
negligence proximately caused Batilla damages. Plas–Tex, agency within the IRS or elsewhere which should have
Inc. v. United States Steel Corp., 772 S.W.2d 442, 445 considered Batilla's malpractice claim prior to her filing suit
(Tex.1989); In re King's Estate, 150 Tex. 662, 664–65, 244 in the trial court.
S.W.2d 660, 661 (1951). The jury is the sole judge of the
credibility of the witnesses and the evidence, and is entitled to Further, there was no requirement that Batilla appeal the final
resolve any conflicts or inconsistencies in the evidence. See assessment by the IRS in order to establish the open and
Benoit v. Wilson, 150 Tex. 273, 239 S.W.2d 792 (1951); M.J. obvious malpractice committed by appellant. We overrule
Sheridan & Son Co. v. Seminole Pipeline Co., 731 S.W.2d appellant's point of error six.
620 (Tex.App.—Houston [1st Dist.] 1987, no writ).
[8] In points of error seven and eight, appellant contends
Based on the facts and evidence already discussed in this the trial court erred in its submission of his case to the jury.
opinion, there is ample evidence, both legally and factually, He argues submitting the case under the standard applicable
to support the jury's finding that Rhodes' negligent conduct to a “tax attorney” is improper because to do so suggests
caused Batilla damage. We overrule appellant's points of error his conduct should be reviewed differently than that of “the
four and five. reasonably prudent attorney.” Additionally, appellant alleges
the instructions to the jury describing Batilla as a “layman”
[6] In point of error six, appellant complains the trial court and him as a “tax attorney” emphasized Batilla's contentions
erred in rendering judgment for Batilla because she had and amounted to an improper comment on the weight *843
not exhausted her administrative or judicial remedies prior of the evidence, resulting in reversible error.
to bringing this action. Appellant cites the United States
Supreme Court describing the doctrine of exhaustion of [9] As a general rule the standard of care for an attorney
administrative remedies as “the long-settled rule of judicial being sued for malpractice is set out as follows:
administration that no one is entitled to judicial relief
for a supposed or threatened injury until the prescribed A lawyer in Texas is held to the
administrative remedy has been exhausted.” Myers v. standard of care which would be
Bethlehem Shipbuilding Corp., 303 U.S. 41, 50–51, 58 S.Ct. exercised by a reasonably prudent
459, 463, 82 L.Ed. 638 (1938). attorney, based on the information the
attorney has at the time of the alleged
[7] Although we agree with appellant's definition of the act of negligence.
exhaustion of remedies doctrine, we cannot agree that the
Cosgrove, 774 S.W.2d at 664; Dyer v. Shafer, Gilliland,
doctrine bars Batilla from prosecuting this suit. The United
Davis, McCollum & Ashley, Inc., 779 S.W.2d 474, 477
States Supreme Court has generally treated the exhaustion of
(Tex.App.—El Paso 1989, writ denied). In other areas of
remedies doctrine “as a jurisprudential doctrine [which does
professional malpractice, such as medical malpractice, a
not bar absolutely a court's jurisdiction to hear a case,] and
practitioner “who holds himself out as a specialist is generally
has evaluat[ed] the specific circumstances of the particular
expected to possess a higher degree of skill and learning
case to determine whether the [doctrine] should be applied.”
than a general practitioner.” King v. Flamm, 442 S.W.2d
I.A.M. Nat'l Pension Fund Benefit Plan C v. Stockton TRI
679, 681 (Tex.1969). Other jurisdictions have applied this
Indus., 727 F.2d 1204, 1208 (D.C.Cir.1984) (citing McKart
standard to attorneys and have held that an attorney who
v. United States, 395 U.S. 185, 193, 89 S.Ct. 1657, 1662,
holds himself out as a specialist or expert in a field is held
23 L.Ed.2d 194 (1969)). As a general rule, the exhaustion
to the standard of the reasonably prudent expert attorney in
of remedies doctrine is utilized to prevent a plaintiff from
that field. See Rodriguez v. Horton, 95 N.M. 356, 359, 622
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Rhodes v. Batilla, 848 S.W.2d 833 (1993)
P.2d 261, 264 (App.1980); Wright v. Williams, 47 Cal.App.3d which appellant's conduct offends the public sense of justice
802, 121 Cal.Rptr. 194 (Ct.App.1975). See also Beck, Legal and propriety sufficient to support this award of exemplary
Malpractice in Texas, 43A BAYLOR L.REV. 1, 70 (1991) damages. Additionally, the amount of exemplary damages
(citing Smith v. Lewis, 13 Cal.3d 349, 118 Cal.Rptr. 621, 627, awarded was $125,000 and the amount of actual damages
530 P.2d 589, 595 (1975)). awarded was $125,500, a ratio of approximately one to one.
The award of exemplary damages was not excessive in this
We see no reason why this standard of care for one who case.
holds himself out as an expert or specialist should not apply
to appellant. According to his own testimony, appellant is a [14] As to appellant's complaint of factually insufficient
“tax expert.” Batilla testified he held himself out to her as a evidence to show his net worth, we will review all of the
tax specialist who was familiar with 100% penalty cases, and evidence and determine if the weight of the record *844
that he would have no troubling taking care of her case. Thus, supports the jury's award of exemplary damages based upon
appellant was properly held to the standard of care which the evidence of his net worth. See Plas–Tex, Inc., 772 S.W.2d
would be exercised by a reasonably prudent tax attorney. at 445.
[10] As to the jury instructions which described appellant Batilla entered into evidence a two page listing of real
as a “tax attorney,” and Batilla as a “layman,” we find no property held in the name of Christopher Rhodes, either
abuse of discretion in the trial court's use of these terms. We individually, or jointly with other persons, including an
agree with appellant that in most legal malpractice cases the office building, rental property, and personal residences.
plaintiff will be a layperson. However, the fact of the matter Appellant testified about rental property, from which he
is appellant held himself out as a tax attorney, and Batilla received income. He also testified he owned acreage, office
was a layman. We do not find the use of these terms to be furniture and equipment, accounts receivables, three boats,
an improper comment on the weight of the evidence. We vehicles, residential furnishings, and guns and other sporting
overrule appellant's points of error seven and eight. equipment. Further, he testified, that in his opinion, none of
these items had much value and that his law practice had zero
[11] In points of error nine, ten, and eleven, appellant value.
complains the trial court erred in awarding $125,000 in
exemplary damages. He alleges the amount of exemplary The jury was free to believe or disbelieve appellant's opinion
damages found by the jury is excessive and there is as to the value of his assets. See Benoit v. Wilson, 150 Tex.
insufficient evidence of his “net worth” on which to base 273, 239 S.W.2d 792 (1951); M.J. Sheridan & Son Co. v.
the award. Appellant also contends there is no evidence or Seminole Pipeline Co., 731 S.W.2d 620 (Tex.App.—Houston
insufficient evidence of “gross negligence” upon which to [1st Dist.] 1987, no writ). Based on a review of all of the
base the award of exemplary damages. evidence, there is sufficient evidence of appellant's net worth
for the jury to have awarded $125,000 in exemplary damages.
[12] [13] The factors to consider when reviewing
exemplary damages are set out in Alamo Nat'l Bank v. Kraus, [15] Finally, we address appellant's complaint of no
616 S.W.2d 908 (Tex.1981). These five factors “are (1) evidence or factually insufficient evidence to establish his
the nature of the wrong, (2) the character of the conduct “gross negligence.” The standards of review for no evidence
involved, (3) the degree of culpability of the wrongdoer, (4) and factually insufficient evidence are set out above under
the situation and sensibilities of the parties concerned, and (5) points of error four and five.
the extent to which such conduct offends a public sense of
justice and propriety.” Id. Further, the amount of exemplary The factor which “lifts ordinary negligence into gross
damages awarded must be reasonably proportioned to the negligence is the mental attitude of the defendant....” Burk
amount of actual damages awarded. Id. at 910. Royalty Co. v. Walls, 616 S.W.2d 911, 922 (Tex.1981). In
order for appellant to be found grossly negligent, Batilla
Based on the facts discussed earlier in this opinion, we must have shown “that [he] was consciously, i.e., knowingly,
find the nature of the wrong, the character of appellant's indifferent to h[er] rights, welfare and safety.” Id. Appellant's
conduct, the degree of culpability of appellant, the situation conduct can be either active or passive in nature, which means
and sensibilities of appellant and Batilla, and the extent to
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Rhodes v. Batilla, 848 S.W.2d 833 (1993)
a finding of gross negligence can be based on either his acts
or omissions. Id. [18] In point of error thirteen, appellant complains the trial
court erred in not submitting his requested instruction on
The record is replete with evidence sufficient to support the “new and independent cause” to the jury. Appellant contends
jury's finding of gross negligence on the part of appellant. His Batilla's new attorney, Stevens, was the source of this new
conscious indifference in investigating and presenting facts and independent cause. He alleges that Stevens represented
to the IRS, in failing to return phone calls from the IRS, Batilla from April 1988 until the time of trial in August 1991.
in failing to investigate or correct the false and misleading During this time period appellant argues Stevens led Batilla
information he sent to the IRS, in failing to research or present to believe she owed the IRS $32,124.31 when in reality the
any facts, affidavits, or legal authority favorable to his client debt was already paid in full.
in his meeting with the IRS, in failing to recognize the effects
of signing the Form 2751 before signing it, in signing the form [19] [20] A “new and independent cause” is a separate
agreeing to the assessment of the tax against his client in direct or independent act that destroys the causal connection
contravention to the purpose for which he had been retained, between a defendant's negligence and a plaintiff's injury,
in doing so without his client's knowledge or consent, and thereby becoming the immediate cause of such injury. Tarry
in terminating his relationship with his client without even Warehouse & Storage Co. v. Duvall, 131 Tex. 466, 115
informing her of the status of her case, are sufficient to S.W.2d 401, 405 (1938); Allied Bank West Loop, N.A. v.
support a finding of gross negligence on appellant's part. We C.B.D. & Assocs., Inc., 728 S.W.2d 49, 55 (Tex.App.—
overrule appellant's points of error nine, ten, and eleven. Houston [1st Dist.] 1987, writ ref'd n.r.e.). In order for a trial
court to submit an instruction on new and independent cause,
[16] In point of error twelve, appellant complains the trial “[t]here must be some evidence that the independent act,
court erred in entering judgment for “emotional distress” rather than the defendant's negligence, was responsible for the
damages because the award is excessive and should not have plaintiff's injury.” Allied Bank West Loop, N.A., 728 S.W.2d
been submitted in the absence of extraordinary or egregious at 55 (citing Goldstein Hat Mfg. Co. v. Cowen, 136 S.W.2d
circumstances. 867, 873 (Tex.Civ.App.—Dallas 1939, writ dism'd judgmt
cor.)). Additionally, a trial court does not err in refusing a new
[17] In certain circumstances the award of emotional and independent cause instruction “where the act alleged to be
distress damages in a legal malpractice case is appropriate. a new and independent cause is dependent on the defendant's
See Cosgrove v. Grimes, 774 S.W.2d 662 (Tex.1989); Heath negligent act.” Id. (citing McAllen Kentucky Fried Chicken
v. Herron, 732 S.W.2d 748 (Tex.App.—Houston [14th Dist.] No. 1, Inc. v. Leal, 627 S.W.2d 480, 483 (Tex.App.—Corpus
1987, writ denied). We believe the facts of this case meet the Christi 1981, writ ref'd n.r.e.)).
test of extraordinary or egregious circumstances.
There is no evidence to support appellant's contention
Batilla testified she suffered severe emotional distress relating that Stevens represented Batilla from April 1988 until
to the mishandling of her tax defense, the dissolution of August 1991. Both Batilla and Stevens testified that Stevens
her marriage, and the negative affect on her credit by the represented her for a period of approximately three or four
Federal Tax Lien filed after the tax assessment was agreed months, from April 1988 until July 1988. Stevens further
to by appellant. She testified about her inability to deal testified his only subsequent contact with Batilla had been
with relationships, both personal and professional, about her through his involvement in this lawsuit as an expert witness.
weight loss, her inability to sleep, spastic stomach, sporadic When Stevens first represented Batilla, the tax debt had
colon ulcers, fear, and nervousness. Batilla told the jury already been assessed against her on February 15, 1988 due to
about her loss of credit, the destruction of her banking appellant's execution of the Form 2751. Although Batilla was
relationships, the emotional trauma of her divorce and *845 unaware that appellant had agreed to the IRS' claim, she was
the accompanying property loss, and the pain of trying to help aware the IRS was going to execute on her property to collect
her son understand the divorce and where his father had gone. on the debt. Once he was retained on the case, Stevens got the
Other witnesses also testified about Batilla's severe weight collection activities against Batilla stopped, and worked out
loss, nervousness and inability to function. We do not find the an installment plan with the IRS for payment of the tax debt.
award of damages for emotional distress to be improper or
excessive. We overrule appellant's point of error twelve.
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Rhodes v. Batilla, 848 S.W.2d 833 (1993)
Further, there is no evidence to support appellant's contention Batilla. At trial, Batilla testified she got a divorce because of
that the tax debt was paid off for the period from April Rhodes' advice to protect her family from the IRS's collection
1988 to August 1991, and certainly no evidence to support efforts. The trial court admitted Batilla's divorce decree as
his contention that the debt was paid off during the period evidence that she did indeed get a divorce. Although the
of Stevens' representation. The record is devoid of evidence trial court refused to allow either the divorce petition or
establishing when the majority of the tax debt was paid or the motion for temporary restraining order into evidence, it
who paid it off. The only evidence in the record is Batilla's did allow appellant to question Batilla extensively regarding
testimony that on August 12, 1991 she paid the final $69 these documents. The trial court did not abuse its discretion
owing on the account in order to zero out the balance. This in refusing to admit these two documents into evidence as
pay-off of the remaining debt was subsequent to the period they were cumulative of the evidence elicited in appellant's
of Stevens' representation. During the period of Stevens' cross-examination of Batilla. See Mottu v. Navistar Int'l
representation, the collection efforts by the IRS were ongoing, Transp. Corp., 804 S.W.2d 144, 147 (Tex.App.—Houston
and Batilla was still receiving phone calls from Amdexter [14th Dist.] 1990, writ denied).
regarding the tax debt. Even after Stevens' representation had
ceased, there is evidence that the debt was still owing since the Appellant was allowed to establish that the petition alleged
IRS sent Batilla a letter dated October 10, 1988, notifying her the grounds for divorce were cruel treatment by her husband,
they were seizing $664.01 of her 1987 tax refund to be applied and that her divorce attorney talked to her about the divorce
to the ROF tax debt. Additionally, there was evidence that, in order to draft and file the petition. Appellant was also able
pursuant to the Form 2751 signed by appellant, the IRS filed to establish that the petition indicated she needed protection
a Federal Tax Lien against Batilla which was outstanding for from her husband, and that she got a temporary restraining
the period from May 2, 1988 until August 1991. This tax lien order entered protecting her from her husband. Finally, he
adversely affected her *846 credit and contributed to her was able to establish that she knew these papers had to be,
mental and emotional distress. We find no evidence to support and were, filed in order to get a divorce, although she alleged
the submission of a new and independent cause instruction to she had not seen these documents and was not aware of their
the jury. Appellant's point of error thirteen is overruled. contents. This is exactly the relevant information appellant
claims in his brief the jury could have gotten from having
In points of error fourteen and fifteen, appellant complains the documents entered into evidence. Thus, error, if any, was
about the admission and exclusion of certain evidence harmless. TEX.R.APP.P. 81(b)(1).
regarding Batilla's divorce. He alleges the trial court erred in
excluding Batilla's divorce papers which were put in issue by [23] Appellant also complains the trial court erred
her testimony, and claims this exclusion of evidence resulted by allowing Batilla to claim an attorney-client
in harmful error. Additionally, appellant contends the trial privilege regarding any advice given by her divorce
court erred by allowing Batilla to claim an attorney-client attorney. Generally, attorney-client communications are
privilege regarding advice from her divorce attorney, while protected from discovery by the attorney-client privilege.
at the same time allowing her to testify about the reasons for, TEX.R.CIV.EVID. 503; TEX.R.CIV.P. 166b(3). Batilla
and affects of, her divorce. did not put in issue any advice given her by her divorce
attorney. Additionally, appellant was allowed to extensively
[21] The divorce papers appellant is complaining about attack Batilla's credibility regarding her divorce on cross-
are Batilla's petition for divorce, a motion for temporary examination without delving into privileged matters. See
restraining order and temporary orders as to custody and TEX.R.APP.P. 81(b)(1). Thus, the trial court did not abuse
support of Batilla's son, and a motion for enforcement and its discretion by allowing Batilla to assert the attorney-client
clarification filed by Batilla's husband approximately a year privilege as to communications with her divorce attorney. We
after the divorce. Appellant is precluded from complaining overrule appellant's points of error fourteen and fifteen.
on appeal about the motion for enforcement and clarification
because he never offered it to the trial court for admission into [24] In points of error sixteen and seventeen, appellant
evidence. complains the trial court erred in admitting Owens' testimony.
He alleges that Owens was not properly identified in Batilla's
[22] As to the other two documents, appellant attempted answers to interrogatories. Appellant also contends Owens
to offer them into evidence during his cross-examination of
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Rhodes v. Batilla, 848 S.W.2d 833 (1993)
should not have been allowed to testify about his own about what information Owens and Batilla gave him at their
separate, extraneous dealings with Batilla and the IRS. initial meeting, and how well he used or followed up on that
information.
*847 Appellant asked in interrogatory number 10 for the
identity of persons with knowledge of relevant facts and the We hold the trial court properly found the evidence was part
substance of their testimony. Batilla's answer in pertinent of the res gestae and was not hearsay. See TEX.R.CIV.EVID.
part was “Larry Owens (Also met with Defendant).” At trial 803. BLACK'S LAW DICTIONARY 1173 (5th ed. 1979).
appellant objected to Owens being called as a witness because We overrule appellant's points of error sixteen and seventeen.
he had not been properly identified since Batilla did not
provide sufficient information about him in her interrogatory In point of error eighteen, appellant complains that Batilla's
answer. testimony should have been excluded because she was not
properly identified as a fact witness in her answers to
Owens was identified by Batilla as a witness. His address and interrogatories.
phone number were easily ascertained from appellant's own
business records since he was one of appellant's own clients. [26] Appellant claims that party status does not constitute
Also, Batilla filed a number of supplemental responses to good cause for nondisclosure of a witness in answers to
interrogatories and requests for production prior to trial, interrogatories. He cites us to Smith v. Southwest Feed
including an affidavit by Owens stating his address, phone Yard, Ltd., 811 S.W.2d 717 (Tex.App.—Amarillo 1991, writ
number and the facts surrounding Batilla's employment and pending). The Smith case was reversed and remanded by the
duties at ROF. Texas Supreme Court in a published opinion dated June 24,
1992, a week before we heard this case on submission. See
At trial, appellant objected to Owens' testimony on the Smith v. Southwest Feed Yards, 835 S.W.2d 89 (Tex.1992).
basis it was hearsay, extraneous, and irrelevant. See The Texas Supreme Court created a limited exception under
TEX.R.CIV.EVID. 402, 802. In his brief, however, appellant which a party may be allowed to testify despite the fact
also argues the trial court should have excluded this evidence he failed to identify himself as a witness in answers to
under TEX.R.CIV.EVID. 403, and because Batilla did not interrogatories. Id. at 90–91.
sufficiently state in her answers to interrogatories the facts
about which Owens had knowledge. Appellant never raised The Smith opinion stresses that “[a] party cannot disregard
either objection at trial; therefore, they are not preserved for procedural rules and still insist upon an absolute right to
appeal. testify in all circumstances.” Id. at 90 (emphasis added).
However, “[t]he importance attached to a party's ability
[25] According to appellant's own attorney, Batilla and to testify in his or her own behalf [does] constitute[ ] an
Owens were co-debtors or co-defendants in the IRS's additional factor [which] the trial court must consider in
collection action on the ROF taxes. The evidence is making its good cause determination.” Id. The Supreme Court
uncontroverted they went together to the IRS to meet goes on to state that “[i]n determining whether ‘good cause’
with Mr. Bean. Owens was an eye-witness to the entire exists to permit his testimony, the substance of [a party's]
event. Additionally, it is uncontroverted Owens and Batilla entire response should be considered, not just *848 his
went together to the meeting with appellant. Appellant's incomplete reply to a single query.” Id. at 91.
representation of Batilla, or the inadequacy thereof, on the
ROF tax debt is what this suit is all about. Thus, this evidence After a review of the facts and circumstances of this case,
is not about some extraneous event, but is the crux of the cause we find the trial court was correct in overruling appellant's
of action for legal malpractice. objection to Batilla's testifying. This is a legal malpractice
case, and the importance of Batilla being able to testify
This evidence was also relevant to show the circumstances as to the circumstances of appellant's representation weighs
surrounding Batilla's filling out the forms Mr. Bean heavily in her favor. Further, a review of her entire response
gave her at the meeting, and to show the circumstances to appellant's interrogatories reveals Batilla had personal
surrounding Batilla's initial meeting with appellant. See knowledge of facts relevant to this lawsuit. See id. Batilla
TEX.R.CIV.EVID. 402. Further, some of the testimony answered interrogatories as follows:
complained of by appellant was offered to rebut his testimony
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Rhodes v. Batilla, 848 S.W.2d 833 (1993)
3. During meeting in Defendant's office on February 13, [28] Appellant has not preserved any complaint for appeal
1986, Defendant told me he was a tax specialist. On based upon a failure to timely provide the W–2 form. In the
approximately June 28, 1986, I received a copy of a letter trial court appellant did not object based on failure to timely
from Defendant to Lawrence M. Fagen of the IRS in produce, and in fact stated: “I don't believe I complained that
which Defendant's letterhead reads “Board Certified Tax you did not give that to me.” Appellant specifically waived
Attorney.” any objection to the production of this document and there
was no error in its admission.
4. On approximately May 16, 1986, I called Defendant on
the telephone and stressed that I would not be signing any
[29] Appellant never requested Batilla's personal income
forms which caused me to incur unnecessary tax liability.
taxes in any request for production. Thus, she was under
Despite that fact, Defendant signed Form 2751 where by I
no duty to produce the documents. Additionally, the trial
incurred unnecessary tax liability.
court only admitted the tax return for the limited purpose of
11. IRS has set up a payment schedule. Have called showing that if Rhodes had used the return in representing
my home several times. The IRS withheld my 1987 tax Batilla before the IRS, it would have shown she did not
refund and applied it to the penalty I incurred because of receive income from ROF in 1985, was not a ROF employee
Defendant's actions. The IRS has filed a personal tax lien for that year, and therefore, could not have been a “person
against me. The IRS has contacted my banker and informed responsible” for paying the taxes for that year. The trial court
him of the action they have against me. did not err in admitting Batilla's personal tax return.
These answers, and several others, in Batilla's 21 original The record contains excerpts from Batilla's oral deposition
answers to appellant's interrogatories, show that she had indicating that the divorce decree was produced on July 26,
unique knowledge of relevant facts. We overrule appellant's 1991 *849 in response to a request for documents. This is
point of error eighteen. at least thirty days before trial and is prior the July 30, 1991
discovery deadline. The trial court did not err in admitting the
[27] In point of error nineteen, appellant complains the trial divorce decree into evidence.
court erred in admitting numerous items of evidence, and
in allowing two witnesses, John Mingus (Mingus) and Elsie [30] The next item on the list is Batilla's letter to the
Ford (Ford), to testify. He states he served interrogatories and IRS requesting abatement. This letter was produced on
requests for production on April 3, 1990, and did not receive August 21, 1991, four days before trial and well after the
the documents or witnesses' names until shortly before trial. deadline for discovery. The trial court admitted the letter
only for the limited purpose of showing that Batilla did
This case went to trial on August 26, 1991. On take steps to try and help herself with the IRS. There was
July 24, 1991, Batilla supplemented her responses to other testimony establishing that she requested an abatement,
appellant's interrogatories and requests for production. In requested affidavits from co-workers at ROF in order to prove
that supplement, she provided the names and addresses of she was not responsible for the taxes, and met with the IRS
both Mingus and Ford, and produced the notice from the to convey this information to Amdexter. Thus, the admission
IRS seizing her 1984 tax refund. These names, and one of of this document for the purpose of showing she had tried
documents complained of by appellant, were produced more to help herself was cumulative of other evidence establishing
than 30 days before trial and several days before the July that same point, and as such was harmless. See Gee v.
30, 1991 discovery deadline. The trial court did not err in Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989);
admitting this document and the witnesses' testimony. Richardson v. Green, 677 S.W.2d 497, 501 (Tex.1984). See
also TEX.R.APP.P. 81(b)(1).
Appellant also complains specifically about the admission of
Batilla's W–2 form, her 1985 income tax return, her decree of [31] [32] Finally, as to Batilla's loan rejection notice,
divorce, her letter to the IRS requesting abatement, and her Batilla's counsel explained to the trial court that she could
loan rejection notice. He alleges he was not served with any not have produced the document any sooner, since it was
of these documents until August 21, 1991, less than a week dated August 12, 1991. She produced it to appellant's counsel
before trial. within 48 hours of receipt. Determination of good cause for
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Rhodes v. Batilla, 848 S.W.2d 833 (1993)
case with the IRS. The trial court did not err in ordering pre-
the admission of late produced evidence is within the sound
judgment interest to begin accruing on April 25, 1988. We
discretion of the trial court and can only be set aside if that
overrule point of error twenty-one.
discretion is abused. Morrow v. H.E.B., Inc., 714 S.W.2d 297,
297–98 (Tex.1986). Logic dictates that a document cannot be
In point of error twenty-two, appellant complains the trial
produced until after it is received. Batilla's counsel satisfied
court erred in allowing Batilla to include as costs of court her
the duty to supplement as soon as it came into her possession.
cost for copies of two depositions.
The trial court did not abuse its discretion, and we overrule
appellant's point of error nineteen.
[34] The Rules of Civil Procedure mandate that a
“successful party to a suit shall recover of his adversary all
In point of error twenty, appellant contends this Court should
costs incurred therein, except where otherwise provided.”
reverse the trial court's judgment based on the cumulative
TEX.R.CIV.P. 131 (emphasis added). Additionally, the trial
effect of all errors. Having found no error, appellant's point
court has the discretion to allocate costs in response to
of error twenty is overruled.
motions by the parties. TEX.R.CIV.P. 133. The rules also
provide that “[n]o fee for a copy of a paper not required
[33] In point of error twenty-one, appellant complains
by law or these rules shall be taxed in the bill of costs.”
the trial court erred in awarding pre-judgment interest to
TEX.R.CIV.P. 140. Appellant has failed to show that the
Batilla because the evidence did not establish with reasonable
deposition copy was not a cost incurred under rule 131, and
certainty when such interest should begin to accrue. Appellant
thus, required to be paid by the losing party. We overrule
contends the April 25, 1988 date set by the trial court from
appellant's point of error twenty-two.
which pre-judgment interest was to accrue was not proper.
The judgment of the trial court is affirmed.
By April 25, 1988, Batilla had already paid appellant the
$500 retainer fee, learned appellant had sent the IRS incorrect
information, obtained her divorce, appellant had agreed to the
All Citations
tax assessment against her, the IRS had seized a $664 tax
refund, and Batilla had retained new counsel to salvage her 848 S.W.2d 833
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
UU
Richey v. Brookshire Grocery Co., 952 S.W.2d 515 (1997)
40 Tex. Sup. Ct. J. 839
83 Cases that cite this headnote
KeyCite Yellow Flag - Negative Treatment
Distinguished by Kroger Texas Ltd. Partnership v. Suberu, Tex.App.-
Dallas, August 18, 2003
[2] Malicious Prosecution
Grounds in General
952 S.W.2d 515 Probable cause, for purposes of malicious
Supreme Court of Texas. prosecution claim, is existence of such facts
and circumstances as would excite belief
Kelley RICHEY, Petitioner,
in reasonable mind, acting on facts within
v.
knowledge of prosecutor or complainant, that
BROOKSHIRE GROCERY CO. d/
person charged was guilty of crime for which he
b/a Super 1 Food Store, Respondent. or she was prosecuted.
No. 95–0692. | Argued Oct. 22, 36 Cases that cite this headnote
1996. | Decided July 9, 1997. |
Rehearing Overruled Oct. 30, 1997.
[3] Malicious Prosecution
Grocery store customer who was arrested for allegedly Grounds in General
leaving store with concealed pack of cigarettes brought Probable cause determination in malicious
malicious prosecution action against store owner following prosecution case asks whether reasonable person
his acquittal on criminal charges. The 241st Judicial District would believe that crime had been committed
Court, Smith County, Joe Tunnell, J., entered judgment in given facts as complainant honestly and
favor of customer, and owner appealed. The Court of Appeals, reasonably believed them to be before criminal
899 S.W.2d 331, reversed and rendered, and application for proceedings were instituted.
writ of error was filed. The Supreme Court, Spector, J., held
that owner had probable cause to initiate criminal proceedings 34 Cases that cite this headnote
against customer, barring customer's malicious prosecution
action. [4] Malicious Prosecution
Presumptions and burden of proof
Affirmed.
There is initial presumption in malicious
prosecution actions that defendant acted
Cornyn, J., filed dissenting opinion in which Gonzalez, Baker
reasonably and in good faith and had probable
and Abbott, JJ., joined
cause to initiate proceedings; that presumption
disappears once plaintiff produces evidence that
motives, grounds, beliefs and other evidence
West Headnotes (11) upon which defendant acted did not constitute
probable cause, and burden then shifts to
defendant to offer proof of probable cause.
[1] Malicious Prosecution
Nature and elements of malicious 40 Cases that cite this headnote
prosecution in general
Plaintiff in malicious criminal prosecution [5] Malicious Prosecution
claim must establish: commencement of Probable cause
criminal prosecution against plaintiff; causation
When facts underlying defendant's decision to
(initiation or procurement) of action by
prosecute are disputed in malicious prosecution
defendant; termination of prosecution in
action, trier of fact must weigh evidence and
plaintiff's favor; plaintiff's innocence; absence of
resolve conflicts to determine if probable cause
probable cause for proceedings; malice in filing
exists, as mixed question of law and fact.
charge; and damage to plaintiff.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Richey v. Brookshire Grocery Co., 952 S.W.2d 515 (1997)
40 Tex. Sup. Ct. J. 839
leave store without paying for item in his
11 Cases that cite this headnote concealed possession.
Cases that cite this headnote
[6] Malicious Prosecution
Probable cause
Probable cause was question of law for court and [10] Malicious Prosecution
not trier of fact in malicious prosecution action Advice of prosecuting officer or magistrate
arising from arrest of grocery store customer, Grocery store employees' failure to fully and
where facts and events leading up to customer's fairly disclose all relevant facts to the police
arrest were undisputed. Restatement (Second) of at time of customer's arrest for shoplifting was
Torts § 673(1)(c). irrelevant to whether customer's prosecution
was supported by probable cause in subsequent
3 Cases that cite this headnote malicious prosecution action.
2 Cases that cite this headnote
[7] Malicious Prosecution
Acts and conduct of accused evidence of
probable cause in general [11] Malicious Prosecution
Grocery store owner had probable cause to Instigation of or participation in prosecution
initiate criminal proceedings against customer, Malicious Prosecution
barring customer's malicious prosecution action, Advice of prosecuting officer or magistrate
where store employees observed customer place Malicious Prosecution
pack of cigarettes in his pocket, retain cigarettes Acts and conduct evidence of malice
in his possession, and pass through checkout line
Failing to fully and fairly disclose all material
without paying for them. V.T.C.A., Penal Code
information and knowingly providing false
§ 31.03.
information to prosecutor are relevant to malice
4 Cases that cite this headnote and causation elements of malicious prosecution
claim but have no bearing on probable cause.
[8] Malicious Prosecution 19 Cases that cite this headnote
Preliminary investigations by prosecutor
In malicious prosecution case based on criminal
complaint, complainant's failure to make further
investigation into suspect's state of mind does not Attorneys and Law Firms
constitute lack of probable cause if all objective
elements of crime reasonably appeared to have *516 Gregory P. Grajczyk, William K. Gleason, Longview,
been completed. for Petitioner.
12 Cases that cite this headnote Molly H. Hatchell, Mike A. Hatchell, Tyler, for Respondent.
Opinion
[9] Malicious Prosecution
Preliminary investigations by prosecutor SPECTOR, Justice, delivered the opinion of the Court,
in which PHILLIPS, Chief Justice, HECHT, ENOCH and
Grocery store employees had no duty to inquire
OWEN, Justices, join.
into customer's state of mind before causing
customer's arrest for shoplifting, in determining The issue in this malicious prosecution case is whether
whether prosecution was supported by probable Brookshire Grocery Store lacked probable cause to initiate
cause in subsequent malicious prosecution criminal proceedings against Kelley Richey. The jury found,
action, where store manager observed customer along with the other elements of malicious prosecution,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Richey v. Brookshire Grocery Co., 952 S.W.2d 515 (1997)
40 Tex. Sup. Ct. J. 839
that Brookshire lacked probable cause to file a criminal with one justice dissenting, reversed and rendered judgment
prosecution against Richey and awarded him damages. The in favor of Brookshire, holding that there was no evidence
court of appeals reversed, holding that there was no evidence to support the jury's finding that Brookshire lacked probable
to support the jury's finding on the probable cause issue. 899 cause to prosecute Richey. 899 S.W.2d at 335.
S.W.2d 331. We agree with the court of appeals and therefore
affirm.
II.
I. [1] A plaintiff in a malicious criminal prosecution claim
must establish
On December 11, 1989, at approximately 2:30 a.m., Richey
entered a Brookshire Super 1 Food Store. Brookshire night (1) the commencement of a criminal prosecution against
manager Russell Farris saw Kelley Richey enter the store the plaintiff;
and place a pack of cigarettes in his shopping cart. Farris
(2) causation (initiation or procurement) of the action by
then observed Richey “twiddle” the cigarettes in his hand and
the defendant;
later put them in his coat pocket. As night manager, Farris
was required to be alert to potential shoplifting, cigarettes (3) termination of the prosecution in the plaintiff's favor;
topping the list of items commonly taken. As Richey *517
checked out, he wrote a check for $51.75 for some groceries (4) the plaintiff's innocence;
and began to bag them. He did not pay for the cigarettes in
(5) the absence of probable cause for the proceedings;
his pocket. Before walking out of the store, Richey pulled a
food carton from one of the bags and read the label. Then (6) malice in filing the charge; and
Richey proceeded toward the door, stopping near a bin in
which customers could place items to be donated to charity. (7) damage to the plaintiff.
He got a sack, went back to the food aisles and filled the sack
with baby food, and paid $8.89 in cash. He still did not pay for See Coniglio v. Snyder, 756 S.W.2d 743, 744 (Tex.App.
the cigarettes. Richey then placed the baby food in the charity —Corpus Christi 1988, writ denied); see also Ellis County
bin and left the store. State Bank v. Keever, 888 S.W.2d 790, 793–94 (Tex.1994);
Browning–Ferris Indus., Inc. v. Lieck, 881 S.W.2d 288, 292–
In the parking lot, Farris and another employee asked Richey 93 (Tex.1994). At issue in this appeal is whether Brookshire
if he had forgotten to pay for anything. Richey said that he had had probable cause to initiate criminal proceedings against
not. When Farris mentioned the cigarettes in Richey's pocket, Richey.
Richey stated that he had inadvertently put them there and
offered to pay for them. Following company policy, Farris [2] [3] We have long defined probable cause as “the
refused to accept payment for the cigarettes. When the police existence of such facts and circumstances as would excite
arrived, Richey asked the police officer to mention in his belief in a reasonable mind, acting on the facts within the
report that Richey had contributed to the charity bin. Richey knowledge of the prosecutor [complainant], that the person
was interrogated, given a citation, and released. On his way charged was guilty of the crime for which he was prosecuted.”
out of the store, Richey removed the baby food from the Akin v. Dahl, 661 S.W.2d 917, 921 (Tex.1983), cert. denied,
charity bin and took it to his car. Farris later signed a sworn 466 U.S. 938, 104 S.Ct. 1911, 80 L.Ed.2d 460 (1984); see
complaint charging Richey with theft of the cigarettes. Ramsey v. Arrott, 64 Tex. 320, 323 (Tex.1885) (quoting
Wheeler v. Nesbitt, 65 U.S. 544, 551–52, 24 How. 544, 16
At the criminal trial, the jury found Richey not guilty after L.Ed. 765 (1860)). The probable-cause determination asks
deliberating only a few minutes. Richey then filed this suit whether a reasonable person would believe that a crime had
for false imprisonment and malicious prosecution. The jury been committed given the facts as the complainant honestly
in the civil trial returned a verdict against Richey on his false and reasonably believed them to be before the criminal
imprisonment claim but found in his favor on the malicious proceedings were instituted. Akin, 661 S.W.2d at 920–21;
prosecution claim, awarding him $18,400 in actual damages Coniglio, 756 S.W.2d at 744.
and $18,400 in exemplary damages. The court of appeals,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Richey v. Brookshire Grocery Co., 952 S.W.2d 515 (1997)
40 Tex. Sup. Ct. J. 839
[4] Malicious prosecution actions involve a delicate balance of mind at the time of the appropriation. See TEX. PENAL
between society's interest in the efficient enforcement of CODE § 31.03.
the criminal law and the individual's interest in freedom
from unjustifiable and oppressive criminal prosecution. [8] [9] In a malicious prosecution case based on a
Lieck, 881 S.W.2d at 290–91. Accordingly, there is an criminal complaint, the complainant's failure to make a
initial presumption in malicious prosecution actions that further investigation into the suspect's state of mind does not
the defendant acted reasonably and in good faith and had constitute lack of probable cause if all objective elements
probable cause to initiate the proceedings. Keever, 888 of a crime reasonably appear to have been completed. See
S.W.2d at 794; *518 Akin, 661 S.W.2d at 920. That Thomas v. Cisneros, 596 S.W.2d 313, 317–18 (Tex.Civ.App.
presumption disappears once a plaintiff produces evidence —Austin 1980, writ ref'd n.r.e.); Carswell v. Southwestern
that the motives, grounds, beliefs, and other evidence upon Bell Tel. Co., 449 S.W.2d 805, 817 (Tex.Civ.App.—Houston
which the defendant acted did not constitute probable cause. [1st Dist.] 1969, no writ). In this case, in which the store
Id. The burden then shifts to the defendant to offer proof of manager observed Richey leave the store without paying for
probable cause. Id. an item in his concealed possession, the store employees
had no duty to inquire into Richey's state of mind before
[5] [6] Whether probable cause is a question of law or a prosecuting. See Delchamps, Inc. v. Morgan, 601 So.2d
mixed question of law and fact depends on whether the parties 442, 445 (Ala.1992) (“Because Morgan undisputedly had a
dispute the underlying facts. When the facts underlying the visible pack of cigarettes in her pocket, [the store employee]
defendant's decision to prosecute are disputed, the trier of fact could have entertained ‘an honest and strong suspicion’ that
must weigh evidence and resolve conflicts to determine if she had concealed store property. Therefore, the malicious
probable cause exists, as a mixed question of law and fact. prosecution count should not have been submitted to the
Akin, 661 S.W.2d at 920. It has long been true, however, jury.”); Melia v. Dillon Cos., Inc., 18 Kan.App.2d 5, 846
that “[w]hen the facts are not contested, and there is no P.2d 257, 261 (1993) (“Here, it is uncontested that Melia
conflict in the evidence directed to that issue, the question of concealed and failed to pay for merchandise belonging to
probable cause is a question of law which is to be decided the store. Consequently, the existence of probable cause in
by the court.” Ramsey v. Arrott, 64 Tex. 320, 323 (1885); this case is not a jury question.”). As one court of appeals
see also Landa v. Obert, 45 Tex. 539, 543 (1876) (“[w]hat has noted, “A private citizen has no duty to inquire of the
facts and circumstances amount to probable cause is a pure suspect whether he has some alibi or explanation before filing
question of law”). Probable cause in this case, in which the charges.” Marathon Oil Co. v. Salazar, 682 S.W.2d 624, 627
facts and events leading up to Richey's arrest are undisputed, (Tex.App.—Houston [1st Dist.] 1984, writ ref'd n.r.e.); see
is therefore a question of law for the court and not the also 52 AM.JUR.2D Malicious Prosecution § 54 (1970).
trier of fact. See also, e.g., Daniels v. Finney, 262 S.W.2d
431, 433 (Tex.Civ.App.—Galveston 1953, writ ref'd n.r.e.); Even if Richey's intent to shoplift could not be presumed
Montgomery Ward & Co. v. Kirkland, 225 S.W.2d 906, under these circumstances, the undisputed facts of this
908 (Tex.Civ.App.—San Antonio 1949, writ ref'd n.r.e.); case dictate that it was not unreasonable for Brookshire's
RESTATEMENT (SECOND) OF TORTSSSSS § 673(1)(c). employees to believe that Richey intended to steal the
cigarettes. Richey admitted that he placed the cigarettes in
his pocket and did not pay for them. At trial, he testified
that his behavior could lead someone to believe that he was
III.
shoplifting:
[7] Because lack of probable cause in this case is a
Q I know you had no intent but yet from your actions it
question of law, the issue for the Court is whether the
looks like somebody was actually shoplifting by picking
undisputed facts underlying the decision to prosecute support
up those cigarettes and concealing them, isn't that right?
a reasonable belief that Richey was guilty of theft. Because
Richey concealed merchandise, retained the merchandise in *519 A That's right.
his possession, and passed through the check-out line without
paying for the merchandise, the only probable-cause issue is ******
the reasonableness of Brookshire's belief as to Richey's state
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Richey v. Brookshire Grocery Co., 952 S.W.2d 515 (1997)
40 Tex. Sup. Ct. J. 839
S.W.2d 902, 910 (Tex.Civ.App.—Houston [14th Dist.] 1969,
Q And the reason why it was a mistake is because writ dism'd).
somebody could look at that and think you were in
fact shoplifting based on what they observed about your The probable cause inquiry asks only whether the
conduct. complainant reasonably believed that the elements of a crime
had been committed based on the information available to
A That's right.
the complainant before criminal proceedings began. When a
complainant reasonably believes a crime has occurred, the
Richey thus admitted that it was reasonable to believe that
reasonableness of that belief is not negated by the failure to
he had committed theft. Neither Richey's charity contribution
fully disclose all relevant facts to the officer. Thus, the extent
nor his offer to pay after passing through the checkout line
of the disclosure to the prosecutor is not probative of lack of
with the cigarettes negates Farris's reasonable belief that
probable cause, but rather indicates whether the complainant
Richey intended to deprive Brookshire of the cigarettes.
may have acted with malice or may have, by knowingly
It was therefore reasonable for Brookshire's employees to
providing false information, caused the prosecution. See
believe that Richey intended to steal the cigarettes. 1 Sebastian, 25 S.W. at 693 (failure to make full disclosure
to officer is probative of malice); Lieck, 881 S.W.2d at
[10] Richey argues that Brookshire's failure to fully and 293–94 (knowingly making false disclosure is probative of
fairly disclose all relevant facts to the police constitutes a causation). Whether Brookshire's employee failed to fully
lack of probable cause. It has been stated that the malicious- disclose all relevant information to the officer is therefore
prosecution defendant lacks probable cause if he or she makes immaterial to the probable-cause inquiry currently before us.
a material misrepresentation or does not disclose all known See Biering v. First Nat'l Bank of Galveston, 69 Tex. 599, 7
material facts in good faith to law enforcement officials. S.W. 90, 92 (1888) (“want of probable cause can never be
See, e.g., Ellis County State Bank v. Keever, 888 S.W.2d inferred from proof of malice”). As a matter *520 of law,
at 794–95; Compton v. Calabria, 811 S.W.2d 945, 950 then, we hold that Brookshire had probable cause to initiate
(Tex.App.—Dallas 1991, no writ); Marathon Oil Co., 682 criminal proceedings against Richey.
S.W.2d at 627; Eans v. Grocer Supply Co., Inc., 580 S.W.2d
17, 21 (Tex.Civ.App.—Houston [1st Dist.] 1979, no writ).
In Browning–Ferris Industries, Inc. v. Lieck, however, we
held that knowingly providing false information to a public IV.
official satisfies the causation element, rather than the lack-
Actions for malicious prosecution create a tension between
of-probable-cause element, of a malicious prosecution claim.
the societal interest in punishing crimes and the individual
881 S.W.2d at 293–94.
interest in protection from unjustifiable criminal prosecution.
Lieck, 881 S.W.2d at 290–91. We are not called upon today
[11] We similarly conclude today that failing to fully
to pass on the wisdom of Brookshire's policy of prosecuting
and fairly disclose all material information and knowingly
customers who reasonably appear to have taken merchandise
providing false information to the prosecutor are relevant to
from the store without paying—regardless of the value of the
the malice and causation elements of a malicious prosecution
merchandise taken. In this case, Brookshire should not and
claim but have no bearing on probable cause. The notion that
cannot be punished for prosecuting Richey when Brookshire's
probable cause can be negated by the failure to make a full and
employees saw Richey conceal merchandise, retain the
fair disclosure seems to have been derived mistakenly from
merchandise in his possession, and pass through the check-
the court of civil appeals' opinion in Sebastian v. Cheney, 24
out line without paying for the merchandise. Accordingly, we
S.W. 970 (Tex.Civ.App.), rev'd, 86 Tex. 497, 25 S.W. 691
affirm the take-nothing judgment of the court of appeals.
(1894). In that case, the court of appeals held that the fact
that a complainant consults with counsel before making a full
and fair disclosure to public officials does not always insulate
the complainant from a later malicious prosecution suit. 24 CORNYN, Justice, joined by GONZALEZ, BAKER and
S.W. at 972. Later courts have cited Sebastian wrongly, we ABBOTT, Justices, dissenting.
think, for the proposition that a failure to make a full and fair After he was acquitted of shoplifting by one jury, a second
disclosure in itself constitutes a lack of probable cause. See, jury concluded from the evidence in this case that no
e.g., Eans, 580 S.W.2d at 21; Ada Oil Co. v. Dillaberry, 440 reasonable person would have believed that Kelley Richey,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Richey v. Brookshire Grocery Co., 952 S.W.2d 515 (1997)
40 Tex. Sup. Ct. J. 839
first, paid $51 for groceries, and then paid almost $9 more motives, grounds, and beliefs, before applying the law. See
for groceries that he donated to charity, and then intentionally Akin v. Dahl, 661 S.W.2d 917, 921 (Tex.1983). But the
stole a $1.49 pack of cigarettes when he had the money Court's analysis unjustifiably excludes far more evidence than
in his pocket to pay for it. Both juries concluded from the it includes.
evidence that Richey took the cigarettes by mistake, without
any intention to steal them. Nevertheless, five members of Second, contrary to the Court's conclusion, under the proper
this Court hold that the only conclusion that may reasonably no-evidence standard of review, Richey produced legally
be drawn from the evidence is that Kelley Richey is a thief. sufficient evidence to support the verdict. Probable cause
Like the two juries who heard all the evidence in this case, is the existence of such facts and circumstances *521 as
three other members of this Court, one justice on the court of would cause the belief, in a reasonable mind, acting on
appeals panel, and the trial judge, I disagree. the facts within the knowledge of the complainant, that the
person charged was guilty of the crime for which he or she
The practical effect of the Court's holding is breathtaking: was prosecuted. Akin, 661 S.W.2d at 921. Material to this
anytime a person leaves a store without paying for objective inquiry is evidence of the beliefs and motives of
merchandise by mistake, that is, with no intention to steal it, the complainant at the time criminal proceedings began; the
the store owner is always legally justified in pursuing criminal ultimate guilt or innocence of the accused is immaterial. Id.
charges against the customer. No other circumstances matter. at 920. Thus, to prevail, Richey needed to offer evidence and
Even though the innocent customer may eventually be secure a jury finding that facts and circumstances did not exist
acquitted, as was Kelley Richey, under today's decision, the at the time criminal proceedings were instituted to support a
customer has no recourse for the public humiliation, the reasonable belief that he had committed a crime. This, he did.
damage to one's reputation, and the potentially devastating
financial consequences of having to defend oneself in the When reviewing a no-evidence point of error, we consider
criminal justice system against false charges. only the evidence and reasonable inferences that support
the verdict and disregard all evidence and inferences to the
I object to the Court's actions on two grounds. My first contrary. Ellis County State Bank v. Keever, 888 S.W.2d 790,
objection is to the Court's transformation of probable cause 794 (Tex.1994). If any evidence supports the finding, the
in this case from a fact question to a legal question. finding must be upheld. In re King's Estate, 150 Tex. 662, 244
Simply because the “facts and events leading up to Richey's S.W.2d 660, 661 (1951).
arrest are undisputed,” supra, 952 S.W.2d at 518, does not
mean probable cause is a question of law for the court. The basic facts, detailed in the Court's opinion, support
While the underlying facts of what happened that night are the jury's inference and finding that a reasonable person in
undisputed, those facts give rise to conflicting inferences. Brookshire's position would not have believed that Richey
This Court has long held that resolution of conflicting had intended to steal the cigarettes. While the jury was not
inferences, including those arising from undisputed facts, lies required to believe Richey's story and could have rejected it,
with the factfinder: “If reasonable minds can draw different it was certainly within the jury's power to accept it. Richey
inferences or conclusions from undisputed facts, a fact issue paid $51.75 for groceries for his family, re-entered the store
is presented.” Commercial Standard Ins. Co. v. Davis, 134 to purchase items for charity, paid an additional $8.89 in
Tex. 487, 137 S.W.2d 1, 2 (1940); see also Ramo, Inc. v. cash for those items, had cash on hand to pay $1.49 for the
English, 500 S.W.2d 461, 467 (Tex.1973); Mills v. Bartlett, cigarettes, and offered to pay for them when he was reminded
377 S.W.2d 636, 638 (Tex.1964); Cavanaugh v. Davis, 149 of his oversight. The jury, in essence, found that a reasonable
Tex. 573, 235 S.W.2d 972, 977 (1951); Le Master v. Fort person would not have believed that a customer who had just
Worth Transit Co., 138 Tex. 512, 160 S.W.2d 224, 226 paid $51.00 for his own groceries and $9.00 for groceries for
(1942). That the court of appeals or this Court would have charity would intentionally steal cigarettes worth $1.49 when
drawn a different conclusion from the facts does not authorize he had in his pocket the money to pay for them.
substitution of judicial factfinding for the jury's verdict. See
Pool v. Ford Motor Co., 715 S.W.2d 629, 634–35 (Tex.1986). Jack Millican, Brookshire's Director of Safety and Loss
Moreover, even if probable cause in this case is a question Control, testified that company policy required managers
of law, the Court is still bound to consider all the facts and to investigate each suspected shoplifting incident. But, he
circumstances, including evidence relevant to Brookshire's said, this policy was limited to determining whether the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Richey v. Brookshire Grocery Co., 952 S.W.2d 515 (1997)
40 Tex. Sup. Ct. J. 839
customer left the store without paying for an item; company 682 S.W.2d 624, 627 (Tex.App.—Houston [1st Dist.] 1984,
policy did not differentiate between criminal and noncriminal writ ref'd n.r.e.). It is only after “a person fairly discloses
takings. Similarly, Kevin Santone, the District Manager, facts in his possession to the prosecuting officer [that] he
testified that rather than determining whether a taking may has no duty to make further investigation....” Id. at 628; see
have been inadvertent, Brookshire's policy was simply to also Coniglio v. Snyder, 756 S.W.2d 743, 744 (Tex.App.—
conclude that the taking was intentional from the taking Corpus Christi 1988, writ denied) (“Unless a person fairly
itself. Once a customer is suspected of being a thief, he said, discloses information to a prosecuting attorney, in good faith,
the customer will always be regarded as such, regardless probable cause does not exist.”); Diamond Shamrock Corp.
of the circumstances of the case. Finally, in contrast to v. Ortiz, 753 S.W.2d 238, 242 (Tex.App.—Corpus Christi
Brookshire's policy when dealing with customers, the jury 1988, writ denied) (“[Complainants] generally have a duty to
heard that store employees who left without paying for make a full and fair disclosure of all evidence to police and
goods would be forgiven for “honest errors.” This evidence a failure to make material exculpatory information known to
lends further support to the jury's apparent conclusion the police could be evidence of a hostile motive or insufficient
that while a reasonable person would have concluded that grounds.”).
Richey inadvertently took the pack of cigarettes, Brookshire
nevertheless pressed charges against Richey as a matter of Farris's internal report on the incident read as follows:
course.
Subject removed 1 pack cigarettes
The jury could also have disregarded Brookshire's alleged from rack at front of store and placed
grounds for probable cause because of inconsistencies in the them in his buggy. Subject went down
testimony of Russell Farris, the night manager on duty during aisle # 8 (dog food) and placed cigs
the incident. He testified that Brookshire stressed accuracy in pocket of coat. Subject shopped for
in the internal reports filed by managers, and he told the approx. 15 mins. and left store. Subject
jury that he had filled out the Richey report while waiting was stopped in parking lot.
for the police to arrive, so that the details would be “fresh”
Farris failed to mention that Richey went through the check-
on his mind. But, neither the internal report nor the police
out stand once, paid $51.00 dollars for groceries, saw the
report mention that Richey paid $5 1.00 for his groceries, re-
charity display, re-entered the store, paid almost $9.00 for
entered the store and paid for more groceries for charity, or
more groceries for the charity bin, left the store again, and
had cash on hand to pay for the cigarettes. And, neither report
then offered to pay for the cigarettes outside the store. If one
included a litany of other factors that Farris told the jury were
read only the internal report, one would believe that Richey
important to his decision to press charges: Richey's “shifty
walked down one aisle, put the cigarettes in his pocket, and
looks,” “stalling tactics,” “nervous” demeanor, and the smell
then left the store without paying for any food at all, much
of alcohol on his breath. When, as here, conflicting evidence
less re-entering to pay for more food for charity.
exists on an issue, the jury's verdict is generally conclusive
on such matters as the weight given to the evidence and the
Likewise, Farris's report to the police was incomplete and
credibility of witnesses. Benoit v. Wilson, 150 Tex. 273, 239
misleading. The relevant portions of the police report read as
S.W.2d 792, 796–97 (1951).
follows:
Moreover, Farris's inaccurate report to the police was Farris stated that Richey came into
sufficient by itself to support a finding that probable cause the store and got a shopping cart.
did not exist to prosecute Richey. “[Lack of probable cause] Richey then got the above item
may be demonstrated by proof that the defendant *522 [the cigarettes] and placed it in
made material misrepresentations to the prosecuting officer.” the shopping cart. Farris stated that
Ellis County State Bank v. Keever, 888 S.W.2d at 794–95. Richey continued to shop for about
Texas law requires a complainant to make a “full and fair 15 minutes. Farris advised that while
disclosure of the facts and circumstances known to him at Richey was shopping, Richey took the
the time.... [U]nless he acts in good faith in disclosing to above listed item out of the shopping
the prosecuting attorney all material facts known to him, cart and placed it inside a coat pocket.
probable cause does not exist.” Marathon Oil Co. v. Salazar, Richey then went through the check-
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Richey v. Brookshire Grocery Co., 952 S.W.2d 515 (1997)
40 Tex. Sup. Ct. J. 839
false imprisonment claim—probable cause to stop—with the
out line and paid for some other items
probable cause relevant to a malicious prosecution claim—
and left the store. Farris then detained
probable cause to believe that the taking was intentional. If
Richey in the parking lot and escorted
Brookshire had to show only that it had probable cause to
Richey back inside the store.
detain Richey to avoid liability for malicious prosecution,
Obviously, there is no mention by Farris of Richey re- then Richey's testimony would dispose of the issue. However,
entering the store to purchase more groceries for charity and the question is whether probable cause existed, not to stop
no mention of Richey's offer to pay cash for the cigarettes Richey, but to file a complaint. Instead of evaluating all of
upon being reminded of his oversight. Farris omitted only the evidence supporting the finding of no probable cause, the
evidence tending to show that the taking was accidental. This Court focuses on the one event that would suggest Richey
is precisely the type of material omission that this Court has took the pack intentionally. This fixation on one piece of
held to be evidence that there was no probable cause to press evidence with regard to one event, to the exclusion of nearly
criminal charges. See Keever, 888 S.W.2d at 794–95. all other evidence, violates the proper standard of review.
The importance of a complete police report cannot be “Once these opposing parties have entered into a factual
overstated. Retailers wishing to notify the authorities of every contest on the issue of probable cause, a fact issue is created
case of suspected shoplifting and to avoid the role of amateur for resolution by the trier of fact. This is a cornerstone of
police officers may discharge their duty by providing a our judicial system.” Akin, 661 S.W.2d at 920. Applying this
thorough report to the police and the prosecuting authorities. principle, I conclude that Richey produced legally sufficient
This allows the authorities to weigh all of the exonerating evidence to support the jury finding that Brookshire pursued
and incriminating evidence and to make an informed decision criminal charges against him without probable cause. The
regarding the merits of a particular case. While the Court Court, unfortunately, while acknowledging the need for
restricts this kind of evidence to the causation or malice balance between vigilant law enforcement and the liberty
elements of malicious prosecution, I view such evidence as interest of those unjustly accused, creates what is in effect a
relevant to a complaining party's motives and beliefs, and thus rule of strict nonliability for store owners—if a customer takes
probative on the issue of probable cause. something out of a store without paying for it, regardless of
the circumstances, the customer is a thief and the store owner
Finally, while Richey did admit that Farris had probable cause cannot be held liable for malicious prosecution. By turning
to stop him and ask about the cigarettes, he never admitted disputed facts into a question of law in this case, the Court has
that a reasonable person would have inferred from the taking simply substituted its opinion for that of the jury. I cannot be
itself that the taking was intentional. He never said that Farris part of such an illegitimate exercise of power. Accordingly,
should have ignored the groceries that he bought for himself, I dissent.
his re-entry to buy more *523 groceries for charity, and his
offer to pay cash for the cigarettes. He characterized his taking
the cigarettes as a “mistake” and answered affirmatively All Citations
to a question that assumed that he had no intent to steal. 952 S.W.2d 515, 40 Tex. Sup. Ct. J. 839
The Court thus confuses the probable cause relevant to a
Footnotes
1 Contrary to the dissent's rhetoric, we do not conclude that Kelly Richey is a “thief.” As the court of appeals noted, “It
appears from the record that Richey was acquitted by the municipal court jury because he did not intend to shoplift, not
because there was a lack of probable cause.” 899 S.W.2d at 337. Our holding that Brookshire had probable cause to
believe that Richey had committed theft is unrelated to Richey's actual innocence or guilt. See McManus v. Wallis, 52
Tex. 534 (1880); Haldeman v. Chambers, 19 Tex. 1 (1857).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
VV
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
and wife thus had standing to bring medical malpractice suit
on behalf of husband's estate; (4) trial court erred in refusing
KeyCite Yellow Flag - Negative Treatment to strike for cause prospective juror who had expressed
Distinguished by Hafi v. Baker, Tex., May 13, 2005
his bias against defendants in medical malpractice action;
962 S.W.2d 28 and (5) purported wife's failure to initiate proceeding to
Supreme Court of Texas. prove common-law marriage within one year of purported
husband's death barred her from subsequently offering any
Richard L. SHEPHERD, M.D., and proof of that relationship to establish standing as surviving
Allan Graham, M.D., Petitioners, spouse to bring suit under Wrongful Death Act.
v.
Lahoma LEDFORD, Respondent. Judgments of Court of Appeals affirmed and remanded in part
TRANSAMERICAN NATURAL GAS and reversed and rendered in part.
CORPORATION, Southwest Texas Services,
Hecht, J., filed an opinion concurring in part and dissenting
Inc., L.T.V. Energy Products d/b/a Wilson
in part in which Phillips, C.J., and Owen, J., joined.
Manufacturing, Continental Emsco Company d/b/
a Wilson Manufacturing, Wilson–Wichita, Inc. d/
b/a Wilson Manufacturing, and Dana Corporation
d/b/a Wilson Manufacturing, Petitioners, West Headnotes (12)
v.
Nancy Rodriguez FUENTES, Respondent. [1] Health
Limitations; time requirements
Nos. 96–0994, 96–1243. | Argued
Provision of Medical Liability and Insurance
April 23, 1997. | Decided Jan. 29, 1998.
Improvement Act (MLIIA) barring any health
| Rehearing Overruled March 13, 1998.
care liability claim unless filed within two years
Plaintiff claiming to be patient's common-law wife brought from occurrence, notwithstanding any other law,
wrongful death action based on medical malpractice. The is exclusive statute of limitations for medical
96th District Court, Tarrant County, entered judgment on malpractice claims. Vernon's Ann.Texas Civ.St.
jury verdict adverse to physicians. Physicians appealed. art. 4590i, § 10.01.
The Court of Appeals, Dixon W. Holman, J., 926 S.W.2d
1 Cases that cite this headnote
405, reversed and remanded for new trial. In a separate
action, alleged common-law spouse of decedent killed in
drilling accident brought wrongful death claim against several [2] Death
defendants. The 49th District Court, Zapata County, Manuel Persons Entitled to Sue
R. Flores, J., granted summary judgment to defendants on To bring suit under Wrongful Death Act, party is
limitations grounds, and plaintiff appealed. The Court of required to prove that he or she was deceased's
Appeals, Phil Hardberger, J., 933 S.W.2d 624, reversed spouse, child, or parent. V.T.C.A., Civil Practice
and remanded. Applications for writs of error were filed & Remedies Code § 71.004(a).
and cases consolidated. The Supreme Court, Baker, J., held
that: (1) former family Code provision requiring elements of 4 Cases that cite this headnote
informal marriage to be proven within one year from end
of relationship does not conflict with, and is not supplanted [3] Death
by, two-year limitations period under Medical Liability and Heirs and next of kin
Insurance Improvement Act (MLIIA) for medical malpractice
Heirs at law can maintain survival suit
or Wrongful Death Act; (2) stipulation that purported spouses
during four-year period allowed for instituting
had valid common-law marriage relieved wife of burden
administration proceedings if they allege and
to prove marriage in order to establish standing to bring
prove that there is no administration pending
wrongful death action for medical malpractice; (3) no formal
administration of estate was required under circumstances,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
and none necessary. V.T.C.A., Civil Practice & one year from end of relationship. V.T.C.A.,
Remedies Code § 71.021(b). Family Code § 1.91(b) (Repealed); Vernon's
Ann.Texas Civ.St. art. 4590i, § 10.01.
31 Cases that cite this headnote
16 Cases that cite this headnote
[4] Death
Special limitations [7] Executors and Administrators
Former Family Code provision requiring Estate of husband or wife
elements of informal marriage to be proven No formal administration of estate was required,
within one year from time of relationship's end and wife thus had standing to bring medical
did not conflict with, and was not supplanted by, malpractice suit on behalf of husband's estate,
Medical Liability and Insurance Improvement under circumstances that husband owned only
Act's (MLIIA) two-year statute of limitations personal property at time he died intestate, that
governing wrongful death action based on property vested immediately in wife, and that
medical malpractice; purported wife could have family had resolved estate's disposition and paid
filed proceeding to declare heirship in order to all debts. V.A.T.S. Probate Code, § 38(b), par. 2.
establish existence of her common-law marriage
within one year of purported husband's death and 30 Cases that cite this headnote
then later filed medical malpractice action within
its 2-year limitations period. V.T.C.A., Family [8] Appeal and Error
Code § 1.91(b) (Repealed); Vernon's Ann.Texas Qualifications and selection, impaneling
Civ.St. art. 4590i, § 10.01. and oath of jurors
9 Cases that cite this headnote When trial court refuses to disqualify juror
for bias or prejudice, complaining party must
show that error was harmful by advising
[5] Stipulations trial court, before exercising its peremptory
Nature and essentials in general challenges, that court's denial of challenges
“Stipulation” is agreement, admission, or for cause would force party to exhaust its
concession made in judicial proceeding by peremptory challenges and, that, after exercising
parties or their attorneys respecting some matter its peremptory challenges, specific objectionable
incident thereto. jurors would still remain on panel. V.T.C.A.,
Government Code § 62.105(4).
31 Cases that cite this headnote
17 Cases that cite this headnote
[6] Stipulations
Agreed statement of facts [9] Jury
Stipulation that purported spouses had valid Subject-Matter of Cause
common-law marriage at time of husband's death Prospective juror who had expressed his bias
was signed by counsel for both parties and against defendants in medical malpractice action
was accepted by trial court and, thus, became was disqualified as matter of law, and thus, trial
conclusive on existence of marriage and thereby court erred in refusing to strike prospective juror
relieved wife of burden to prove common- for cause when defendants made showing that
law marriage in order to establish standing to they would be forced to use peremptory strike
bring wrongful death action based on medical on him that they would otherwise have used on
malpractice, even though wife otherwise would another specific objectionable juror.
have been barred from establishing common-
law marriage by former provision of family code 16 Cases that cite this headnote
requiring informal marriage to be proven within
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
[10] Death Attorneys and Law Firms
Special limitations
*30 Anthony M. Kuehler, Jennifer M. Andrews, Joseph M.
Former Family Code provision requiring
Gallagher, Fort Worth, for Petitioners in No. 96–0994.
elements of informal marriage to be proven
within one year from time of relationship's David G. McCracken, Allister M. Waldrop, Dallas, Macey
end does not conflict with or supplant two- Reasoner Stokes, Houston, Michael V. Powell, Dallas, Allan
year statute of limitations governing wrongful R. King, Corpus Christi, Robert H. Etnyre, Houston, for
death actions; purported spouse could file other Petitioners in No. 96–1243.
proceeding to establish existence of common-
law marriage within one year of purported Margaret I. Henning, Janis M. Calos, William A. Newman,
spouse's death and then later file wrongful Bruce A. Pauley, Dallas, for Respondent in No. 96–0994.
death action within 2-year limitations period.
V.T.C.A., Family Code § 1.91(b) (Repealed); James K. Jones, Jr., Laredo, Alicia C. Finley–Richter, San
V.T.C.A., Civil Practice & Remedies Code §§ Antonio, Arnulfo Gonzalez, Jr., Laredo, for Respondent in
16.003(b), 71.004(a). No. 96–1243.
6 Cases that cite this headnote Opinion
BAKER, Justice, delivered the opinion of the Court, in which
[11] Marriage GONZALEZ, ENOCH, SPECTOR and ABBOTT, Justices,
Annulment join.
Purported wife's failure to initiate proceeding to
In these two cases we consider whether former Family
prove common-law marriage within one year of
relationship's end at time of purported husband's Code section 1.91(b) 1 conflicts with Medical Liability and
death, as required by former provision of Family Insurance Improvement Act (“MLIIA”) section 10.01 or
Code, barred her from subsequently offering Texas Civil Practice and Remedies Code section 16.003.
any proof of that relationship to establish We hold that section 1.91(b), as it existed before the 1995
standing as surviving spouse to bring suit under amendment, does not conflict with either section 10.01 of
Wrongful Death Act. V.T.C.A., Family Code § the MLIIA or section 16.003 of the Texas Civil Practice and
1.91(b) (Repealed); V.T.C.A., Civil Practice & Remedies Code. Accordingly, we affirm the court of appeals'
Remedies Code §§ 16.003(b), 71.004(a). judgment in Shepherd v. Ledford, 2 and reverse the court of
appeals' judgment in Transamerican v. Fuentes.
9 Cases that cite this headnote
[12] Death I. BACKGROUND
Nature and form of remedy
Purpose of Wrongful Death Act is to provide
A. Shepherd v. Ledford
means whereby surviving spouses, children, and
parents can recover for loss of their family Shepherd v. Ledford involves a wrongful death and survival
member. V.T.C.A., Civil Practice & Remedies claim for medical malpractice. Lahoma Ledford sued Drs.
Code § 71.004(a). Richard Shepherd and Allan Graham for the wrongful
death of her alleged common-law husband, John Ledford.
6 Cases that cite this headnote
The medical malpractice action resulted from the doctors'
treatment of Mr. Ledford for a heart condition. The jury
found for Mrs. Ledford on both causes of action. The trial
court rendered judgment on the verdict on the wrongful
death claim. However, the trial court partially granted the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
defendants' motion for judgment notwithstanding the verdict
on the survival claim. (2) they agreed to be married, and after the agreement
they lived together in this state as husband and wife, and
Affirming the trial court in part, the court of appeals held they represented to others that they were married.
that section 1.91(b) did not bar Mrs. Ledford's cause of
(b) A proceeding in which a marriage is to be proved under
action. The court reasoned that section 1.91(b) conflicted with
this section must be commenced not later than one year
the medical malpractice two-year statute of limitations for
after the date on which the relationship ended or not later
wrongful death in section 10.01 of the MLIIA. The court
than one year after September 1, 1989, whichever is later.
then determined that section 10.01 supplanted section 1.91(b)
of the Family Code and held that Mrs. Ledford had two TEX. FAM.CODE § 1.91(b).
years to bring a wrongful death action as the decedent's
wife. Additionally, the court of appeals reversed the trial Legislative history shows that section 1.91(b)'s one year time
court's judgment notwithstanding the verdict on the survival limit was a compromise alternative to completely abrogating
claim. The court of appeals determined that Mrs. Ledford did common-law marriages in Texas. See Russell v. Russell,
have standing to assert the survival action on behalf of Mr. 865 S.W.2d 929, 932 (Tex.1993). The Texas Legislature
Ledford's estate. However, the court of appeals reversed and has had a long history of “grudging” tolerance of common-
remanded the case for a new trial because the district judge law marriages. See Russell, 865 S.W.2d at 931. Thus, the
did not disqualify a biased juror. 926 S.W.2d 405. Legislature intended for section 1.91(b) to strictly limit
parties' ability to prove a common law marriage. See Riley
v. State, 849 S.W.2d 901, 903 (Tex. App—Austin 1993, pet.
B. Transamerican v. Fuentes ref'd).
Transamerican v. Fuentes involves a wrongful death claim
for ordinary negligence. On October 15, 1993, Nancy
B. MLIIA Section 10.01
Rodriguez Fuentes filed this wrongful death action as Julio
Fuentes's alleged common-law spouse. Mr. Fuentes was [1] The MLIIA provides: “Notwithstanding any other law,
killed in a drilling rig accident on October 16, 1991. The trial no health care liability claim may be commenced unless
court granted the defendants' motion for summary judgment, the action is filed within two years from the occurrence....”
and Mrs. Fuentes appealed. The court of appeals reversed TEX.REV.CIV. STAT. art. 4590i, § 10.01. Section 10.01 is
the summary judgment *31 and remanded the case for trial, the exclusive statute of limitations for medical malpractice
holding that Mrs. Fuentes had two years to bring a wrongful claims. See Bala v. Maxwell, 909 S.W.2d 889, 892–
death action as Mr. Fuentes's common-law wife. 933 S.W.2d 93 (Tex.1995). In Bala, the Court concluded that the
624. phrase “notwithstanding any other law” clearly evinced the
Legislature's unequivocal intent that section 10.01 govern
when its time limitations conflicts with another law. See Bala,
II. APPLICABLE LAW 909 S.W.2d at 892–93.
A. Family Code Section 1.91
C. Wrongful Death Act
When Mrs. Ledford and Mrs. Fuentes filed suit, section 1.91
provided that: [2] An action to recover damages for wrongful death is
for the exclusive benefit of the deceased's surviving spouse,
(a) In any judicial, administrative, or other proceeding, the children, and parents. See TEX. CIV. PRAC. & REM.CODE
marriage of a man and woman may be proved by evidence § 71.004(a); see also Rose v. Doctors Hosp., 801 S.W.2d 841,
that: 846 (Tex.1990); Garza v. Maverick Mkt., Inc., 768 S.W.2d
273, 276 (Tex.1989); Brown v. Edwards Transfer Co., 764
(1) a declaration of their marriage has been executed S.W.2d 220, 222 (Tex.1988). Furthermore, to bring suit under
under Section 1.92 of this code; or the Wrongful Death Act, a party is required to prove that he
or she was the deceased's spouse, child, or parent. See TEX.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
CIV. PRAC. & REM.CODE § 71.004(a); See also Garza, surviving spouse is entitled to all of the personal estate. See
768 S.W.2d at 275–76; Brown, 764 S.W.2d at 220. TEX. PROB.CODE § 38(b)(2).
D. Survival Statute III. ANALYSIS
The Survival Statute provides that only a personal
representative, administrator, or heir may sue on behalf of an A. Shepherd v. Ledford
estate. See TEX. CIV. PRAC. & REM.CODE § 71.021(b).
A person who dies intestate with no children leaves all 1. Limitations Period
of his or her estate to his or her spouse as sole heir. See
Tex. PROB.CODE §§ 37, 38(b)(2). The Wrongful Death Because Mrs. Ledford alleged a common-law marriage, as
Act expressly authorizes the surviving spouse to bring suit opposed to a formal marriage, she was required to prove
on behalf of all wrongful death beneficiaries. However, the the elements of an informal marriage within one year from
Survival Statute is silent about whether and when a spouse the time the relationship ended. See TEX. FAM.CODE §
may bring a survival claim. Compare TEX. CIV. PRAC. 1.91(b). The apparent conflict arises, however, because the
& REM.CODE § 71.004(b) with TEX. CIV. PRAC. & statute of limitations for medical negligence is two years. See
REM.CODE § 71.021(b). TEX.REV.CIV. STAT. art. 4590i, § 10.01; Bala, 909 S.W.2d
at 893.
[3] This Court has determined that generally, personal
representatives of the decedent's estate are the only people Affirming the trial court's judgment, the court of appeals
entitled to sue to recover estate property. See Frazier v. Wynn, held that section 1.91(b) impermissibly reduced the time
472 S.W.2d 750, 752 (Tex.1971). However, circumstances Mrs. Ledford had to file her wrongful death suit. The court
can exist when an heir may have standing to bring suit on reasoned that because section 1.91(b) required her to file
behalf of the decedent's estate. Heirs at law can maintain the wrongful death lawsuit within one year of Mr. Ledford's
a survival suit during the four-year period the law allows death and the limitations for a medical malpractice wrongful
for instituting administration proceedings if they allege and death claim is two years under section 10.01, section 1.91(b)
prove that there is no administration pending *32 and none necessarily conflicted with section 10.01. We disagree.
necessary. See Frazier, 472 S.W.2d at 752.
[4] We hold that section 1.91(b) of the Family Code does
A family settlement agreement is an alternative method of not conflict with section 10.01 of the MLIIA. When the
administration in Texas that is a favorite of the law. See one-year time period in section 1.91(b) expires, the party
In re Estate of Hodges, 725 S.W.2d 265, 267 (Tex.App.— asserting an informal marriage is barred only from proving
Amarillo 1986, writ ref'd n.r.e.); Estate of Morris, 577 S.W.2d the marriage's existence. See Mossler v. Shields, 818 S.W.2d
748, 755–56 (Tex.Civ.App.—Amarillo 1979, writ ref'd n.r.e.) 752, 754 (Tex.1991).
Under section 37 of the Probate Code, when a person dies
leaving a will, all of the estate devised or bequeathed by the Mrs. Ledford did not have to file her medical liability
will immediately vests in the devisees or legatees, subject to claim within one year of Mr. Ledford's death. Rather, she
payment of the decedent's debts. The beneficiaries of an estate only had to initiate a proceeding to prove the requisite
are free to arrange among themselves for the distribution of elements of an informal marriage within one year of his
the estate and for the payment of expenses from that estate. death. See TEX. FAM.CODE § 1.91(a) & (b). There
See Tex. Prob.Code § 37; see also Pitner v. United States, 388 are legal procedures available for common-law spouses in
F.2d 651, 656 (5th Cir.1967); Estate of Hodges, 725 S.W.2d Mrs. Ledford's situation. For example, Mrs. Ledford could
at 267. have filed a Proceeding to Declare Heirship to establish
the existence of her common-law marriage. See TEX.
Section 37 also provides that when a person dies intestate, all PROB.CODE § 48(a). Or she could have filed the wrongful
of his estate shall vest immediately in his heirs at law, subject death claim within one year of Mr. Ledford's death and
to payment of the debts of the estate. See TEX. PROB.CODE established the existence of the common-law marriage at trial.
§ 37. If the deceased has no children or their descendants, the The choice was hers, as long as she initiated a proceeding to
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
prove her informal marriage within the one-year time limit.
See TEX. FAM.CODE § 1.91(b); Mossler, 818 S.W.2d at [5] [6] A stipulation is “an agreement, admission, or
754. concession made in a judicial proceeding by the parties
or their attorneys respecting some matter incident thereto.”
Accordingly, we reject the court of appeals' conclusion Ortega–Carter v. American Int'l Adjustment, 834 S.W.2d
that section 1.91(b) provided an independent limitations 439, 441–42 (Tex.App.—Dallas 1992, writ denied). Counsel
mechanism that directly conflicted with section 10.01. for both parties signed the stipulation and thereby judicially
Rather, we hold that section 1.91(b) simply estops a person admitted that Mr. and Mrs. Ledford were common-law
from claiming that he or she is informally married unless he spouses. The trial court accepted the stipulation and thus
or she starts a proceeding to establish an informal marriage it became conclusive on the existence of the Ledfords'
within section 1.91(b)'s one year time limit. Consequently, common-law marriage. See Herschbach v. City of Corpus
the person would be unable to assert standing to sue under the Christi, 883 S.W.2d 720, 733 (Tex.App.—Corpus Christi
Wrongful Death Act. 1994, writ denied) (citing Hennigan v. I.P. Petroleum Co.,
Inc., 858 S.W.2d 371, 372 (Tex.1993)) (stating that a “true
This holding is compatible with Mossler. In Mossler, the judicial admission is a formal waiver of proof usually found
petitioner filed a second divorce action after the trial court in ... the stipulations of the parties.”). Therefore, because
dismissed with prejudice the initial divorce proceeding. See the defendants judicially admitted facts that establish Mrs.
Mossler, 818 S.W.2d at 754. We held that the dismissal with Ledford's standing to bring a wrongful death action as Mr.
prejudice of Mrs. *33 Mossler's first suit estopped her from Ledford's surviving spouse, they are estopped from now
bringing a second suit for divorce. We then held that section claiming to the contrary. See Herschbach, 883 S.W.2d at 733.
1.91 prevented Mrs. Mossler from claiming that a common-
law marriage existed in the second proceeding, achieving Consequently, the stipulation relieved Mrs. Ledford of her
the same result as estoppel based upon a dismissal with burden to prove her common law marriage, something she
prejudice. See Mossler, 818 S.W.2d at 754. We specifically would not have been able to prove otherwise, and she had
noted that public policy supported our decision because the standing to bring the wrongful death action. Accordingly,
Legislature approved barring stale claims of an informal section 1.91(b) does not apply in this case.
marriage by enacting the one-year time limit in section
1.91(b) of the Family Code. See Mossler, 818 S.W.2d at 754.
Therefore, under the law, Mrs. Ledford was required to begin
3. Survival Suit
a proceeding to prove an informal marriage within one year
from the time the marriage ended. Defendants' final contention is that the court of appeals erred
in holding that Mrs. Ledford had standing to bring the survival
claim on behalf of Mr. Ledford's estate. They assert that
2. The Stipulation Mrs. Ledford lacks standing to sue as Mr. Ledford's heir
because she did not plead and prove that no administration
We have held that section 1.91(b) required Mrs. Ledford was pending or necessary. Defendants contend that when Mr.
to begin a proceeding to prove her common-law marriage Ledford died he owed more than the minimum two debts
within one year limit of Mr. Ledford's death, or forfeit the to qualify for an informal estate administration. See TEX.
opportunity to establish her standing to bring suit under the PROB.CODE § 178(b).
Wrongful Death Act. However, under the specific facts of this
case, her failure to comply with section 1.91(b) does not bar Mrs. Ledford's evidence showed that Mr. Ledford owned no
her wrongful death claim. real property and had no children. Therefore, his personal
estate vested immediately in Mrs. Ledford, his surviving
Mrs. Ledford sued on November 15, 1991. Despite the fact spouse. See TEX. PROB.CODE § 38(b)(2). Mrs. Ledford
that she had not complied with section 1.91(b), the court testified that by the time of trial all Mr. Ledford's debts had
entered an order, which reflected the parties agreement, been paid. She also testified that she made an agreement with
stating that the parties “stipulated and agreed ... that Lahoma other family members permitting her to take the minimal
Ledford and John Ledford had a valid common-law marriage, assets of Mr. Ledford's estate as his only heir. Defendants did
prior to and at the time of John Ledford's death.” not controvert this evidence.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
so.” Next, counsel asked prospective juror Somerville: “You
[7] The evidence shows that the family had resolved the feel that based upon your past experience, you could not be
estate's disposition and that all debts were paid. Accordingly, fair and objective in looking at the medical facts as they have
no administration was necessary for it would have served no been testified to so that both sides start out evenly in this case;
purpose. We see no reason why the Pitner rationale approving is that correct ma'am?” In response, Somerville responded,
no administration *34 when the devisees under a will make “That is true.” Immediately following this exchange, counsel
an agreement to distribute the estate and pay the bills does began to ask the following question of the jury panel, and
not apply with equal force in the situation where the heirs venireperson Guerra responded:
of an intestate decedent make an agreement to distribute the
estate and pay the bills. See Pitner, 388 F.2d at 656. Thus, the COUNSEL: Is there anybody else, after we've listened to
Pitner rationale applies here, where the decedent owned only this-
personal property, and that property vested immediately in
GUERRA: I feel the same way. ... My dad died of a heart
Mrs. Ledford. Accordingly, we hold that under the facts and
attack also. I just don't like to talk about it because it
because of the family agreement, no formal administration
brings back bad memories. But yeah, I think it would
was necessary. See In re Estate of Hodges, 725 S.W.2d at
have a—I would have a problem with that.
267; Estate of Morris, 577 S.W.2d at 755–56. We conclude
the court of appeals correctly determined that Mrs. Ledford COUNSEL: [A]s a result of that, you feel that Mrs. Ledford
had standing to sue on behalf of Mr. Ledford's estate. would be—you would feel for her and put her—sort of
put her ahead of the defense in this case ... ?
GUERRA: I think so. Like I said, my dad was—after that,
4. Juror Disqualification
for a long, he was in a coma, so I seen [sic] him suffer a
We now turn to Mrs. Ledford's complaint that the court of lot, and I know what it did to me.
appeals erred in remanding the case for trial because the trial
court did not disqualify an allegedly biased prospective juror. The trial court granted Shepherd's motion to strike Caudill and
Drs. Shepherd and Graham contend that the trial court abused Somerville for cause. However, despite defendants' showing
its discretion in refusing to strike the prospective juror for that Guerra was biased and that they would be forced to use a
cause. peremptory strike on Guerra that they would otherwise have
used on another specific objectionable juror, the trial court
[8] A prospective juror who admits bias or prejudice is refused to strike Guerra for cause.
disqualified to serve as a juror. See TEX. GOV'T CODE
§ 62.105(4); Compton v. Henrie, 364 S.W.2d 179, 182 [9] The court of appeals correctly held that Guerra was
(Tex.1963). When a trial court refuses to disqualify a juror disqualified as a matter of law. Guerra expressed his bias, and
for bias or prejudice, the complaining party must show that the trial court should have granted the defendants' motion to
the error was harmful. To do this, the party, before exercising strike Guerra for cause. Accordingly, we affirm the court of
its peremptory challenges, must advise the trial court that appeals' judgment and remand this case to the trial court.
“the court's denial of the challenges for cause would force
the party to exhaust its peremptory challenges and, that after
exercising its peremptory challenges, specific objectionable B. Transamerican v. Fuentes
jurors would still remain on the panel.” Goode v. Shoukfeh,
943 S.W.2d 441, 452 (Tex.1997); Hallett v. Houston N.W.
Med. Ctr., 689 S.W.2d 888, 890 (Tex.1985). 1. Limitations—Wrongful Death
[10] “A person must bring suit not later than two years after
During voir dire, defendants' counsel elicited statements from
the day the cause of *35 action accrues in an action for injury
three consecutive prospective jurors that none of them could
resulting in death.” TEX. CIV. PRAC. & REM.CODE §
be fair to the defendants because of the results of medical
16.003(b). As we have explained, section 1.91(b) sets the time
treatment experienced by family members. Defense counsel
limit in which a proceeding to prove an informal marriage
asked prospective juror Caudill if she could consider the facts
must be brought. Thus, for the same reasons discussed above,
objectively and in a neutral way. She replied, “I don't think
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
section 1.91(b) does not supplant or conflict with the two-year
statute in section 16.003(b).
B. Transamerican v. Fuentes
It is undisputed that Mrs. Fuentes and Mr. Fuentes were never Mrs. Fuentes had no standing to file a wrongful death claim
formally married and never filed a declaration of informal because she did not file a proceeding to prove the existence of
marriage. Thus, the only way Mrs. Fuentes could assert a common-law marriage within section 1.91(b)'s time limit.
standing to bring this suit under the Wrongful Death Act is Therefore, she is barred from maintaining her wrongful death
if she proved she was Mr. Fuentes's common-law surviving claim against Transamerican. Accordingly, we reverse the
spouse. See TEX. CIV. PRAC. & REM.CODE § 71.004(a). court of appeals' judgment and render judgment that Mrs.
Fuentes take nothing.
[11] Mrs. Fuentes had to initiate a proceeding to prove that
she was Mr. Fuentes's common-law surviving spouse within
one year of his death. See TEX. FAM.CODE § 1.91.
However, Mrs. Fuentes did not initiate a proceeding to prove HECHT, J., joined by PHILLIPS, C.J., and OWEN, J.,
her common-law marriage within section 1.91(b)'s one-year concurs and dissents in part.
requirement; therefore, she is barred from offering any proof
HANKINSON, J., not sitting.
of that relationship.
[12] The purpose of the Wrongful Death Act is “to HECHT, Justice, joined by PHILLIPS, Chief Justice, and
provide a means whereby surviving spouses, children, and OWEN, Justice, concurring and dissenting in part.
parents can recover” for the loss of their family member. I agree with the Court that Section 1.91(b) of the Family
Garza,, 768 S.W.2d at 275. Because section 1.91(b)bars Mrs. Code bars plaintiffs' recoveries in these two cases. I do not
Fuentes from proving her standing as Mr. Fuentes's surviving agree, however, that Dr. Shepherd and Dr. Graham's attorney
spouse, she cannot maintain her wrongful death action against waived applicability of that statute by stipulating that Lahoma
Transamerican. and John Ledford had a valid common law marriage. The
purpose and effect of the stipulation was merely to obviate
the necessity of proof of the marriage at trial; it was not
intended to waive defendants' consistent contention that even
IV. CONCLUSION
if a marriage existed, Section 1.91(b) precluded Ledford from
asserting it in this action. The Court's contrary conclusion is
A. Shepherd v. Ledford not supported by the text of the stipulation and is contrary
to defendants' intent apparent in the context in which the
While we affirm the court of appeals' judgment in this stipulation was made. I would hold that the stipulation does
case, we disapprove of the court of appeals' determination not preclude the application of Section 1.91(b), and that
that Family Code section 1.91(b) conflicts with MLIIA judgment should be rendered for Drs. Shepherd and Graham,
section 10.01. Section 1.91(b) is a time limit for bringing just as the Court renders judgment for TransAmerican Natural
a proceeding to prove the requisite elements of a common- Gas Corporation and the other defendants in the companion
law marriage. However, because the parties stipulated to the case. From the affirmance of the *36 judgment against Drs.
Ledfords' common-law marriage, Mrs. Ledford had standing Shepherd and Graham I respectfully dissent.
to bring a wrongful death claim without meeting section
1.91(b)'s requirements. Furthermore, Mrs. Ledford, as Mr. Ms. Ledford could not sue for John Ledford's death without
Ledford's sole heir, also has standing to assert his survival proving that she had been his wife. See TEX. CIV. PRAC.
action. & REM.CODE § 71.004. Ms. Ledford claimed a common-
law marriage to John Ledford. Section 1.91(b) requires that a
Because the trial court erroneously refused to disqualify proceeding in which a common-law marriage is to be proved
venireperson Guerra, despite his apparent bias, we remand must be brought within one year of the relationship's end.
this case to the trial court for proceedings consistent with this Ms. Ledford did not initiate such a proceeding within the
opinion. prescribed time period. Thus, as the Court holds, she cannot
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
recover in this action unless defendants waived applicability she was married to John Ledford if only Section 1.91(b)
of Section 1.91(b). permitted her to do so, without waiving their argument that
Section 1.91(b) precluded her from making such proof. A
Before trial Dr. Shepherd and Dr. Graham asserted that defendant can stipulate that available evidence would prove a
Section 1.91(b) prevented Ms. Ledford from recovering for fact without waiving the contention that recovery based on the
John Ledford's death because this action was undisputedly fact is barred for some other reason. To take another example,
not brought within one year of the termination of their a defendant can stipulate that his negligence caused plaintiff's
relationship. Defendants took this position in a motion for injuries without waiving his contention that plaintiff's claim is
summary judgment, a supplemental motion for summary barred by limitations. The Court does not, and cannot, argue
judgment, and a plea in abatement. The district court to the contrary. The question is not could defendants make
consistently rejected defendants' argument. such a limited stipulation, but did they.
On the first day of trial, counsel for all parties approved a “Waiver is an intentional relinquishment of a known right
written stipulation “that Lahoma Ledford and John Ledford or intentional conduct inconsistent with claiming that right.”
had a valid common-law marriage prior to and at the time Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37
of John Ledford's death.” The stipulation was made in the (Tex.1987). More than a century ago we said that waiver is “
form of an order signed by the district court and approved ‘largely a matter of intention’ ”. Pope v. A.T. Graham & Co.,
by counsel. At the close of plaintiff's evidence, defendants 44 Tex. 196, 199 (1875). More recently, we stated: “[W]aiver
moved for a directed verdict on the ground that Section must be clearly established by facts or circumstances showing
1.91(b) precluded plaintiff from proving a common-law an intention by one party to waive and an understanding to
marriage. Without allowing plaintiff's counsel to respond, that effect by the other.” *37 Garner v. Texas State Bd. of
the district court denied the motion, stating: “I take this as Pharmacy, 304 S.W.2d 530, 534 (Tex.Civ.App.—Eastland
[defendants' counsel's] preserving her record for purposes of 1957, writ ref'd). Neither the intention by Drs. Shepherd
appeal. Since we've addressed this question ... in motions for and Graham to forego their Section 1.91(b) defense, nor
summary judgment and on other occasions, my ruling will be the contemporaneous understanding by Ledford that they
consistent.” Thus, at this point in the trial, several days after had done so, both requisite for waiver under our holding in
the stipulation had been made, the district court, who signed Garner, is present.
the stipulation, was apparently of the view that defendants
had not waived their Section 1.91(b) defense. Had the court I agree with the court of appeals in United States Fire
thought that the stipulation waived the defense, there would Insurance Co. v. Carter, 468 S.W.2d 151, 154 (Tex.Civ.App.
have been no reason to refer to defendants' motion for directed —Dallas), writ ref'd n.r.e., 473 S.W.2d 2 (Tex.1971) (per
verdict as being made to preserve their complaint for appeal. curiam), when it wrote:
The district court's statement indicated that defendants had
not by their stipulation waived their contention that Section A stipulation is an agreement or
1.91(b) precluded plaintiff's recovery. contract between the parties made in
a judicial proceeding in respect to
At the close of the evidence, Drs. Shepherd and Graham again some matter incident thereto and for
moved for a directed verdict based on Section 1.91(b). Again the purpose, ordinarily, of avoiding
the district court denied their motion without permitting delay, trouble and expense.... Being
plaintiff to respond. After a verdict against Drs. Shepherd and a contract the stipulation must truly
Graham, they moved for judgment non obstante veredicto, express the intentions of the parties
still asserting Section 1.91(b). For the first time, Ms. Ledford making same. A court will not
argued that defendants waived their contention by their construe a stipulation so as to effect an
pretrial stipulation. The court denied defendants' motion and admission of something intended to be
rendered judgment against Drs. Shepherd and Graham for controverted or so as to waive a right
$150,000, plus interest. not plainly agreed to be relinquished.
Accord: Jackson v. Lewis, 554 S.W.2d 21, 24 (Tex.Civ.App.
Unquestionably, Drs. Shepherd and Graham could have
—Amarillo 1977, no writ) (stating also that a stipulation “will
stipulated that Ms. Ledford would succeed in proving that
be given no more force than the parties intended it to have”);
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Shepherd v. Ledford, 962 S.W.2d 28 (1998)
41 Tex. Sup. Ct. J. 333
that defendants had not waived their position. Ms. Ledford
see also Discovery Operating, Inc. v. Baskin, 855 S.W.2d
did not assert that defendants had waived their Section
884, 886 (Tex.App.—El Paso 1993, no writ); Ortega–Carter
1.91(b) defense until she filed her response to defendants'
v. American Int'l Adjustment Co., 834 S.W.2d 439, 441–442
motion for judgment non obstante veredicto. While it now
(Tex.App.—Dallas 1992, writ denied); National Union Fire
appears that defendants' counsel would have been prudent
Ins. Co. v. Martinez, 800 S.W.2d 331, 334 (Tex.App.—El
to expressly reserve defendants' Section 1.91(b) contention
Paso 1990, no writ). I also agree with the court of appeals in
in the stipulation, she was not required to do so. Waiver
Mann v. Fender, 587 S.W.2d 188, 202 (Tex.Civ.App.—Waco
is the intentional relinquishment of a known right, not the
1979, writ ref'd n.r.e.) (quoting Texas Indem. Ins. Co. v. Dunn,
unintentional failure to reserve a known right.
221 S.W.2d 922, 924 (Tex.Civ.App.—Waco 1949, no writ)),
that “[t]he intention of the parties in a trial stipulation is for the
The Court offers no explanation for its holding that Drs.
determination of the court from the language used in the entire
Shepherd and Graham intended to waive a defense they
agreement ‘in the light of the surrounding circumstances,
had consistently asserted prior to trial and continued to
including the state of the pleadings, the allegations therein,
assert afterward. Absent a clear statement of waiver in the
and the attitude of the parties in respect of the issues.’ ”
stipulation, any evidence of an intent to waive defenses in
defendants' conduct, any evidence that plaintiff understood
The stipulation does not itself reflect an intention to waive
the stipulation to be a waiver at the time it was made, and any
applicability of Section 1.91(b), and there is no other evidence
suggestion of a reason why defendants might have intended to
in our record from which that intention can be discerned. To
waive a position they were continuing to assert, I would hold
the contrary, Drs. Shepherd and Graham have consistently
that Drs. Shepherd and Graham did not waive their defense
maintained before trial, during trial, after trial, and on appeal,
under Section 1.91(b). The $150,000 judgment against them
that Ms. Ledford's recovery is barred by Section 1.91(b).
is simply not their lawyer's fault. Because the Court says it is,
Defendants explained that they agreed to the stipulation as a
I respectfully dissent.
mechanism for shortening the trial of the case by obviating
the need for plaintiff to adduce evidence of her common-law
marriage which defendants acknowledged existed but argued
All Citations
was to no avail because of the statute. The district court, who
signed the stipulation, was apparently of the view mid-trial 962 S.W.2d 28, 41 Tex. Sup. Ct. J. 333
Footnotes
1 All references to section 1.91(b) of the Family Code are to section 1.91(b) as it existed before the 1995 amendments and
the 1997 recodification. Although we acknowledge that the issues presented in these two cases are unlikely to reoccur
because of the amendment, the apparent conflict between the statutes as it affects these parties and others similarly
situated is important to the jurisprudence of the state.
2 While the court in Shepherd misapplied section 1.91(b), we affirm its judgment on other grounds.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
WW
Shoemake v. Fogel, Ltd., 826 S.W.2d 933 (1992)
60 USLW 2572
[2] Parent and Child
KeyCite Yellow Flag - Negative Treatment Right of action by child or child's
Declined to Extend by Rucker v. Killian, Tex.App.-El Paso, October representatives against parent
11, 2001
Doctrine of parental immunity restricts right of
826 S.W.2d 933 unemancipated minor to bring tort action against
Supreme Court of Texas. his or her parent.
Janet SHOEMAKE, Individually 5 Cases that cite this headnote
and as Administratrix of the Estate
of Miranda Gilley, Petitioner, [3] Parent and Child
v. Right of action by child or child's
FOGEL, LTD., A.T., Federal Group representatives against parent
I, and International Property Parental immunity does not extend to suits
Management, Inc., Respondents. arising in course of parent's business activities or
to automobile tort actions.
No. D–0526. | Feb. 26, 1992. |
Rehearing Overruled April 29, 1992. Cases that cite this headnote
Apartment complex owners and manager sought contribution
[4] Contribution
for mother's negligent supervision of child in survival action
Persons not in pari delicto; active and
and wrongful death action following near drowning accident
passive wrongdoers
in swimming pool. The 153rd District Court, Tarrant County,
Sidney Farrar, J., reduced jury's award in wrongful death Contribution
action but rendered judgment for estate in full amount in Particular Torts or Wrongdoers
survival suit. Defendants appealed. The Fort Worth Court of Parental immunity barred contribution claim
Appeals, Second Judicial District, Sam Day, J., 795 S.W.2d by apartment complex owners and apartment
903, reversed in part. On application for writ of error, the complex manager against victim's mother
Supreme Court, Mauzy, J., held that doctrine of parental in survival action arising from death of
immunity barred contribution where mother's negligence child following near-drowning in apartment's
involved only negligent supervision of child. swimming pool based on mother's alleged
negligence in management, supervision, and
Court of Appeals reversed and district court affirmed. control of child.
Hecht, J., dissented and filed opinion in which Phillips, C.J., 4 Cases that cite this headnote
Gonzalez and Doggett, JJ., joined.
[5] Parent and Child
Right of action by child or child's
representatives against parent
West Headnotes (11)
Objective of parental immunity is to avoid undue
judicial interference with parental discretion.
[1] Contribution
Nature and grounds of obligation 2 Cases that cite this headnote
Contribution claim is derivative of plaintiff's
right to recover from joint defendant against [6] Parent and Child
whom contribution is sought. Right of action by child or child's
representatives against parent
25 Cases that cite this headnote
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Shoemake v. Fogel, Ltd., 826 S.W.2d 933 (1992)
60 USLW 2572
Child's death does not, by itself, extinguish
parent's immunity from liability for negligent 14 Cases that cite this headnote
supervision.
[11] Death
2 Cases that cite this headnote
Contributory negligence of plaintiff or
beneficiary
[7] Pleading Mother's negligence in failing to supervise
Necessity for defense child affected her recovery following near-
Affirmative defense is generally waived if not fatal drowning under wrongful death statute
pleaded. Vernon's Ann.Texas Rules Civ.Proc., but did not affect recovery of child's estate
Rule 94. under survival statute, despite fact that parental
immunity barred contribution claim against
16 Cases that cite this headnote mother. V.T.C.A., Civil Practice & Remedies
Code §§ 33.001 et seq., 71.021.
[8] Pleading
5 Cases that cite this headnote
Necessity for defense
Immunity is affirmative defense that ordinarily
must be pleaded to avoid waiver. Vernon's
Ann.Texas Rules Civ.Proc., Rule 94.
Attorneys and Law Firms
9 Cases that cite this headnote
*934 Ken M. Link, Fort Worth, C. Denise Smith, Houston,
for petitioner.
[9] Contribution
Pleading *935 R. Brent Cooper, Dallas, for respondents.
Mother did not waive immunity, to contribution
claim by apartment complex owners and
manager in survival action arising from death OPINION
of child, by failing to specifically plead
MAUZY, Justice.
defense of parental immunity; allegations that
defendants were not entitled to indemnity or In this cause, we consider whether a defendant in a survival
contribution from mother were sufficient given action arising from the death of a child may seek contribution
that defendants failed to file special exceptions from a negligent parent of the deceased child. We hold that the
to clarify claim and contribution claims alleged doctrine of parental immunity bars such contribution when
that mother had been negligent in supervision the parent's negligence involves only negligent supervision of
of child. Vernon's Ann.Texas Rules Civ.Proc., the child.
Rules 90, 91, 94.
One month before her second birthday, Miranda Gilley nearly
10 Cases that cite this headnote
drowned in the swimming pool at her apartment complex.
The child was rescued and temporarily revived, but four
[10] Pleading months later died from the injuries she had suffered. Her
Necessity for defense mother, Janet Shoemake, then brought this suit against the
Defense of parental immunity is not waived by apartment complex owners, Fogel, Ltd. A.T. and Federal
failure to specifically plead immunity if defense Group I, and the apartment complex manager, International
is apparent on face of petition and established Property Management, Inc. (collectively “Fogel”). 1 In
as matter of law. Vernon's Ann.Texas Rules addition to seeking damages in her own capacity for wrongful
Civ.Proc., Rules 90, 91, 94. death, Shoemake brought a survival action in her capacity
as representative of the child's estate. See Tex.Civ.Prac.
& Rem.Code §§ 71.001–.011 (wrongful death), 71.021
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Shoemake v. Fogel, Ltd., 826 S.W.2d 933 (1992)
60 USLW 2572
(survival). The jury awarded $285,492.28 to Shoemake on her Jilani, 767 S.W.2d 671 (Tex.1988). In both cases, though,
wrongful death claim, and $50,969 to the child's estate in the we adhered to the view that *936 a parent retains immunity
survival action. Considering the negligence that caused the as to “alleged acts of ordinary negligence which involve a
near-drowning, the jury attributed a total of fifty-five percent reasonable exercise of parental authority or the exercise of
to the Fogel defendants, and the remaining forty-five percent ordinary parental discretion with respect to provisions for the
to Janet Shoemake. care and necessities of the child.” Felderhoff, 473 S.W.2d at
933; Jilani, 767 S.W.2d at 672.
As to the wrongful death action, the trial court
reduced Shoemake's recovery by forty-five percent, in [4] In the present case, Fogel alleged that Shoemake was
accordance with the findings on comparative negligence. negligent in the “management, supervision and control”
See Tex.Civ.Prac. & Rem.Code ch. 33. That aspect of the of Miranda Gilley, and that this negligence proximately
judgment was not appealed. caused Miranda's death. 2 Because Fogel chose not to bring
forward a statement of facts, see Tex.R.App.P. 53(d), we
In connection with the survival action, Fogel argued that a cannot determine the exact circumstances of the child's
similar result should obtain; i.e., that it was entitled to a injuries. We assume, however, that there was no evidence
forty-five percent contribution from Shoemake, to be credited that Shoemake was negligent in any manner other than that
against the amount owed her on the wrongful death claim. suggested by the pleadings. See Christiansen v. Prezelski,
The trial court rejected that argument and rendered judgment 782 S.W.2d 842, 843 (Tex.1990) (explaining Rule 53(d));
for the estate in the full amount of the jury verdict, along with see also Vance v. Wilson, 382 S.W.2d 107, 108 (Tex.1964)
pre-judgment interest. The court of appeals reversed, holding (judgment disposes of all issues presented by the pleadings).
that the requested contribution was available under sections Thus, we assume the evidence indicated that Shoemake was
33.012 and 33.016 of the Texas Civil Practice and Remedies negligent in the management, supervision and control of
Code. 795 S.W.2d 903. her child. Those responsibilities entail exactly the sort of
parental authority that remains protected under Felderhoff
Shoemake now argues that Fogel is barred from contribution and Jilani. If Shoemake's negligence entailed some other
against Shoemake, because the doctrine of parental immunity sort of authority, such as business authority or driving
bars Miranda Gilley's estate from recovering damages against responsibilities, Fogel has failed to sustain its burden of
Shoemake. We agree. presenting a sufficient record to show the trial court's error.
See Tex.R.App.P. 50(d); Christiansen, 782 S.W.2d at 843.
[1] A defendant's claim of contribution is derivative of the
plaintiff's right to recover from the joint defendant against The court of appeals considered the policy concerns
whom contribution is sought. Varela v. American Petrofina underlying parental immunity, but concluded that they were
Co. of Texas, 658 S.W.2d 561, 562 (Tex.1983). Thus, Fogel's not implicated by the present facts. The usual rationale for
claim of contribution depends upon whether Miranda Gilley's retaining parental immunity, the court determined, is that
estate has the right to recover damages from Shoemake. “parental immunity is necessary for the protection of family
peace and tranquility and any change in the rule would unduly
[2] The right of an unemancipated minor to bring a tort interfere with the rights of parents to discipline, control, and
action against his or her parent is restricted by the doctrine of care for their children.” 795 S.W.2d at 907–08. Applying
parental immunity. See Felderhoff v. Felderhoff, 473 S.W.2d the first half of that rationale to the present case, the court
928 (Tex.1971). The purpose of the doctrine is “to prevent the decided that “the public policy consideration of family peace
judicial system from being used to disrupt the wide sphere of and tranquility disappeared upon Miranda's death and at the
reasonable discretion which is necessary in order for parents time that Shoemake's action accrued.” Id. at 908. The court
to properly exercise their responsibility to provide nurture, therefore held that parental immunity did not bar Fogel from
care, and discipline for their children.” Id. at 933. seeking contribution against Shoemake. Id.
[3] In Felderhoff, this court held that parental immunity In Felderhoff, this court did consider the issue of family
does not extend to suits arising in the course of the parent's harmony. We expressly recognized, however, that the aim of
business activities. Id. More recently, this court held that the domestic tranquility did not provide a realistic justification
doctrine is inapplicable to automobile tort actions. Jilani v. for parental immunity:
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Shoemake v. Fogel, Ltd., 826 S.W.2d 933 (1992)
60 USLW 2572
that Fogel was “not entitled to indemnity or contribution from
We recognize that peace, tranquility Counter-defendant ... as a matter of law.” Fogel filed no
and discipline in the home are special exceptions to clarify this claim. Thus, Fogel cannot
endowed and inspired by higher now complain that Shoemake's pleading was insufficiently
authority than statutory enactments specific. Tex.R.Civ.P. 90, 91; see, e.g., Roark v. Allen,
and court decisions. Harmonious 633 S.W.2d 804, 810 (Tex.1982); Manufactured Housing
family relationships depend on filial Management Corp. v. Tubb, 643 S.W.2d 483, 487 (Tex.App.
and parental love and respect which —Waco 1982, writ ref'd n.r.e.).
can neither be created nor preserved by
legislatures or courts. [10] Moreover, Rule 94's requirement of pleading is not
absolute. Recently, in Phillips v. Phillips, 820 S.W.2d 785
473 S.W.2d at 933. See also Price v. Price, 732 S.W.2d 316,
(Tex.1991), this court considered the circumstances in which
318 (Tex.1987) (rejecting view that interspousal immunity
the failure to plead an affirmative defense does not result
promotes domestic tranquility).
in waiver. We noted that the defense of illegality need not
be pleaded, even though it is specifically listed in Rule 94,
[5] The real objective of parental immunity, as stated in
because “[p]leading an agreement illegal on its face in effect
Felderhoff, is not to promote family harmony; rather, it is
anticipates the defense,” and because “[e]nforcement of an
simply to avoid undue judicial interference with parental
illegal agreement violates public policy.” 820 S.W.2d at 789–
discretion. The discharge of parental responsibilities, such
90. For those same reasons, we held that “the defense of
as the provision of a home, food and schooling, entails
penalty is not waived by the failure to plead it if it is apparent
countless matters of personal, private choice. In the absence
on the face of the petition and established as a matter of law.”
of culpability beyond ordinary negligence, those choices are
Id.
not subject to review in court.
The same considerations also apply to the defense of
[6] As the court of appeals observed, family harmony
parental immunity. If a child sued a parent for the
may not be a practical *937 concern in cases like the
negligent performance of parental duties, the pleading would
present one, where the family unit no longer exists. Concerns
effectively anticipate the defense of parental immunity.
about judicial interference with parental authority, though,
Moreover, in view of the concerns discussed above, allowing
do survive the death of a child. Though hindsight may
the action would violate public policy; the policy concerns
be clear, a court should still be reluctant to “second-guess
behind parental immunity are at least as great as those
a parent's management of family affairs” beyond basic,
underlying the penalty defense. For these reasons, we
statutory protections. Paige v. Bing Construction Co., 61
conclude that the defense of immunity, like the defense of
Mich.App. 480, 233 N.W.2d 46, 49 (1975). We hold,
penalty, is not waived by the failure to specifically plead it if
therefore, that a child's death does not, by itself, extinguish the
it is apparent on the face of the petition and established as a
parent's immunity from liability for negligent supervision. 3 matter of law.
See, e.g., Lewis v. Farm Bureau Mut. Auto Ins. Co., 243 N.C.
55, 89 S.E.2d 788 (1955). In the present case, the pleadings of two of the
respondents alleged that Shoemake had been negligent in
[7] [8] Fogel claims, however, that Shoemake has waived the “management, supervision and control,” of Miranda
any claim of parental immunity by failing to plead such Gilley, while the other respondent alleged that Shoemake
immunity specifically. Generally, an affirmative defense is “negligently or intentionally failed to maintain proper
waived if it is not pleaded. Tex.R.Civ.P. 94. Though not
supervision” of Miranda Gilley. 4 The respondents rely on
specifically mentioned in Rule 94, immunity is an affirmative
their pleadings, and not on any factual matters, to support
defense that ordinarily must be pleaded to avoid waiver. See,
their contribution claim: in designating the record on appeal,
e.g., Davis v. City of San Antonio, 752 S.W.2d 518, 519–20
the respondents stated that “[t]he issues in this case are ones
(Tex.1988) (governmental immunity).
solely of law,” and for that reason chose not to bring forward
a statement of facts. Because the defense of *938 parental
[9] Shoemake did not specifically plead the defense
immunity was apparent on the face of the pleadings, and its
of parental immunity. However, she did plead, as an
application was purely a matter of law, there was no need for
affirmative defense against each of Fogel's counterclaims,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Shoemake v. Fogel, Ltd., 826 S.W.2d 933 (1992)
60 USLW 2572
a separate jury finding on immunity. We hold, then, that the avoidance or affirmative defense.” See also Davis v. City
defense of parental immunity was not waived by Shoemake's of San Antonio, 752 S.W.2d 518, 519–520 (Tex.1988)
failure to specifically plead it. (governmental immunity is an affirmative defense). As such,
it must be pleaded or it is waived. TEX.R.CIV.P. 94; see
[11] Because the child's estate has no viable negligence also Davis, 752 S.W.2d at 520 (governmental immunity and
claim against Shoemake, Fogel has no viable contribution charitable immunity must be pleaded as affirmative defenses
claim against Shoemake. Varela, 658 S.W.2d at 562; see or they are waived).
also Johnson v. Holly Farms of Texas, 731 S.W.2d 641,
645 (Tex.App.—Amarillo 1987, no writ) (parent's negligence Nevertheless, the Court excuses the failure to plead parental
cannot be imputed to child's cause of action). Shoemake's immunity in this case because the defense “is apparent on the
negligence does affect her recovery under the wrongful death face of the pleadings, and is established as a matter of law.”
statute; but it does not affect the recovery of her child's estate Ante, at 937. Although one might well argue, with respect to
under the survival statute. See Mitchell v. Akers, 401 S.W.2d the first phrase quoted, that it is apparent in this case from
907 (Tex.Civ.App.—Dallas 1966, writ ref'd n.r.e.). defendants' pleadings that Shoemake should have pleaded
parental immunity, it can hardly be said that she did. And it
We conclude that the court of appeals erred in reforming the cannot be said, with respect to the second quoted phrase, that
trial court's judgment to reflect a $29,851.52 credit in favor the defense is established as a matter of law. To the *939
of Fogel. We reverse the judgment of the court of appeals contrary, whether the defense is applicable depends upon
and affirm the trial court's judgment in favor of the estate of whether Shoemake was negligent and in what particulars.
Miranda Gilley. Shoemake's negligence was a matter properly decided by the
jury upon the evidence submitted. It cannot be determined
from the pleadings alone whether Shoemake was protected by
parental immunity. According to the Court, if defendants here
Dissenting opinion by HECHT, J., joined by PHILLIPS, C.J.,
could demonstrate that Shoemake was negligent other than
and GONZALEZ and DOGGETT, JJ.
in the management, supervision and control of her daughter,
parental immunity would not insulate her from liability. Thus,
HECHT, Justice, dissenting. whether the defense of parental immunity is available to
The central issue in this case is whether a parent who Shoemake is very much a question of fact.
negligently injures his or her child is liable for contribution to
another whose negligence also caused the injury. The Court The Court also excuses Shoemake's failure to plead parental
holds that if the parent is negligent only in the management, immunity on the ground that it would be against public policy
supervision and control of the child, a claim for contribution to hold her liable for contribution for her daughter's injuries.
against the parent by the joint tortfeasor is barred by parental In so doing, the Court contradicts its own authorities. Surely
immunity. While I do not disagree with this holding as an it is no more against public policy to hold a parent liable
abstract legal proposition, I do disagree that it can be applied when he or she might have claimed immunity than it is to
in this case when parental immunity was never pleaded or hold the government or a charity liable when they might
raised in any way in the trial court. I therefore dissent. have claimed immunity. As the Court notes, citing Davis, 752
S.W.2d at 520, we have held that governmental immunity and
Defendants in this case pleaded that plaintiff Janet Shoemake charitable immunity can be waived by the failure to assert
was negligent, not only in the management, supervision them as affirmative defenses. If immunity can be waived by
and control of her daughter, but generally in her failure to governments and charities, then it seems to me it can be
exercise ordinary care. 1 Defendants sued for contribution waived by parents. The converse is also true: if a parent may
from Shoemake. The jury found that Shoemake was 45% assert immunity without pleading it, there is no logical basis
responsible for her daughter's accident. for denying the same right to others, like governments and
charities. That conclusion, however, would contradict Davis.
Shoemake never pleaded parental immunity. Although the Thus, the Court has either overruled Davis without saying
defense is not among the affirmative defenses listed in so, or cited it without following it, or carved out a special
TEX.R.CIV.P. 94, I agree with the Court that it is, exception for this case.
in the language of the rule, “a matter constituting an
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Shoemake v. Fogel, Ltd., 826 S.W.2d 933 (1992)
60 USLW 2572
*940 The Court also states that Shoemake's pleadings raise
As its sole authority for excusing the pleading of parental
some affirmative defense, even if its exact nature cannot be
immunity in this case, the Court cites its recent opinion in
ascertained. The language to which the Court points states:
Phillips v. Phillips, 820 S.W.2d 785, 789 (Tex.1991), in
which we held that “the defense of penalty is not waived “Counter–Defendant would further
by the failure to plead it if it is apparent on the face of the show that as a matter of an
petition and established as a matter of law.” In Phillips, the affirmative defense, Counter–Plaintiff
plaintiff pleaded that she was entitled to recover ten times herein is not entitled to indemnity nor
her actual damages according to a provision in a contract contribution from Janet Shoemake, as
she had with her husband. Assuming she was correct, her a matter of law.”
own pleadings conclusively demonstrated that she sought
to enforce a penalty. We held that a provision authorizing Shoemake included an essentially identical paragraph in all
recovery of decuple damages was an unenforceable penalty her pleadings in response to defendants' counterclaims. The
on its face. No evidence could demonstrate that such a Court states that because defendants did not specially except
provision was any less a penalty than it appeared on the face of to this pleading, they cannot complain that it lacks specificity.
plaintiff's pleadings. Furthermore, we observed that a penalty There are two problems with the Court's position. The first
provision was similar to an illegal contract, and that “the is that Shoemake never argued that the quoted language was
courts will not enforce a plainly illegal contract even if the sufficient to raise immunity as an affirmative defense until her
parties do not object.” Id. at 789; Texas & P. Coal Co. v. rebuttal during oral argument in this Court. Having failed to
Lawson, 89 Tex. 394, 34 S.W. 919, 921 (1896). Penalty, like raise this argument in the court of appeals, Shoemake ought
illegality, but unlike immunity, cannot be waived. not to be heard to make it now. The second flaw in the Court's
position is that it violates the rule that pleadings must give
Phillips is simply inapposite in this case. Here, assuming fair notice of what is alleged. TEX.R.CIV.P. 45(b). Pleading
defendants are correct in their allegations that Shoemake “as an affirmative defense, I am not liable”, gives no notice
was negligent, her liability might or might not be barred at all, much less fair notice, of the allegation made. The
by immunity, according to the Court. Both Shoemake's Court must conclude that defendants should have known from
liability and her immunity from liability are factual issues this pleading that Shoemake was asserting immunity. Again,
to be resolved on the evidence. Although the Court refers to although I do not agree with this conclusion, the Court offers
Shoemake's immunity as being both apparent on the face of no reason for not applying the same rule in other cases.
her pleadings and established as a matter of law, it is simply
neither. Even if Shoemake's immunity could be established I would hold that Shoemake could be protected by parental
by defendants' pleadings, she could waive that immunity, immunity only if she affirmatively pleaded it in the trial
and the law would not protect her without a timely assertion court, and would therefore affirm the judgment of the court
of the defense. In this respect immunity is different from of appeals. Accordingly, I dissent.
penalty and illegality. By extending the holding of Phillips
from the defense of penalty to the defense of immunity, the
Court necessarily holds that the requirement that affirmative
PHILLIPS, C.J., and GONZALEZ and DOGGETT, JJ., join
defenses be pleaded will be relaxed whenever it appears from
in this dissenting opinion.
the claimant's pleadings that an affirmative defense could be
pleaded. While I do not agree with this change in our pleading All Citations
rules, the Court will lack justification for not adhering to it
when it is not so intent upon a result as it is in this case. 826 S.W.2d 933, 60 USLW 2572
Footnotes
1 Shoemake's original petition also named as defendants two individual owners of the apartment complex, Danny Fogel
and William Hummel.
2 Fogel Ltd., A.T. and Danny Fogel both alleged that Shoemake was negligent in the “management, supervision and
control” of Miranda Gilley. Federal Group I alleged that Shoemake “negligently or intentionally failed to maintain proper
supervision” of Miranda Gilley. International Property Management alleged that Shoemake was “negligent on the occasion
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Shoemake v. Fogel, Ltd., 826 S.W.2d 933 (1992)
60 USLW 2572
in question, including in her management, supervision and control” of Miranda Gilley. William Hummel alleged that
Shoemake “negligently failed to maintain proper supervision” of Miranda Gilley.
3 We expressly disapprove the dicta in Sneed v. Sneed, 705 S.W.2d 392, 397 (Tex.App.—San Antonio 1986, writ ref'd
n.r.e.), to the extent that it conflicts with this opinion.
4 See note 2, supra.
1 Defendants Fogel, Ltd. and Danny Fogel pleaded that “Janet Shoemake was negligent in the management, supervision
and control of Miranda Gilley”. Defendants Federal Group I and William Hummel pleaded that “Janet Shoemake failed
to exercise ordinary care for the safety of her daughter” and “negligently ... failed to maintain proper supervision of
her daughter”. Defendant International Property Management, Inc. pleaded that “Janet Shoemake was negligent on the
occasion in question, including, in her management, supervision and control of Miranda Gilley”.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
XX
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
A legal malpractice action is based on
negligence.
KeyCite Yellow Flag - Negative Treatment
Distinguished by In re SMIC, Ltd., Bankr.N.D.Tex., August 13, 2013 1 Cases that cite this headnote
395 S.W.3d 178
Court of Appeals of Texas, [2] Attorney and Client
Houston (1st Dist.). Elements of malpractice or negligence
action in general
Robert B. TAYLOR, Appellant
A plaintiff bringing a legal malpractice claim
v. must show that: (1) the attorney owed the
ALONSO, CERSONSKY & GARCIA, plaintiff a duty, (2) the attorney breached that
P.C., James A. Cersonsky, John Causey, duty, (3) the breach proximately caused the
and Hope and Causey, P.C., Appellees. plaintiff's injuries, and (4) damages occurred.
No. 01–11–00078–CV. | Aug. 30, 2012. 1 Cases that cite this headnote
Synopsis
Background: Client brought action against first and second [3] Attorney and Client
law firms for legal malpractice, gross negligence, and breach Conduct of litigation
of fiduciary duty after he paid personal funds over his If a legal malpractice claim is based on the
insurance policy limit to settle underlying car accident suit. attorney's acts during prior litigation, a plaintiff
Law firms filed motions for summary judgment, and the must prove that, but for the attorney's breach of
190th District Court, Harris County, Patricia J. Kerrigan, J., duty, the plaintiff would have been successful in
granted the motions and rendered a take-nothing judgment. the prior case.
Client appealed.
1 Cases that cite this headnote
Holdings: The Court of Appeals, Rebeca Huddle, J., held [4] Attorney and Client
that: Conduct of litigation
The “suit within a suit” causation requirement
[1] first law firm's representation of client did not cause for a claim based on prior litigation applies both
alleged damages, and to claims for legal malpractice and claims for
a former attorney's alleged breach of fiduciary
[2] summary judgment affidavit failed to show that the results duty when the damages sought are based on the
of a trial in underlying action probably would have been better attorney's wrongful conduct in prior litigation.
for client.
2 Cases that cite this headnote
Affirmed. [5] Attorney and Client
Pleading and evidence
See also 356 S.W.3d 92.
Generally, expert testimony is required to prove
causation in a legal malpractice suit.
West Headnotes (17) 2 Cases that cite this headnote
[6] Negligence
[1] Attorney and Client
Necessity of causation
Elements of malpractice or negligence
action in general Negligence
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
Foreseeability harm suffered by the client if nothing the first
Negligence attorney did or failed to do hampered the second
In general; degrees of proof attorney's representation.
Proximate cause has two elements, cause in Cases that cite this headnote
fact and foreseeability; these elements cannot
be established by mere conjecture, guess, or
speculation. [10] Evidence
Cause and effect
Cases that cite this headnote An expert may not simply opine that the
defendant's negligence caused the plaintiff's
[7] Negligence injury, but must also explain how and why the
“But-for” causation; act without which negligence caused the injury; in other words, an
event would not have occurred expert must sufficiently link his conclusions to
the facts.
Negligence
Substantial factor Cases that cite this headnote
The test for cause in fact is whether the act or
omission was a substantial factor in causing the
[11] Evidence
injury without which the harm would not have
Disclosure, necessity and right
occurred.
The factfinder must have access to the facts and
Cases that cite this headnote data underlying an expert's testimony in order to
accurately assess the testimony's worth.
[8] Attorney and Client 1 Cases that cite this headnote
Conduct of litigation
First law firm's representation of client in
[12] Judgment
personal injury action arising out of motor
Weight and sufficiency
vehicle accident did not cause alleged damages
to client, who paid personal funds over his Judgment
insurance policy limit to settle the underlying Matters of fact or conclusions
action; first law firm only represented client for An expert opinion on causation stated without
five months before withdrawing, no trial date the underlying facts is conclusory, and a
had been set and no scheduling order had been conclusory opinion is not probative and will
entered at that time, second law firm took over neither support nor defeat a summary judgment.
representation approximately 18 months before
eventual mediation and trial date, and first law 1 Cases that cite this headnote
firm did not do anything in that five-month
period which hampered or interfered with second [13] Evidence
law firm's later representation. Necessity and sufficiency
An expert cannot simply say “Take my word for
Cases that cite this headnote
it; I know.”
[9] Attorney and Client Cases that cite this headnote
Elements of malpractice or negligence
action in general [14] Judgment
When an attorney withdraws from representing Attorneys
a client, and another attorney agrees to represent Expert's summary judgment affidavit failed to
the client, the first attorney does not cause the show that the results of a trial in underlying
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
personal injury action probably would have been
better for client, who paid $3,000,000 in personal Attorneys and Law Firms
funds over his $250,000 automobile insurance
*179 Jeffery W. Steidley, The Steidley Law Firm, Houston,
policy limit to settle the underlying action, and
TX, for Appellant.
thus failed to establish that law firm's alleged
legal malpractice in failing to proceed to trial Allison Standish Miller, William A. Scheel, Billy Shepherd,
caused client damages; expert merely assumed Shepherd, Scott, Clawater & Houston, L.L.P., Alan N.
that injured victim's failure to wear a seat belt Magenheim, Magenheim & Associates, William Book,
would have been admissible at trial and that the Tekell, Book, Allen & Morris LLP, Houston, TX, for
trial judge would have reduced client's liability Appellees.
by the percentage of the injury that would have
been avoided had the victim worn a seat belt, *180 Panel consists of Chief Justice RADACK and Justices
although Texas law was unsettled on the issue, BLAND and HUDDLE.
and expert failed to explain his reasoning or
supply any authority to suggest that a trial would
have unfolded in such a manner. V.T.C.A., OPINION
Transportation Code § 545.413(g).
REBECA HUDDLE, Justice.
Cases that cite this headnote
In this legal malpractice case, Robert B. Taylor appeals the
trial court's rendition of summary judgment in favor of his
[15] Negligence former attorneys. Taylor was sued in the underlying case for
Gross negligence allegedly causing a car accident that left the passenger in the
In order to prevail on a claim for gross other car in a permanent vegetative state. In the car accident
negligence, a plaintiff must first show ordinary case, Taylor initially was represented by James A. Cersonsky
negligence. and Alonso, Cersonsky & Garcia, P.C. (Cersonsky). After
Cersonsky withdrew from the representation, John Causey
Cases that cite this headnote
and Hope and Causey, P.C. (Causey) took over Taylor's
representation.
[16] Attorney and Client
Conduct of litigation Taylor ultimately paid $3 million in personal funds over his
Suit-within-a-suit causation is an element of a $250,000 policy limit to settle the car accident suit. He then
legal malpractice claim and a breach of fiduciary brought this suit against Cersonsky and Causey, asserting
duty claim for damages based on representation claims for legal malpractice, gross negligence, and breach
in underlying litigation. of fiduciary duty. Cersonsky and Causey each moved for
summary judgment. The trial court granted the motions and
2 Cases that cite this headnote rendered a take-nothing judgment. Taylor appeals, arguing
that the trial court erred in granting summary judgment
because he raised fact issues as to each of the essential
[17] Attorney and Client
elements of his claims. We conclude that the trial court
Deductions and forfeitures
correctly granted summary judgment and, accordingly, we
In breach of fiduciary duty cases in which the affirm.
former client seeks disgorgement of fees paid to
the attorney, the former client need not prove
actual damages.
Background
Cases that cite this headnote
The accident
In July 2005, Taylor, then seventy-eight years old, was
involved in a head-on collision on a two-lane road in
Chambers County. Russell Fullen, a passenger in the other
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
car, suffered a severe brain injury and, as a result, fell into a
permanent vegetative state. Fullen, who was twenty-one years Following Cersonsky's withdrawal in July 2006, Allstate
old at the time of the accident, will require round-the-clock hired Causey to continue the representation of Taylor.
medical care for the rest of his life. It is estimated that the cost While the case ultimately settled eighteen months later,
of his medical care will approach $20 million. the settlement came after several developments—each
unfavorable to Taylor—came to pass:
The accident report completed by the Chambers County
Sheriff's Office indicated that Taylor and Leach, the driver • First, Fullen amended his petition to assert a fraudulent
of the car in which Fullen rode, were driving in opposite transfer claim against Taylor, Taylor's family members,
directions. Taylor attempted to turn left in front of Leach, who Taylor's family trust, and others, after discovering
swerved to his left to avoid Taylor. Taylor then swerved back that Taylor, after the accident, had transferred certain
into his lane of traffic, striking Leach. The report concluded: significant assets in an apparent effort to avoid exposing
“[Taylor] drove on the wrong side-not passing, and [Leach] his substantial net worth to a potential judgment
may have taken a faulty evasive action.” Taylor ultimately in Fullen's favor. Fullen also obtained a temporary
was charged with a moving violation in connection with the restraining order and temporary injunction prohibiting
accident. the transfer of certain assets until the case was
resolved. 1
Taylor's insurer, Allstate Insurance Company, retained
The ProNet Group to investigate the accident. ProNet's
January 2006 accident reconstruction report noted that Taylor • Second, the trial court denied Taylor's motion for
claimed Leach caused the accident by driving erratically summary judgment on Fullen's gross negligence claim,
and swerving into Taylor's lane of traffic. Nevertheless, the leaving Taylor open to jury consideration of exemplary
report concluded that the evidence, some of which was not damages.
conclusive, suggested that the accident did not occur as
• Third, more unfavorable evidence regarding fault
Taylor had described. Rather, ProNet concluded that it was
came to light. An accident reconstruction expert
more likely that the accident occurred as described in the
retained by Causey concluded that Taylor was a
police report. In February 2006, Allstate informed Taylor that
cause of the accident. And an eyewitness to the
his potential liability exceeded his policy limits.
accident testified that the accident was Taylor's
fault because he crossed over into the lane of
Fullen's suit against Taylor oncoming traffic while attempting to turn left.
In February 2006, Fullen, through his family, sued Taylor. It was against this backdrop that the parties mediated the
Allstate retained Cersonsky to defend Taylor in the suit. case, nine days before the scheduled trial date in October
Cersonsky communicated with Taylor and Richard Baker, 2007. 2 At the mediation, Allstate tendered policy limits of
Taylor's personal attorney, during Cersonsky's representation $250,000, and Taylor, who was accompanied by Causey
of Taylor. One of Taylor's main objectives in the litigation and two personal lawyers not retained by Allstate, agreed
was to prevent disclosure of his *181 personal financial to pay $3 million to settle all of the claims against Taylor,
information. To that end, Taylor, Baker, and Cersonsky his family members, and related entities. Taylor signed the
decided to file a special exception and motion for protection written settlement agreement, as did Causey and Taylor's
to prevent disclosure of that information, which the Fullen personal attorney, Baker.
family had requested in discovery. The trial court ruled
against Taylor on the motion for protection and ordered the
financial information produced. Taylor decided to appeal Taylor's suit against Cersonsky and Causey
the decision. Cersonsky, who does not handle appeals, told In February 2008, Taylor sued Cersonsky, Causey, and
Allstate to transfer the matter to another attorney. Cersonsky Allstate. Taylor alleged that Cersonsky and Causey
wrote Taylor and informed him that Allstate was assigning the committed legal malpractice by failing to properly investigate
case to Causey, and Cersonsky withdrew. During Cersonsky's and develop viable defenses to Fullen's suit that could have
five-month representation of Taylor, no scheduling order or resulted in a verdict in Taylor's favor or significantly reduced
trial setting was in place, and no settlement offers or demands the value of Fullen's claims. Although Taylor alleged various
were exchanged. acts of malpractice, his primary complaint was that his
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
lawyers, who he claims were beholden to Allstate, failed settlement would have been accomplished for the available
to investigate and pursue a defense based on the fact that policy limits or less.” The trial court granted the summary
Fullen failed to wear a seat belt on the day of the accident. judgment motions, and Taylor appealed, contending that it
While Causey pleaded an affirmative *182 defense based on erred in doing so.
Fullen's failure to wear a seat belt and later designated (after
the expert deadline) an expert to opine on whether Fullen
would have avoided serious injury had he worn a seat belt,
Standard of Review
Taylor complains that it was too little, too late.
We review a trial court's summary judgment de novo.
With respect to the alleged breach of fiduciary duty, Taylor Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862
contended that Cersonsky and Causey defended his case so as (Tex.2010). If a trial court grants summary judgment without
to further their own interests, and Allstate's interests, rather specifying the grounds for granting the motion, we must
than Taylor's. 3 He contends that Cersonsky and Causey, each uphold the trial court's judgment if any one of the grounds is
of whom took the case for a flat fee, were motivated to save meritorious. Beverick v. Koch Power, Inc., 186 S.W.3d 145,
Allstate from having to pay for an expensive defense, and did 148 (Tex.App.-Houston [1st Dist.] 2005, pet. denied). The
not act in Taylor's best interest. For example, he contends that *183 motion must state the specific grounds relied upon
a lawyer truly representing Taylor would have immediately for summary judgment. See TEX. R. CIV. P. 166a(c), (i);
interviewed witnesses and that Cersonsky and Causey did Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex.2009).
not work up the case soon enough because of the nature of When reviewing a summary judgment motion, we must (1)
their fee arrangement. Randy Donato, Taylor's legal expert, take as true all evidence favorable to the nonmovant and (2)
also asserts that Cersonsky and Causey improperly failed to indulge every reasonable inference and resolve any doubts
disclose to Taylor the nature of their fee arrangements with in the nonmovant's favor. Valence Operating Co. v. Dorsett,
Allstate. 164 S.W.3d 656, 661 (Tex.2005) (citing Provident Life &
Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003)).
Cersonsky and Causey each filed traditional and no-evidence
motions for summary judgment on all of Taylor's claims A party seeking summary judgment may combine in a
against them. Both argued that Taylor had no evidence of single motion a request for summary judgment under the
causation or, in other words, that Taylor could not raise a no-evidence standard with a request under the traditional
fact issue on the “suit within a suit” element of his legal summary judgment standard. Binur v. Jacobo, 135 S.W.3d
malpractice claim. Cersonsky additionally argued that his 646, 650–51 (Tex.2004). In a no-evidence motion for
early withdrawal from the case broke the chain of causation. summary judgment, the movant asserts that there is no
In response, Taylor offered the affidavits of three experts: a evidence to support an essential element of the nonmovant's
biomechanical engineering expert, John Lenox, who averred claim on which the nonmovant would have the burden of
that Fullen would not have sustained serious injury if he proof at trial. See TEX. R. CIV. P. 166a(i); Hahn v. Love, 321
had been wearing his seat belt on the day of the accident; S.W.3d 517, 523–24 (Tex.App.-Houston [1st Dist.] 2009, pet.
an accident reconstruction expert, William Greenlees, who denied). The burden then shifts to the nonmovant to present
performed an accident reconstruction analysis; and Donato, evidence raising a genuine issue of material fact as to each
who opined that Cersonsky's and Causey's breaches of of the elements specified in the motion. Mack Trucks, Inc. v.
the standard of care in their representation of Taylor Tamez, 206 S.W.3d 572, 582 (Tex.2006); Hahn, 321 S.W.3d
caused Taylor to suffer damages. Donato concluded: “Both at 524.
Cersonsky and Causey failed to adequately investigate and
prepare the underlying defenses available to them rising out In a traditional summary judgment motion, the movant has
of the accident facts. Had that work been performed properly, the burden to show that no genuine issue of material fact
in my opinion, the value of the case should have been reduced exists and that the trial court should grant judgment as
to within, Allstate's policy limits.” In other words, “had either a matter of law. TEX. R. CIV. P. 166a(c); KPMG Peat
of these lawyers, retained by Allstate Insurance Company Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d
complied with the standard of care in timely locating and 746, 748 (Tex.1999). A defendant moving for traditional
retaining experts ... it is more probable than not that a summary judgment must conclusively negate at least one
trial would have resulted in a defense verdict and a pretrial essential element of each of the plaintiff's causes of action
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
or conclusively establish each element of an affirmative the injury without which the harm would not have occurred.
defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 Id.
(Tex.1997).
1. Taylor's claims against Cersonsky
Discussion
[8] Cersonsky moved for summary judgment on all Taylor's
A. Legal malpractice claims claims on the ground that Cersonsky's withdrawal, and
[1] [2] [3] [4] A legal malpractice action is basedCausey's substitution, broke the chain of causation. We agree
on negligence. Cunningham v. Hughes & Luce, L.L.P., 312 that Taylor failed to raise a fact issue as to how Cersonsky's
S.W.3d 62, 67 (Tex.App.-El Paso 2010, no pet.) (citing representation of Taylor caused Taylor's alleged damages.
Cosgrove v. Grimes, 774 S.W.2d 662, 664 (Tex.1989)). A
plaintiff bringing a legal malpractice claim must show that [9] When an attorney withdraws from representing a client,
“(1) the attorney owed the plaintiff a duty, (2) the attorney and another attorney agrees to represent the client, the first
breached that duty, (3) the breach proximately caused the attorney does not cause the harm suffered by the client
plaintiff's injuries, and (4) damages occurred.” Grider v. Mike if nothing the first attorney did or failed to do hampered
O'Brien, P.C., 260 S.W.3d 49, 55 (Tex.App.-Houston [1st the second attorney's representation. See Blake v. Lewis,
Dist.] 2008, pet. denied) (quoting Alexander v. Turtur & 886 S.W.2d 404, 408 (Tex.App.-Houston [1st Dist.] 1994,
Assocs., Inc., 146 S.W.3d 113, 117 (Tex.2004)). If the legal no writ); see also Medrano v. Reyes, 902 S.W.2d 176,
malpractice claim is based on the attorney's acts during prior 178 (Tex.App.-Eastland 1995, no writ) (holding, in legal
litigation, a plaintiff must prove that, but for the attorney's malpractice suit for failure to file action within limitations
breach of duty, the plaintiff would have been successful in period, that firm should not be liable when it withdrew
the prior case. Id. (citing Greathouse v. McConnell, 982 twenty-one months before limitations period expired giving
S.W.2d 165, 172 (Tex.App.-Houston [1st Dist.] 1998, pet. former client sufficient time to employ other counsel).
denied)); see also Heath v. Herron, 732 S.W.2d 748, 753 Here, Cersonsky represented Taylor for approximately five
(Tex.App.-Houston [14th Dist.] 1987, writ denied) (stating months before withdrawing. At the time of his withdrawal
that defendant in underlying case claiming malpractice must in July 2006, no trial date had been set and no scheduling
show a “meritorious defense,” that is, a defense “that, if order had been entered. Causey took over the representation
proved, would cause a different result upon retrial of the approximately eighteen months before the eventual mediation
case”). This causation burden in this type of legal malpractice and trial date. In his affidavit, Donato does not assert that
claim has been called the “suit-within-a-suit” requirement. anything Cersonsky did in that five-month period hampered
See Greathouse, 982 S.W.2d 165 at 173. The “suit within a or interfered with Causey's later representation. Rather, he
suit” causation requirement applies both to claims for legal opines generally that both Cersonsky and Causey should have
malpractice and claims for a former attorney's alleged breach begun their factual investigation of the case earlier than they
of fiduciary duty when the damages sought are based on the did, but nowhere explains how Cersonsky's doing so would
attorney's wrongful conduct in prior litigation. See Finger have yielded a better outcome for Taylor. We hold that Taylor
*184 v. Ray, 326 S.W.3d 285, 292 (Tex.App.-Houston [1st failed to raise a fact issue concerning the element of causation
Dist.] 2010, no pet.); Greathouse, 982 S.W.2d 165 at 173. on his malpractice claim against Cersonsky. See Blake, 886
S.W.2d at 408; Medrano, 902 S.W.2d at 178.
[5] [6] [7] Generally, expert testimony is required to
prove causation in a legal malpractice suit. See Alexander, We overrule the portion of Taylor's point of error with respect
146 S.W.3d at 119–20. Proximate cause has two elements: to the summary judgment on Taylor's malpractice claims
cause in fact and foreseeability. W. Invs., Inc. v. Urena, against Cersonsky. 4
162 S.W.3d 547, 551 (Tex.2005). “These elements cannot
be established by mere conjecture, guess, or speculation.”
Id. (quoting Doe v. Boys Clubs of Greater Dallas, Inc., 907
S.W.2d 472, 477 (Tex.1995)). The test for cause in fact is 2. Taylor's claims against Causey
whether the act or omission was a substantial factor in causing
As part of his motion for summary judgment, Causey asserted
that there was no evidence of the element of causation. Taylor
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
responded with summary judgment evidence, including an see also Burrow v. Arce, 997 S.W.2d 229, 235 (Tex.1999)
affidavit from a legal expert, Randy Donato. In his affidavit, (“[I]t is the basis of the witness's opinion, and not the witness's
Donato identifies a number of acts and omissions he contends qualifications or his bare opinions alone, that can settle an
amount to malpractice by Causey. The alleged breaches of the issue as a matter of law; a claim will not stand or fall on the
standard of care include: failing to interview the investigating mere ipse dixit of a credentialed witness.”). An expert “cannot
officer and other witnesses early in the representation; *185 simply say, ‘Take my word for it; I know....’ ” Burrow, 997
failing to raise and develop a defense based on Fullen's failure S.W.2d at 236.
to wear a seat belt, specifically, failing to consult or retain
appropriate experts necessary to prove a seat belt defense; and In Burrow, the Supreme Court of Texas examined an
generally carrying out the representation in such a way to save affidavit in a legal malpractice case. Burrow, 997 S.W.2d
Allstate money rather than pursuing Taylor's best interests. at 235. Former clients sued their attorneys, asserting that
Donato avers that Causey “failed to defend in a reasonable the attorneys had improperly settled their suits and allocated
manner the ‘how this accident happened’ issues.” damages among the clients. Id. at 232–33. The attorneys
moved for and were granted summary judgment by the trial
Donato's affidavit addresses the suit within a suit requirement court. Id. at 233. In support of their motion for summary
by positing how a hypothetical lawyer “uninfluenced by the judgment, the attorneys included an affidavit from an expert
fact he is being paid by an insurance company, would have who opined that the attorneys' actions did not cause the
defended the underlying lawsuit.” He avers that, properly clients any damages. Id. at 235. The expert stated there
handled, the seat belt defense “would have significantly were several important considerations in considering the
reduced Mr. Fullen's claims and likely eliminated them reasonableness of the settlement amounts, he considered
altogether.” In other words, Donato opines that if a lawyer those factors, and he concluded that the clients were all
acting in Taylor's best interest had defended the case properly, reasonably compensated and, therefore, had not been harmed
and if Taylor had proceeded to trial, the seat belt defense by the alleged malpractice. Id. The Supreme Court explained
would have been a viable defense and yielded an outcome that because *186 the expert did not explain why the
in which Taylor's liability would have been less than the $3 settlements were fair and reasonable for each client, the
million Taylor paid to settle the case. Donato accords the affidavit was conclusory. Id. at 236.
seat belt defense such importance that he concludes that, if
it had been properly developed in this case, “the value of [14] We conclude that, like the deficient affidavit in Burrow,
the case should have been reduced to within Allstate's policy Donato's affidavit fails to sufficiently explain how Causey
limits.” In short, according to Donato, satisfactory counsel caused Taylor's damages. More specifically, it fails to explain
would have saved Taylor from contributing a single dollar the basis for Donato's opinion that a lawyer properly handling
toward a settlement or judgment. the case would have achieved the favorable outcome Donato
posits. The main flaw in Donato's analysis is the causal leap it
[10] [11] [12] [13] An expert may not “simply ... opinemakes with respect to legal rulings the trial court would have
that the defendant's negligence caused the plaintiff's injury.” made regarding the seat belt defense had Taylor proceeded
Jelinek v. Casas, 328 S.W.3d 526, 536 (Tex.2010). An expert to trial. The basis for these leaps is nowhere explained, but
must also “explain how and why the negligence caused the the assumptions themselves are embedded in a key passage
injury.” Id. In other words, an expert must sufficiently link his of Donato's affidavit:
conclusions to the facts. Earle v. Ratliff, 998 S.W.2d 882, 890
(Tex.1999). The factfinder must have access to the facts and The most glaring failure I have found in failing to do
data underlying an expert's testimony in order “to accurately that which a lawyer exercising independent judgment
assess the testimony's worth.” In re Christus Spohn Hosp. would have done, is the failure of [Cersonsky and Causey]
Kleberg, 222 S.W.3d 434, 440 (Tex.2007). An opinion on to investigate the non-use of seatbelt issues applicable
causation stated without the underlying facts is conclusory. specifically to Mr. Fullen. For years as a defense attorney,
See Jelinek, 328 S.W.3d at 536; Arkoma Basin Exploration I was frustrated by the fact that Texas Law did not allow in
Co., Inc. v. FMF Assocs. 1990–A, Ltd., 249 S.W.3d 380, 389 front of juries the use or non-use of seatbelts. It is proven
n. 32 (Tex.2008). A conclusory opinion is not probative and by the statistics countless injuries and specifically head
will neither support nor defeat a summary judgment. See City injuries are avoided when occupants wear seatbelts.
of San Antonio v. Pollock, 284 S.W.3d 809, 818 (Tex.2009);
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
authorities discussing issue of seat belt usage since repeal of
In 2003, our Texas Legislature repealed sections 545.412d section 545.413(g)). Donato cited no authorities to support
and 545.413 [g] of the Texas Transportation Code. In his view of how a trial court would rule on these questions.
repealing these sections, the Legislature gave defense And our own research revealed no Texas Supreme Court or
lawyers, a new and potentially case winning defense if a Texas appellate court cases discussing the significance or
Plaintiff was not wearing a seatbelt and if his injury would effect of the provision's repeal. Nor have we located Texas
have been prevented by the use of a seatbelt. The way cases discussing whether or how an injured party's failure to
seat belt use is submitted in Texas, gives defense counsel wear a seat belt should be submitted to the jury. Indeed, the
essentially two bites at the apple. A jury will be asked to few federal court opinions addressing these issues reached
assign fault on a proportionate basis as between parties conclusions that conflict with Donato's assumptions about
for causing the accident. After the jury has answered that how the hypothetical Chambers County trial court would have
question, a seat belt inquiry question is submitted which ruled.
inquires essentially, as to how much of a, Plaintiffs injury
would have been prevented had he been wearing a seatbelt. One federal court concluded that the legislature's repeal in
Both fault and injury causation are used to establish if and 2003 of section 545.413(g) “does not indicate that [evidence
how a defendant may owe. of a party's failure to wear a seat belt] is now per se
admissible.” Idar v. Cooper Tire & Rubber Co., C.A. No.
.... Competent Plaintiff counsel throughout the state of
C–10–217, 2011 WL 2412613, at *9 (S.D.Tex. June 6,
Texas for years fought against the repeal of the provisions
2011); see also Trenado v. Cooper Tire & Rubber Co., C.A.
of the Transportation Code making the use or non-use of
No. 4:08–cv–249 (S.D.Tex. Jan. 26, 2010) (noting that the
seatbelts inadmissible. They did so for a very good reason,
legislative intent was to change the admissibility of seat belt
and that is failing to wear seatbelts is and will continue to
usage from a substantive to a procedural issue and concluding
be a devastating defense against their clients.
that, while Texas law does not preclude the admissibility
.... Accordingly, had either of these defense lawyers, of seat belt evidence, admissibility would be decided by
retained by Allstate Insurance Company complied with the trial court according to evidentiary rules). This casts doubt
standard of care in timely locating and retaining experts ... on Donato's assumption that the fact that Fullen failed to
it is more probable than not that a trial would have resulted wear a seat belt would be the deciding factor in the jury's
in a defense verdict and pretrial settlement would have been deliberations had Taylor proceeded to trial.
accomplished for the available insurance policy limits or
less. The same can be said of Donato's assumption that Taylor's
liability would have been reduced due to Fullen's failure to
(Emphasis added.) Before its repeal in 2003, Texas wear a seat belt. Trenado and Idar each made two holdings
Transportation Code section 545.413(g) provided, “Use or that undercut Donato's assumption on this point: (1) the
nonuse of a safety belt is not admissible evidence in a civil alleged failure of the injured person to wear a seat belt did
trial....” Act of Apr. 21, 1995, 74th Leg., R.S., ch. 165, § 1, not contribute to the accident, and, under current Texas law,
sec. 545.413(g), 1995 Tex. Gen. Laws 1025, 1644, repealed it should not give rise to a contributory negligence defense,
by Act of June 1, 2003, 78th Leg., R.S., ch. 204, § 8.01 Idar, 2011 WL 2412613, at *11; Trenado, at *41–42, and
2003 Tex. Gen. Laws 847, 863. Donato assumes that, with (2) the injured person's failure to wear a seat belt did not
the repeal of section 545.413(g), admissibility of an injured constitute subsequent negligence and therefore does not give
party's failure to wear a seat belt is a foregone conclusion. rise to a defense of failure to mitigate damages that would
Donato likewise assumes that the trial judge would have yield a reduction in recovery. Idar, 2011 WL 2412613, at
reduced Taylor's liability by the percentage of the injury that *11–12; Trenado, at 38–39.
would have been *187 avoided had Fullen worn a seat belt,
as found by the jury. Donato's analysis nowhere explains the specific legal basis for
his opinion that earlier development of the seat belt defense by
But Donato nowhere explains the basis for either of these Causey probably would have yielded a more favorable result
leaps. That likely is because Texas law on these points is at trial. Instead, his analysis leaps from the fact of section
unsettled. See Trenado v. Cooper Tire & Rubber Co., No. 545.413(g)'s repeal to his conclusion that Taylor would have
4:08–cv–249 (S.D.Tex. Jan. 26, 2010) (noting absence of obtained a better outcome at trial had he been properly
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
represented, without ever addressing the unsettled legal issues
that the trial court would have confronted, or how or why he
believes that Taylor would have obtained favorable rulings on B. Gross negligence claims
them—and convinced a jury of their outcome-determinative [15] Taylor pleaded that his lawyers' acts and omissions rose
nature—had Taylor proceeded to trial. Donato's failure to to the level of gross negligence. Texas law is well-settled
explain this analytical gap—together with the absence of that, in order to prevail on a claim for gross negligence, a
any authority to suggest that the trial would have unfolded plaintiff must first show ordinary negligence. Doe v. Messina,
in the manner Donato suggests—lead us to conclude that 349 S.W.3d 797, 804 (Tex.App.-Houston [14th Dist.] 2011,
Donato's opinion is insufficient to raise a fact issue on pet. denied) (citing Sonic Sys. Int'l, Inc. v. Croix, 278 S.W.3d
causation. Pollock, 284 S.W.3d at 818 (conclusory opinion 377, 395 (Tex.App.-Houston [14th Dist.] 2008, pet. denied)).
is not probative and will not defeat a summary judgment); Here, we have concluded that the summary judgment on the
Burrow, 997 S.W.2d at 235 (an expert's opinion is conclusory negligence claims against Cersonsky and Causey was proper.
and will not support summary judgment if it does not contain Therefore, Taylor's gross negligence claims also fail. We
the basis or reasoning for the opinion). hold that the trial court properly granted summary judgment
on Taylor's gross negligence claims against Cersonsky and
*188 In addition, Donato does not address other significant Causey.
legal and factual hurdles Taylor faced in the underlying
lawsuit. For example, Donato does not address the
C. Breach of fiduciary duty claims
undisputedly severe and tragic nature of Fullen's injury or the
The parties dispute whether Taylor asserted only claims
substantial estimated cost of his medical care needs and how
of legal malpractice or whether he also stated a breach of
these facts may have influenced a jury. Additionally, Fullen
fiduciary duty claim. Taylor contends that his allegations
had amended his petition to assert a fraudulent transfer claim
about allegedly divided loyalties give rise to a breach of
based on Taylor's attempt to shield assets from a judgment
fiduciary duty claim. Specifically, he claims Cersonsky
in Fullen's favor. Taylor had also lost a summary judgment
*189 and Causey breached their fiduciary duties to Taylor
on Fullen's gross negligence claim, leaving the possibility of
by failing to disclose certain facts (the nature of their fee
Taylor being liable for exemplary damages at trial. Finally,
arrangement with Allstate and the fact that Fullen's medical
the police report and both accident reconstruction expert
lien could be waived) and by acting in the interests of Allstate
reports concluded that Taylor was a cause of the accident.
and themselves (by allegedly skimping on Taylor's defense in
Under the facts of this case, we conclude that Donato's
order to keep Allstate happy and thereby secure other work
affidavit is insufficient to raise a fact issue on whether the
for themselves in the future). The former lawyers argue that
alleged malpractice caused injury to Taylor because it does
Taylor's allegations are nothing more than complaints about
not show that the results of a trial probably would have been
the adequacy of their representation and therefore can only
better for Taylor. See Pollock, 284 S.W.3d at 818; Burrow,
give rise to ordinary malpractice claims. See Greathouse, 982
997 S.W.2d at 235; see also Cooper v. Harris, 329 S.W.3d
S.W.2d at 172 (the test to determine whether a plaintiff asserts
898, 904 (Tex.App.-Houston [14th Dist.] 2010, pet. denied)
only malpractice claims, generally, is whether the “crux”
(finding expert testimony insufficient to support jury's verdict
of each separate claim is that the lawyer “did not provide
on legal malpractice claim because expert who testified
adequate legal representation.”).
that malpractice plaintiff would have recovered a money
judgment had his claims been prosecuted by a reasonably
[16] [17] Our resolution of this case is based on Taylor's
prudent attorney did not “address the complicated factual
failure to raise a fact issue with respect to the suit within
and legal issues” in the underlying case); Kemp v. Jensen,
a suit causation element of his claims. This causation is
329 S.W.3d 866, 871 (Tex.App.-Eastland 2010, pet. denied)
an element of a legal malpractice claim and a breach of
(affirming summary judgment on legal malpractice claim
fiduciary duty claim for damages based on representation
where expert opined that malpractice plaintiff would have
had a much better opportunity of obtaining a favorable jury in underlying litigation. 6 See Finger, 326 S.W.3d at 291–
verdict but for the alleged malpractice, but did not explain the 92 (former client asserting breach of fiduciary duty claim
based on representation in prior suit must prove “suit within
basis of the statement). 5 Accordingly, we hold that the trial
a suit” causation); Smith v. Aldridge, No. 14–11–00673–CV,
court correctly granted summary judgment on Taylor's legal
2012 WL 1071246, at *6 (Tex.App.-Houston [14th Dist.]
malpractice claims.
March 29, 2012, no pet.) (assuming malpractice plaintiff's
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Taylor v. Alonso, Cersonsky & Garcia, P.C., 395 S.W.3d 178 (2012)
on the element of causation would render summary judgment
allegations supported an independent action for breach of
proper on any such claim. See Finger, 326 S.W.3d at 291–92;
fiduciary duty, plaintiff was required to prove “suit within
Smith, 2012 WL 1071246, at *6.
a suit” to defeat summary judgment on that claim). Because
Taylor had the burden—but failed—to raise a fact issue
on causation, it is immaterial whether Taylor asserted only
malpractice claims, on the one hand, or whether he asserted Conclusion
both malpractice and breach of fiduciary duty claims, on the
other. Even if some of his allegations could form the basis We affirm the judgment of the trial court.
for a breach of fiduciary duty claim, Taylor's failure to meet
his burden with respect to causation vitiates both. We express
All Citations
no opinion as to whether Taylor asserted claims for breach of
fiduciary duty as distinct from legal malpractice; rather, we 395 S.W.3d 178
conclude that, even if he had, his failure to raise a fact issue
Footnotes
1 Causey did not handle this aspect of the litigation; it was handled by Nelson Hensley, another personal attorney of Taylor.
2 Taylor had made a written $1 million settlement offer through his personal attorney, Hensley, the month before the
mediation.
3 Taylor also sued Allstate. He alleged Allstate (1) tortiously interfered with Taylor's relationships with Cersonsky and
Causey, (2) breached its contract with Taylor and (3) violated the DTPA and Insurance Code in handling his claim. After
the trial court granted Allstate's motion for summary judgment, it severed the claims against Allstate, and Taylor appealed.
This court affirmed in part but reversed and remanded Taylor's DTPA and Insurance Code claims against Allstate. See
Taylor v. Allstate Ins. Co., 356 S.W.3d 92, 103 (Tex.App.-Houston [1st Dist.] 2011, pet. denied).
4 In addition, the discussion below concerning the causation in the case against Causey applies equally to causation in
the case against Cersonsky.
5 Donato's affidavit can also be read to conclude that proper handling of the case would have reduced the amount Taylor
had to pay to settle the case, had he decided not to proceed to trial. That theory is also insufficient to survive summary
judgment, because there is no evidence that Fullen's representatives would have accepted a settlement offer lower
than $3 million. See Tolpo v. Decordova, 146 S.W.3d 678, 684 (Tex.App.-Beaumont 2004, no pet.) (affirming summary
judgment based on lack of fact issue on causation where there was no evidence that other party in underlying suit would
have entered into the contract had former counsel proposed special provision, the omission of which was the basis of
former client's malpractice claim).
6 We note that Taylor sought only actual and exemplary damages in this case. In breach of fiduciary duty cases in which the
former client seeks disgorgement of fees paid to the attorney, the former client need not prove actual damages. Burrow
v. Arce, 997 S.W.2d 229, 240 (Tex.1999). Because he did not seek disgorgement of fees, Taylor was required to prove
Causey and Cersonsky's breach of fiduciary duties caused his actual damages.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
YY
Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
A “facial challenge” claims that a statute, by
its terms, always operates unconstitutionally; by
445 S.W.3d 698
contrast, an “as-applied challenge” asserts that a
Supreme Court of Texas.
statute, while generally constitutional, operates
TENET HOSPITALS LIMITED, A Texas Limited unconstitutionally as to the claimant because of
Partnership d/b/a Providence Memorial Hospital, her particular circumstances.
and Michael D. Compton, M.D., Petitioners
2 Cases that cite this headnote
v.
Elizabeth RIVERA, as Next
[2] Constitutional Law
Friend for M.R., Respondent.
Conditions, Limitations, and Other
No. 13–0096. | Argued Feb. 4, Restrictions on Access and Remedies
2014. | Decided Aug. 22, 2014. Open courts provision of Constitution guarantees
| Rehearing Denied Nov. 21, 2014. that a common law remedy will not be
unreasonably abridged. Vernon's Ann.Texas
Synopsis Const. Art. 1, § 13.
Background: Mother, on behalf of minor child, brought
action against hospital and physician for medical negligence, Cases that cite this headnote
arising from emergency cesarean section allegedly resulting
in minor's permanent neurological injury and disability. [3] Limitation of Actions
The 120th Judicial District Court, El Paso County, Maria In general; what constitutes discovery
Salas–Mendoza, J., granted summary judgment in favor
Tolling provisions generally defer accrual of a
of hospital and physician. Mother appealed. The Court of
claim until the plaintiff knew, or in the exercise
Appeals, Guadalupe Rivera, J., 392 S.W.3d 326, reversed and
of reasonable diligence should have known, the
remanded. Hospital sought review.
facts giving rise to the claim.
Cases that cite this headnote
Holdings: The Supreme Court, Guzman, J., held that:
[4] Constitutional Law
[1] statute of repose for the Medical Liability Act did not Time for proceedings
violate open courts provision as applied to mother, and
In contrast to tolling statutes, the open courts
provision of the Constitution merely gives
[2] statute was not unconstitutionally retroactive as applied.
litigants a reasonable time to discover their
injuries and file suit; courts must determine what
Reversed and rendered. constitutes a reasonable time frame. Vernon's
Ann.Texas Const. Art. 1, § 13.
Lehrmann, J., dissented and filed opinion.
1 Cases that cite this headnote
[5] Constitutional Law
West Headnotes (17)
Time for proceedings; limitation or
suspension of remedy
[1] Constitutional Law An open courts challenge is a due process
Facial invalidity complaint and requires the party to use due
Constitutional Law diligence. U.S.C.A. Const.Amend. 14; Vernon's
Invalidity as applied Ann.Texas Const. Art. 1, § 13.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
V.T.C.A., Civil Practice & Remedies Code §
1 Cases that cite this headnote 74.251(b).
1 Cases that cite this headnote
[6] Constitutional Law
Right of access to the courts and a remedy
for injuries in general [10] Constitutional Law
The party raising the open courts challenge must Abrogation, modification, or recognition of
raise a fact issue establishing that he did not have remedies
a reasonable opportunity to be heard. Vernon's Test for whether a law violates the open
Ann.Texas Const. Art. 1, § 13. courts provision is if the law: (1) imposes
substitute remedies, whether those remedies
1 Cases that cite this headnote are reasonable, or (2) extinguishes remedies,
whether such action is a reasonable exercise of
[7] Constitutional Law the police power. Vernon's Ann.Texas Const.
Delay in assertion of rights; laches Art. 1, § 13.
A guardian's lack of diligence may operate to Cases that cite this headnote
bar a legally incompetent person's open courts
challenge. Vernon's Ann.Texas Const. Art. 1, §
13. [11] Statutes
Nature and definition of retroactive statute
1 Cases that cite this headnote A “retroactive law” is one that extends to matters
that occurred in the past.
[8] Constitutional Law
1 Cases that cite this headnote
Delay in assertion of rights; laches
A next friend's lack of due diligence may operate
to bar a minor child's open courts challenge. [12] Statutes
Vernon's Ann.Texas Const. Art. 1, § 13. Power to enact; validity
Not all retroactive statutes are unconstitutional.
1 Cases that cite this headnote
Cases that cite this headnote
[9] Constitutional Law
Time for proceedings [13] Statutes
Limitation of Actions Power to enact; validity
Constitutionality of statute The test for examining whether retroactive
Ten-year statute of repose for the Medical laws are constitutional considers the nature and
Liability Act did not violate open courts strength of the public interest served by the
provision as applied to mother, who brought statute as evidenced by the Legislature's factual
action as next friend of her child against hospital findings, the nature of the prior right impaired by
and physician for medical negligence, arising the statute, and the extent of the impairment.
from emergency cesarean section allegedly
Cases that cite this headnote
resulting in child's permanent neurological injury
and disability, where an attorney sent the hospital
and physician the statutorily required notice [14] Statutes
of child's health care liability claim two years Power to enact; validity
before the statute of repose barred it, but In retroactivity inquiry, Supreme Court must
then waited over six-and-a-half years to file balance a compelling public interest against the
suit. Vernon's Ann.Texas Const. Art. 1, § 13;
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
nature of the prior right and the extent to which *700 V.T.C.A., Civil Practice & Remedies Code §
the statute impairs that right. 74.251(b)
Cases that cite this headnote Attorneys and Law Firms
Michael S. Hull, Hull Hendricks L.L.P., Austin, TX, for
[15] Limitation of Actions Amicus Curiae Texas Alliance for Patient Access.
Retroactive Operation
Statutes Jason Paul Hungerford, John Scott Mann, Ken Slavin, Kemp
Statutes of limitations Smith, LLP, P. Michael Jung, Strasburger & Price LLP,
Dallas, TX, for Petitioner Tenet Hospitals Limited.
Ten-year statute of repose for the Medical
Liability Act was not unconstitutionally H. Keith Myers, Steven L. Hughes, Mounce, Green, Myers,
retroactive as applied in action by mother Safi, Paxson & Galatzan, P.C., El Paso, TX, for Petitioners
as next friend of child against hospital and Michael D. Compton, M.D.
physician for medical negligence, arising from
emergency cesarean section allegedly resulting Alfonso L. Melendez, Alfonso L. Melendez P.C., Enrique
in child's permanent neurological injury and Moreno, Law Offices of Enrique Moreno, John P. Mobbs,
disability; Medical Liability Act demonstrated Attorney-at-Law, El Paso, TX, for Respondent Elizabeth
its compelling public purpose in lowering the Rivera.
cost of medical malpractice premiums and
broadening access to health care, and mother Opinion
had a three-year grace period to bring the claim.
Justice GUZMAN delivered the opinion of the Court in which
V.T.C.A., Civil Practice & Remedies Code §
Chief Justice HECHT, Justice GREEN, Justice JOHNSON,
74.251(b).
Justice WILLETT, Justice BOYD, Justice DEVINE, and
1 Cases that cite this headnote Justice BROWN joined.
Our Constitution must strike a delicate balance between
[16] Constitutional Law the pre-existing rights of individuals and the state's need
Third-party standing in general to abridge those rights to achieve important public policy
The more difficult plight of a different or objectives. This appeal raises such questions of balance
hypothetical litigant will not save a litigant's as- through a challenge to the statute of repose in the Medical
applied challenge to the constitutionality of a Liability Act. In 2003, the Legislature enacted the Medical
statute. Liability Act to lower the escalating cost of medical
malpractice insurance premiums and increase access to health
1 Cases that cite this headnote care. The Act contains a statute of repose that operates to bar
claims not brought within ten years of the date of the medical
treatment.
[17] Constitutional Law
Judicial Authority and Duty in General
Here, alleged negligence occurred during the birth of a
There is no need to strike a statute down because
child in 1996. Under the 2003 repose statute, a suit on this
it might operate unconstitutionally in another
negligence claim must be filed by 2006. In 2004, an attorney
case.
for the mother notified the hospital of the minor's claim, but
1 Cases that cite this headnote no suit was filed until 2011, five years after the repose statute's
deadline. The hospital moved for summary judgment on the
ground that the repose statute barred the claim, and the mother
responded that the repose statute violates the open courts
and retroactivity provisions of the Texas Constitution. We
West Codenotes
overrule both constitutional challenges.
Negative Treatment Vacated
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
The open courts challenge fails due to the mother's In August 2004, Rivera's lawyer sent the hospital the
lack of diligence in filing suit. In this context, an statutorily required notice of a health care liability claim, 3
open courts challenge contends that the claimant had an but only filed suit (on M.R.'s behalf) in March 2011—five
insufficient opportunity to bring suit. It is well-established years after the repose statute barred the claim and six-and-
in our jurisprudence that such open-courts challengers must a-half years after Rivera sent pre-suit notice of the claim.
themselves be diligent in bringing suit. The mother cannot The hospital and Dr. Compton moved for summary judgment
meet this requirement because she was aware of the claim based on the statute of repose and the trial court granted the
one year into her three-year period to bring the claim but motion. The court of appeals reversed, holding that the statute
waited over six additional years to file suit. The mother's of repose violated the open courts provision as applied to
retroactivity challenge also fails because a compelling public M.R. 392 S.W.3d 326, 333 (Tex.App.–El Paso 2012). We
purpose justified the legislation and granted her a three-year
granted the hospital and Dr. Compton's petitions for review. 4
grace period to file suit. Because the court of appeals found in
the mother's favor on her open courts challenge, we reverse
the court of appeals' judgment and render judgment that the
plaintiff take nothing. II. Discussion
Rivera poses open courts and retroactivity challenges to the
repose statute as independent bases for affirming the court
I. Background of appeals. Regarding the open courts challenge, Rivera
claims the repose statute is similar to previous statutes
In 1996, Elizabeth Rivera was nine months pregnant with
of limitations we held to be unconstitutional as applied
her daughter, M.R., when she visited the emergency room
to minors. Regarding the retroactivity challenge, Rivera
of *701 Providence Hospital 1 with a cough and fever. contends the repose statute is unconstitutionally retroactive
Dr. Michael Compton assessed Rivera and discharged her. because it extinguished M.R.'s claim before she could reach
The following day, Rivera noticed decreased fetal movement the age of majority. We address each constitutional challenge
and returned to the hospital, where M.R. was delivered via in turn. In doing so, we are mindful that we begin assessing a
emergency C-section. M.R. lacked oxygen and has permanent constitutional challenge with a presumption that the statute is
neurological disabilities. Rivera claims this injury resulted
valid 5 and *702 do not defer to lower court constructions
from the hospital and Dr. Compton's failure to properly assess
and monitor her and notify her OB/GYN. of statutes. 6
Seven years after the medical treatment at issue (in 2003), [1] The distinction between facial and as-applied challenges
the Legislature enacted a ten-year statute of repose for the also bears mentioning because we consider bother Rivera's
Medical Liability Act, which provides: challenges to be as-applied challenges. A facial challenge
claims that a statute, by its terms, always operates
A claimant must bring a health care unconstitutionally. United States v. Salerno, 481 U.S. 739,
liability claim not later than 10 years 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987); Tex. Workers'
after the date of the act or omission that Comp. Comm'n v. Garcia, 893 S.W.2d 504, 518 (Tex.1995).
gives rise to the claim. This subsection By contrast, an as-applied challenge asserts that a statute,
is intended as a statute of repose so that while generally constitutional, operates unconstitutionally as
all claims must be brought within 10 to the claimant because of her particular circumstances. 7 City
years or they are time barred. of Corpus Christi v. Pub. Util. Comm'n of Tex., 51 S.W.3d
231, 240 (Tex.2001); Garcia, 893 S.W.2d at 518 n. 16.
Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 10.01, 2003
Tex. Gen. Laws 847, 872 (current version at TEX. CIV.
Both of Rivera's constitutional challenges here (open courts
PRAC. & REM.CODE § 74.251(b)). Thus, when the repose
and retroactivity) are as-applied challenges. Her open
statute became law, M.R.'s claim needed to be brought within
courts challenge does not claim the repose statute operates
three years to avoid the claim being barred by the statute of
unconstitutionally as to all persons, and we have previously
repose. 2 held open courts applied constitutionally to an adult who
could not discover her claim before the repose statute
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Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
barred it. 8 Methodist Healthcare Sys., Ltd., L.L.P. v. to be heard.” Stockton v. Offenbach, 336 S.W.3d 610, 618
Rankin, 307 S.W.3d 283, 292 (Tex.2010); see Yancy v. (Tex.2011) (quoting Yancy, 236 S.W.3d at 785).
United Surgical Partners Int'l, Inc., 236 S.W.3d 778, 786
(Tex.2007) (treating an open courts challenge as an as-applied We have interpreted this due diligence requirement three
challenge). Likewise, Rivera's retroactivity challenge is an as- times in the past two decades, and these precedents guide
applied challenge because it contends the repose statute is our analysis here. First, in Shah v. Moss, Moss sued Shah
unconstitutionally retroactive as to M.R.'s claim based upon for negligence in performing eye surgery and neglecting to
the particular circumstances of her situation. See Robinson v. provide adequate post-surgical treatment. 67 S.W.3d 836, 839
Crown Cork & Seal Co., 335 S.W.3d 126, 147 (Tex.2010) (Tex.2001). When Shah moved for summary judgment on
(treating a retroactivity challenge as an as-applied challenge). limitations, Moss asserted that the limitations statute violated
With this background in mind, we turn to the substance of the open courts provision. Id. at 840–41. Moss knew about
Rivera's constitutional challenges. the alleged injury at least seventeen months before he filed
suit but offered no explanation for his delay. Id. at 847. Thus,
we concluded that, as a matter of law, Moss failed to file suit
within a reasonable time after discovering his injury. Id.
A. Open Courts
Six years after we decided Shah, we addressed a case with
In Weiner v. Wasson 9 and Sax v. Votteler 10 , we held statutesfacts more closely aligned with those presented here. In
of limitations requiring minors to bring medical malpractice Yancy, Yates suffered cardiac arrest when undergoing a
suits by a certain age violated the open courts provision. procedure to remove kidney stones. 236 S.W.3d at 780. She
Rivera argues these decisions compel the conclusion that this was resuscitated but remained comatose after the procedure.
repose statute is unconstitutional as applied to M.R., who is Id. Some nineteen months later, Yates's guardian sued two
also a minor. The hospital primarily counters that, because we defendants and waited another twenty-two months to sue two
upheld this repose statute against an open courts challenge in additional defendants. Id. The additional defendants moved
11
Rankin, we likewise must do so here. We agree with the for summary judgment on limitations, to which the guardian
hospital's conclusion that the repose statute does not violate raised an open courts challenge. Id. Relying on Shah, we
the open courts provision as applied to M.R., but rely on overruled the open courts challenge because the guardian
different reasons. offered no explanation for waiting twenty-two months after
filing her petition to sue the additional defendants. Id. at 785.
*703 [2] [3] [4] [5] [6] The open courts provision Specifically, we observed that the guardian
of the Texas Constitution provides: “All courts shall be open
and every person for an injury done him, in his lands, goods, knew of [Yates's] condition and
person or reputation, shall have remedy by due course of law.” retained a lawyer well within the
TEX. CONST. art. I, § 13. This requirement “guarantees that limitations period. On this record,
a common law remedy will not be unreasonably abridged.” there is no fact issue establishing
Garcia, 893 S.W.2d at 521. This guarantee operates quite that [the guardian] ... sued within a
differently from a tolling provision. Yancy, 236 S.W.3d at reasonable time after discovering the
784. Tolling provisions generally defer accrual of a claim alleged wrong. Thus, the open courts
until the plaintiff knew, or in the exercise of reasonable provision does not save Yates's time-
diligence should have known, the facts giving rise to the barred negligence claims.
claim. Id. (citing HECI Exploration Co. v. Neel, 982 S.W.2d
Id. We acknowledged precedent indicating that a statute
881, 886 (Tex.1998)). By contrast, “the open courts provision
requiring an incapacitated plaintiff to give pre-suit notice
merely gives litigants a reasonable time to discover their
would “require an impossible thing.” Id. at 786 (citing Tinkle
injuries and file suit,” and courts must determine what
v. Henderson, 730 S.W.2d 163, 167 (Tex.App.-Tyler 1987,
constitutes a reasonable time frame. See id. In short, an open
writ ref'd)). But we concluded the limitations statute there did
courts challenge is a due process complaint and requires the
not require an impossible thing of Yates, who had a guardian,
party to use due diligence. Id. at 785. Procedurally, the party
retained a lawyer, and filed suit within the limitations period.
raising the open courts challenge “must raise ‘a fact issue
Id. We opined that, because the limitations statute was
establishing that he did not have a reasonable opportunity’
constitutional as applied to Yates, “there is no need to strike it
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Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
down because it might operate unconstitutionally in another reasonable opportunity to discover the alleged wrong and
case.” Id. bring suit before the repose statute barred her claim or that she
sued within a reasonable time after discovering the alleged
*704 Most recently, in Stockton, a mother of a minor with wrong.” Id. at 785. Accordingly, the open courts provision
a health care liability claim raised an open courts challenge cannot revive M.R.'s time-barred claim. See id.
to the Medical Liability Act's 120–day deadline to serve an
expert report. 336 S.W.3d at 617–18. There, Stockton was Rivera argues we should not impute any lack of diligence
unable to serve the report on a defendant and filed a motion on her part to M.R. But our precedents have required due
forty days after filing suit to request substituted service for diligence of a next friend raising an open courts challenge
the report. Id. at 618. However, Stockton did not alert the on behalf of a minor in Stockton, 336 S.W.3d at 617–18,
trial court to the impending expert report deadline, and the as well as of the guardian of a legally incompetent person
court granted the motion four months later after requesting raising an open courts challenge in *705 Yancy, 236 S.W.3d
additional information. Id. at 617. We held that Stockton at 785–86. Rivera offers us no compelling reason to overturn
did not raise a fact issue concerning her due diligence and either decision. And the consistency of these decisions is
overruled her open courts challenge. Id. at 617–18. Notably, well-founded. The law, our precedent, and our rules of
the fact that she was a next friend of her minor child did not procedure all treat minors and legally incompetent persons
prevent this Court from imputing her lack of diligence to her alike as lacking the legal capacity to sue, such that they must
child. Id. appear in court through a legal guardian, a next friend, or
a guardian ad litem. See TEX. CIV. PRAC. & REM.CODE
12 § 16.001 (classifying persons under 18 years of age and
[7] [8] In sum, we have found delays of four months,
persons of unsound mind as being under a legal disability);
seventeen months, 13 and twenty-two months 14 to constitute
TEX.R. CIV. P. 44, 173; Austin Nursing Center v. Lovato,
a lack of due diligence as a matter of law—such that
an open courts challenge must fail at summary judgment. 171 S.W.3d 845, 849 (Tex.2005). 19 Indeed, our precedent
Additionally, a guardian's lack of diligence may operate to bar reveals only one instance discussing minors and incompetent
a legally incompetent person's open courts challenge. Yancy, persons differently, and it poignantly observed that minors
236 S.W.3d at 785. And a next friend's lack of due diligence and legally incompetent persons are treated comparably,
may operate to bar a minor child's open courts challenge. but that incompetent persons are deserving of perhaps even
Stockton, 336 S.W.3d at 617–18. greater protections. Tinkle, 730 S.W.2d at 166. 20
[9] Here, Rivera acted as the M.R.'s next friend. In 2004, We must note the fact that the similar treatment of minors and
a lawyer for Rivera sent the hospital the statutorily required legally incompetent persons does not necessarily mean next
notice of M.R.'s health care liability claim, but Rivera waited friends or parents and guardians are treated similarly. There
over six-and-a-half years to file suit (represented by the same are specific procedures for guardians that do not apply to next
lawyer). This period of time is fifteen times the four months friends. For example, guardians: are court-appointed, 21 act
we found constituted a lack of diligence in Stockton, 15 over as fiduciaries on behalf of the legally incompetent person, 22
five times the seventeen months in Shah, 16 and almost three need not post security for costs in suits brought on behalf
times the twenty-two months in Yancy. 17 And as in Stockton, of the legally incompetent person, 23 generally must post a
Yancy, and Shah, the plaintiff has offered no explanation bond, 24 and must annually report on the guardianship to the
for her delay in filing suit. Moreover, similar to Yancy, the
court that appointed them. 25 But if anything, these technical
repose statute did not deprive M.R. of her opportunity to
requirements simply bring guardians in line with the powers
be heard because she gave statutory pre-suit notice of her
and duties that parents possess. Unlike a guardian, a parent
claim two years before the repose statute barred it. 18 See as next friend need not post a bond until possessing *706
Yancy, 236 S.W.3d at 785–86 (concluding that a statute did
money from a judgment on behalf of a minor. 26 But such
not deprive a legally incompetent person of her opportunity
disparate treatment is largely attributable to the presumption
to be heard because she had a guardian, retained a lawyer,
that fit parents act in the best interest of their children. See
and filed suit against some defendants within the limitations
In re Derzapf, 219 S.W.3d 327, 333 (Tex.2007). As a whole,
period). Accordingly, on this record, there is no fact issue
our statutes, rules, and precedent treat guardians and next
establishing that Rivera (on M.R.'s behalf) “did not have a
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Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
friends similarly. See, e.g., TEX.R. CIV. P. 44 (granting next
friends the same rights as guardians except that they must give
B. Retroactivity
security for costs). We see no reason today to depart from our
requirement that guardians and next friends use due diligence Rivera also challenges the repose statute as unconstitutionally
27 retroactive because it required M.R. to bring her previously
in bringing suit to sustain an open courts challenge.
accrued claim before she reached the age of majority.
[10] Rivera and the hospital both contend that different The hospital counters *707 that the repose statute is not
precedents regarding the reasonableness of statutory limits to unconstitutionally retroactive because it allowed M.R. three
common-law recovery should govern our analysis of the open years after the statute took effect to bring her claim through
courts challenge. Substantively, our longstanding test for her next friend. We agree with the hospital.
whether a law violates the open courts provision is (1) if the
law imposes substitute remedies, whether those remedies are [11] A retroactive law is one that extends to matters
reasonable, or (2) if the law extinguishes remedies, whether that occurred in the past. Robinson, 335 S.W.3d at 138
such action is a reasonable exercise of the police power. (“A retrospective law literally means a law which looks
Lebohm v. City of Galveston, 154 Tex. 192, 275 S.W.2d backwards, or on things that are past; or if it be taken to
951, 955 (1955). Rivera contends that under Weiner and Sax, be the same as retroactive, it means to act on things that
requiring a minor to sue through a next friend is unreasonable. are past.” (quoting DeCordova v. City of Galveston, 4 Tex.
The hospital asserts that under Rankin, extinguishing the 470, 475–76 (1849))); Subaru of Am., Inc. v. David McDavid
claim altogether if not filed within ten years is a reasonable Nissan, Inc., 84 S.W.3d 212, 219 (Tex.2002); see also
exercise of the police power. Rivera's assertion that Sax and Landgraf v. USI Film Prods., 511 U.S. 244, 270, 114 S.Ct.
Weiner control fails for two reasons. First, we need not 1483, 128 L.Ed.2d 229 (1994) (determining for purposes of
assess whether the law was reasonable if the party challenging retroactivity “whether the new provision attaches new legal
the law was not diligent. We never reached the question of consequences to events completed before its enactment.”).
whether the statute was reasonable as applied to the claimants Here, the parties concede the statute is retroactive as applied
in Stockton, Yancy, and Shah because the claimants in those to M.R. because it established a date to bar her already-
cases demonstrated a lack of due diligence. Stockton, 336 accrued claim.
S.W.3d at 617–18; Yancy, 236 S.W.3d at 785; Shah, 67
S.W.3d at 847. Second, Sax and Weiner involved statutes [12] [13] But not all retroactive statutes are
of limitations that expressly applied to minors (that minors unconstitutional. Robinson, 335 S.W.3d at 138. In Robinson,
must bring health care claims by age twelve in Sax and age we established a three-part test for examining whether
fourteen in Weiner ). We held that those statutes were facially retroactive laws are constitutional: “the nature and strength
unconstitutional. See Weiner, 900 S.W.2d at 320 (expressly of the public interest served by the statute as evidenced by
declining to invalidate statute of limitations for minors on an the Legislature's factual findings; the nature of the prior right
as-applied basis). By contrast, this statute does not only affect impaired by the statute; and the extent of the impairment.”
minors, and Rivera's constitutional challenge is necessarily an Id. at 145. This test acknowledges the heavy presumption
as-applied attack. Thus, we must consider the circumstances against retroactive laws by requiring a compelling public
of Rivera's representation of M.R., including the fact that she interest to overcome the presumption. Id. at 146. But it also
hired a lawyer to send pre-suit notice of the claim two years appropriately encompasses the notion that “statutes are not to
before the repose statute barred it. be set aside lightly.” Id. We examine each of the three factors
in turn with respect to the repose statute.
We likewise disagree with the hospital that Rankin controls
this case. Had Rivera exercised due diligence and the repose Regarding the public interest, the statute at issue in Robinson
statute still barred her claim, we would then be required to was enacted solely to benefit a single company by reducing
assess the reasonableness of the law. See Rankin, 307 S.W.3d its liability in asbestos litigation, which we determined
at 285 (assessing the reasonableness of the repose statute constituted only a slight public interest. Id. at 146, 150. By
when the plaintiff's diligence in bringing suit was not at issue). contrast, the repose statute here was part of the 2003 Medical
The absence of due diligence means we need not reach this Liability Act, which was a comprehensive overhaul of Texas
issue. medical malpractice law to “make affordable medical and
health care more accessible and available to the citizens of
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Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
Texas,” 28 and to “do so in a manner that will not unduly bring her claim, and we observed in Robinson that “a change
restrict a claimant's rights any more than necessary to deal in the law need not provide a grace period to prevent an
impairment of vested rights.” 335 S.W.3d at 141. We noted
with the crisis.” 29 The Legislature conducted hearings and
gathered evidence of the increasing costs of malpractice that grace periods of two months to sue, 31 four years to
insurance resulting from claims that endured indeterminately. sue, 32 and seven years to resume pumping water 33 had all
As a result, the Legislature expressly found that a spike previously been upheld over retroactivity challenges. Id.
in healthcare liability claims was causing a malpractice
insurance crisis that adversely affected the provision of We have only upheld constitutional retroactivity challenges
30 four times. In two of those cases, we upheld retroactivity
healthcare services in Texas. Unlike the statute in
Robinson, there is no indication the statute here was to benefit challenges because amendments to statutes of limitations
only a particular entity; rather, it was aimed at broadening revived claims the previous statutes barred. 34 And in
access to health care by lowering malpractice insurance one case, the Legislature extinguished a taxpayer's valid
premiums. We previously concluded this public interest was limitations defense to a governmental property tax claim by
sufficient to overcome a different constitutional challenge to enacting legislation that prevented taxpayers from raising
this statute. Rankin, 307 S.W.3d at 288 (holding that public limitations defenses. Mellinger v. City of Houston, 68 Tex. 37,
interest in lowering malpractice insurance premiums and 3 S.W. 249, 254–55 (1887). Finally, in Robinson, the statute
increasing access to health care by implementing this repose operated to extinguish Robinson's mature tort claim against a
statute was a valid exercise of the police power sufficient particular defendant, despite discovery showing a substantial
to overcome an open courts challenge). It is likewise a basis in fact for the claim. 335 S.W.3d at 148. When balanced
compelling public *708 interest with respect to Rivera's against a statute that contained no findings and affected only
retroactivity challenge. one defendant, we concluded the “slight” public interest did
not justify the impairment to the claims at issue. Id. at 149.
[14] But a compelling public interest does not end the
retroactivity inquiry. We must balance that purpose against [15] Here, M.R. possessed a three-year grace period from
the nature of the prior right and the extent to which the statute the time the repose statute took effect until it extinguished her
impairs that right. Regarding the nature of the prior right, we claim. We have upheld statutes with shorter grace periods,
held in Robinson that the personal injury claim at issue (for and we cannot say the three-year grace period M.R. possessed
mesothelioma) was a mature tort that had a substantial basis in rendered the statute unconstitutional as applied in light of its
fact due to the discovery in the case. 335 S.W.3d at 148. Here, compelling public interest.
M.R.'s claim is mature because claims for medical negligence
in utero are established causes of action in Texas, Brown v. *709 Rivera counters that this grace period is meaningless
Shwarts, 968 S.W.2d 331, 334 (Tex.1998), and M.R.'s injury because M.R. could not sue during the time she was under
has allegedly come to fruition. But unlike in Robinson, the a legal disability and would have to sue through her next
sparse record before us fails to provide any indication of the friend. But we cannot ignore that Rivera brings an as-applied
strength of M.R.'s claim. Thus, though the type of claim M.R. challenge. Thus, the inquiry must be Rivera representing
has is clearly established, the strength of her individual claim M.R.—not parents representing children generally. Two
is unclear. facts in this case compel us to reject Rivera's retroactivity
challenge. First, Rivera knew of M.R.'s claim one year into the
Finally, we assess the extent to which the repose statute three-year grace period. She demonstrated that knowledge by
impaired M.R.'s claim. Before 1996, when the injury sending the statutorily-required notice of M.R.'s claim to the
allegedly occurred, there was no statute of repose for medical hospital through her lawyer. Thus, Rivera cannot rightfully
negligence claims and a minor had until age twenty to sue contend that a three-year grace period unconstitutionally
before limitations would run (the age of majority plus two deprived her of the ability to bring M.R.'s claim when she
years for limitations). Weiner, 900 S.W.2d at 318–19. Thus, knew of the claim long before the period expired. Second,
M.R. reasonably had settled expectations in 1996 that she Rivera actually brought M.R.'s claim, albeit after the repose
would have until age twenty to file suit, and the repose statute barred it. She brought the claim on M.R.'s behalf
statute impaired these settled expectations. But we have while M.R. was still a minor. While one may conceive of a
long recognized that the impairment of such a right may be scenario where a parent fails to bring her child's claim due
lessened when a statute affords a plaintiff a grace period to to legal incompetence or a conflict of interest with the child,
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57 Tex. Sup. Ct. J. 1238
Rivera's as-applied challenge requires us to consider only her to comply with the statute's procedure barred her minor child's
circumstances. See Weiner, 900 S.W.2d at 327 (Owen, J., claim. There is no legal difference between Stockton and this
dissenting). There is no indication in the record that Rivera case.
is legally incompetent or possesses a conflict of interest
with M.R. And sending pre-suit notice of M.R.'s claim and Second, the dissent believes that imputing a guardian's lack
filing suit on her behalf demonstrates Rivera's capability of of diligence to a ward in Yancy is materially different
representing M.R. from imputing a parent's lack of diligence to a minor child
and warrants a different result. But the dissent cites no
In short, the Legislature's findings in enacting the Medical authority for that proposition, and for a good reason. We
Liability Act demonstrate its compelling public purpose in have previously observed that “[t]raditionally the interests of
lowering the cost of medical malpractice premiums and minors, incompetents, and other helpless persons are viewed
broadening access to health care. And although the record in law as substantially similar, and both the substantive
gives no indication of the strength of M.R.'s claim, the repose law and the rules of procedure accord them comparable
statute gave M.R. a three-year grace period to bring her claim. treatment.” Tinkle, 730 S.W.2d at 166. We see no reason to
In light of the compelling public purpose and the three-year treat parents of minor children differently than guardians of
grace period, we overrule Rivera's challenge that the statute wards in this circumstance.
is unconstitutionally retroactive as applied.
[16] [17] Finally, the dissent concludes that the repose
statute is unconstitutionally retroactive as applied to M.R.
This conclusion stems from its interpretation of Weiner that
C. Response to the Dissent
inquiring into whether a particular parent was incompetent
The dissent would hold that the repose statute violates the or possessed a conflict of interest is an unworkable
open courts provision and is unconstitutionally retroactive. standard. Weiner did not involve a retroactivity challenge,
Regarding the open courts challenge, the dissent correctly and retroactivity challenges are, by definition, as-applied
observes that the open courts provision requires a “reasonable constitutional challenges. They examine only the position of
opportunity” to sue and may not make a remedy contingent on the party raising the challenge. The more difficult plight of
“an impossible condition.” 445 S.W.3d 698, 711 (Lehrmann, a different or hypothetical litigant will not save a litigant's
J., dissenting) (quoting Stockton, 336 S.W.3d at 617–18, and as-applied challenge. Or as we observed in Yancy, “there is
Shah, 67 S.W.3d at 842). But here, M.R. had three years to sue no need to strike [a statute] down because it might operate
through Rivera, who hired a lawyer and sent pre-suit notice unconstitutionally in another case.” 236 S.W.3d at 786. Our
of the claim two years before the repose statute barred it. The courts have had little difficulty examining the particular
statute afforded M.R. a reasonable opportunity to sue through circumstances of those raising retroactivity challenges, and
her parent and did not impose an impossible condition. Thus, we are confident in their ability to continue to do so.
we disagree with the dissent that the as-applied challenge
prevails.
III. Conclusion
The dissent also raises two additional arguments regarding
the open courts challenge, neither of which is persuasive. In sum, we uphold the Medical Liability Act's ten-year statute
First, the dissent contends we have never imputed a parent's of repose against Rivera's as-applied constitutional challenges
due diligence to the minor child she represents. But we did on open courts and retroactivity grounds. Rivera fails to meet
precisely that three years ago in Stockton. 35 The dissent this requirement because she was aware of M.R.'s claim one
claims Stockton was different in that the parent there argued year into her three-year period to bring the claim but waited
the statute was unconstitutional as applied “to her ” because it over six-and-a-half additional years to file suit. Rivera's
was impossible for her to comply with the statutory deadline retroactivity challenge also fails because a compelling public
at issue. 445 S.W.3d at 713 (Lehrmann, J., dissenting) purpose justified the legislation and granted Rivera a three-
(quoting Stockton, 336 S.W.3d at 612). But in Stockton, year grace period to file suit. Because the court of appeals
the parent's failure to use due diligence to comply with the found in favor of Rivera on her open courts challenge, we
statutory procedure barred her minor *710 child's claim. 336 reverse the court of appeals' judgment and render judgment
S.W.3d at 612. Here, the parent's failure to use due diligence that Rivera take nothing.
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57 Tex. Sup. Ct. J. 1238
when a litigant shows (1) he “has a cognizable common
law cause of action that is being restricted,” and (2) “the
restriction is unreasonable or arbitrary when balanced against
Justice LEHRMANN filed a dissenting opinion.
the purpose and basis of the statute.” Trinity River Auth.
v. URS Consultants, Inc., 889 S.W.2d 259, 262 (Tex.1994)
Justice LEHRMANN, dissenting. (citation and internal quotation marks omitted). We have
Statutes of repose present harsh barriers to the administration also noted that a plaintiff is not entitled to relief under the
of justice. Today the Court extends this obstacle to situations open courts provision “if he does not use due diligence and
involving the most vulnerable amongst us—our children. sue within a reasonable time after learning about the alleged
And it does so under the false notion that all parents can wrong.” Shah, 67 S.W.3d at 847.
and do adequately protect their children. However, the sad
reality is that the needs of too many children—our most The Court holds that Rivera failed to use due diligence
valuable resource—are not satisfactorily addressed by their in filing the underlying suit on M.R.'s behalf, thereby
parents. While the Texas Medical Liability Act's repose foreclosing her open courts challenge to the statute of
statute requires a health care liability claim to be brought repose. 2 In my view, attributing Rivera's lack of due
within ten years of the date medical treatment is provided, diligence to her daughter is both fundamentally unfair and
we have never held that this statute may properly apply to contrary to our decisions in Sax v. Votteler, 648 S.W.2d
bar the claims of innocent children. To the contrary, we have 661 (Tex.1983), and Weiner v. Wasson, 900 S.W.2d 316
consistently held that statutes of limitations that similarly (Tex.1995).
purport to bar a child's claim violate the Texas Constitution.
In Sax, we evaluated the two-year statute of limitations on
In the underlying suit, M.R. was injured during childbirth, medical malpractice claims contained in a prior version of
allegedly as a result of *711 the negligence of the treating
the Medical Liability Act. 3 648 S.W.2d at 663. Before that
physician and hospital. M.R.'s mother, Elizabeth Rivera, filed
statute was enacted, the limitations period on all tort actions
suit on M.R.'s behalf more than ten years later. M.R. was
by minors was tolled until two years after they reached the age
seven years old when the repose statute took effect. The
of majority. Id. The challenged statute removed that tolling
Court holds today that, as applied to M.R., the statute violates
provision in medical malpractice cases, with the exception
neither the Texas Constitution's open courts provision nor its
that minors under the age of six had until their eighth birthday
prohibition against retroactive laws. In so holding, the Court
to file such claims. Id. The plaintiffs in Sax sued a doctor
attributes Rivera's apparent lack of diligence to her daughter
for malpractice on behalf of their minor daughter more than
and concludes that M.R. had a reasonable opportunity to
two years after she was treated, and the defendant argued that
sue through Rivera before the statute took effect. Because
the statute of limitations barred their *712 claim. Id. We
this holding contradicts well-settled precedent in which we
held that the admittedly legitimate purpose of the statute of
refused to bar a minor's claim because of the action (or,
limitations—generally, to increase the availability of medical
more accurately, inaction) of a parent, I am compelled to
practice insurance and, more specifically, to limit the length
respectfully express my dissent.
of time insureds are exposed to potential liability—did not
justify “the effective abrogation of a child's right to redress.”
Id. at 666–67.
I. Open Courts
In holding that the statute violated the open courts provision,
The Texas Constitution's open courts provision 1 “protects we expressly considered, and rejected, a parent's ability to
a person from legislative acts that cut off a person's right sue on behalf of his child as adequately protecting the child's
to sue before there is a reasonable opportunity to discover rights. We held:
the wrong and bring suit.” Shah v. Moss, 67 S.W.3d 836,
842 (Tex.2001). Stated another way, the Legislature may not If the parents, guardians, or next
“mak[e] a remedy by due course of law contingent upon an friends of the child negligently fail to
impossible condition.” Stockton v. Offenbach, 336 S.W.3d take action in the child's behalf within
610, 617–18 (Tex.2011) (citation and internal quotation the time provided by article 5.82, the
marks omitted). A statute violates the open courts provision child is precluded from asserting his
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
cause of action under that statute. Our analysis in Sax and Weiner confirms that a parent's failure
Furthermore, the child is precluded to use due diligence in pursuing his minor child's health care
from suing his parents on account of liability claim should not and does not foreclose pursuit of
their negligence, due to the doctrine that claim. However, the Court concludes that these cases do
of parent-child immunity. The child, not control for two reasons, neither of which is persuasive.
therefore, is effectively barred from First, the Court notes that in Sax and Weiner we evaluated
any remedy if his parents fail to the reasonableness of the statute in question, while the issue
timely file suit. Respondents argue here is the diligence of the party challenging the law. 445
that parents will adequately protect the S.W.3d at 706. But the basis of our holding that the statutes of
rights of their children. This Court, limitations in *713 Sax and Weiner were unreasonable—and
however, cannot assume that parents in turn unconstitutional—was that it was “neither reasonable
will act in such a manner. It is nor realistic to rely upon parents, who may themselves be
neither reasonable nor realistic to rely minors, or who may be ignorant, lethargic, or lack concern,
upon parents, who may themselves to bring a malpractice lawsuit action” within the limitations
be minors, or who may be ignorant, period. Sax, 648 S.W.2d at 667; see also Weiner, 900 S.W.2d
lethargic, or lack concern, to bring a at 320 (“We fail to see any benefit in requiring a minor to
malpractice lawsuit action within the show that his or her parent was incompetent or failed to
time provided by article 5.82. act in the minor's best interests by not pursuing a medical
malpractice claim, especially when the very failure of the
Id. at 667 (emphasis added) (internal citation omitted). We parent to do so leaves the minor without any legal recourse.”).
concluded that “[u]nder the facts in [that] case, [the child was] For the same reason, we may not rely on parents to pursue
forever precluded from having her day in court to complain their child's health care liability claim with due diligence. As
of an act of medical malpractice,” that “the [L]egislature in Sax and Weiner, their failure to do so leaves the minor with
[had] failed to provide her any adequate substitute to no legal recourse.
obtain redress,” and that former article 5.82 was therefore
“unconstitutional as it applie[d] to a minor's cause of action.” Second, the Court distinguishes Sax and Weiner on the
Id. grounds that they presented facial open courts challenges
to the statutes at issue, while the underlying case presents
Twelve years after deciding Sax, we reaffirmed the opinion an as-applied challenge that must take into account “the
and applied its reasoning in Weiner. In that case, we circumstances of Rivera's representation of M.R.” 445
considered an open courts challenge to the statute that S.W.3d at 706. I disagree. In Sax and Weiner, the plaintiffs
replaced article 5.82. 900 S.W.2d at 317–18. Section 10.01 contended, and we held, that the statutes at issue were
of the Medical Liability and Insurance Improvement Act unconstitutional as applied to minors whose claims were cut
maintained the two-year statute of limitations for medical off before they reached the age of majority and had the legal
malpractice claims contained in article 5.82, but broadened capacity to sue. See Sax, 648 S.W.2d at 667 (holding article
the exception for minors to allow those under the age of 5.82 unconstitutional “as it applies to a minor's cause of
twelve until their fourteenth birthday to file suit. Act of May action”); Weiner, 900 S.W.2d at 318 (holding section 10.01
30, 1977, 65th Leg., R.S., ch. 817, § 10.01, 1977 Tex. Gen. “unconstitutional as applied to minors”). Similarly, in this
Laws 2039, 2052 (former TEX.REV.CIV. STAT. art. 4590i, case Rivera challenges the constitutionality of the Medical
§ 10.01), repealed by Act of June 2, 2003, 78th Leg., R.S., Liability Act's statute of repose as applied to minor plaintiffs
ch. 204, § 10.09, 2003 Tex. Gen. Laws 884. Notwithstanding whose claims are cut off before they reach the age of majority.
this “inconsequential” change, we held that “section 10.01, See Adams v. Gottwald, 179 S.W.3d 101, 102 (Tex.App.-
like its predecessor article 5.82, is unconstitutional as applied San Antonio 2005, pet. denied) (noting that the plaintiffs
to minors because it purports to cut off [the minor plaintiff's] challenged the constitutionality of the Medical Liability Act's
cause of action before he reaches majority, an age at which he statute of limitations “on its face as applied to all minors,” not
may lawfully sue on his own behalf.” Weiner, 900 S.W.2d at “as applied to [the minor at issue] and her circumstances”).
318. In so holding, we confirmed that “Sax has become firmly
ensconced in Texas jurisprudence.” Id. at 320. The Court also relies on three distinguishable cases in which
we rejected open courts challenges based on a lack of due
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
diligence. Shah provides no guidance because it involved M.R. because (1) she has a cognizable common law cause
a plaintiff who failed to use due diligence in asserting his of action that is being restricted, and (2) the restriction is
own claim. 67 S.W.3d at 846–47. The Court also relies on unreasonable when balanced against the statute's purpose. See
Stockton, in which a parent sued on behalf of her minor id. at 666. As noted above, in those cases we held that the
child and challenged the Medical Liability Act's expert- Act's statute of limitations was unconstitutional as applied to
report requirement, with which she had failed to comply. a minor's cause of action that the statute “purports to cut off ...
336 S.W.3d at 612. The parent argued that the statute before [the minor] reaches majority.” Weiner, 900 S.W.2d at
was “unconstitutional as applied to her because it was 318; see also Sax, 648 S.W.2d at 667. To the extent the Act's
impossible for her to comply with its deadline.” Id. (emphasis statute of repose leads to the same result, it too violates the
added). The parent did not argue that her failures should not open courts provision.
extinguish her child's claim, and we did not address the issue.
The hospital in this case contends that our opinion in
Finally, the Court relies on Yancy v. United Surgical Partners Methodist Healthcare System of San Antonio, Ltd. v. Rankin,
International, Inc., in which the guardian of an incapacitated 307 S.W.3d 283 (Tex.2010), which also involved an open
adult filed health care liability claims on behalf of her ward courts challenge to the Act's statute of repose, forecloses
against some defendants within the limitations period, but Rivera's claim. In Rankin, the plaintiff presented evidence that
against others after the limitations period had expired. 236 she did not know and could not have reasonably discovered
S.W.3d 778, 780 (Tex.2007). We held that the guardian's prior to the repose period's expiration that a surgical sponge
lack of diligence in pursuing claims against the latter had been left inside her during surgery. Id. at 285. Rejecting
defendants precluded the open courts provision from saving the plaintiff's open courts challenge, we held that the statute
the ward's time-barred claims. Id. at 785. The Court applies of repose was a reasonable exercise of the Legislature's police
this reasoning to a parent's lack of diligence in pursuing power, noting that “the key purpose of a repose statute is to
a minor child's claims; I would not. The Court recognizes eliminate uncertainties under the related statute of limitations
the strict legal procedures applicable to guardians, such as and to create a final deadline for filing suit that is not subject
the fact that they are court-appointed, act as fiduciaries on to any exceptions.” Id. at 286, 290.
behalf of their wards, must post a bond, and must report
annually to the court. 445 S.W.3d at 705. These statutory Although Rankin involved the Medical Liability Act's statute
requirements *714 are significant and do more than simply of repose, while Sax and Weiner involved the Act's statute
“bring guardians in line with the powers and duties that of limitations, I would hold that Sax and Weiner, rather than
parents possess.” Id. at 705. They also help minimize the Rankin, control the outcome of this case. First, the statutes
possibility that guardians “may be ignorant, lethargic, or lack of limitations we considered in Sax and Weiner, as applied
concern,” the very concern that led us in Sax to reject the to minors, had the effect of a repose statute in that they
presumption that parents will act diligently in pursuing claims removed the tolling provision otherwise applicable to minors,
on their child's behalf. 648 S.W.2d at 667. at least once the minors reached a certain age (six in Sax;
twelve in Weiner ). As to such plaintiffs, the statutes served
For these reasons, I would not extend Yancy's reasoning to the as a “definitive cut-off” just as statutes of repose do. Id.
underlying case. Confining Yancy to the situation in which at 288. And the purpose underlying the Medical Liability
a court-appointed guardian fails to act with due diligence Act that was passed in 2003 as part of House Bill 4, which
reconciles that case with Sax and Weiner, and properly contains the applicable statute of repose, is the same as that
recognizes the significant differences between such guardians underlying the statutes that were at issue in Sax and Weiner:
and parents acting as next friends. I would hold that, under Sax to limit the length of time malpractice insureds are exposed
and Weiner, an open courts challenge to the Medical Liability to potential liability in order to increase the availability of
Act's statute of repose brought by or on behalf of a minor may medical practice insurance and affordable health care. See id.
not be foreclosed by a parent's lack of diligence in bringing at 287; Sax, 648 S.W.2d at 666. While this purpose remains
the suit. legitimate, it does not alter the analyses or the conclusions
reached in Sax and Weiner.
I would further hold that Sax and Weiner compel a holding
that the Medical Liability Act's ten-year statute of repose *715 Finally, in Rankin we found it significant that
violates the open courts provision as applied to minors like allowing a constitutional exception to the statute of repose
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
for undiscoverable injuries “means never-ending exposure to cases is a legitimate one. Rankin, 307 S.W.3d at 287–88;
liability, which in turn injects actuarial uncertainty into the Sax, 648 S.W.2d at 667. As to the second factor, the Court
insurance market [that] wholly undermines the purpose of recognizes that M.R.'s claim for medical negligence in utero
House Bill 4 and of statutes of repose generally: to declare is an “established cause[ ] of action in Texas.” 445 S.W.3d at
a no-exceptions cut-off point and grant a substantive right 708. Because these factors weigh in opposing directions, the
to be free of liability.” 307 S.W.3d at 291. This concern is third factor is the crux of the Court's conclusion. As to that
unfounded when the basis of the open courts violation is that factor, the Court holds that the extent of the impairment to
minors' claims will be foreclosed before they reach the age M.R.'s rights is significantly lessened by the fact that she had
of majority. A malpractice insured's exposure is not “never- a three-year grace period following the statute's enactment
ending” in this context; a definite “cutoff point” exists at to pursue her claim before the repose period expired, despite
which the insured will “be free of liability.” Id. the fact that she could not do so on her own behalf. Id. at
709. Because there is evidence that Rivera knew of the claim
“Under the facts in this case, [M.R.] is forever precluded from but failed to timely assert it, and finding “no indication in
having her day in court to complain of an act of medical the record that Rivera is legally incompetent or possesses a
malpractice.” Sax, 648 S.W.2d at 667. Because I cannot conflict of interest with [M.R.],” the *716 Court finds this
conclude that this results from a reasonable use of the police grace period persuasive. Id. at 709.
power, I depart from the Court and would hold that the
Medical Liability Act's ten-year statute of repose violates This conclusion is at odds with our recognition in Weiner that
Article I, Section 13 of the Texas Constitution as applied to a parent's failure to sue on behalf of a minor affects neither
minors. the tolling of the limitations period nor the constitutionality
of the Medical Liability Act's statute of limitations under the
open courts provision. 900 S.W.2d at 318–19. We criticized
as “unworkable” a standard that “would inquire whether
II. Retroactivity
the minor's parent was ‘incompetent’ or had a ‘conflict of
As the Court notes, M.R.'s malpractice claim accrued in 1996, interest’ that prevented the parent from acting in the minor's
and the ten-year statute of repose went into effect in 2003. best interests.” Id. at 320. For the same reason a parent's
Prior to the repose statute's enactment, a minor had until the right to take action on his child's behalf is irrelevant to
age of twenty to assert a health care liability claim. Weiner, an open courts challenge, it has no bearing on the extent
900 S.W.2d at 321. After its enactment, a minor had no of a retroactive statute's impairment of a minor's rights. In
more than ten years from the date of medical treatment. In other words, while Rivera had a three-year grace period to
a case like M.R.'s, the statute's effect is to cut off a minor's assert M.R.'s claims, M.R. herself had no grace period at
previously accrued claim before she has the legal capacity all because the statute of repose absolutely extinguished her
to sue. The Court concludes that the repose statute, while negligence claim before she was legally capable of asserting
retroactive as applied to M.R., is not unconstitutionally so. I it. I would therefore hold that the presumption against the
disagree. statute's constitutionality was not overcome.
A retroactive law is presumed unconstitutional, 4 requiring
“a compelling public interest to overcome” that presumption. III. Conclusion
Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126, 146
(Tex.2010). In Robinson, we developed a three-factor test However legitimate a statute's purpose, the Legislature may
to utilize in evaluating a retroactive law. Id. at 145. Under not abrogate a child's established common law cause of action
that test, we consider: “the nature and strength of the public before that child reaches the age of majority. The Medical
interest served by the statute as evidenced by the Legislature's Liability Act's statute of repose does exactly that in this case,
factual findings; the nature of the prior right impaired by the violating the Texas Constitution's open courts guarantee as
statute; and the extent of the impairment.” Id. well as its prohibition against retroactive laws. Because the
Court holds otherwise, I respectfully dissent.
I do not disagree with the Court's analysis of the first factor.
We have already recognized that the Legislature's purpose
in limiting the length of exposure to medical malpractice
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
All Citations
445 S.W.3d 698, 57 Tex. Sup. Ct. J. 1238
Footnotes
1 Providence Hospital is the d/b/a for Tenet Hospitals Limited, LP. The hospital and Dr. Michael Compton are collectively
referred to in this opinion as “the hospital.”
2 Neither party discusses the effect of limitations on M.R.'s claim, and we therefore express no opinion on that issue.
3 Under the Medical Liability Act, anyone asserting a health care liability claim must give written notice to the physician or
health care provider at least sixty days before filing suit. TEX. CIV. PRAC. & REM.CODE § 74.051(a).
4 At the petition stage, the Texas Alliance for Patient Access, the Texas Medical Association, the Texas Hospital
Association, the American Congress of Obstetricians and Gynecologists, the Texas Children's Hospital, and the Texas
Osteopathic Medical Association jointly submitted an amicus brief supporting the hospital.
5 See Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126, 146 (Tex.2010) (“To be sure, courts must be mindful that
statutes are not to be set aside lightly.”); Sax v. Votteler, 648 S.W.2d 661, 664 (Tex.1983) ( “We recognize that ‘[i]n
passing upon the constitutionality of a statute, we begin with a presumption of validity.’ ” (quoting Smith v. Davis, 426
S.W.2d 827, 831 (Tex.1968)) (alteration in original)).
6 City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex.2003).
7 As we have observed previously, “the line between facial and as-applied challenges is not so well defined that it has
some automatic effect.” In re Nestle USA, Inc., 387 S.W.3d 610, 617 (Tex.2012) (quotation marks omitted); see also id.
at 617 n. 76 (observing that “ ‘courts remain hopelessly befuddled in this area’ ” (quoting Scott A. Keller & Misha Tseytlin,
Applying Constitutional Decision Rules Versus Invalidating Statutes in Toto, 98 VA. L.REV. 301, 312 (2012))).
8 Rivera asserts that the repose statute is unconstitutional “as applied to children injured by medical negligence before their
eighth birthday.” This framing unnecessarily blurs the line between facial and as-applied challenges. Because Rivera
contends in neither constitutional challenge that the repose statute always operates unconstitutionally, her challenges
are as-applied to her circumstances only.
9 900 S.W.2d 316 (Tex.1995).
10 648 S.W.2d 661 (Tex.1983).
11 307 S.W.3d 283 (Tex.2010).
12 Stockton, 336 S.W.3d at 617–18.
13 Shah, 67 S.W.3d at 847.
14 Yancy, 236 S.W.3d at 785.
15 336 S.W.3d at 617–18.
16 67 S.W.3d at 847.
17 336 S.W.3d at 785.
18 Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 10.01, 2003 Tex. Gen. Laws 847, 872 (current version at TEX. CIV.
PRAC. & REM.CODE § 74.251(b)).
19 See also TEX. HEALTH & SAFETY CODE § 611.004(a)(4) (treating minor's and legally incompetent persons similarly
for purposes of disclosing certain confidential information); TEX. LAB.CODE § 403.007 (treating workers' compensation
death benefits payable to minors and legally incompetent persons similarly).
20 Tinkle, 730 S.W.2d at 166 (“It is impossible to avoid the analogy between the situation of the child plaintiff in Sax and the
arguably incompetent plaintiff in this case. Traditionally the interests of minors, incompetents, and other helpless persons
are viewed in law as substantially similar, and both the substantive law and the rules of procedure accord them comparable
treatment. In many respects, mentally incompetent persons present a more compelling case for legal protection. They
are frequently less communicative, more vulnerable and dependent than children.... The mentally incompetent are less
likely than children to have someone intimately interested in their welfare and inclined to act in their behalf.”). We note
that the record here describes M.R.'s condition as such that she might need a guardian when she reaches the age of
majority. Because the law treats minors and legally incompetent persons similarly, such a change in legal status would
not affect our holding.
21 TEX. EST.CODE § 1001.001 (formerly TEX. PROB.CODE § 602) (“A court may appoint a guardian with full authority
over an incapacitated person....”).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
Tenet Hospitals Ltd. v. Rivera, 445 S.W.3d 698 (2014)
57 Tex. Sup. Ct. J. 1238
22 Id. §§ 1053.052 (formerly TEX. PROB.CODE § 622) (discussing guardian's fiduciary capacity), 1105.051 (formerly TEX.
PROB.CODE § 700) (establishing oath to faithfully discharge duties to a legally incompetent person).
23 Id. § 1053.052 (formerly TEX. PROB.CODE § 622) (“No security for costs shall be required of a guardian ... in any suit
brought by the guardian ... in [her] respective fiduciary capacit[y].”). Rule of Civil Procedure 44 grants next friends “the
same rights concerning such suits as guardians have, but shall give security for costs, or affidavits in lieu thereof, when
required.”
24 Id. §§ 1105.101 (formerly TEX. PROB.CODE § 702), 1105.102 (formerly TEX. PROB.CODE § 702A).
25 Id. § 1163.101 (formerly TEX. PROB.CODE § 743).
26 TEX. PROP.CODE § 142.002 (formerly TEX. PROB.CODE § 142.002(a)) (providing for next friend to take possession
of money recovered from a judgment for the minor only after posting a bond).
27 For these reasons, we disagree with the court of appeals that any lack of diligence on Rivera's part could not be imputed
to M.R. 392 S.W.3d at 334.
28 Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 10.11(b)(5), 2003 Tex. Gen. Laws 847, 884–85.
29 Id. § 10.11(b)(3).
30 Id. § 10.11(a).
31 City of Tyler v. Likes, 962 S.W.2d 489, 502 (Tex.1997).
32 DeCordova, 4 Tex. at 470–71.
33 Tex. Water Rights Comm'n v. Wright, 464 S.W.2d 642, 644 (Tex.1971).
34 Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1, 4 (Tex.1999); Wilson v. Work, 122 Tex. 545, 62 S.W.2d 490,
490–91 (1933) (per curiam) (original proceeding).
35 336 S.W.3d at 612.
1 “All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have
remedy by due course of law.” TEX. CONST. art. I, § 13.
2 The statute of repose at issue provides that “[a] claimant must bring a health care liability claim not later than 10 years
after the date of the act or omission that gives rise to the claim.” TEX. CIV. PRAC. & REM.CODE § 74.251(b).
3 See Act of May 29, 1975, 64th Leg., R.S., ch. 330, § 4, 1975 Tex. Gen. Laws 864, 865 (former TEX.REV.CIV. STAT. art.
582), repealed by Act of May 30, 1977, 65th Leg., R.S., ch. 817, § 41.03, 1977 Tex. Gen. Laws 2064.
4 “No bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of contracts, shall be made.”
TEX. CONST. art. I, § 16.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
ZZ
Texas & P. Ry. Co. v. Wood, 145 Tex. 534 (1947)
199 S.W.2d 652
be arranged as parties plaintiff in considering
question of venue. Rev.St.1925, art. 1995, subd.
145 Tex. 534
25; Vernon's Ann.Civ.St. art. 4675.
Supreme Court of Texas.
Cases that cite this headnote
TEXAS & P. RY. CO.
v.
WOOD et al. [3] Evidence
Conclusiveness and Effect
No. A-1053. | Feb. 12, 1947. | Evidence
Rehearing Denied March 12, 1947. Testimony
Certified Questions from Court of Civil Appeals of Eighth The testimony of a party to a suit and admissions
Supreme Judicial District. made by him must be construed as binding upon
him, and not merely as raising issues of fact.
Action by Mrs. O. M. Wood and others against the Texas
7 Cases that cite this headnote
& Pacific Railway Company for wrongful death of O. M.
Wood, named plaintiff's husband. From an order granting
plaintiffs' motion overruling defendant's plea of privilege, [4] Evidence
defendant appealed, to the Court of Civil Appeals which Testimony
certified questions. In wife's action for wrongful death of husband
against railroad, testimony of husband's parents
Questions answered in accordance with the opinion. who were joined as parties defendant, that
they did not assert any cause of action against
railroad was binding upon the parents. Vernon's
Ann.Civ.St. art. 4675.
West Headnotes (11)
3 Cases that cite this headnote
[1] Death
Persons Entitled to Sue [5] Death
Death Joinder
Joinder Where petition for damages for death by
Death wrongful acts alleges and proof shows that
Apportionment and Distribution of Amount parents of deceased have no interest in the suit,
Recovered no useful purpose can be subserved by making
The death statute gives the right of action them parties. Vernon's Ann.Civ.St. art. 4675.
for death to all the persons within the classes
1 Cases that cite this headnote
named but there can be but one action and
sum recovered must be apportioned among
those persons according to their several rights. [6] Railroads
Vernon's Ann.Civ.St. art. 4675. Actions for Injuries to Person or Property
Action for wrongful death of husband against
5 Cases that cite this headnote
railroad by wife who was a nonresident could
be maintained under exception 25 of the venue
[2] Railroads statute in Crane County in which railroad
Actions for Injuries to Person or Property operated and was not required to be brought in
In action by wife against railroad for wrongful Dallas County in which railroad's principal office
death of husband, although husband's parents was located, notwithstanding husband's parents,
were nominally parties defendants, they were to joined as parties defendant, were residents of
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Texas & P. Ry. Co. v. Wood, 145 Tex. 534 (1947)
199 S.W.2d 652
Texas, where plaintiff established her allegation the county of its principal office, on ground that it
that parents had no cause of action and they did not request submission to the jury of issue of
asserted none against railroad. Rev.St.1925, art. plaintiff's nonresidence, raised by the plea, since
1995, subd. 25; Vernon's Ann.Civ.St. art. 4675. burden of proving nonresidence so as to bring
plaintiff within exception clause of venue statute,
Cases that cite this headnote was upon plaintiff. Rev.St.1925, art. 1995, subd.
25; Vernon's Ann.Civ.St. art. 4675.
[7] Evidence
2 Cases that cite this headnote
Location of Railroads
Court could take judicial notice that defendant
railroad operated its railroad through Crane
County.
Attorneys and Law Firms
Cases that cite this headnote
*535 **653 J. T. Suggs, D. L. Case, and Robert G. Payne,
all of Dallas, Hill D. Hudson, of Pecos, and Black & Stayton
[8] Venue and Charles L. Black, all of Austin, for appellant.
Estoppel and Waiver
John J. Watts, of Odessa, Richard Critz, and Critz,
A defendant can waive his privilege to be sued
Kuykendall, Bauknight, Mann & Stevenson, all of Austin, for
in his own domicile.
appellees.
4 Cases that cite this headnote
Opinion
[9] Estoppel SIMPSON, Justice.
Nature and Elements of Waiver
Mrs. Ollie M. Wood, surviving wife of Ollie M. Wood,
“Waiver” is an intentional relinquishment of a deceased, for herself, as administratrix of the estate of her
known right or intentional conduct inconsistent deceased husband, and as next friend for her minor son,
with claiming it. as plaintiff sued the Texas & Pacific Railway Company
in the district court of Crane County, Texas, for damages
20 Cases that cite this headnote
for the alleged wrongful death of her husband. ,She made
his surviving parents, *536 who were residents of Martin
[10] Railroads County, Texas, parties defendant, alleging that her husband
Actions for Injuries to Person or Property had not contributed to their support and hence his parents
In action for wrongful death against railroad, the had no cause of action as plaintiffs; and further that all
fact that railroad agreed that plea of privilege and statutory beneficiaries had been made parties to the suit. The
the cause on its merits might be tried together railway company by a timely plea asserted its privilege to
did not constitute a waiver of its plea of privilege be sued in Dallas County, Texas, where its principal office
to be sued in county where its principal office was located. This plea was controverted by Mrs. Ollie M.
was located. Rev.St.1925, art. 1995, subd. 25; Wood, who alleged that she was a nonresident of Texas and
Vernon's Ann.Civ.St. art. 4675. that venue was properly laid in Crane County under Section
25, Art. 1995, R.S., which among other things provides, as
Cases that cite this headnote an exception to the general statute giving defendants the
privilege of being sued in the county of their domicile, that: ‘If
[11] Railroads the plaintiff is a non-resident of this State, then such suit may
Actions for Injuries to Person or Property be brought in any county in which the defendant corporation
may run or operate its railroad, or have an agent.’
In action for wrongful death against railroad
brought in Crane County, railroad did not waive A jury was demanded on the venue issues, which the parties
its plea of privilege to be sued in Dallas County, agreed might be tried along with the suit upon its merits.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Texas & P. Ry. Co. v. Wood, 145 Tex. 534 (1947)
199 S.W.2d 652
The cause came on to be heard in November, 1945, and was for the sole and exclusive benefit of and may be brought by the
submitted upon special issues to a jury, which was unable to surviving husband, wife, children, and parents of the person
agree. No issues were submitted as to the venue facts, but Mrs. whose death has been caused or by either of them for the
Ollie M. Wood requested the submission of the issue of her benefit of all.’ Art. 4675, R.S.1925, as amended, Vernon's
nonresidence, which the court refused. Ann.Civ.St. art. 4675.
[1] [2] The statute gives the right of action to all the
Upon trial of the plea of privilege (tried, as has been indicated, persons within the classes named to recover one sum. That
along with the cause upon the merits), the father of the sum must be apportioned among those persons according to
deceased husband stated in his testimony that he did not then their several rights, but under the statute there can be but
nor afterwards intend to assert any claim against the railway one action. San Antonio & A. P. Ry. Co. v. Mertink, 101
company for the death of his son, and Ollie M. Wood's mother Tex. 165, 105 S.W. 485. Necessarily the mother and father
testified that she did not make any claim for damages on of Ollie M. Wood potentially occupied the same position and
account of her son's death. bore the same relation toward the railway company as his
surviving wife and son, all being within those classes to whom
**654 In this state of the record, on February 19, 1946, the
the statute gives a right of action for Ollie M. Wood's death
district court granted plaintiff's motion to overrule the plea of
if wrongful. And we have no difficulty in concluding that
privilege, from which order the railway company appealed to
the mother and father of the deceased, although nominally
the Honorable Court of Civil Appeals at El Paso, which in
defendants, should be arranged as parties plaintiff and the
a tentative opinion concluded that the plea of privilege was
venue question considered with the parties so aligned.
properly overruled but has certified the following questions:
‘1. Did the fact that the surviving parents of the deceased
[3] [4] But it does not follow that venue should be
Wood were made parties defendant by plaintiff and were each
controlled by the presence before the court of parties if they
residents of the State of Texas on the date plaintiff filed her
have no interest in *538 the suit. To the contrary, if the
suit entitle defendant railway company as a matter of law to
pleadings and proof demonstrate that the mother and father
a change of venue to the county of its residence?
of the deceased had no cause of action against the railway
company, their presence should not be given controlling
‘2. Were we correct in holding that judicial notice could
effect upon the question of venue. As has been pointed out, the
be *537 taken of the fact that at the relevant time part of
plaintiff averred that neither her mother-in-law nor her father-
defendant's railroad was operated through Crane County?
in-law had a cause of action against the railway company.
While the pleading mistakenly ascribes an evidentiary and not
‘3. Did defendant waive its plea of privilege by proceeding
a controlling circumstance as the reason for the assertion that
with the trial on the merits without objection to the failure to
the parents had no cause of action, namely, the circumstance
submit an issue as to nonresidence of plaintiff on the date of
that the plaintiff's husband had not contributed to his parents'
filing her suit?
support, still the petition did fairly give notice to the railway
company that it was the plaintiff's position that the mother and
‘3(a). If Question No. 1 be answered in the affirmative, then
father had no cause of action. Upon the hearing of the plea of
did defendant waive its plea of privilege by proceeding to trial
privilege, the mother and father testified unequivocally that
on the merits without objection?’
they did not assert any cause of action against the railway
company. While it is true that there was substantial evidence
We conclude the answers to Questions Nos. 1, 3, and 3(a) in the record which, in the absence of these admissions, would
should be ‘No,’ and to Question No. 2 ‘Yes.’ have supported an award of damages to the mother and father,
still these admissions by the parents of the deceased would
Question No. 1 inferentially assumes that the plaintiff was a have effectively precluded them from recovering anything.
nonresident of Texas, and this discussion proceeds upon that As was said in Southern Surety Co. v. Inabnit, Tex.Civ.App.,
assumption. 1 S.W.2d 412, 415: ‘The testimony of a **655 party to
a suit and admissions made by him must be construed as
Our present-day version of Lord Campbell's Act, also binding upon him, and not merely as raising issues of fact. His
frequently called the ‘Death Statute,’ (originally passed in testimony is governed by different rules to those governing
England in 1846 and first enacted in Texas in 1860) provides witnesses who are not parties.’ See also note, 80 A.L.R. 624.
in part that: ‘Actions for damage arising from death shall be
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Texas & P. Ry. Co. v. Wood, 145 Tex. 534 (1947)
199 S.W.2d 652
By reference she made the petition a part of her affidavit
controverting the defendant's plea of privilege. She pursued
The mother and father of the deceased filed no pleadings. the allegations she had originally tendered and established
Their admissions from the witness stand have been noted. them. There was no shifting of position by the plaintiff in an
Under all the circumstances, it must be concluded that the effort to defeat the plea of privilege after it had been filed. No
plaintiff pleaded and established that the mother and father of improper evasion or avoidance on her part to hold venue in
the deceased had no interest in the suit. Crane County was shown as a matter of law.
[5] The rules as to necessary parties in actions under the [7] As to the second question, we conclude the Court of Civil
‘Death Statute’ which are regarded as pertinent here are thus Appeals was correct in holding that judicial notice can be
stated in Cobb Brick Co. v. Lindsay, Tex.Civ.App., 277 taken *540 of the fact that the defendant railway company at
S.W. 1107, 1112-language which was expressly approved in the relevant time operated its railroad through Crane County.
Greathouse v. Fort Worth & D. C. Ry. Co., Tex.Com.App., The rule, thus stated in Miller & Co. v. Texas & N. O. Ry.
65 S.W.2d 762: ‘The Supreme Court and the several Courts of Co., 83 Tex. 518, 520, 18 S.W. 954, is well settled: ‘There
Civil Appeals have by numerous decisions held that a parent are certain facts, however, which may be judicially noticed by
is a beneficiary of the damages claimed under the provisions the courts, because of their public notoriety and indisputable
of the death statute, *539 and a necessary party to a suit to existence. Railways are public highways, and it is a matter
recover them, and that, where it appears from the record that of history that important lines of railways, once established,
a parent is not made a party, the judgment cannot stand; the have remained as fixed and permanent in their course as the
error going to the very foundation of the action. (Citing cases.) rivers themselves. Their locality becomes so notorious and
An equally well established rule to the one requiring that a indisputable that the courts will take notice thereof.’ See also
father, having a statutory interest by reason of the wrongful McCormick & Ray, Texas Law of Evidence, s 100.
act, be made a party to the suit for damages, is one holding
that where the petition for such damages alleges, and the
proof shows, that he has no interest in the suit, no useful Accordingly, Question No. 2 has been asswered ‘Yes.’
purpose can be subserved by making him a party. (Citing
cases.)’ (Emphasis supplied.) See also Dallas & W. R. Co. v. Questions Nos. 3 and 3(a) will be considered together. We
Spiker, 59 Tex. 435. conclude that the **656 railway company did not waive its
plea of privilege by proceeding to trial on the merits without
[6] Upon an application of these principles to the objection, nor was there any waiver because the company did
circumstances before us, we conclude that the presence of the not object to the court's failure to submit an issue as to the
mother and father of deceased, residents of Martin County, nonresidence of the plaintiff.
Texas, even be they aligned as parties plaintiff, did not as a
The record shows that the parties agreed that the plea of
matter of law entitle the railway company to have its plea of
privilege and the cause on its merits might be tried together.
privilege sustained.
Conceivably this arrangement might greatly expedite the
proceedings and so benefit all parties by settling the
The railway company points out the rule stated in Ogburn- interlocutory venue question and the case on its merits in one
Dalchau Lumber Co. v. Taylor, 59 Tex.Civ.App. 442, 126 trial and on one appeal instead of having separate trials and
S.W. 48, 50, that: ‘If at the time this suit was instituted appeals of the two matters. If the parties wished to try to
the appellee held the lien which he here asserts, then the expedite the proceedings in this way, we would not feel at all
jurisdiction of the court properly attached and would not be warranted in penalizing either by imposing a waiver upon him
devested by the subsequent loss or abandonment of the lien in for having made the arrangement.
changing the form of the action.’ It also calls attention to the [8] [9] [10] It is admittedly true that a defendant can
great value of the right to be sued in one's own domicile and waive his privilege to be sued in his own domicile, as,
points out that this right must not be defeated by any evasion for example, when he has prevailed upon the trial court to
or artifice contrived for that purpose. Pool v. Pickett, 8 Tex. enter an order sustaining that right but later disregards the
122. No violence is done these principles by the conclusions order and litigates the case to final judgment in the foreign
we have reached. The plaintiff had alleged in her petition, as forum. Frosh v. Holmes, 8 Tex. 29. A somewhat similar
we have taken pains to show, that her husband's mother and waiver is considered in Hosmer v. New York Buyers' Ass'n,
father had no cause of action against the defendant company. Tex.Civ.App., 258 S.W. 853, error refused. But no such a
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Texas & P. Ry. Co. v. Wood, 145 Tex. 534 (1947)
199 S.W.2d 652
affidavit was upon the plaintiff. Newlin v. Smith, 136 Tex.
situation obtains here. The defendant company disregarded
260, 150 S.W.2d 233. Her nonresidence was her own issue.
no order in its favor on the issue of venue. A waiver has
No duty devloved upon the defendant company to request
been frequently defined as an intentional relinquishment of a
its submission. Nor was the company bound to except to the
known right or intentional conduct inconsistent with claiming
court's refusal to submit it. So to require would in effect cast
it. 67 C.J. 288. We are unable to discern how it *541
upon the defendant company the duty of assisting the plaintiff
would be fairly said that the defendant company intended to
in establishing her venue facts, one of the chief of which was
surrender its right to be sued in its own domicile or conducted
that of her nonresidence. This would obviously be intolerable.
itself inconsistently with the continued assertion of that right
We conclude the railway company waived nothing by not
(assuming it otherwise existed) by simply agreeing to proceed
objecting to the failure of the court to submit this issue.
with the trial of the venue issues and the cause on its merits
together.
Accordingly, Questions Nos. 3 and 3(a) have been answered
[11] As to the waiver sought to be imposed upon the railway ‘No.’
company for failing to request submission to the jury of
the controverted matter of the plaintiff's nonresidence, this All Citations
issue was duly requested by the plaintiff and its submission
improperly refused. The burden of proof upon the trial of the 145 Tex. 534, 199 S.W.2d 652
issues joined by the plea of privilege and the controverting
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
AAA
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
[4] TxDOT's alleged failure to erect adequate signage and
decision to install high-mast floodlights did not give city
146 S.W.3d 637
council member and mayor standing to bring equal protection
Supreme Court of Texas.
claim based on geographic disparate treatment;
TEXAS DEPARTMENT OF TRANSPORTATION,
Michael W. Behrens, Robert L. Nichols, John [5] TxDOT did not intentionally single out city council
W. Johnson, and Ric Williamson, Petitioners, member and mayor for treatment different than other city
residents; and
v.
CITY OF SUNSET VALLEY, Terrance R.
[6] nuisance created by floodlights did not amount to
Cowan, and Donald Hurwitz, Respondents.
unconstitutional taking of mayor's property.
No. 03–0041. | Argued Feb. 4,
2004. | Decided Sept. 24, 2004. Reversed and rendered.
Synopsis
Background: City filed inverse condemnation action against
Texas Department of Transportation (TxDOT) concerning West Headnotes (26)
highway expansion, and mayor and city council member
intervened as additional plaintiffs. The District Court, Travis
County, 353rd Judicial District, Peter M. Lowry, J., overruled [1] States
TxDOT's plea to the jurisdiction and rendered partial Necessity of Consent
summary judgment for city. TxDOT appealed. The Court State agencies like Texas Department of
of Appeals, 8 S.W.3d 727, affirmed. On remand, the 353rd Transportation (TxDOT) are immune from
Judicial District Court, Travis County, Suzanne Covington, liability in Texas unless the Legislature waives
J., entered judgment on jury verdict, which awarded city that immunity.
$836,192.80 for cost of substitute road and $810,978.60
2 Cases that cite this headnote
in prejudgment interest, declared that TxDOT violated
administrative regulations regarding noise and lighting,
enjoined private nuisance, awarded city $34,075 in attorney [2] States
fees, awarded mayor and council member $3,648 in damages, Mode and Sufficiency of Consent
enjoined equal protection violations arising from use of flood Sovereign immunity is waived only when
lights and failure to erect city limit signs, and awarded the Legislature has clearly and unambiguously
mayor and council member $7,000 in attorney fees. TxDOT expressed that intent. V.T.C.A., Government
appealed. The Court of Appeals, 92 S.W.3d 540, affirmed in Code § 311.034.
part and reversed in part. TxDOT appealed.
5 Cases that cite this headnote
Holdings: The Supreme Court, O'Neill, J., held that: [3] Eminent Domain
Appeal and error
[1] Transportation Code section mandating compensation for Texas Department of Transportation (TxDOT)
the acquisition of a state agency's property by TxDOT did not did not waive right in inverse condemnation
create a private right of action for city; action to challenge whether city was a “state
agency,” although it couched its argument in
[2] TxDOT had immunity from city's claim that road closure terms of whether it had sovereign immunity, as
constituted a common-law nuisance claim; TxDOT raised the issue in its brief by arguing
that the Transportation Code expressly excludes
[3] city did not have superior ownership interest in road so as cities from compensation and adequately
to support its right to compensation under takings theory; challenged city's right to recover under the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
Transportation Code. V.T.C.A., Transportation Purpose
Code § 203.058(a); Rules App.Proc., Rule 1.1. When interpreting a statute, the court considers
the objective the law seeks to obtain and the
8 Cases that cite this headnote
consequences of a particular construction.
[4] Statutes 14 Cases that cite this headnote
Intent
The primary objective when construing a statute [9] States
is to ascertain and give effect to the Legislature's Eminent domain
intent. Transportation Code section mandating
compensation for acquisition of a state agency's
39 Cases that cite this headnote
property by Texas Department of Transportation
(TxDOT) did not create private right of action for
[5] Statutes city, which brought inverse condemnation action
Plain Language; Plain, Ordinary, or after TxDOT closed road, so as to amount to
Common Meaning waiver of TxDOT's sovereign immunity; statute
In discerning the Legislature's intent in a statute, provided a mechanism by which state agencies
the court begins with the plain and common could ensure budgetary protection when property
meaning of the statute's words. is transferred between them, and city was not a
“state agency” within the meaning of the statute,
48 Cases that cite this headnote although it exercised governmental powers as an
agent of the state for certain purposes. V.T.C.A.,
[6] Statutes Transportation Code §§ 203.001(4), 203.058(a).
Statute as a Whole; Relation of Parts to
8 Cases that cite this headnote
Whole and to One Another
The court must read a statute as a whole and not
[10] States
just isolated portions.
Nature of Act or Claim
35 Cases that cite this headnote Texas Department of Transportation (TxDOT)
had immunity from city's claim that TxDOT's
[7] Statutes act in closing road as part of highway expansion
Giving effect to statute or language; constituted a common-law nuisance claim;
TxDOT's expansion of the state's highways
construction as written
was a governmental function for which it
Statutes
had sovereign immunity, and there was no
Statute as a Whole; Relation of Parts to
statute which waived TxDOT's immunity for
Whole and to One Another
performing that function.
If statutory language is unambiguous, the court
must interpret it according to its terms, giving 4 Cases that cite this headnote
meaning to the language consistent with other
provisions in the statute.
[11] States
37 Cases that cite this headnote Highway matters
Texas Department of Transportation (TxDOT)
is immune from liability for its governmental
[8] Statutes
actions unless that immunity is waived.
Construction in View of Effects,
Consequences, or Results 2 Cases that cite this headnote
Statutes
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
[12] Eminent Domain 4 Cases that cite this headnote
Property and Rights Subject of
Compensation
[17] Municipal Corporations
City did not have superior ownership interest in Title and rights of municipality in general
road so as to support its right to compensation
As the State's agent or trustee, a municipality
under takings theory after Texas Department of
possesses a superior interest in its public roads
Transportation (TxDOT) closed road as part of
vis-a-vis private citizens.
highway expansion; state held title to road and
had right to control road, which included right to Cases that cite this headnote
close road. Vernon's Ann.Texas Const. Art. 1, §
17.
[18] Action
2 Cases that cite this headnote Persons entitled to sue
Standing is a constitutional prerequisite to
[13] Eminent Domain maintaining suit.
Questions for jury
10 Cases that cite this headnote
Whether there has been a taking is a question of
law for the court to decide. Vernon's Ann.Texas
[19] Constitutional Law
Const. Art. 1, § 17.
Equal Protection
3 Cases that cite this headnote Standing to raise an equal-protection challenge
requires the claimant to demonstrate an interest
[14] Eminent Domain distinct from that of the general public such
Property and Rights Subject of that the actions complained of have caused a
Compensation particular injury. U.S.C.A. Const.Amend. 14.
To recover under the constitutional takings 3 Cases that cite this headnote
clause, one must first demonstrate an ownership
interest in the property taken. Vernon's
[20] Constitutional Law
Ann.Texas Const. Art. 1, § 17.
Conditions, Limitations, and Other
11 Cases that cite this headnote Restrictions on Access and Remedies
Constitutional Law
[15] Highways Standing
Power to vacate The separation of powers doctrine and the open
The State's right to control its roads includes the courts provision require an actual grievance, not
right to close them. one that is merely hypothetical or generalized, in
order for a claimant to have standing to bring an
1 Cases that cite this headnote equal protection claim. U.S.C.A. Const.Amend.
14; Vernon's Ann.Texas Const. Art. 1, § 13, Art.
2, § 1.
[16] Municipal Corporations
Powers and functions of local government 2 Cases that cite this headnote
in general
General-law municipalities are political
[21] Appeal and Error
subdivisions created by the State and, as such,
Cases Triable in Appellate Court
possess those powers and privileges that the State
expressly confers upon them.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
As a component of subject matter jurisdiction, based on highway floodlights which other cities
the Supreme Court reviews a claimant's standing had not received; all city residents suffered
de novo. from same alleged injury of inadequate signage
and light pollution. U.S.C.A. Const.Amend. 14;
60 Cases that cite this headnote Vernon's Ann.Texas Const. Art. 1, § 3.
4 Cases that cite this headnote
[22] Constitutional Law
Equal Protection
Alleged failure of Texas Department of [25] Eminent Domain
Transportation (TxDOT) to erect adequate Nuisance and demolition
signage and the installation of high-mast Nuisance created by high-mast floodlights did
floodlights in connection with highway not amount to unconstitutional taking of city
expansion did not give city council member and mayor's property by Texas Department of
mayor standing to bring equal protection claim Transportation (TxDOT) which installed lights
against TxDOT based on geographic disparate as part of highway expansion, as lights similarly
treatment, even if other municipalities had affected others in the community. Vernon's
received more signage and had not been subject Ann.Texas Const. Art. 1, § 17.
to high-mast floodlights; TxDOT necessarily
had to draw distinctions between geographic 1 Cases that cite this headnote
areas when building highways. U.S.C.A.
Const.Amend. 14; Vernon's Ann.Texas Const. [26] Eminent Domain
Art. 1, § 3. What Constitutes a Taking; Police and
Other Powers Distinguished
3 Cases that cite this headnote
Eminent Domain
Particular acts and regulations
[23] Constitutional Law
Not every deleterious impact on private property
Territorial uniformity; application to
amounts to a compensable taking; instead,
places, areas, or regions
property impacts resulting from the construction
State and federal equal-protection guarantees of public works are compensable only to the
relate to equality between persons as such, rather extent they are not common to the community at
than between areas, and territorial uniformity large. Vernon's Ann.Texas Const. Art. 1, § 17.
is not a constitutional prerequisite. U.S.C.A.
Const.Amend. 14; Vernon's Ann.Texas Const. 2 Cases that cite this headnote
Art. 1, § 3.
1 Cases that cite this headnote
Attorneys and Law Firms
[24] Constitutional Law
Equal Protection *640 Edward D. Burbach, Barry Ross McBee, Ronda Leigh
Neff, Kristina Weber Silcocks, Rafael Edward Cruz, Rance
Texas Department of Transportation (TxDOT)
L. Craft, Office of Attorney General, Philip A. Lionberger,
did not intentionally single out city council
Brown McCarroll, L.L.P., Jeffrey S. Boyd, Thompson &
member and mayor for treatment differently
Knight, Greg Abbott, Attorney General of TX, Austin, Rick
from others similarly situated in connection
Thompson, Law Office of Deborah Hankinson PC, Dallas,
with highway expansion project, and thus
John Stephen Toland, Watson Bishop London Galow, P.C.,
council member and mayor lacked standing
Austin, Idolina Garcia, Hermes Sargent Bates, LLP, Dallas,
as individuals to bring equal protection claim
for Petitioners.
against TxDOT based on alleged lack of same
signage which other cities had received and
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
emergencies. To remedy the problem, the City constructed a
W. Thomas Buckle, Brad Rockwell and Jessica Scott, substitute road at its own expense.
Douglas C. Young, Scanlan Buckle & Young, P.C., Sheri
Joy Nasya Tolliver, Texas Civil Rights Project, Austin, for In May 1998, the City sued TxDOT to recover its costs in
Respondent. constructing the substitute road. The City asserted several
liability theories, including a right of reimbursement under
James C. Harrington, Austin, for Amicus Curiae Texas Civil
*641 section 203.058(a) of the Texas Transportation Code,
Rights Project.
an unconstitutional taking under Article I, section 17 of the
Opinion Texas Constitution, and common-law nuisance and trespass.
TxDOT filed a plea to the jurisdiction asserting sovereign
Justice O'NEILL delivered the opinion of the Court. immunity and challenging the plaintiffs' standing, which
the trial court denied. On interlocutory appeal, the court
The Texas Department of Transportation (TxDOT) destroyed of appeals affirmed. 8 S.W.3d 727. On remand, the City's
a portion of Jones Road in the City of Sunset Valley mayor, Terrance Cowan, and one of its council members,
when it expanded State Highway 290. To regain the vital Donald Hurwitz, intervened in the suit on behalf of Sunset
transportation link lost in the expansion, the City constructed Valley's citizens claiming TxDOT had violated their equal-
a substitute street. We must decide whether the City can protection rights by failing to post adequate highway signs
recover the cost of that construction from TxDOT under like those present in other similar municipalities and by
section 203.058(a) of the Texas Transportation Code, the installing high-mast floodlights not used on other controlled-
common law of nuisance, or Article I, section 17 of the access highways. Mayor Cowan also asserted individual
Texas Constitution. We hold that it cannot because (1) section nuisance claims for injuries that he alleged were particular to
203.058(a) does not waive TxDOT's immunity from suit, his property. The trial court held TxDOT liable to the City
nor is the City a state agency within the statute's purview; for the $836,192.80 cost of constructing reasonably necessary
(2) absent an applicable waiver, TxDOT retained immunity substitute facilities, and awarded the City approximately
from the City's common-law nuisance claim; and (3) TxDOT $857,000 in pre-judgment interest and attorneys' fees. The
cannot be liable for an unconstitutional taking because the trial court also granted injunctive relief on the intervenors'
State owns the property that was appropriated for highway equal-protection claims, abating the high-mast floodlights
expansion. We also hold that the City's mayor and a council and ordering TxDOT to post adequate signs. It also awarded
member lack standing to assert equal-protection claims on Cowan and Hurwitz $9,450 in attorneys' fees. Finally, the
their own behalf or on behalf of the City's residents. Finally, trial court awarded Cowan $3,648 in damages, as well as
we hold that the mayor's individual nuisance claim does not injunctive relief, based on his individual nuisance claim.
rise to the level of a constitutional taking and is thus barred
by sovereign immunity. Accordingly, we reverse the court of The court of appeals affirmed the trial court's judgment in
appeals' judgment and render judgment for TxDOT.
part and reversed in part. 92 S.W.3d 540. It held that section
203.058(a) of the Texas Transportation Code supported the
City's right to recover, but concluded that the statutory
I. Background scheme required the Texas General Land Office to determine
the amount of compensation that should be awarded and
In 1991, TxDOT expanded State Highway 290 to create a remanded the case accordingly. Id. at 547. Because it upheld
controlled-access highway. The expansion extended to parts the judgment based on the statutory claim, the court of
of the City of Sunset Valley, a general-law municipality appeals did not address the City's alternative constitutional
approximately one square mile in size located in southwest or common-law claims. Id. In all other respects, the court of
Travis County. To complete the project, TxDOT closed Jones appeals affirmed the trial court's judgment. Id. We granted
Road at its western intersection with Brodie Lane. Jones Road review to consider the plaintiffs' respective claims arising
was a main thoroughfare that connected the City's center to out of TxDOT's highway expansion and the closure of Jones
the northern, western, and southwestern portions of the City. Road.
According to the City, the road's closure increased threefold
the travel time across the City, significantly impacting the
City's ability to combat crime and respond to police and other
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
agency” as “a department or agency of this state”). We agree
II. Texas Transportation Code with TxDOT on both points. 1
[1] [2] State agencies like TxDOT are immune from [4] [5] [6] [7] [8] Our primary objective when
liability in Texas unless the Legislature waives that construing a statute is to ascertain and give effect to the
immunity. See Fed. Sign v. Tex. S. Univ., 951 S.W.2d Legislature's intent. See McIntyre v. Ramirez, 109 S.W.3d
401, 405 (Tex.1997); Duhart v. State, 610 S.W.2d 740, 741, 745 (Tex.2003) (citing Tex. Dep't of Transp. v. Needham,
741 (Tex.1980). We have long recognized the Legislature's 82 S.W.3d 314, 318 (Tex.2002)). In discerning that intent,
exclusive power to create a cause of action that waives the we begin with the “ ‘plain and common meaning of the
State's immunity. See Tex. Dep't of Transp. v. Jones, 8 S.W.3d statute's words.’ ” Id. (quoting State ex rel. State Dep't of
636, 638 (Tex.1999). But sovereign immunity is waived Highways & Pub. Transp. v. Gonzalez, 82 S.W.3d 322, 327
only when the Legislature has clearly and unambiguously (Tex.2002) (quoting Fitzgerald v. Advanced Spine Fixation
expressed that intent. See Kerrville State Hosp. v. Fernandez, Sys., Inc., 996 S.W.2d 864, 865 (Tex.1999))). We must
28 S.W.3d 1, 3 (Tex.2000); see also TEX. GOV'T CODE read the statute as a whole and not just isolated portions.
§ 311.034 (codifying common-law standard for immunity See City of San Antonio v. City of Boerne, 111 S.W.3d
waiver: “[A] statute shall not be construed as a waiver of 22, 25 (Tex.2003) (citing Gonzalez, 82 S.W.3d at 327). If
sovereign immunity unless the waiver is effected by clear and the statutory language is unambiguous, we must interpret
unambiguous language.”). it according to its terms, giving meaning to the language
consistent with other provisions in the statute. See McIntyre,
The City claims that the Legislature waived TxDOT's 109 S.W.3d at 745. We also consider the objective the
sovereign immunity in section 203.058(a) of the Texas law seeks to obtain and the consequences of a particular
Transportation Code, which provides: construction. TEX. GOV'T CODE § 311.023(1), (5); see also
McIntyre, 109 S.W.3d at 745.
If the acquisition of real property,
property rights, or material by the [9] Nothing in the plain language of section 203.058
department from a state agency under indicates the Legislature intended to waive immunity in
this subchapter will deprive the agency situations like the one presented. The statute provides that
of a thing of value to the agency in when the State acquires property from a state agency
the exercise of its functions, adequate pursuant to its chapter 203 powers, it must make “adequate
compensation for the real property, compensation.” TEX. TRANSP. CODEE § 203.058(a).
property rights, or material shall be The statute then outlines the actual accounting procedures
made. by which compensation is to be accomplished. See id.
§ 203.058(b)-(e). For example, subsection (b) states that
TEX. TRANSP. CODEE § 203.058(a). The City contends
compensation will be paid on vouchers, and subsection
this provision clearly and unambiguously *642 provides a
(c) indicates to which budget item compensation shall be
judicial right of recovery against TxDOT for property that
credited. Subsection (d) concerns situations in which it is
it appropriated in closing Jones Road. The court of appeals
unclear which appropriation item or agency account is to be
agreed, holding that the City is a “state agency” entitled to
credited. Finally, subsection (e) provides that the General
compensation under the statute. 92 S.W.3d at 546–47.
Land Office will determine appropriate compensation if the
agency and TxDOT cannot agree on an amount. Nowhere
[3] TxDOT claims that in enacting section 203.058(a) the
does the statute expressly waive TxDOT's immunity. That
Legislature did not intend to create a statutory cause of
the statute imposes a financial obligation on the State does
action for which the State may be sued, but merely intended
not in itself mean that the Legislature intended to create a
to establish a mechanism by which state agencies may be
private right of action, as evidenced by the fact that the statute
compensated if TxDOT uses their property in exercising
expressly vests the *643 power to determine adequate
powers conferred under chapter 203. TxDOT further argues
compensation in the General Land Office. Id. § 203.058(e). In
that, even if section 203.058(a) does create a right of action,
deciding whether the Legislature intended to waive TxDOT's
the City is not a “state agency” as defined in the statute.
immunity, “we must look at whether [the] statute makes any
See TEX. TRANSP. CODEE § 203.001(4) (defining “state
sense if immunity is not waived.” Kerrville State Hosp., 28
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
S.W.3d at 6. Clearly section 203.058 does, in that it provides differs from a[n] ... agency of the State. A political
a mechanism by which state agencies may ensure budgetary subdivision has jurisdiction over a portion of the State; a[n] ...
protection when property is transferred between them. agency of the State exercises its jurisdiction throughout
the State.... [T]he legislature has consistently recognized
Moreover, the City is not a “state agency” within section these distinctions between ... agencies on the one hand and
203.058(a)'s purview. The court of appeals determined that political subdivisions on the other.”). Chapter 203 itself
it was, relying on our decision in Proctor v. Andrews, 972 reflects that the Legislature recognized a distinction between
S.W.2d 729, 734 (Tex.1998). But that reliance is misplaced. a state agency, a political subdivision, and a municipality.
In Proctor, we addressed whether a provision of the Civil Section 203.032 provides that a commission order under
Service Act that allowed police officers and fire fighters section 203.031 “supersedes a conflicting rule or ordinance
who had been suspended, passed over for promotion, or of a state agency or subdivision of this state or any county
recommended for demotion to appeal to an independent third- or municipality.” TEX. TRANSP. CODEE § 203.032. Yet
party hearing examiner was an unconstitutional delegation the Legislature did not include a “political subdivision,”
of legislative authority or impermissibly infringed on a “county,” or *644 “municipality” in the definition of a “state
home-rule city's governmental authority to direct, control, agency.” Id. § 203.001(4). We see nothing in the statutory
and discipline its civil servants. Id. at 732. Presuming that language that would support the broad meaning that the City
the delegation did in fact infringe upon the City's police ascribes to the term “state agency” in section 203.058(a).
powers, we held that the infringement was permissible if the
Legislature by general law clearly intended it. Id. at 733. Because nothing in the statutory language indicates that the
Concluding that the Legislature did so intend, we made the Legislature intended to waive immunity by creating a private
following statement that the court of appeals in this case right of action for entities like the City, we hold that it cannot
relied on: “ ‘Municipal corporations [including home rule seek compensation thereunder for TxDOT's closure of Jones
cities] are created for the exercise of certain functions of Road.
government.... [I]n so far as their character is governmental,
they are agencies of the state, and subject to state control.’ ”
Id. at 734 (alteration in original) (quoting Yett v. Cook, 115
III. Common–Law Nuisance
Tex. 205, 281 S.W. 837, 842 (1926)). Thus, we described
the principal-agent relationship that exists between the State [10] [11] The City's common-law nuisance claim is
and a political subdivision in exercising certain governmental similarly foreclosed. See City of Dallas v. Jennings, 142
powers. Id.; see also Payne v. Massey, 145 Tex. 237, 196 S.W.3d 310 (Tex.2004). TxDOT is immune from liability
S.W.2d 493, 495 (1946) (“Municipalities are creatures of our for its governmental actions unless that immunity is waived.
law and are created as political subdivisions of the state as Id. at 315. TxDOT's expansion of the State's highways is a
a convenient agency for the exercise of such powers as are governmental function. TEX. CIV. PRAC. & REM.CODE §
conferred upon them by the state.”); Tex. Nat'l Guard Armory 101.0215(a). Therefore, TxDOT cannot be liable for damage
Bd. v. McGraw, 132 Tex. 613, 126 S.W.2d 627, 638 (1939) resulting from its expansion of State Highway 290 without a
(“In its governmental capacity a city is a political subdivision clear waiver of immunity. As we have said, the City's reliance
of the State, and in many instances is considered as an agent on section 203.058(a) of the Texas Transportation Code to
of the State; and the State may use such agent in the discharge establish that waiver is misplaced, and the City has asserted
of its duties.”). no other basis to support a waiver. Accordingly, TxDOT
retained immunity from the City's common-law nuisance
That a municipality may exercise governmental powers as an claim. The only claim the City could potentially assert against
agent of the State for certain purposes does not mean that TxDOT, then, is for an unconstitutional taking under Article
it is a “state agency” within section 203.058(a)'s meaning. I, section 17 of the Texas Constitution, to which we now turn.
When used in this context, we have long recognized a
distinction between agencies of the State, which generally
exercise statewide jurisdiction, and political subdivisions like
municipalities, which have limited geographic jurisdiction. IV. Unconstitutional Taking
See Monsanto Co. v. Cornerstones Mun. Util. Dist., 865 [12] [13] Article I, section 17 of the Texas Constitution
S.W.2d 937, 939–40 (Tex.1993) (“[A] political subdivision provides: “No person's property shall be taken, damaged
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
or destroyed for or applied to public use without adequate city controls the streets as trustee for the public. It has no
compensation being made, unless by the consent of such proprietary title nor right to exclusive possession.”).
person....” TEX. CONST. art. I, § 17. The City claims that
it is entitled to recover its cost of constructing a substitute [15] The City attempts to distinguish Robbins and the cases
road under this constitutional provision. TxDOT argues that, upon which it relies, claiming that they involved control over
as against the State, the City has no proprietary title or vested road maintenance rather than outright destruction or closure
property right in Jones Road sufficient to confer a right to as presented here. Once Jones Road was closed and ceased
compensation. Because the court of appeals affirmed the trial operating as a public road, the City argues, it was no longer
court's judgment based on the statutory claim, it did not held for the benefit of the public, thus entitling the City to
address the City's constitutional claim. 92 S.W.3d at 546. compensation. We are not persuaded. The State's right to
Whether there has been a taking is a question of law for the control its roads includes the right to close them, and we see
court to decide. See Tarrant Reg'l Water Dist. v. Gragg, 151 nothing in the cases the City cites that would support the
S.W.3d 546, ––––, 2004 WL 1439646 (Tex.2004). distinction it seeks to draw. 2 Neither do factual differences
among those cases undermine their fundamental premise—
[14] It is fundamental that, to recover under the that the State has a superior ownership interest in its roads.
constitutional takings clause, one must first demonstrate an
ownership interest in the property taken. TEX. CONST. art. I, [16] [17] This does not mean, however, that municipalities
§ 17 (“No person's property shall be taken....”). The City relies have no possessory interest in their roads. General-law
upon its fee simple title to Jones Road to support its right to municipalities like the City of Sunset Valley are political
compensation under the takings clause. TxDOT, on the other subdivisions created by the State and, as such, possess those
hand, contends the City merely holds the road in trust with powers and privileges that the State expressly confers upon
legal title belonging to the State. As a result, TxDOT claims, them. See Payne, 196 S.W.2d at 495. As the State's agent
the City's takings claim fails as a matter of law. We agree. or trustee, a municipality does possess a superior interest in
its public roads vis-a-vis private citizens. See Popplewell,
This Court has consistently recognized that the State has a 294 S.W.2d at 715. Thus, we have said that the Legislature
superior ownership interest in its public roads. See State v. may grant cities and towns “exclusive dominion” over the
Hale, 136 Tex. 29, 146 S.W.2d 731, 736 (1941); Robbins public ways within their corporate or municipal boundaries.
v. Limestone County, 114 Tex. 345, 268 S.W. 915, 918 See City of San Antonio, 111 S.W.3d at 28 (recognizing
(1925); Travis County v. Trogden, 88 Tex. 302, 31 S.W. in dispute between two cities that the Legislature granted
358, 359–60 (1895). We have also recognized that the State's general control to commissioners courts); City of Fort Worth
ownership interest in its roads is superior to that of its v. Taylor, 162 Tex. 341, 346 S.W.2d 792, 793 (1961) (noting
political subdivisions. See Robbins, 268 S.W. at 918. In that a home rule city, by statutory grant, may regulate and
Robbins, the county argued that a recently enacted statute control obstructions from streets and alley ways); West v. City
allowing the State to place public roads under the State of Waco, 116 Tex. 472, 294 S.W. 832, 834 (1927) (holding
Highway Department's direct control resulted *645 in an State can and did delegate authority to a city to regulate
unconstitutional taking because the roads were built with parking on a public square). We have also recognized the
funds raised by local taxation. Id. In response to questions unique nature of school lands and that school districts, as
certified by the court of civil appeals, we held that there could political *646 subdivisions of the State, have an ownership
be no taking because the Legislature has sole and exclusive interest in their property. See Love v. City of Dallas, 120 Tex.
power pertaining to public roads and highways which may 351, 40 S.W.2d 20, 29 (1931); Milam County v. Bateman, 54
only be modified by another constitutional provision. Id. The Tex. 153, 165 (1880). But none of these cases support the
county argued, as does the City here, that it was entitled to proposition that municipalities possess a superior ownership
compensation under the Constitution because it held legal title interest in public roads vis-a-vis the State that would support a
to the roads taken. Id. We disagreed, stating that, even though right to compensation under the Constitution's takings clause
legal title was taken in the county's name, title was held for the when they are applied to another public use. Accordingly, the
benefit of the State and the general public. Id. We specifically City's takings claim fails as a matter of law.
said: “Public roads are state property over which the state has
full control and authority.” Id.; see also City of Mission v.
Popplewell, 156 Tex. 269, 294 S.W.2d 712, 715 (1956) (“The
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
were treated unequally with respect to these features and have,
as a community, suffered particularized injury distinct from
V. Intervenors' Claims
that of similar municipalities. The court of appeals agreed,
Terrance Cowan, the City's mayor, and Donald Hurwitz, concluding that the injuries alleged were unique to residents
a City council member, intervened in this suit on behalf of Sunset Valley as compared to other regions, and that as
of the citizens of Sunset Valley. They alleged TxDOT residents Cowan and Hurwitz had standing to assert them. 92
violated their equal-protection rights by treating the citizens S.W.3d at 551–53.
of Sunset Valley disparately from residents of other
Texas communities. Cowan also asserted an individual [23] TxDOT contends that, to the extent the intervenors'
private-nuisance claim, for which the trial court awarded claims are based on geographic disparate treatment, an
him damages. TxDOT challenges the intervenors' standing equal-protection claim will not lie. See Richards v. League
to assert equal-protection claims and contends sovereign of United Latin Am. Citizens, 868 S.W.2d 306, 311–12
immunity protects it from Cowan's private-nuisance claim. (Tex.1993) (“LULAC ”). We agree. State and federal equal-
We address each argument in turn. protection guarantees relate to *647 “ ‘equality between
persons as such, rather than between areas, and ... territorial
uniformity is not a constitutional prerequisite.’ ” Id. at 311
(quoting McGowan v. Maryland, 366 U.S. 420, 81 S.Ct.
A. Equal Protection 1101, 6 L.Ed.2d 393 (1961)); see also Mouton v. State, 627
[18] [19] [20] [21] Standing is a constitutionalS.W.2d 765, 767 (Tex.App.-Houston [1st Dist.] 1981, no
pet.). In LULAC, we held that, although the plaintiffs could
prerequisite to maintaining suit. See Tex. Ass'n of Bus. v.
challenge the State's higher-education system based on their
Tex. Air Control Bd., 852 S.W.2d 440, 444 (Tex.1993);
racial identity, they could not challenge it as residents of a
Hunt v. Bass, 664 S.W.2d 323, 324 (Tex.1984). Standing
geographic region of the State. Id. at 311–12, 314. This, of
to raise an equal-protection challenge requires the claimant
course, makes sense. When the State exercises governmental
to demonstrate an interest distinct from that of the general
powers, such as building highways, it necessarily draws
public such that the actions complained of have caused a
distinctions between different geographic areas. Entitling
particular injury. See Williams v. Lara, 52 S.W.3d 171,
every citizen to equal benefits whenever government money
178–79 (Tex.2001); see also Hunt, 664 S.W.2d at 324
is spent “would make almost all government programs
(“Standing consists of some interest peculiar to persons
unconstitutional.” Weber v. City of Sachse, 591 S.W.2d 563,
individually and not as members of the general public.”).
567 (Tex.Civ.App.-Dallas 1979, writ dism'd). Insofar as the
The “particularized injury” requirement “inheres in the nature
intervenors' equal-protection claims are brought on behalf
of standing[, which] ‘stems from two limitations on subject
of area residents for TxDOT's failure to provide signage or
matter jurisdiction: the separation of powers doctrine and,
lighting equal to that provided in other geographic areas, it
in Texas, the open courts provision.’ ” Brown v. Todd, 53
fails as a matter of law.
S.W.3d 297, 302 (Tex.2001) (quoting Tex. Ass'n of Bus., 852
S.W.2d at 443). These provisions require an actual grievance,
[24] To bring an individual equal-protection claim, Cowan
not one that is merely hypothetical or generalized. Id. As
and Hurwitz must demonstrate that they were intentionally
a component of subject matter jurisdiction, we review a
singled out and treated differently from others similarly
claimant's standing de novo. See Tex. Ass'n of Bus., 852
situated. County of Bexar v. Santikos, 144 S.W.3d 455, 463,
S.W.2d at 445.
2004 WL 1908328 (Tex.2004). According to Cowan and
Hurwitz's pleadings and the evidence presented, though, all
[22] Cowan and Hurwitz allege standing as members of a
Sunset Valley residents suffered the same injury—inadequate
class, namely the residents of Sunset Valley, which they claim
signage and light pollution. There is simply no evidence that
TxDOT targeted for disparate treatment. Specifically, they
Cowan or Hurwitz were singled out or treated disparately
allege disparate treatment based on TxDOT's (1) failure to
with regard to these alleged highway effects. As we stated
erect highway signs indicating Sunset Valley's exit and city
in Brown v. Todd, in which an individual voter asserted
limits, when similar municipalities in Texas have properly
standing to challenge a city ordinance he had voted against in
marked signs, and (2) installation of high-mast floodlights,
a previous election, “the injury that [the voter] identifies is not
when no other similar highway area in Texas uses them. The
unique to him. Indeed, it is shared by all living Houstonians
intervenors claim that Sunset Valley residents, as a group,
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Texas Dept. of Transp. v. City of Sunset Valley, 146 S.W.3d 637 (2004)
47 Tex. Sup. Ct. J. 1252
Instead, property impacts resulting from the construction of
who were among the ... electors who actually voted against
public works are compensable only to the extent they are
the proposed ordinance.” 53 S.W.3d at 302. Although the
not common to the community at large. Id. at 463; Felts
voter in that case did not assert an equal-protection violation,
v. Harris County, 915 S.W.2d 482, 485 (Tex.1996). Here,
the generalized grievance bar to standing that we upheld also
Cowan testified that the lights shine “into [his] neighborhood
applies to equal-protection claims like those asserted here.
and [his] neighbors' property,” and his pleadings also suggest
See United States v. Hays, 515 U.S. 737, 743, 115 S.Ct. 2431,
that the lights similarly affect others in the community.
132 L.Ed.2d 635 (1995). Because Cowan and Hurwitz could
*648 While the proximity of Cowan's property to Highway
not assert equal-protection claims on their own behalf or that
290 may increase the degree of the lights' impact on his
of Sunset Valley's residents, these claims fail as a matter of
property in comparison to its impact on other properties in
law.
the area, that fact alone does not suffice to render his injuries
constitutionally compensable. See Felts, 915 S.W.2d at 485.
Because Cowan failed to demonstrate that the nuisance he
B. Private Nuisance alleged amounted to an unconstitutional taking, sovereign
immunity protects TxDOT from Cowan's private-nuisance
[25] Cowan also asserted a private-nuisance claim based on
claim.
light pollution, which TxDOT argues is barred by sovereign
immunity. Because Cowan has asserted no statutory or other
basis for a waiver of TxDOT's sovereign immunity, TxDOT
can only be liable if the nuisance rises to the level of an VI.
unconstitutional taking under Article I, section 17 of the
For the foregoing reasons, we reverse the court of appeals'
Texas Constitution. See Jennings, 142 S.W.3d at 312.
judgment and render judgment for TxDOT.
[26] Cowan presented evidence that the high-mast
floodlights shone extremely brightly on his property,
All Citations
destroying its rural character and creating a “spot light effect.”
But not every deleterious impact on private property amounts 146 S.W.3d 637, 47 Tex. Sup. Ct. J. 1252
to a compensable taking. Santikos, 144 S.W.3d at 459.
Footnotes
1 As a preliminary matter, the City claims TxDOT waived its right to challenge the judgment on the second ground by failing
to properly raise it. It is true that TxDOT couched its argument to the court of appeals in terms of sovereign immunity.
But as the court of appeals noted, TxDOT raised the issue in its brief by arguing that the Transportation Code expressly
excludes cities from compensation. 92 S.W.3d at 546 n. 2. Because TxDOT adequately challenged the City's right to
recover under the Transportation Code, it did not waive the issue on appeal. See TEX.R.APP. P. 38.1(e).
2 The City cites several cases from other states that it contends support a municipality's constitutional right to compensation
from the state. See City of Chester v. Commonwealth Dep't of Transp., 495 Pa. 382, 434 A.2d 695 (1981); State ex. rel.
Ala. State Docks Dep't v. Atkins, 439 So.2d 128 (Ala.1983); State ex rel. State Highway Comm'r v. Cooper, 24 N.J. 261,
131 A.2d 756 (1957). Those cases, however, are either distinguishable in that they involved statutorily created eminent-
domain rights, or inapposite in their reliance on federal authority. The relationship between a city and state, which are
not separate sovereigns, is not analogous to that between the federal government and a state. See United States v.
Carmack, 329 U.S. 230, 242 n. 12, 67 S.Ct. 252, 91 L.Ed. 209 (1946) (“When ... a sovereign state transfers its own public
property from one governmental use to another ... a like obligation does not arise to pay just compensation for it.”).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
BBB
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
[2] Malicious Prosecution
KeyCite Yellow Flag - Negative Treatment Instigation of or Participation in
Distinguished by Gonzalez v. Grimm, Tex.App.-El Paso, July 8, 2015 Prosecution
974 S.W.2d 70 Finding that business associate initiated or
Court of Appeals of Texas, procured commencement of fraud and theft
San Antonio. prosecution against accused, as element of
malicious prosecution, was supported by
Terry THRIFT, Jr., Appellant, evidence that business associate filed complaint
v. with district attorney's office which falsely
Sandra HUBBARD k/n/a Sandra represented substance of various transactions.
Hubbard Venable, Appellee.
1 Cases that cite this headnote
No. 04–96–01013–CV. | Feb. 25, 1998.
| Opinion Dissenting from Denial of Rehearing [3] Malicious Prosecution
May 6, 1998. | Review Denied Oct. 15, 1998. Instigation of or Participation in
Prosecution
Accused brought action for malicious prosecution against
Person initiates criminal prosecution, as element
business associate after charges of misapplication of funds,
of malicious prosecution, if he makes formal
fraud, and theft were dismissed. The 224th Judicial District,
charge to law enforcement authorities.
Bexar County, David Peeples, J., entered judgment on jury
verdict awarding accused $524,760, and business associate 1 Cases that cite this headnote
appealed. The Court of Appeals, Angelini, J., held that: (1)
evidence supported finding of liability, and (2) evidence
supported damage award. [4] Malicious Prosecution
Instigation of or Participation in
Affirmed. Prosecution
Person procures criminal prosecution, as element
Green, J., filed dissenting opinion on motion for rehearing. of malicious prosecution, if his actions are
enough to cause prosecution, and but for his
actions, prosecution would not have occurred.
West Headnotes (18) Cases that cite this headnote
[1] Malicious Prosecution [5] Malicious Prosecution
Weight and Sufficiency of Evidence Instigation of or Participation in
In cases of malicious prosecution, delicate Prosecution
balance must be struck between interest of Person does not procure criminal prosecution, as
society in good faith reporting of suspect element of malicious prosecution, when decision
criminal conduct and interest of individual whether to prosecute is left to discretion of
in freedom from unjustifiable and oppressive another, including law enforcement official or
litigation of criminal charges, and in order to grand jury, unless person provides information
protect this delicate balance, courts must require which he knows is false.
strict proof of each element of cause of action;
4 Cases that cite this headnote
however, as with any other cause of action, if
elements are proved, liability is established.
[6] Malicious Prosecution
1 Cases that cite this headnote Mode of Termination
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
Acquittal and resolution of factual elements of Belief in Guilt of Accused
case were not required for criminal prosecution In determining whether probable cause exists
to be resolved in accused's favor, as element of in malicious prosecution case, trier of fact
malicious prosecution. must determine whether complainant reasonably
believed that elements of crime had been
1 Cases that cite this headnote
committed based on information available before
criminal proceedings began; it is, therefore,
[7] Malicious Prosecution important that probable cause inquiry focus
Mode of Termination only on actions of complainant, based upon his
Finding that criminal prosecution was resolved perspective of facts at time report was made,
in accused's favor, as element of malicious and not on subsequent actions of third-parties or
prosecution, was supported by prosecutor's information discovered after the fact.
testimony that he dismissed case after
4 Cases that cite this headnote
conducting prosecution for eight to ten months
and concluding that it was no longer a good case,
because there was not enough evidence to obtain [11] Malicious Prosecution
conviction. Presumptions and Burden of Proof
Defendant in malicious prosecution case is
2 Cases that cite this headnote
afforded initial presumption that he acted
reasonably and in good faith in initiating criminal
[8] Malicious Prosecution proceeding against plaintiff, but presumption is
Grounds in General rebutted when plaintiff produces evidence that
Finding that business associate lacked probable motives, grounds, beliefs, and other evidence
cause to initiate fraud and theft prosecution upon which defendant acted did not constitute
against accused, as element of malicious probable cause to commence proceeding, in
prosecution, was supported by evidence that which case burden shifts to defendant to prove
list of accounts receivable given as security he acted with probable cause.
clearly showed age of each account and did not
10 Cases that cite this headnote
misrepresent their value, that check was issued as
part of new loan transaction and was not intended
to be honored immediately, and that allegedly [12] Malicious Prosecution
misappropriated funds were used for legitimate Probable Cause
business purpose. When facts surrounding impetus of decision to
instigate criminal prosecution are in dispute in
Cases that cite this headnote
malicious prosecution case, issue of probable
cause becomes mixed question of law and fact to
[9] Malicious Prosecution be resolved by jury.
Belief in Guilt of Accused
3 Cases that cite this headnote
Probable cause for initiation of criminal
prosecution, precluding claim of malicious
prosecution, exists when relevant facts and [13] Malicious Prosecution
circumstances would excite belief in mind of Probable Cause and Malice
reasonable person that individual accused is Finding that business associate acted with malice
guilty of crime for which he is prosecuted. in filing criminal complaint against accused was
supported by evidence that business associate
1 Cases that cite this headnote
was aware of exculpatory facts that he did
not disclose to district attorney, and that he
[10] Malicious Prosecution
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
threatened accused and her spouse with criminal Award of $9,800 in malicious prosecution case
charges and vowed to “get even” with them. for past lost wages was supported by accused's
estimation that she spent approximately 98 hours
9 Cases that cite this headnote preparing for, traveling to, and making seven
four-hour court appearances and seven ten-
[14] Malicious Prosecution hour court appearances while indictment was
Inference from Want of Probable Cause pending, that if she had not been traveling and
making court appearances, she would have been
Malicious Prosecution
working, and that her standard billing rate for
Probable Cause and Malice
programming was $100 an hour.
Malice element of malicious prosecution may
be established by either direct or circumstantial 1 Cases that cite this headnote
evidence and may be inferred from lack of
probable cause.
[18] Appeal and Error
5 Cases that cite this headnote Particular Cases
Any error in including alternative definition of
“malice” in jury charge was not prejudicial in
[15] Malicious Prosecution
malicious prosecution case, where there was
Amount Awarded
more than enough evidence to support finding of
Award of $275,000 in malicious prosecution
malice under standard definition.
case for damage to reputation was supported by
evidence that accused avoided business dealings 1 Cases that cite this headnote
and restricted church activities so she would not
have to disclose indictment, and testimony that
no one would want to work with her because of
indictment. Attorneys and Law Firms
1 Cases that cite this headnote *71 W. Wendell Hall, Fulbright & Jaworski, L.L.P., San
Antonio, for appellant.
[16] Malicious Prosecution
*72 Darby Riley, Law Office of Darby Riley, Thomas B.
Amount Awarded
Black, San Antonio, for appellee.
Award of $150,000 in malicious prosecution
case for emotional distress was supported by Before STONE, GREEN and ANGELINI, JJ.
evidence of accused's fear and anxiety related
to charges pending against her, and emotional
strain surrounding her preparation for and OPINION
attendance at over 15 court proceedings as
criminal defendant; additional evidence that she ANGELINI, Justice.
could not sleep or eat, required medication or
psychiatric care, experienced depression, or fell This is an appeal from a jury verdict in favor of Sandra
into substance abuse as result of the charges Hubbard in her suit against Terry Thrift for malicious
against her was not required. prosecution. In four points of error, Thrift contends that
the evidence is both legally and factually insufficient to
1 Cases that cite this headnote support the jury's findings of malicious prosecution, damaged
reputation, emotional distress, and lost earning capacity. In an
additional point of error, Thrift contends that the jury charge
[17] Malicious Prosecution
contained an erroneous theory of law. We affirm the judgment
Amount Awarded
of the trial court.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
the pledged stock, which he received, but that the Hubbards
transferred the stock to him in the company books on their
Factual and Procedural Background
own volition.
This complex set of facts began in 1985 when Victor 1
Sandra testified that Peerless was in dire financial straits,
and Sandra Hubbard were seeking investors for a new
but that it had promising prospects. Peerless was behind in
software company they were starting. The Hubbards had been
payment of rent, employment taxes, and employee wages.
employees in the software division of Peerless Equipment
Sandra testified that, from the point of the stock transfer,
Company (“PECO”) when they developed a software
she and her husband considered Thrift to be the majority
program that attracted a tremendous amount of attention.
shareholder in Peerless. Therefore, she claims that Peerless's
PECO and the Hubbards agreed that the Hubbards would
financial condition was fully disclosed to Thrift. She claims
spin PECO's software division into an independent company,
that, per Thrift's request, she prepared status reports of
Peerless Technologies Corporation (“Peerless”), in order to
Peerless's progress almost weekly for Thrift's review. Thrift
develop and market the new program (“EMIS”). PECO
acknowledges requesting but denies receiving these status
retained the rights to inventory, equipment, and the software
*73 reports. He testified that he requested them so that he
at its current level. The Hubbards were majority stock holders,
could determine whether he wanted to extend the line of credit
officers, and employees of Peerless.
he had given Peerless.
When Peerless spun off from PECO, the Hubbards needed
In December of 1986, Sandra Hubbard testified that Thrift
capital to get the company off the ground. The Hubbards were
and Peerless engaged in a “check swap” loan, whereby Thrift
introduced to Terry Thrift, who agreed to invest in Peerless
gave a $13,000 check to Peerless for use in a hardware
after receiving assurances that the Hubbards's stock was not
purchase and Peerless gave Thrift a post-dated $13,000 check
pledged and that the Hubbards's salaries were capped. He
in repayment. There was not enough money in the account
continued to invest in the company over the course of several
to cover Peerless's check, but, because Peerless had overdraft
months. In February of 1986, Thrift issued to Peerless a
coverage protection, the bank paid the check anyway.
$100,000 line of credit. The loan was secured by (1) Peerless's
accounts receivable less than 75 days old, unless otherwise
Also in December of 1986, it became necessary for Peerless
approved by Thrift, and (2) all of Peerless's other assets. There
to obtain the rights to the EMIS software that PECO had
was also a stock pledge agreement effective February 19,
retained when Peerless was formed. The evidence is disputed
1986, whereby the Hubbards pledged half of their stock to
regarding the impetus of this transaction. Thrift contends that
Thrift in further satisfaction of the loan.
Victor Hubbard beseeched him to purchase PECO's interest in
the EMIS software because Peerless could not afford the lease
In October of 1986, Thrift notified the Hubbards in writing
payments. Conversely, Sandra Hubbard testified that Thrift
that Peerless was insolvent because of unpaid debts, back
approached the Hubbards about him personally obtaining
employment taxes, and failure to pay interest on the line
rights to the software through Peerless so that he would not be
of credit. Thrift demanded payment in full on the line of
identifiable as the purchaser. Sandra Hubbard further testified
credit and laid claim to all of Peerless's assets pursuant to
that the company attorney advised Thrift to purchase the
the security agreement. He instructed the Hubbards that they
software rights on his own, but that Thrift insisted on doing
could not sell or buy any permanent asset of the company,
it through Peerless.
nor could they pay corporate officers without his consent.
He demanded accurate and up to date operating statements,
In any event, Thrift gave Peerless the $100,000 asking price
financial statements, and an estimate of sales and cash needs.
to purchase the EMIS software rights from PECO. However,
there was an $87,122.85 IRS levy on Peerless's account when
Sandra Hubbard testified that Thrift also demanded that half
Thrift's check was deposited, so $87,122.55 of the $100,000
of the Hubbards's stock be transferred to his name on the
intended to be used to purchase the EMIS rights was taken by
company books pursuant to the stock pledge agreement.
the IRS as soon as the check was deposited. Sandra Hubbard
Peerless's stock transfer records indicate that 600,000 shares
testified that she was not aware of the IRS levy when the
of Peerless stock were transferred from the Hubbards to Thrift
check was deposited. The evidence reflects that, in order to
on January 16, 1987, making him the majority shareholder
repay Thrift his $100,000, Peerless issued Thrift a note in the
of Peerless. Thrift testified that he requested possession of
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
amount of $87,122.55 and paid him the $12,877.15 difference discovered that no money was due from NACO when he later
by check. Thrift eventually purchased the EMIS rights on his took over the company. Sandra Hubbard testified that the
own for $75,000. receivable was listed accurately at the time the list was made,
but that the deal later fell through.
As the result of a sale to Wrigley Company, Peerless was
due to collect $49,484 in the spring of 1987. Sandra Hubbard Also in February of 1987, Thrift made Peerless another loan.
testified that in January of 1987, Peerless's landlord was Peerless needed money to purchase hardware in order to
threatening to lock the doors because of unpaid rent. She complete the Wrigley contract. Thrift wrote Peerless a check
claims that, in a meeting with Thrift, he instructed the for $17,981, indicating that it was a 14 day loan. On the same
Hubbards to reduce office space. The Hubbards, knowing date, Peerless wrote Thrift a check for $17,981, post-dating
Peerless needed to be current on its lease before it could it 11 days. Sandra Hubbard testified that this transaction was
move its offices, agreed to assign $21,227.64 of the Wrigley another “check swap” loan. She stated that she post-dated the
account receivable to the landlord in satisfaction of Peerless's check 11 days because she was expecting some receivables
obligations under the lease. This assignment was made in and she felt sure there would be money to cover the check in
January of 1987. Sandra Hubbard testified that Thrift was the Peerless account within that time. Thrift testified that this
aware of this assignment. transaction was not a “check swap” loan. He contends that he
made the loan on assurances that he would be paid back out of
On February 19, 1987, Thrift and Peerless executed another the Wrigley account. Sandra Hubbard testified that she never
line of credit in the amount of $109,776.10. This line of stated Peerless would pay the $17,981 back from the Wrigley
credit extended the original 1986 line of credit and included account. The money loaned was to buy hardware to complete
unpaid interest on the 1986 note. The second note was the Wrigley contract. She stated that there is no way Peerless
collateralized with Peerless's accounts receivable. However, could have purchased the hardware, completed the contract,
neither party disputes that no credit was made for assets invoiced the Wrigley Company, and been paid in 11 days.
already appropriated and stock already taken when Thrift
foreclosed on the 1986 note. In March of 1987, Thrift had still not deposited the $17,981
check, apparently on the advice of the Hubbards. In a March
Thrift contends that the Hubbards listed the value of the 9, 1987, status report, Sandra Hubbard notified Thrift that
accounts receivable at $140,000 in order to induce Thrift to Peerless was still waiting on money “from several large
extend the loan. It is undisputed that, except for the Wrigley accounts (e.g.Wrigley's)—so I'll let you know as soon as your
account and another $10,000 of the accounts receivable, check can go through!” In another status report dated May
the remaining accounts listed were older than 75 days at 18, 1997, Sandra Hubbard notified Thrift that the Wrigley
the time the security agreement was signed. The security receivable had come in. The letter stated that the money
agreement on the second note indicates that the collateral does was used to pay the landlord pursuant to the assignment,
not include accounts receivable older than 75 days absent back wages (including those due the Hubbards), and critical
Thrift's consent. Sandra Hubbard testified that she gave Thrift operating bills. In explanation, the letter continued:
a list of the accounts receivable on a regular basis. Thrift
acknowledges receiving at least one of these lists showing Peerless does not have the money to pay you right now the
accounts receivable up to January 22, 1987. This list included $17,981 it owes you. The Wrigley money and the Bank One
the age of each account. According to Sandra Hubbard, by money was just barely enough to keep the company afloat.
agreeing to use the accounts receivable as collateral for the I made a judgment call with these funds—one necessary to
note, Thrift either did not intend to collateralize the old the survival of Peerless (and therefore to protect all of us).
receivables or he consented to use them as collateral pursuant You may not have agreed with it, but it seemed to be the
to the terms of the security agreement. Sandra Hubbard was right thing to do at the time.
under the impression that only the receivables less than 75
days old were collateralized.
****
Thrift also contends that several of the accounts receivable
listed by the Hubbards were fictitious, particularly a $101,704 I thought about calling you at the time but reasoned to
receivable *74 from NACO. Thrift testified that he myself that it would make no difference, considering how
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
badly things had deteriorated—and the very best thing that good chance of paying its other creditors if it continued to
I could do for you was to protect your total investment operate.
by trying to keep Peerless alive long enough to reduce the
overheads. With a reduced overhead, if it could not make Also on May 22, 1987, Thrift turned over all of his Peerless
it on its own cash, then it could at least tread water long stock to the company attorney. He contends he did this
enough to be sold and leave you (and everyone else) whole. before he received the Hubbards's letter of resignation. Sandra
Also in this letter, Sandra Hubbard notified Thrift that she Hubbard contends that he turned in the stock after he received
and Victor Hubbard had become self-employed agents for their letter. Sandra Hubbard testified that she believes Thrift
one of Peerless's major account resellers. She stated they turned in his stock because he did not want to be totally
had done this in order to take a large part of their salaries responsible for the company's liabilities after the Hubbards
out of Peerless's overhead. Following Thrift's receipt of this resigned. Thrift claims he returned the stock because it
letter in the latter part of May, 1987, Thrift and the Hubbards was worthless and because the Hubbards were abdicating
had several meetings regarding Peerless. Thrift asked the responsibility for Peerless by claiming that Thrift was the
Hubbards to sign several documents which would enable majority stockholder.
him to recover what he could of his investment. Thrift
presented letters to himself and others that he had drafted Shortly thereafter, Thrift took over the Peerless office. Bill
on Victor Hubbard's behalf. Thrift asked Victor Hubbard to Shaefer, Peerless's chief operating officer testified that Thrift
sign the letters, all of which were introduced into evidence. entered the office on a Friday morning and introduced himself
The first letter authorized Thrift to receive and cash any as the majority stockholder. He offered the employees their
checks that came into Peerless. The second letter notified jobs and agreed to pay them back wages if they would
all Peerless customers to make payments directly to Thrift. continue to work for him. However, Thrift later explained
Victor Hubbard signed both of these letters. to the employees that he could not pay the back wages
because it would cause him to be liable for other Peerless
A third letter operated to effectually give all Peerless assets debts. Thrift instructed Schaefer to fire the Hubbards's son,
and equipment to Thrift free and clear of all other creditors. who was working for the company, because he did not want
It stated that Peerless could not continue operation “because a Hubbard working at his company. Schaefer testified that
of severe insolvency,” and it gave Thrift access to all of Thrift seemed surprised to learn that the Hubbards were
Peerless's equipment and records. The letter also stated that working somewhere else marketing EMIS. Thrift told Shaefer
the company furniture and equipment was not where it was that “[The Hubbards] don't know who they're messing with.
supposed to be. Finally, the letter asked Thrift to allow the I'll get even with them no matter how long it takes.” Thrift
Hubbards to *75 continue working with him as agents or continued the company as EMIS Software, Inc. for several
software writers. Thrift testified that he felt the letter would years and eventually sold it.
be a simple way to disentangle himself from Peerless without
being too hard on the Hubbards. Sandra Hubbard testified that On May 26, 1987, Thrift and the Hubbards entered
she and Victor refused to sign the third letter because they felt into a separation agreement regarding Peerless. Among
it contained untrue statements and was unethical. other things, the agreement provided that Thrift would
regain possession of company equipment, receive title
Thrift acknowledges that he threatened to file fraud charges to all accounts receivable, and obtain possession of the
against the Hubbards because they refused to comply with company offices. The agreement further provided that Thrift
his wishes. Sandra Hubbard testified that Thrift said, “I have would assume responsibility for employee wages and rent
friends, and I can do it” when making the threat. Thrift claims obligations. The Hubbards retained the right to sell EMIS
that the threat was idle and used merely as a negotiation tool. as a “major account reseller” and to use the fixed assets
already in their possession in doing so. Finally, the agreement
In a letter dated May 22, 1987, the Hubbards resigned provided that Thrift would not pursue fraud charges against
from the company. The letter acknowledged Thrift's majority the Hubbards and that the Hubbards would not represent
interest in the company and his desire to transfer company to anyone that Thrift assumed any liability of Peerless or
assets. It continued by stating that the Hubbards did not want that he was a shareholder, officer, director or employee of
to be a part of such activity because they felt Peerless had a Peerless. Thrift testified that he included this last provision in
the agreement because the Hubbards were referring creditors
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
and unhappy customers to him, claiming that he owned the found that they were gone and had started a new business as an
company software and was “in charge.” agent of Peerless so they could siphon profits from Peerless;
(6) the Hubbards purposefully and unlawfully reduced the
The agreement provided that “It is apparent that there are no receivables to $7,887.25; and (7) the Hubbards had included
funds immediately available that would be adequate enough a fictitious account receivable (NACO) in the original list of
to satisfy [Thrift's] demands....” Nevertheless, on June 4, pledged receivables.
1987, Thrift deposited the $17,981 check. Predictably, the
bank would not honor the check. Thrift testified that he Assistant District Attorney Ben Sifuentes was assigned to
deposited the check in spite of his knowledge of Peerless's the case. He reviewed the complaint and conducted an
insolvency because he was “hoping there might be [some independent evaluation. Sifuentes testified that, during his
money in the account].” On the other hand, Sandra Hubbard investigation, he was operating under an assumption, created
contends that Thrift deposited the check knowing there was by Thrift, that Thrift was attempting to purchase Peerless
no money in the account in order to obtain a check with a NSF when the alleged acts took place. The case was eventually
stamp and set the Hubbards up for fraud charges. transferred to Assistant District Attorney Jane Davis who also
conducted an investigation. Davis testified that she thought
*76 On July 9, 1997, Thrift sent the Hubbards a letter that the case against the Hubbards was very good. Three years
declaring the separation agreement null and void. He claimed later, in March of 1990, a grand jury indicted Victor Hubbard.
that the Hubbards deceived him regarding the collectability In December of 1990, Sandra Hubbard was also indicted on
and existence of accounts receivable, refused to return two counts of misapplication of funds, one count of fraud, and
company equipment, and failed to otherwise abide by the one count of theft. The case was reset a number of times over
agreement. Sandra Hubbard testified that, on July 13, 1987, the next three years. During that time, Victor Hubbard passed
she and Victor Hubbard sent Thrift a letter rebutting the away.
allegations in his July 9, 1987, letter and informing Thrift that,
if the separation agreement was void, they would compete During the course of the prosecution, the case was again
with him in the market place. reassigned, this time to Assistant District Attorney Dwight
Chumbley. Chumbley testified that the case was old by the
On July 20, 1997, Thrift filed a complaint with the Bexar time he got it, but that Thrift stayed involved, offering to
County District Attorney's Office against the Hubbards, provide him meticulously kept documents. He testified that he
alleging theft of accounts receivable. Thrift testified that he believed there was enough evidence against Sandra Hubbard
filed the complaint pursuant to the directions of Assistant to support an indictment. However, he also testified, via
District Attorney Ben Sifuentes. He does not remember what affidavit, that there was insufficient evidence to convict or
documents he attached to the complaint, but he repeatedly otherwise prove the allegations beyond a reasonable doubt.
testified that he “stand[s] by [his] complaint.” The jury was On December 6, 1993, Chumbley filed a motion to dismiss
not provided with the complaint actually filed as Thrift had the case. The motion to dismiss reflects that Chumbley's
thrown his copy away and the D.A.'s office could not locate its explanation for dismissing the case was: “[co-defendant]
file. A copy of the complaint obtained from Thrift's attorney deceased. In the interest of justice.”
in a related civil suit was admitted at trial. The jury was
instructed regarding the situation and allowed to make its On August 26, 1994, Sandra Hubbard sued Terry Thrift for
own decision regarding the veracity of the complaint actually malicious prosecution. The case was tried to a jury. The jury
admitted. returned a verdict in favor of Sandra Hubbard, finding that
she had been damaged in the amount of $524,760. Thrift filed
In the complaint, Thrift alleged that (1) he gave the Hubbards a motion for new trial, a motion to disregard the jury findings,
a note against Peerless's accounts receivable in the amount of and a motion for judgment notwithstanding the verdict, all of
$109,776 in an effort to refinance a previous note scheduled which were denied by the trial court. A judgment reflecting
to come due; (2) a list of receivables in the amount of the jury's verdict was entered and this appeal ensues.
$140,392.75 was pledged by the Hubbards in exchange for
this note; (3) a check for $17,981 was added to the principle
amount of the note; (4) the Hubbards never reported Peerless's
ARGUMENT AND AUTHORITY
progress as he had requested; (5) he went to their office and
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
In his first four points of error, Thrift challenges the legal
and factual sufficiency of *77 the jury's verdict as it
pertains to both liability and damages. In considering a legal A. Commencement and Causation
insufficiency point, we consider only the evidence favorable [2] [3] [4] [5] There is no dispute that a criminal
to the decision of the trier of fact and disregard all evidence prosecution was commenced against Hubbard, thereby
and inferences to the contrary. Davis v. City of San Antonio, establishing the first element of a malicious prosecution cause
752 S.W.2d 518, 522 (Tex.1988). If there is more than a of action. However, Thrift contends that Hubbard failed to
scintilla of evidence to support the finding, the no evidence prove that Thrift initiated or procured the commencement of
challenge fails. Stafford v. Stafford, 726 S.W.2d 14, 16 the prosecution. A person initiates a criminal prosecution if he
(Tex.1987). In considering a factual sufficiency point, we makes a formal charge to law enforcement authorities. Lieck,
must assess all the evidence and reverse for a new trial 881 S.W.2d at 292. A person procures a criminal prosecution
only if the challenged finding shocks the conscience, clearly if his actions are enough to cause the prosecution, and but
demonstrates bias, or is so against the great weight and for his actions, the prosecution would not have occurred.
preponderance of the evidence that it is manifestly unjust. Id. A person does not procure a criminal prosecution when
Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986); the decision whether to prosecute is left to the discretion of
Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). Under this another, including a law enforcement official or the grand
analysis, we are not fact finders, we do not pass upon the jury, unless the person provides information which he knows
credibility of witnesses, nor do we substitute our judgment for is false. Id. Thrift argues that because he did not direct
that of the trier of fact, even if there is conflicting evidence Hubbard's arrest and because the District Attorney's Office
upon which a different conclusion could be supported. Clancy and the grand jury exercised sole discretion in deciding
v. Zale Corp., 705 S.W.2d 820, 826 (Tex.App.—Dallas 1986, to prosecute Hubbard, he could have neither initiated nor
writ ref'd n.r.e.). procured the prosecution.
In the present case, Thrift filed a sworn, notarized complaint
I. MALICIOUS PROSECUTION form with the District Attorney's office. The complaint itself
[1] In his first point of error, Thrift contends that the states that it is made for the sole purpose of instituting
evidence is both legally and factually insufficient to support criminal prosecution where the investigation indicates
the jury's finding of malicious prosecution. This court has criminal activity. The complaint lists Sandra Hubbard as
recently noted that in order to prevail in a malicious a co-defendant and repeatedly accuses her of numerous
prosecution case, the following elements must be established: illegal acts. While Thrift argues that the mere filing of a
(1) a criminal prosecution was commenced against the complaint does not constitute the initiation of a criminal
plaintiff; (2) the prosecution was initiated or procured prosecution, we find it unnecessary to address this contention
by the defendant; (3) the prosecution terminated in favor because, even though the decision to prosecute Hubbard was
of the plaintiff; (4) the plaintiff was innocent; (5) the ultimately made *78 by the District Attorney's office, the
defendant lacked probable cause to instigate the prosecution; jury had sufficient evidence to believe that Thrift intentionally
(6) the defendant acted with malice in bringing about the included false and misleading information in his complaint.
prosecution; and (7) the plaintiff suffered damages as a Thus, the evidence is sufficient to support a finding that Thrift
result of the prosecution. Zess v. Funke, 956 S.W.2d 92, 93 procured the prosecution of Sandra Hubbard.
(Tex.App.—San Antonio 1997, n.w.h.); see Browning–Ferris
Indus., Inc. v. Lieck, 881 S.W.2d 288, 292–93 (Tex.1994). Specifically, Thrift indicated in his complaint to the District
In cases of malicious prosecution, a delicate balance must Attorney that the $17,981 check was a part of the second
be struck between the interest of society in the good faith line of credit he extended to Peerless. However, the trial
reporting of suspect criminal conduct and the interest of evidence indicates that the $17,981 was a separate and
the individual in freedom from unjustifiable and oppressive independent loan. Thrift also told the District Attorney that
litigation of criminal charges. Lieck, 881 S.W.2d at 290. In the Hubbard's pledged to him accounts receivable in the
order to protect this delicate balance, courts must require amount of $140,392.75, when there is evidence that he knew
strict proof of each element of the cause of action. Id. at 291. this to be untrue. He further claimed that he was not kept up to
However, as with any other cause of action, if the elements date on the operations of Peerless. However, Sandra Hubbard
are proved, liability is established. Id.; see Ellis County State testified that reports were given to Thrift almost weekly. In
Bank v. Keever, 888 S.W.2d 790, 793 (Tex.1994). fact, several of those reports were admitted into evidence.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
In the present case, Assistant District Attorney Dwight
Further, Thrift implied in his complaint that, on May 19, 1987, Chumbley testified that he dismissed the case after
he was surprised to learn that the Thrift's had “started another conducting the prosecution for eight to ten months and
business” in order to siphon Peerless profits. Conversely, the concluding that it was no longer a good case. He
evidence reveals that Thrift knew the Hubbards were acting acknowledged that there was probable cause to support the
as major account resellers for Peerless and that he agreed original indictment, but that there was not enough evidence
to them acting as such. Finally, Assistant District Attorney to obtain a conviction. This evidence is clearly sufficient to
Ben Sifuentes testified that he conducted his investigation support a finding that the prosecution in this case terminated
of the Hubbards and Peerless based upon information given in Sandra Hubbard's favor.
to him by Thrift that was untrue, that is that Thrift was
attempting to purchase Peerless when the alleged theft took
place. Accordingly, the evidence is sufficient to establish that C. Probable Cause
the criminal prosecution of Sandra Hubbard would not have [8] [9] Finally, Thrift contends that the evidence is
occurred but for the complaint filed by Terry Thrift. insufficient, in all respects, to support a finding that Thrift
lacked probable cause to initiate a criminal prosecution
against Sandra Hubbard. Probable cause for the initiation
B. Resolution in Hubbard's Favor of a criminal prosecution exists when the relevant facts and
[6] [7] Thrift further contends that the evidence is circumstances *79 would excite belief in the mind of a
insufficient to support a finding that the prosecution in this reasonable person that the individual accused is guilty of the
case ended in Sandra Hubbard's favor. Particularly, Thrift crime for which he is prosecuted. Akin v. Dahl, 661 S.W.2d
argues that an action terminates in favor of the accused only 917, 921 (Tex.1983), cert. denied, 466 U.S. 938, 104 S.Ct.
where there has been an acquittal and a resolution of some 1911, 80 L.Ed.2d 460 (1984).
or all of the factual elements of the case. In the present
case, Thrift claims that because there was no resolution or [10] In determining whether probable cause exists in
adjudication of the facts underlying the criminal charges a malicious prosecution case, the trier of fact must
against Hubbard, the jury should not have concluded that the determine “whether the complainant reasonably believed
prosecution ended in her favor. that the elements of a crime had been committed based on
the information available before the criminal proceedings
However, in addressing the same issue, several Texas courts, began.” Richey v. Brookshire Grocery Co., 952 S.W.2d 515,
including our supreme court, have held otherwise. See Davis, 519 (Tex.1997). It is, therefore, important that the probable
752 S.W.2d at 523; Leal v. American Nat. Ins. Co., 928 cause inquiry focus only on the actions of the complainant,
S.W.2d 592, 597 (Tex.App.—Corpus Christi 1996, writ based upon his perspective of the facts at the time the report
denied); Closs v. Goose Creek Consol. Ind. School Dist., was made, and not on the subsequent actions of third-parties
874 S.W.2d 859, 878 (Tex.App.—Texarkana 1994, no writ); or information discovered after the fact. Akin, 661 S.W.2d at
see also Lang v. City of Nacogdoches, 942 S.W.2d 752, 758 921; Digby v. Texas Bank, 943 S.W.2d 914, 920 (Tex.App.—
(Tex.App.—Tyler 1997, writ denied) (implying favorable El Paso 1997, writ denied).
dismissal where criminal charges were dismissed). In Davis,
the supreme court specifically rejected an argument similar [11] [12] The defendant in a malicious prosecution case
to Thrift's, holding that termination on the merits is not is afforded the initial presumption that he acted reasonably
a necessary requirement of a malicious prosecution cause and in good faith in initiating a criminal proceeding against
of action. Davis, 752 S.W.2d at 523. The court held that the plaintiff. Richey, 952 S.W.2d at 517; Keever, 888 S.W.2d
“even when the termination is indecisive as to the accused's at 794; Akin, 661 S.W.2d at 920. However, this presumption
guilt, it is nevertheless favorable if the prosecution cannot be is rebutted when the plaintiff produces evidence that the
revived.” Id. Likewise, in Leal, the court held that dismissal motives, grounds, beliefs, and other evidence upon which
of the criminal charges against the accused constituted the defendant acted did not constitute probable cause to
termination on the merits where the prosecutor testified that commence the proceeding. Id. The burden then shifts to the
he concluded that the criminal prosecution might not be defendant to prove he acted with probable cause. Id. When
successful. Leal, 928 S.W.2d at 597; see also Closs, 874 the facts surrounding the impetus of the defendant's decision
S.W.2d at 878. to instigate a criminal prosecution are in dispute, the issue of
probable cause becomes a mixed question of law and fact to
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
be resolved by the jury. Richey, 952 S.W.2d at 518; Akin, 661 in the civil litigation stemming from these same facts. In
S.W.2d at 920. fact, Thrift testified that his own attorney advised him against
filing charges against the Hubbards when he threatened to do
While we may not agree with the jury's finding of lack so. When viewed in this manner, the evidence is sufficient to
of probable cause in this case, there is certainly sufficient support a finding that Thrift did not reasonably believe the
evidence to support such a finding. Thrift accused Sandra Hubbards had stolen money from him, and, therefore, lacked
Hubbard of theft of accounts receivable. Specifically, he probable cause to instigate criminal proceedings against
accused her of misrepresenting the value of Peerless's Sandra Hubbard.
accounts receivable, giving him a “bad check” in repayment
of a loan he made to Peerless, and misappropriating the
money received from the Wrigley account. The list of D. Malice
accounts receivable Thrift alleges was misrepresented to him [13] [14] With respect to the element of malice, Thrift
clearly shows the age of each account. The security agreement argues that the evidence is insufficient to support a finding
relevant to the line of credit he issued specifically provides that he acted with malice in reporting Hubbard's conduct to
that he did not have to accept as collateral any receivable older the District Attorney's Office. Malice may be established by
than 75 days. The jury could have reasonably concluded that either direct or circumstantial evidence and may be inferred
the receivables were honestly represented to Thrift and that he from lack of probable cause. Digby, 943 S.W.2d at 922;
made the conscious decision to issue the line of credit in spite Fisher v. Beach, 671 S.W.2d 63, 67 (Tex.App.—Dallas 1984,
of the large percentage of old receivables contained on the list. no writ). Malice is generally defined as ill will, evil motive,
The evidence certainly supports the fact that Thrift could not gross indifference, or reckless disregard of the rights of
have believed that Sandra Hubbard personally pledged the old others. Digby, 943 S.W.2d at 922; Closs, 874 S.W.2d at 878.
receivables because their own security agreement prevented
her from doing so without Thrift's approval. In the present case, there is sufficient evidence to demonstrate
that Thrift acted with malice in filing the complaint accusing
Thrift himself testified that the $17,981 note was not part Sandra Hubbard of theft. There is evidence that Thrift
of the line of credit as he claimed in his complaint to was aware of exculpatory facts that he did not disclose to
the District Attorney. He further testified that he deposited the District Attorney, specifically in regard to his exercise
Peerless's $17,981 check when he knew the Peerless account of control over Peerless operations, the circumstances
was insolvent and he knew why. There is evidence that Thrift surrounding the $17,981 loan, his prior knowledge of the
was aware that a large portion of the Wrigley receivable had collectability of the accounts receivable, and his beliefs
already been pledged to Peerless's landlord before he claimed regarding the Wrigley account. Moreover, there is evidence
that his $17,981 loan was collateralized by the Wrigley that he threatened the Hubbards with criminal charges and
account. The evidence also supports a finding that Thrift vowed to “get even” with the Hubbards.
was aware that his $17,981 loan might not be paid out of
the Wrigley receivable as he stated in his complaint. Letters We conclude, based upon a thorough review of the record,
from Sandra Hubbard to Thrift also support a finding that that the evidence in this case is sufficient to support the
Thrift was aware that the Peerless receivables he claimed the jury's affirmative finding regarding each element of malicious
Hubbards stole were used for legitimate business purposes. prosecution. Thrift's first point of error is overruled.
Thrift's testimony concerning his good faith belief that the
II. DAMAGES
Hubbards had stolen his investment is compelling. However,
In his second through fourth points of error, Thrift disputes
the evidence also supports a finding that Thrift was a
the sufficiency of the evidence supporting the jury's findings
disappointed investor who gambled and lost on a fledgling
of damages. The jury awarded Hubbard $437,300 in damages:
company that could not keep its head above water. Where
$2,500 in attorney's fees, $275,000 for injury to reputation;
the evidence supports differing conclusions, we must defer to
$150,000 for emotional distress; and $9,800 for lost wages.
the jury's verdict. It is reasonable to interpret the evidence in
this case as proving that Thrift filed his criminal complaint
against the Hubbards, knowing it was specious, in an attempt A. Injury to Reputation
to avenge his lost investment *80 or to gain an advantage
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
[15] In his second point of error, Thrift contends that the
evidence does not support the jury's award of damages for
injury to Hubbard's reputation. He argues that there is no B. Emotional Distress
evidence that Hubbard possessed a certain amount of respect [16] In his third point of error, Thrift contends that the
in the community that she lost as a result of the criminal evidence is insufficient to support the jury's award of damages
charges against her. He further claims that the evidence is for emotional distress because the award necessitates an
insufficient because there was no evidence that Hubbard's inference of humiliation. We disagree. The evidence reflects
indictment was ever publicized. that Hubbard was indicted by a grand jury of four counts
of criminal activity reflecting negatively on her character,
At trial, Hubbard testified that she was extremely involved and that she remained under indictment for over three years.
in the computer software business prior to her indictment. Hubbard testified that she had to sit with other criminal
She had been and continued to work with large corporations defendants who were chained and attended by guards during
and government agencies designing computer software. In her fifteen court appearances. She further testified that,
her opinion, she had “quite a very good reputation” in the during these hearings, she endured “glossy eyed” on-lookers
technology industry. Hubbard also testified that she was “pawing” at her and asking why she was there. She spent over
heavily involved in church activities and that she taught fifth three years assisting in her defense and fearing a conviction
grade Sunday school. of unfounded charges. She testified that it was “terrible.”
After the indictment was returned against her, Hubbard Hubbard testified that she discontinued her church activities
testified that she chose not to continue seeking promising because she feared misleading people about her faith if
employment opportunities with government agencies because they discovered that she was under indictment. She also
she would have had to disclose that there was an indictment worried about her business dealings and feared applying for
pending against her. She also chose not to attempt to certain projects because she would be compelled to disclose
sell technology she had developed because industry-wide the indictment. Hubbard's criminal attorney testified that
due diligence requirements mandated that she disclose the she was many times, “crying, a nervous wreck.” Hubbard's
indictment. Because the indictment is still on her record, stepdaughter testified that the Hubbards's criminal defense
she continues to be required to disclose its existence in her took up “pretty much all of their time and all of their thoughts
business dealings. Likewise, she will always have to disclose and everything ... I mean they worked hard to get where they
the indictment on official forms and applications asking for were, and it was all gone, taken away.”
such information. According to Hubbard, “it is a poison pill”
and “it killed [her] reputation.” Her stepdaughter stated, and Thrift's contention that the award of damages for emotional
the jury apparently agreed, that “nobody is going to want to distress required evidence that Hubbard could not sleep or
work with somebody ... with that kind of reputation.” eat, required medication or psychiatric care, experienced
depression, or fell into substance abuse as a result of the
*81 As for her church activities, Jerry Horn, one charges against her is unfounded. The evidence in this
of Hubbard's friends from church testified that Sandra case supports a finding that Hubbard's daily routine was
relinquished her responsibilities and decreased her substantially disrupted by fear and anxiety related to the
involvement in church activities. He testified that, if charges pending against her, not to mention by the emotional
information regarding her indictment had been widely strain surrounding her preparation for and attendance at
known, it would have discredited her ministry. over 15 court proceedings as a criminal defendant. The
jury's award of $150,000 for mental anguish was, therefore,
Thrift did not counter any of this evidence. Under these appropriate. Thrift's third point of error is overruled.
circumstances, the jury reasonably concluded that Hubbard
had suffered damage to her reputation in the amount of
C. Lost Wages
$275,000. Such a finding is reasonable in light of the gross
[17] In her fourth point of error, Thrift contends that the
social stigma attached to criminal charges that Hubbard will
evidence is insufficient to support the jury's award of damages
be burdened with both professionally and socially as long as
for past lost wages. The evidence introduced at trial in
the indictment remains on her record. Thrift's second point of
support of Hubbard's claim for lost wage damages consists of
error is overruled.
Hubbard's estimation that she spent approximately 98 hours
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
preparing for, traveling to, and making seven four-hour court defined or by finding that Thrift filed his complaint for some
appearances and seven ten-hour court appearances while the other reason than to obtain justice.
indictment was pending. She testified that if she had not been
traveling and making court appearances, she would have been While the charge in this case allowed the jury to find malice
working. She further testified that her standard billing rate for based upon a legal theory not generally recognized in Texas
programming was $100 an hour. case law, the instruction given is consistent with the theory of
malice established in the Restatement Second of Torts. The
Thrift argues that the evidence is insufficient to support Restatement provides that:
the award of lost wages because Hubbard's testimony
constituted speculation. However, Thrift did not object to [t]o subject a person to liability
this allegedly speculatory testimony at trial nor did he offer for malicious prosecution, the
any controverting evidence. Hubbard's testimony was clear, proceedings must have been initiated
definitive, and within her personal knowledge—it was not primarily for a purpose other than that
speculative. Accordingly, the evidence is sufficient to support of bringing an offender to justice.
the jury's award of lost wage damages in the amount of
RESTATEMENT (SECOND) OF TORTS § 668 (1997); see
$9,800. Thrift's fourth point of error is overruled.
W. PAGE KEETON ET AL., PROSSER AND KEETON ON
THE LAW OF TORTS § 119 at 883 & n. 65 (5th ed.1984)
*82 III. THE JURY CHARGE (citing Nesmith v. Alford, 318 F.2d 110 (5th Cir.1963), cert.
[18] In his final point of error, Thrift complains that the trial denied, 375 U.S. 975, 84 S.Ct. 489, 11 L.Ed.2d 420 (1964) for
court erred in overruling his objection to the jury instruction proposition that malice is established where the defendant's
regarding malice. The jury instruction actually given allowed primary purpose was something other than the bringing an
the jury to make an affirmative finding regarding the malice offender to justice).
element of malicious prosecution if it determined:
It is Thrift's burden to establish that he was harmed by the
that Terry Thrift, Jr. acted with malice in initiating or trial court's submission of the allegedly erroneous malice
procuring the criminal prosecution, or that he initiated or issue to such a degree that the error probably caused the
procured it primarily for a purpose other than to bring an rendition of an improper judgment. TEX.R.APP. P. 44.1(a)
offender to justice; (formerly TEX.R.APP. P. 81(b)(1)). Contrary to Thrift's
contention, the fact that the jury may have relied upon a
“Malice” is ill will or evil motive or such gross legal theory submitted in error does not necessarily require
indifference or reckless disregard for the rights of others reversal because it does not affirmatively demonstrate that
as to amount to wanton and willful action, knowingly the error probably caused rendition of an improper judgment.
and unreasonably done. Provident American Ins. Co. v. Castaneda, 914 S.W.2d 273,
277 (Tex.App.—El Paso 1996, writ granted).
As discussed above, a finding of malice is necessary to
a successful malicious prosecution case. Malice has been In order to make a sufficient showing of harm, Thrift must
consistently defined by Texas courts as it was defined by show that there is no or insufficient evidence to support a
the court's charge in this case: ill will, evil motive, gross finding based upon the correct portion of the malice issue
indifference, or reckless disregard. See Fisher, 671 S.W.2d at submitted to the jury. Ford Motor Co. v. Pool, 688 S.W.2d
67; Dahl v. Akin, 645 S.W.2d 506, 515 (Tex.App.—Amarillo 879, 882 (Tex.App.—Texarkana 1985), aff 'd in part and
1982), aff'd, 661 S.W.2d 917 (Tex.1983), cert. denied, 466 rev 'd in part, 715 S.W.2d 629 (1986) (affirming holding of
U.S. 938, 104 S.Ct. 1911, 80 L.Ed.2d 460 (1984). However, appellate court in regard to proposition at issue); Bernstein v.
the court's charge in this case goes beyond the common law Portland Sav. & Loan Assoc., 850 S.W.2d 694, 702 (Tex.App.
definition of malice and allows an affirmative finding of the —Corpus Christi 1993, writ denied). In other words, if the
malice element upon proof that the prosecution was sought evidence is not sufficient to demonstrate that Thrift acted with
“primarily for a purpose other than to bring an offender to ill will, evil motive, gross indifference, or reckless disregard
justice.” Thrift argues that the instruction given in this case in filing his complaint against the Hubbards, then it is more
is erroneous because it enabled the jury to find malice on likely than not that the jury found malice based upon the
alternative grounds: either by finding malice as it is generally Restatement definition. However, as discussed above, the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Thrift v. Hubbard, 974 S.W.2d 70 (1998)
evidence in this case is more than sufficient to demonstrate
that Thrift's complaint was filed with ill will, evil motive,
gross indifference, or reckless disregard. Accordingly, we GREEN, Justice, dissenting on motion for rehearing.
find that, if the jury *83 charge in this case was in fact Appellant's motion for rehearing should be granted on the
erroneous, the error is harmless. damages issues. Because the panel majority has voted to deny
the motion, I respectfully dissent.
Because we find that Thrift suffered no harm as a result of the
inclusion of the Restatement definition of malice in the jury
charge, we will not pass on the actual propriety of the charge. All Citations
Thrift's fifth point of error is overruled.
974 S.W.2d 70
The judgment of the trial court is affirmed.
Footnotes
1 While Victor Hubbard is essential to the factual development of this case, he has since passed away. Neither he nor his
estate have been involved in the malicious prosecution case.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
CCC
Tittizer v. Union Gas Corp., 171 S.W.3d 857 (2005)
164 Oil & Gas Rep. 172, 48 Tex. Sup. Ct. J. 1023
[4] lessee had appealed award of $150,000 in attorneys' fees to
non-drillsite lessors, such that Court of Appeals should have
KeyCite Yellow Flag - Negative Treatment considered issue on appeal.
Declined to Extend by Kuzmin v. Schiller, Tex.App.-Dallas, January
8, 2015
171 S.W.3d 857 Affirmed in part, reversed in part, and remanded.
Supreme Court of Texas.
Evelyn TITTIZER, Individually and as Independent
West Headnotes (15)
Executrix of the Estate of Louis Tittizer, Petitioner,
v.
UNION GAS CORPORATION, Respondent. [1] Appeal and Error
Cases Triable in Appellate Court
No. 04–0100. | Aug. 26, 2005. The Supreme Court reviews the trial court's
summary judgment de novo.
Synopsis
Background: Oil and gas lessors brought action against 19 Cases that cite this headnote
lessee seeking payment of royalties in accordance with
pooling agreement. Lessee joined non-drillsite lessors as
[2] Mines and Minerals
third-party defendants and sought declaration to establish
In General; General Rules of Construction
rights of the parties concerning the royalty payments and
the effective date of the pooled unit as the date of first An oil and gas lease is a contract, and its terms
production for all royalty owners. Non-drillsite lessor brought are interpreted as such.
counterclaim seeking declaration that the effective date of the
24 Cases that cite this headnote
pooled unit under her lease was the date of first production,
and seeking to recover her pro rata share of royalties accruing
from the date of first production to the date of judgment. [3] Mines and Minerals
The 267th District Court, Victoria County, granted lessors' In General; General Rules of Construction
and non-drillsite lessors' motions for summary judgment, In construing an unambiguous oil and gas lease,
awarded attorney's fees, and granted motions to sever. Lessee the court seeks to enforce the intention of the
appealed. The Court of Appeals, Thirteenth District, affirmed parties as it is expressed in the lease.
in part and reversed in part. Lessee and non-drillsite lessor
petitioned for review. 18 Cases that cite this headnote
[4] Contracts
Holdings: The Supreme Court held that: Application to Contracts in General
The court enforces an unambiguous document as
[1] effective date of the pooled unit under lease was the date written.
of recordation of the designation;
1 Cases that cite this headnote
[2] lessee was not estopped under the invited error doctrine
from arguing on appeal that effective date of pooled unit was
[5] Mines and Minerals
date of recordation;
Place or Portion Developed; Pooled or
Unitized Tracts
[3] lessee did not unequivocally take a position in the trial
Oil and gas lease, which provided that lessee
court that was clearly adverse to its position on appeal such
“shall exercise said option as to each desired
that lessee was estopped from making such an argument on
unit by executing an instrument identifying
appeal; and
such unit and filing it for record,” did not
authorize lessee to execute a pooling designation
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Tittizer v. Union Gas Corp., 171 S.W.3d 857 (2005)
164 Oil & Gas Rep. 172, 48 Tex. Sup. Ct. J. 1023
with a retroactive effect, but rather provided
that unitization could be effective only upon 3 Cases that cite this headnote
recordation, and thus effective date of the
pooled unit was the date of recordation of the [9] Appeal and Error
designation and non-drillsite lessor was entitled Error Committed or Invited by Party
only to her pro rata share of the royalties earned Complaining
after that date.
As a general rule, the doctrine of estoppel
4 Cases that cite this headnote precludes a litigant from requesting a ruling
from a court and then complaining that the court
committed error in giving it to him.
[6] Mines and Minerals
Place or Portion Developed; Pooled or 9 Cases that cite this headnote
Unitized Tracts
An oil and gas lessee has no power to [10] Appeal and Error
pool without the lessor's express authorization, Error Committed or Invited by Party
usually contained in the lease's pooling clause. Complaining
5 Cases that cite this headnote A party cannot complain on appeal that the trial
court took a specific action that the complaining
party requested, a doctrine commonly referred to
[7] Mines and Minerals as “the invited error doctrine.”
Place or Portion Developed; Pooled or
Unitized Tracts 44 Cases that cite this headnote
For pooling to be valid, it must be done
in accordance with the method and purposes [11] Appeal and Error
specified in the oil and gas lease. Nature and Theory of Cause, and Grounds
of Action or Defense
5 Cases that cite this headnote
Declaratory Judgment
Scope and Extent of Review in General
[8] Appeal and Error
Oil and gas lessee did not unequivocally take
Nature and Theory of Cause, and Grounds
a position in the trial court, where lessee
of Action or Defense
argued for declaration that pooled unit was
Declaratory Judgment retroactively effective as of the date of first
Scope and Extent of Review in General production, that was clearly adverse to its
Oil and gas lessee was not estopped under the position on appeal, which was that effective date
invited error doctrine from arguing on appeal of pooled unit was date of recordation, such
that effective date of pooled unit was date of that lessee was estopped from making such an
recordation, despite lessee's third-party claim argument on appeal; lessee stated in trial court
seeking declaration that the pooled unit was that a “bona fide dispute exists” concerning
retroactively effective as of the date of first lessors' entitlement under their respective leases
production; lessee filed third-party claim to and under unit designation, which was an
avoid potential double liability by obtaining a acknowledgment that both positions concerning
judicial determination of its obligations under the effective date of pooling might have validity
leases and by joining all stakeholders as parties, and were asserted in good faith.
lessee's argument that it had the power to
make the unit retroactive was contingent on the 5 Cases that cite this headnote
retroactive application being uniformly applied
to all parties, but trial court declined to apply that [12] Appeal and Error
application to non-drillsite lessor.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Tittizer v. Union Gas Corp., 171 S.W.3d 857 (2005)
164 Oil & Gas Rep. 172, 48 Tex. Sup. Ct. J. 1023
Points and Arguments
Emmett Cole Jr., William L. Sciba, III, Cole, Cole & Easley,
Oil and gas lessee had appealed award of
P.C., Victoria, for petitioner.
$150,000 in attorneys' fees to non-drillsite
lessors, such that Court of Appeals should have Opinion
considered issue on appeal; although lessee
stated in point of error that court erred in PER CURIAM.
granting fees to other lessors, body of argument
supporting the point of error twice referred to The parties dispute the amount of royalties that an oil and
challenges to the attorneys' fees awarded to non- gas lessee owes landowners under the pooling provisions of
drillsite lessors, and argument concluded that multiple oil and gas leases. The landowner argues that her
attorney's fee award to non-drillsite lessors was lease's pooling provisions entitle her to royalties on the pooled
“unreasonable as a matter of law.” unit from the date of first production. The lessee argues that
royalties are due from the later date of recordation of the
4 Cases that cite this headnote Designation of Pooled Unit. We agree with the lessee and
affirm in part the judgment of the court of appeals and remand
the case to the court of appeals to consider the reasonableness
[13] Appeal and Error
of attorneys' fees.
Points and Arguments
Points of error should be liberally construed In 1999, Union Gas Corporation entered into multiple oil
to fairly and equitably adjudicate the rights of and gas leases with Jimmie Gisler, Jenell Gisler, Ralph
litigants. Rules App.Proc., Rule 38.9. Gisler, and Doris Gisler (the Gislers) and various adjoining
landowners. The leases contained pooling clauses, allowing
5 Cases that cite this headnote
lessee Union Gas to pool acreage owned by the various lessors
for production of natural gas. Under the leases, each lessor in
[14] Appeal and Error the “pooled unit” was entitled to receive a pro rata share of
Points and Arguments royalty fees from production anywhere in the unit. Completed
An appellate court should consider the parties' in March 2000, the Watts–Gisler No. 1 Well was part of a
arguments supporting each point of error and pooled unit. The well began production on March 27, 2000.
not merely the wording of the points. Rules However, Union Gas did not file a Designation of Pooled Unit
App.Proc., Rule 38.9. (the Designation) until August 7, 2000. The county recorded
the Designation on the same day. The Designation included
Cases that cite this headnote language that purported to make the pooled unit effective
retroactively, from the date of first production on March 27,
[15] Appeal and Error 2000.
Defects, Objections, and Amendments
The Gislers filed a breach of contract claim against
Adhering to tenets of preservation of error
Union Gas, seeking to defeat the retroactive effect of the
is important; however, appellate courts should
Designation. They sought 100% of their royalties from the
avoid being overly technical in their application.
March 27, 2000 production date until the August 7, 2000
Cases that cite this headnote recordation of the Designation. The suit also alleged bad-faith
pooling, damages for drainage, breach of implied covenants,
fraud, negligence, and conversion. Union Gas joined, as third-
party defendants, the adjoining landowners (the non-drillsite
lessors), alleging that these parties' royalty rights under the
Attorneys and Law Firms
pooling clauses of the leases could be affected by the Gislers'
*859 Paul S. Francis, Kenneth Sup Soh, Baker & Hostetler, claim to 100% of the royalties from March 27, 2000 to August
LLP, Joe G. Roady, Hirsch & Westheimer, Houston, for 7, 2000. Union Gas sought a declaration to establish the
respondent. rights of the parties concerning the royalty payments and the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Tittizer v. Union Gas Corp., 171 S.W.3d 857 (2005)
164 Oil & Gas Rep. 172, 48 Tex. Sup. Ct. J. 1023
effective date of the pooled unit as the date of first production were entitled to royalties from production between March
for all royalty owners. 27, 2000 and August 7, 2000. 171 S.W.3d 209, ––––, 2003
WL 22479980. The court of appeals affirmed the trial court's
Evelyn Tittizer was one of the non-drillsite lessors joined judgment in all other respects. Id. at ––––. The court of
by Union Gas's third-party action. Tittizer counterclaimed appeals also held that Union Gas failed to attack the award
against Union Gas seeking a declaration that the effective of Tittizer's attorneys' fees and thus did not consider the
date of the pooled unit under her lease was the date of first reasonableness of the $150,000 award. Tittizer and Union Gas
production, and seeking to recover her pro rata share of petitioned this Court for review. We review the trial court's
royalties accruing from the date of first production to the date summary judgment de novo. Provident Life & Accident Ins.
of judgment. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003).
Union Gas later amended its third-party action to add a claim [2] [3] [4] An oil and gas lease is a contract, and its
for interpleader, alleging that competing claims for royalties terms are interpreted as such. See Anadarko Petroleum Corp.
placed them “in the position of potential double liability.” v. Thompson, 94 S.W.3d 550, 554 (Tex.2002); Skelly Oil Co.
Union Gas tendered over $1.3 million into the registry of the v. Archer, 163 Tex. 336, 356 S.W.2d 774, 778 (1961). In
court, representing this amount as the royalties accruing from construing an unambiguous oil and gas lease, such as the one
March 27, 2000 (the date of first production) to August 7, at issue here, we seek to enforce the intention of the parties as
2000 (the recordation date of the Designation). it is expressed in the lease. Heritage Res., Inc. v. NationsBank,
939 S.W.2d 118, 121 (Tex.1996); McMahon v. Christmann,
The Gislers filed a motion for partial summary judgment 157 Tex. 403, 303 S.W.2d 341, 344 (1957). We enforce an
seeking 100% of their royalties from March 27, 2000 to unambiguous document as written. Sun Oil Co. v. Madeley,
August 7, 2000. All of the non-drillsite lessors, including 626 S.W.2d 726, 728 (Tex.1981).
*860 Tittizer, also filed motions for partial summary
judgment, seeking declarations that the pooling clauses of the [5] [6] [7] A lessee has no power to pool without the
leases were effective from the date of first production and that lessor's express authorization, usually contained in the lease's
all of the owners of the pooled unit were entitled to pro rata pooling clause. Southeastern Pipe Line Co. v. Tichacek, 997
shares of the $1.3 million in royalties from production during S.W.2d 166, 170 (Tex.1999); Jones v. Killingsworth, 403
the March 27, 2000 to August 7, 2000 period. S.W.2d 325, 327–28 (Tex.1965) (“The lessors' land may be
pooled only to the extent stipulated in the lease.”). For pooling
The trial court granted the Gislers' and all non-drillsite to be valid, it must be done in accordance with the method and
lessors' motions for partial summary judgment against Union purposes specified in the lease. Tichacek, 997 S.W.2d at 170.
Gas. The trial court also granted motions to sever the
Gislers' breach of contract claims and the non-drillsite lessors' Union Gas's lease with Tittizer reads:
counterclaims against Union Gas, creating eleven different
cases. The trial court entered final judgment for the Gislers on Lessee shall exercise said option as
their severed contract claims for over $1.3 million in royalties, to each desired unit by executing an
plus attorneys' fees. The trial court also entered judgment for instrument identifying such unit and
each of the non-drillsite lessors. Specifically, the trial court filing it for record in the public office
awarded Tittizer her pro rata share of royalties from March 27, in which this lease is recorded. Each
2000, the date of first production, through April 30, 2001, the of said options may be exercised by
date of judgment in her favor, plus attorneys' fees. By doing lessee at any time and from time to
so, the trial court implicitly rejected Union Gas's interpleader time while this lease is in force, and
claim. whether before or after production has
been established either on said land,
[1] On appeal, Union Gas complained that it had been or on the portion of *861 said land
wrongfully ordered to pay double royalties for production included in the unit, or on other land
between March 27, 2000 and August 7, 2000. The court of unitized therewith.
appeals reversed in part the trial court's judgments in favor
Tittizer argues that the language in her lease allows Union
of the non-drillsite lessors and ordered that the Gislers alone
Gas to make the effective date of the pooled unit retroactive
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Tittizer v. Union Gas Corp., 171 S.W.3d 857 (2005)
164 Oil & Gas Rep. 172, 48 Tex. Sup. Ct. J. 1023
by language in the Designation. On the contrary, under the 392 (Tex.App.El Paso 1998, no pet.); Austin Transp. Study
terms of the lease, pooling can only be effectuated upon Policy Advisory Comm. v. Sierra Club, 843 S.W.2d 683, 689–
recordation of an instrument identifying the pooled unit. 90 (Tex.App.Austin 1992, writ denied). The rule is grounded
While the lease allows Union Gas to pool by recording at in justice and dictated by common sense. Hodges, 158 S.W.2d
any time, it does not allow Union Gas to pool on a date at 488. Union Gas responds that it is not raising a point of
other than that of recordation of the Designation. Therefore, error inconsistent with its position at the trial court. We agree.
the attempt by Union Gas to effect pooling on a date prior
to the date of recordation, by assigning a different effective Union Gas filed its third-party claim to avoid potential
date in the Designation, is contrary to the unambiguous double liability by obtaining a judicial determination of its
terms of the lease. Our courts of appeals have also reached obligations under the leases, and also by joining all the
the same conclusion on similar lease language. See, e.g., stakeholders as parties to ensure that it obtained a binding
Sauder v. Frye, 613 S.W.2d 63, 64 (Tex.Civ.App.Fort Worth determination of their contractual rights and obligations in the
1981, no writ) (holding, in interpreting a pooling clause oil and gas properties. While Union Gas did seek a declaration
providing that the lessee “shall execute in writing and record” that the effective date of the pooled unit for royalty purposes
an instrument identifying the units, that the intent of the was the date of first production, *862 it also stated that
parties was for unitization to be effective only upon recording “the possibility of double liability makes it essential that
of the designation); Yelderman v. McCarthy, 474 S.W.2d Union Gas obtain a declaration of the rights of the parties.”
781, 782, 784 (Tex.Civ.App., Houston [1st Dist.] 1971, Union Gas's argument that it had the power to make the
writ ref'd n.r.e.) (holding that ratification of a lease clause unit retroactive was contingent on the retroactive application
providing that “upon such recordation the unit shall be being uniformly applied to all parties, such that it owed no
effective as to all parties hereto” made pooling conditioned more than the amount it sought to interplead into the court's
upon recordation); cf. Tiller v. Fields, 301 S.W.2d 185, registry.
191 (Tex.Civ.App.Texarkana 1957, no writ) (holding that
effective date of pooling was the date of execution of the [10] As we explained in Hodges, a party cannot complain
designation where the lease did not require that the unit on appeal that the trial court took a specific action that the
designation be recorded); see also Howard R. Williams & complaining party requested, a doctrine commonly referred
Charles J. Meyers, Oil and Gas Law §§ 669.11, 921.16 to as “the invited error” doctrine. 158 S.W.2d at 488; see,
(2004); 1 Ernest E. Smith & Jacqueline Lang Weaver, Texas e.g., Naguib v. Naguib, 137 S.W.3d 367, 375 (Tex.App.,
Law of Oil and Gas § 4.8[B][2] (2d ed.2005). Dallas 2004, pet. denied); Neasbitt v. Warren, 22 S.W.3d
107, 112 (Tex.App.Fort Worth 2000, no pet.); Ramirez, 973
We hold that this lease does not authorize the lessee to S.W.2d at 392. Union Gas sought a uniform determination
execute a pooling designation with a retroactive effect. The from the trial court, applicable to all royalty owners, that the
lease provides that unitization can be effective only upon effective date of pooling was the date of first production.
recordation. We affirm the court of appeals' conclusion Granting Tittizer's motion for summary judgment, the trial
that the effective date of the pooled unit was the date of court declared that the effective date of the pooled unit as to
recordation of the Designation, and that Tittizer is only the Tittizer lease was the date of first production. However,
entitled to her pro rata share of the royalties earned after that the court did not apply the same effective date to the Gisler
date. lease. Instead, contrary to Union Gas's position, the court
entered judgment in favor of the Gislers in an amount based
[8] [9] Tittizer next argues that Union Gas is estopped on an effective date of pooling from the date of recordation
from arguing that the effective date of the pooled unit is of the Designation. By establishing different effective dates
the date of recordation because Union Gas filed a third- for the Gislers and Tittizer, the trial court did not grant Union
party claim seeking a declaration that the pooled unit was Gas's requested uniform relief. Therefore, the invited error
effective as of the date of first production, on March 27, doctrine is inapplicable to this case because Union Gas did
2000. As a general rule, the doctrine of estoppel precludes not request that the trial court rule in the manner in which it
a litigant from requesting a ruling from a court and then did and thus did not “invite” the error.
complaining that the court committed error in giving it to him.
Northeast Tex. Motor Lines v. Hodges, 138 Tex. 280, 158 [11] In addition, to be estopped from asserting that
S.W.2d 487, 488 (1942); Ramirez v. State, 973 S.W.2d 388, recordation is the effective date of pooling, Union Gas must
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Tittizer v. Union Gas Corp., 171 S.W.3d 857 (2005)
164 Oil & Gas Rep. 172, 48 Tex. Sup. Ct. J. 1023
783, 784 (Tex.1995); Holley v. Watts, 629 S.W.2d 694,
have unequivocally taken a position in the trial court that
696 (Tex.1982). After severing all the non-drillsite lessors'
is clearly adverse to its position on appeal. See Am. Sav.
counterclaims, the trial court awarded attorneys' fees to both
& Loan Ass'n v. Musick, 531 S.W.2d 581, 589 (Tex.1975)
Tittizer and the Gislers. The body of the argument supporting
(“One of the requirements for application of the doctrine
the point of error twice refers to challenges to the attorneys'
of judicial estoppel is that the statement must be deliberate,
fees awarded to Tittizer. The text of Union Gas's argument
clear, and unequivocal.”). Union Gas's position at the trial
concludes that “the attorneys fee award provided to the
court was neither unequivocal nor clearly adverse to its
Tittizer appellees is thus unreasonable as a matter of law.”
position on appeal. Union Gas stated in its third-party claim
that a “bona fide dispute exists” concerning the entitlement
[15] The context of the litigation, as well as the text of the
of Tittizer and the non-drillsite lessors “under their respective
argument in its brief to the court of appeals, indicates that
leases and under the Unit Designation.” This statement is an
the intent of Union Gas was to appeal the award of attorneys'
acknowledgment that both positions concerning the effective
fees to Tittizer, even though its point of error erroneously
date of pooling may have validity and are asserted in good
mentioned “the Gislers.” Adhering to tenets of preservation
faith. Union Gas's position that the effective date of pooling
is important; however, appellate courts should avoid being
was the date of first production was not unequivocal. For
overly technical in their application. See In re B.L.D. &
similar reasons, Union Gas's third-party claim is not clearly
B.R.D., 113 S.W.3d 340, 350 (Tex.2003) (describing the
adverse to its position on appeal. At the trial court, Union
underpinnings of preservation rules as fairness to the parties
Gas sought to obtain a uniform determination applicable to
and judicial economy and accuracy); Motor Vehicle Bd. of
all royalty owners to avoid double liability, and its position
the Tex. Dep't of Transp. v. El Paso Indep. Auto. Dealers
on appeal is the same.
Ass'n, 1 S.W.3d 108, 111 (Tex.1999) (stating the Court's
preference to decide cases on substance rather than procedural
[12] Finally, Union Gas complains that the court of appeals
technicalities). The court of appeals erred in holding that this
erred in holding that Union Gas did not appeal the award of
point of error was not raised. We remand this issue to the court
$150,000 in attorneys' fees to Tittizer. We agree. In its brief to
of appeals. Tex.R.App. P. 61.4.
the court of appeals, Union Gas included the following point
of error: “The trial court erred in granting final judgments
We hold that the court of appeals is correct in concluding
which awarded attorneys fees to the Gislers [Union Gas Corp.
that Tittizer is not entitled to royalties for production between
v. Gisler, 129 S.W.3d 145 (Tex.App.—Corpus Chrisit)]
March 27, 2000 and August 7, 2000 because the lease
because the amounts awarded were excessive and were not
unambiguously provides for pooling to commence on the date
reasonable, necessary, equitable, or just.” (emphasis added).
of the Designation's recordation. We further hold that the
The court of appeals held simply that “Union did not appeal
court of appeals erred in concluding that Union Gas failed to
the award of attorneys fees in this case.” 171 S.W.3d at 211
appeal the trial court's award of attorneys' fees. We affirm in
[(Tex.App.—Corpus Christi—2003)].
part and reverse in part the court of appeals' judgment and
*863 [13] [14] Read in isolation, Union Gas's point remand the case to the court of appeals to consider Union
Gas's challenge to the reasonableness of the attorneys' fees
of error in the court of appeals complains that the trial
awarded to Tittizer.
court awarded excessive fees to the Gislers and includes
no challenges to the trial court's attorneys' fees award to
Tittizer. Under this view Union Gas failed to preserve error
as to Tittizer's attorneys' fees award. However, points of Justice Willett did not participate in the decision.
error should be liberally construed to fairly and equitably
adjudicate the rights of litigants. Tex.R.App. P. 38.9; All Citations
Williams v. Khalaf, 802 S.W.2d 651, 658 (Tex.1990).
171 S.W.3d 857, 164 Oil & Gas Rep. 172, 48 Tex. Sup. Ct.
Furthermore, an appellate court should consider the parties'
J. 1023
arguments supporting each point of error and not merely
the wording of the points. Anderson v. Gilbert, 897 S.W.2d
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
DDD
Tobin v. Garcia, 159 Tex. 58 (1958)
316 S.W.2d 396
his care, use or disposal of it. Vernon's
Ann.St.Const. art. 3, § 20.
KeyCite Yellow Flag - Negative Treatment
Declined to Extend by United Parcel Service, Inc. v. Tasdemiroglu, 3 Cases that cite this headnote
Tex.App.-Hous. (14 Dist.), August 10, 2000
159 Tex. 58 [2] Judgment
Supreme Court of Texas. Evidence and Affidavits in Particular Cases
In consolidated mandamus proceedings to
Daniel TOBIN, Jr., et al.
require county commissioners to issue certificate
v.
showing plaintiffs' election to office of county
Amando GARCIA, Jr., and George B. Parr.
clerk, and office of sheriff, respectively, exhibits,
pleadings and affidavits submitted for and in
No. A-6632. | April 30, 1958.
opposition to motions for summary judgment
| Rehearing Denied Oct. 1, 1958.
presented in issue of fact as to whether plaintiffs
| Concurring Opinion Oct. 16, 1958.
were ineligible to hold offices of county clerk
Consolidated mandamus proceedings to require county and sheriff, respectively, under constitutional
commissioners to issue certificate showing plaintiffs' election provision that no person entrusted with public
to office of county clerk, and office of sheriff, respectively. money shall be eligible to office until he shall
The District Court, Duvall County, C. W. Laughlin, J., have obtained a discharge, precluding summary
granted defendants' motions for summary judgment and judgment. Vernon's Ann.St.Const. art. 3, § 20;
plaintiffs appealed. The San Antonio Court of Civil Appeals, Rules of Civil Procedure, rule 166–A.
307 S.W.2d 836, reversed and remanded with instructions,
68 Cases that cite this headnote
and plaintiffs and defendants brought error. The Supreme
Court, Hickman, C. J., held that exhibits, pleadings and
affidavits submitted for and in opposition to motions for [3] Judgment
summary judgment presented an issue of fact as to whether Nature of summary judgment
plaintiffs were ineligible to hold offices of county clerk and The right to summary judgment was unknown
sheriff, respectively, under constitutional provision that no to common law and exists only by virtue of rule
person entrusted with public money shall be eligible to office providing therefor, and in order to be entitled to
until he shall have obtained a discharge, precluding summary benefits of such rule, all of its terms must be
judgment. complied with. Rules of Civil Procedure, rule
166–A.
Judgment of Court of Civil Appeals affirmed with directions.
21 Cases that cite this headnote
West Headnotes (5) [4] Appeal and Error
Nature and Scope of Decision
Appeal and Error
[1] Officers and Public Employees
Rendering Final Judgment
Special requirements
If the only order in a trial court is one overruling
In constitutional provision that no person with
a motion for summary judgment, then that
whom public money has been entrusted shall be
order is interlocutory and no appeal will lie
eligible to office until he shall have obtained
therefrom, but when both parties file motions
a discharge for such money, “entrusted” means
for summary judgment and one such motion is
to confer a trust upon, or to deliver to another
granted, then the trial court's judgment becomes
something in trust or to commit something
final and appealable, and on appeal the Court
to another with a certain confidence regarding
of Civil Appeals should determine all questions
presented, and if reversible error is found, it
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Tobin v. Garcia, 159 Tex. 58 (1958)
316 S.W.2d 396
should render such judgment as the trial court the Commissioners' Court of that County, which had declared
should have rendered, and if the case is brought the office vacant, and thereafter this became a suit between
to the Supreme Court and the judgment of the Amando Garcia, Jr., and Rafael Garcia for the office of
Court of Civil Appeals is reversed, Supreme County Clerk of Duval County.
Court should render such judgment as Court of
Civil Appeals should have rendered. Rules of Likewise, George B. Parr originally brought a suit against
Civil Procedure, rules 434, 501, 505. Daniel Tobin, Jr., and the County Commissioners, seeking,
among other things, a writ of mandamus requiring the
240 Cases that cite this headnote defendants to issue to him a certificate showing that he
was elected to the office of Sheriff of Duval County at the
General Election in November, 1956, at which he received a
[5] Courts
substantial majority of the votes. On January 1, 1957, J. P.
Review by or certificate to Supreme Court
Stockwell qualified as *60 Sheriff of Duval County under an
by Court of Civil Appeals of questions where
appointment by the Commissioners' Court of Duval County,
its decision conflicts with or overrules that of
which had declared the office vacant, and thereafter that cause
another Court of Civil Appeals or that of the
became a suit between George B. Parr and J. P. Stockwell for
Supreme Court
the office of Sheriff of Duval County. These two cases were
Where application for writ of error to review consolidated by the trial court with a third suit filed by Felipe
decision of Court of Civil Appeals, failed to Valerio, Jr., against Daniel Tobin, Jr., and others. The Valerio
comply with applicable rule of civil procedure it case (Tobin v. Valerio, Tex.Civ.App., 309 S.W.2d 479) is not
was wholly insufficient to present any question involved in this appeal and need not be further mentioned.
for review. Rules of Civil Procedure, rule 469.
Ultimately, Amando Garcia, Jr., and George B. Parr filed
2 Cases that cite this headnote motions for summary judgment, and the defendants also filed
a motion for summary judgment. The trial court denied the
motions of Amando Garcia, Jr., and George B. Parr, but
granted the motion of defendants, and rendered judgment that
Attorneys and Law Firms George B. Parr and Amando Garcia, Jr., take nothing, from
which judgment they prosecuted an appeal.
*59 **397 Gerald Weatherly, Laredo, Werner A.
Gohmert, Alice, for petitioners. The Court of Civil Appeals reversed the judgment of the
trial court, and remanded the case thereto. 307 S.W.2d 836.
Sidney P. Chandler, Corpus Christi, Sam H. Burris, Alice,
The parties will be sometimes referred to herein as they were
Walter Purcell, San Diego, for respondents.
designated in the trial court, wherein Amando Garcia, Jr., and
Opinion George B. Parr were designated as plaintiffs and the other
parties as defendants.
HICKMAN, Chief Justice.
Both the plaintiffs and defendants filed applications for writs
Our statement of this case will be substantially in the language of error. We consider first the application of the defendants.
of the opinion of the Court of Civil Appeals. The ground upon which they were awarded a summary
judgment in the trial court is that Amando Garcia, Jr.,
**398 This is a consolidated case. Originally Amando and George B. Parr were ineligible to hold the offices of
Garcia, Jr., brought a suit against Daniel Tobin, Jr., County Clerk and Sheriff, respectively, under the provisions
County Judge of Duval County, and the then four County of Article III, Section 20, of our State Constitution, Vernon's
Commissioners of that County, seeking, among other things, Ann.St. That section reads as follows:
a writ of mandamus requiring the defendants to issue to him
‘No person who at any time may
a certificate showing that he was elected to the office of
have been a collector of taxes, or who
County Clerk of Duval County at the General Election in
may have been otherwise entrusted with
November, 1956, at which election he received practically
public money, shall be eligible to the
all the votes. On January 1, 1957, Rafael Garcia qualified
Legislature, or to any office of profit or
as County Clerk of Duval County, under an appointment by
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Tobin v. Garcia, 159 Tex. 58 (1958)
316 S.W.2d 396
trust under the State government, until
he shall have obtained a discharge for In effect, the same definition is given in 48 C.J.S. p. 754, and
the amount of such collections, or for all Webster's New International Dictionary. In order to render
public moneys with which he may have judgment against the plaintiffs it must be determined that
been entrusted.’ public money was entrusted with them in the meaning of the
above definition, and they have failed to obtain a discharge
therefor.
[1] The Court of Civil Appeals reversed the trial court's
[2] The motion for summary judgment was not verified. It
judgment on the ground that the constitutional provision
referred for identification to a number of exhibits attached
presupposes that there has been a prior judicial determination
to the motion, explained a portion of the exhibits, and
or admission of the entrustment of public money and a
incorporated all of the movant's pleadings.
failure to obtain a discharge therefor. Assuming that the
Commissioners' Court exceeded its authority in refusing to
issue certificates of *61 election to the plaintiffs, that is not With respect to Amando Garcia, Jr., the charge is that he
determinative of this case. As the case developed, it was a collected certain fees of office which were not paid into
suit by Amando Garcia, Jr., and George B. Parr against Rafael the treasury of the county as required by law. In support
Garcia and J. P. Stockwell for the title to the offices of County of the *62 charge, movants attached purported copies of
Clerk and Sheriff, respectively, and in order to prevail in that summary accounts of total fees collected and purported copies
**399 suit it was incumbent upon them to show themselves of schedules of fees of office paid into the treasury for the
to be duly elected, qualified and eligible to hold the offices same years, plus photostatic copies of 194 checks payable
which they sought. If it is shown on the trial that they have to cash or to Garcia and signed by him. The only proof
failed to be discharged of money entrusted to them, they will of these documents is this statement in the affidavit of the
not have shown themselves eligible and entitled to the offices. attorney for defendants: ‘All of the copies of the instruments
We do not agree with the ground upon which the Court of described in the defendants' motion for summary judgment,
Civil Appeals based its decision. Exhibits A to T, inclusive, are true copies of said instruments
or the records from which they were taken.’ The summary
judgment rule, Rule 166-A, Texas Rules of Civil Procedure,
Before considering the motion upon which the trial court
provides that affidavits must be made by competent affiants
rendered a summary judgment for defendants, we turn to
with personal knowledge of the statements in them, which
a construction of the constitutional provision above quoted.
statements must be so worded that if given on the witness
The provision is narrow in its application. It deals only with
stand they would be admissible as evidence. Obviously, the
persons with whom public money has been entrusted. One
statement of the attorney, if given on the witness stand, would
who, for example, steals public money would be morally
not be competent to identify public documents, nor would it
unfit for public office, but the provision has no application in
establish that Garcia himself had signed the checks or for what
that case. Its meaning is to be determined by the definition
purpose they were executed. The trial court erred in rendering
of ‘entrusted.’ That term has a well-defined meaning. It is
summary judgment against Garcia.
defined in Black's Law Dictionary as:
‘To confer a trust upon; to deliver to With reference to George B. Parr, the motion for summary
another something in trust or to commit judgment was based upon several grounds. One ground was
something to another with a certain that the Texas State Bank of Alice was the depository of
confidence regarding his care, use or the funds of Duval County and the Benevides Independent
disposal of it.’ School District; that Parr was a stockholder, director and
officer of the bank; that he took money from the bank, charged
it to the county and the school district, and applied same in
Ballentine's Law Dictionary defines it as follows: a manner not authorized by the county or the school district,
‘To transfer or deliver property to another and not permitted by law. As noted above, the motion is
to hold as trustee.’ not verified, and what has been held regarding the checks of
Garcia is applicable to the deposit slips and checks attached in
support of this allegation. Even if the checks were identified,
that would **400 not establish that Parr was in default with
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Tobin v. Garcia, 159 Tex. 58 (1958)
316 S.W.2d 396
money entrusted to him by the county and the school district. the rule all of its terms must be complied with. This the
When the moneys were deposited in the bank, a relationship defendants have failed to do.
was created between the bank and the depositors, and no
relationship of trust was created between the depositors and
Parr. The summary judgment cannot be sustained on the As noted above, plaintiffs filed a motion for summary
ground of Parr's dealings with the bank, however wrongful judgment in the trial court which was overruled. In Rogers
they may have been. v. Royalty Pooling Co., Tex., 302 S.W.2d 938, where both
parties filed motions for summary judgment, and the trial
Another ground of the motion was that Parr had borrowed court granted one motion and overruled the other, this court
money from the county and had not repaid it. Parr admitted held that in an appeal from the order granting a summary
at the hearing on the motion that he owed money to Duval judgment, the Court of Civil Appeals could not review the
County, but he did not admit that it was money entrusted to order of the trial court overruling the other motion.
him. So far as the record discloses, it may have been owing for [4] After a careful consideration of the matter we have come
taxes. In support of the allegation that Parr borrowed money *64 to the conclusion that that case should be overruled. If
from *63 Duval County which had not been repaid, the the only order in the trial court is one overruling a motion
defendants in one of their verified pleadings quote from an for summary judgment, then that order is interlocutory and
alleged deposition of Parr and alleged pleading of Parr in no appeal will lie therefrom. But when, as in this case, both
other cases, but no copy of the alleged deposition or pleading parties file motions for summary judgment and one such
was attached as required by Rule 166-A. The state of the proof motion is granted, then the trial court's judgment becomes
on this charge would not warrant the rendition of a summary final and appealable, and on appeal the Court of Civil Appeals
judgment. should determine all questions presented. If reversible error is
found, the court should render such judgment as the trial court
Another ground in the motion was that if Parr's present suit should have rendered, Rule 434, and if the case is brought
were in good faith ‘he would repay to Duval County all to this court and the **401 judgment of the Court of Civil
funds that while County Judge of Duval County he illegally Appeals is reversed, we should render such judgment as that
took, received, concealed, converted, and paid to persons court should have rendered. Rules 501 and 505. Rogers v.
such as Dan U. Garcia, whom Parr paid $20,000.00 on or Royalty Pooling Co. is overruled.
about April 1, 1952, of Duval County funds to induce said
Dan U. Garcia to resign as Sheriff of Duval County so said [5] Concerning the application of the plaintiffs Garcia and
Parr could be appointed to said office upon his resigning Parr but little need be written. They join in a single application
as County Judge of said Duval County,’ and for which no for writ of error, which is wholly insufficient to present any
discharge has been received. The only support for that charge questions for review under Rule 469, T.R.C.P. We here copy
is an answer of defendants to the original petition, which the entire application following the statement of jurisdiction:
is verified by the attorney who drew the answer. Even if
we assume that the certification complies with Rule 166-A,
the allegation concerning the transaction with Dan U. Garcia
is the only specific one involving the time when Parr was 'Points of Error.
County Judge. We find in the record an affidavit of Charles
‘1. The Court of Civil Appeals reversibly erred in not
T. Stansell, Jr., who was County Auditor of Duval County at
rendering judgment in favor of petitioner Garcia, that he
the time of the alleged transaction. The affidavit states that at
forthwith recover the office he sues for. (Germane to
no time between 1935 and 1954 was George Parr entrusted
assignment of error No. 1 in Appellants' Motion for Rehearing
with public money without having since obtained a discharge
in the Court of Civil Appeals.)
therefor. Thus a fact issue is raised requiring adjudication
‘2. The Court of Civil Appeals reversibly erred in not
upon trial.
rendering judgment in favor of petitioner Parr, that he
[3] It must be kept in mind that this case has never been
forthwith recover the office he sues for. (Germane to
tried on its merits, but only on motions for summary judgment
assignment of error No. 2 in Appellants' Motion for Rehearing
under Rule 166-A. The right to summary judgment was
in the Court of Civil Appeals.)
unknown to common law and exists in this State only by
virtue of that rule. In order to be entitled to the benefits of
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Tobin v. Garcia, 159 Tex. 58 (1958)
316 S.W.2d 396
holding on the question in the Rogers and Wright cases. The
‘3. Because there is no evidence supporting its below-quoted
majority in the present case makes no effort to do so. There
holding, and this holding is inconsistent with its other holding
is no distinction. **402 This Court must have so thought,
which are correct, the Court of Civil Appeals reversibly erred
otherwise it would not have cited the Wright case, supra, in
in its holding (Opinion, p. 6) that: ‘However, as to appellant
support of its decision in the Rogers case.
George B. Parr the answer is sufficient to raise an issue of
fact as to whether Parr has been entrusted with public moneys The parties to the present suit were not concerned enough
and has not paid it back or properly accounted therefor and with this question to mention the overruling of the Rogers
that he has freely admitted such defalcation.’ (Germane to case in their motion for rehearing, this for the obvious
assignment of error No. 3 in Appellants' Motion for Rehearing reason that *66 the cause was reversed and remanded for
in the Court of Civil Appeals.) trial. The overruling of the Rogers case was unnecessary
to a decision in the present case. Since the decision in the
*65 'Brief of the Argument, with Prayer. (All points are Wright and Rogers cases, supra, litigants have accepted the
grouped together.) law announced in such cases, and without doubt attorneys
representing their clients in many cases have made no effort
‘Petitioners respectfully submit that it necessarily and to appeal from an order overruling a motion for summary
inevitably follows, from the correct holdings and authorities judgment. Likewise, the opposite party will make no effort to
in the Court of Civil Appeals opinion, that the Trial point out issues of fact in the event error should be assigned
Court's judgment should be reversed and rendered, adjudging to the action of the trial court in overruling a motion for
that appellants forthwith recover the offices sued for, summary judgment. As a matter of fact, we have such a
to which they were unquestionably duly elected. And case pending in this Court. The case is styled and numbered:
petitioners respectfully submit that this Court should so A-6759, Gulf, Colorado and Santa Fe Railway Company v.
render judgment.’ G. C. McBride, DBA G. C. McBride Company, and Central
Surety and Insurance Corporation. In that case, the respondent
very briefly replied to the point urging that the court erred
in overruling petitioner's motion for summary judgment. The
The judgment of the Court of Civil Appeals is affirmed, but
respondent apparently felt secure in the belief that appeals
upon a trial on the merits the court will be guided by this
cannot lie where orders are interlocutory in nature, and that
opinion.
appeals cannot lie from those portions of orders which are
interlocutory until a final judgment has been reached in
SMITH, Justice (concurring). the case. The respondent in the McBride case thought it
sufficient to say: ‘In view of the very recent Supreme Court
The opinion reaches a correct result, but I respectfully decline
opinions in the cases of Wright v. Wright (154 Tex. 138), 274
to join in overruling the holding in Rogers v. Royalty Pooling
S.W.2d 670, and Rogers v. Royalty Pooling Co. (Tex.), 302
Co., Tex., 302 S.W.2d 938. In that case we held that where
S.W.2d 938, we will not unnecessarily lengthen this writing.
both parties filed motions for summary judgment, and the
One comment in connection with this point, however, seems
trial court granted one motion and overruled the other, the
indicated. Contrary to the position that petitioner has taken
Court of Civil Appeals could not review the order of the
in its application, the rule as announced by this Honorable
trial court overruling the motion for summary judgment. It is
Court in the above cases is not ‘downright unjust and unfair “.
true that the Rogers decision was announced in a Per Curiam
(See 322 S.W.2d 492.) As pointed out by this Court, speaking
opinion. The application for writ of error was not granted,
through the Honorable Justice Garwood in the Wright case,
thereby depriving the parties of an opportunity to present oral
supra (154 Tex. 138, 274 S.W.2d 674), the benefits of such
argument on the question. Although this method of procedure
a rule as petitioner urges would ‘well be outweighed by the
has never met with my approval, yet it must be said that
resultant confusion.’
the holding that an order overruling a motion for summary
judgment was interlocutory in nature, and, therefore, not All Citations
appealable, was supported by the case of Wright v. Wright,
154 Tex. 138, 274 S.W.2d 670, decided by this Court on 159 Tex. 58, 316 S.W.2d 396
January 5, 1955. I am unable to draw a distinction between the
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Tobin v. Garcia, 159 Tex. 58 (1958)
316 S.W.2d 396
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
EEE
Turner v. State, 850 S.W.2d 210 (1993)
thus causing their death, were “pesticides”
subject to pesticide registration requirements of
850 S.W.2d 210
Agriculture Code as a matter of law. V.T.C.A.,
Court of Appeals of Texas,
Agriculture Code §§ 76.001 et seq., 76.001(18).
Texarkana.
1 Cases that cite this headnote
Dana L. TURNER and aaNKILL 44, Inc., Appellants,
v.
The STATE of Texas and Rick Perry, Commissioner [3] Evidence
of the Texas Department of Agriculture, Appellees. Conclusiveness and Effect
When litigant admits positive facts which defeat
No. 6–92–105–CV. | Feb. 23, 1993. his right to recover, and such admissions are not
| Rehearing Denied March 29, 1993. subsequently modified by litigant, then he or she
is conclusively bound by such admissions.
State and Commissioner of Department of Agriculture
brought action against developer of products to get rid of 1 Cases that cite this headnote
fire ants seeking civil penalties and injunctive relief for
alleged violations of pesticide registration requirements of
[4] Injunction
Agriculture Code. The 188th Judicial District Court, Gregg
Scope of Relief in General
County, Marcus Vascocu, J., entered judgment for state.
Developer appealed. The Court of Appeals, Grant, J., held Permanent injunction should not be more
that: (1) products were “pesticides” under Code as a matter comprehensive or restrictive than justified by
of law, and (2) permanent injunction was too expansive pleadings, evidence and usages of equity.
and would be modified so that meaning of “pesticide” and
1 Cases that cite this headnote
“distribute” would be meaning given those terms in Code.
Affirmed in part and reformed in part. [5] Injunction
Other particular businesses or occupations
Permanent injunction preventing developer of
fire ant pesticides from distributing those
West Headnotes (5)
pesticides, as well as any other pesticide, unless
it was registered with Department of Agriculture
[1] Appeal and Error was too expansive and would be modified to
Extent of Review Dependent on Nature of limit meaning of “distribute” to meaning given
Decision Appealed from term in Agriculture Code to offer for sale, hold
When trial court grants motion to disregard for sale, sell, barter or supply and to limit
jury answers and answers are on issues upon meaning of “pesticide” to meaning given in
which appellant has burden of proof, Court of Agriculture Code. V.T.C.A., Agriculture Code §
Appeals reviews trial court's action to determine 76.001(7, 18).
if appellant has established all vital facts in
1 Cases that cite this headnote
support of issue as a matter of law.
2 Cases that cite this headnote
Attorneys and Law Firms
[2] Environmental Law
Registration and labelling *211 Gregory Neeley, Akin, Steele, Bush & Neeley,
Two products, which were developed by Longview, for appellants.
defendant and which defendant admitted were
intended to prevent fire ants from eating, Grant Gurley, Asst. Atty. Gen., Environmental Protection
Div., Austin, for appellees.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Turner v. State, 850 S.W.2d 210 (1993)
requested a permanent injunction preventing Turner or his
Before CORNELIUS, C.J., and BLEIL and GRANT, JJ. corporation from distributing any of the products.
The jury returned answers to the charge indicating that
OPINION aaNKILL 44 is a pesticide and that Turner committed three
acts of illegal distribution in regard to that product. The
GRANT, Justice. jury found that neither Plus nor DLT Mound Leveler is
a pesticide. The trial court granted the State's motion to
The State of Texas and Rick Perry, Commissioner of the
disregard the jury's findings and held that Plus and DLT
Texas Department of Agriculture, filed suit against Dana
Mound Leveler are pesticides as a matter of law. The court
L. Turner and aaNKILL 44, Inc. seeking civil penalties
entered judgment favoring the State in regard to all three
and injunctive relief for alleged violations of the pesticide
products. The trial court did not find any additional instances
registration requirements of Chapter 76 of the Texas
of illegal distribution beyond the three instances found by the
Agriculture Code. Turner appeals from a judgment favoring
jury.
the State.
Turner contends that the trial court erred in disregarding the
Turner contends that the trial court erred in disregarding
jury's findings as to Plus and DLT Mound Leveler and in
the jury's findings and entering a judgment concluding that
entering judgment favoring the State. He does not contest the
the products in question are pesticides as a matter of law.
judgment as to aaNKILL 44.
He further contends that the trial court erred in drafting the
permanent injunction because it exceeds the scope of the
[1] We have been asked to review the trial court's granting of
pleadings and the evidence. The State raises three cross points
a motion to disregard two of the jury's answers. These answers
in which it alleges that the trial court erred in admitting
were on issues upon which the State had the burden of proof.
irrelevant evidence and that the jury's answers to certain
Thus, we review the trial court's action to determine if the
questions in the charge were against the great weight and
State established all vital facts in support of the issue as a
preponderance of the evidence.
matter of law. See Ritchey v. Crawford, 734 S.W.2d 85, 86
(Tex.App.—Houston [1st Dist.] 1987, no writ); Meyerland
In 1990, Turner developed a product designed to have a
Community Improvement Ass'n v. Temple, 700 S.W.2d 263,
detrimental effect on fire ants. In September or October of that
year, he formed a corporation, aaNKILL 44, Inc., and began 267 (Tex.App.—Houston [1st Dist.] 1985, writ ref'd n.r.e.). 1
to market the product. On November 28, 1990, David Inman, The undisputed evidence shows that Turner sold the product
an inspector for the Texas Agriculture Department, served and that the product was not registered. The only vital fact
Turner with an administrative stop sale order. The stop sale issue that Turner contests is whether the State established that
order put Turner on notice that the Agriculture Department Plus and DLT Mound Leveler are pesticides as a matter of
considered aaNKILL 44 to be an unregistered pesticide, and law.
Turner ceased selling the product under that name.
[2] Section 76.001(18) of the Texas Agriculture Code
In August 1991, Turner began selling a product he called defines a pesticide as “a substance or mixture of substances
Plus Water Activator (“Plus”) which contained essentially intended to prevent, destroy, repel, or mitigate any pest, or
the same formula that comprised aaNKILL 44. On October any substance or mixture of substances intended for use as a
10, 1991, the trial court issued a temporary restraining order plant regulator, defoliant, or desiccant.” TEX.AGRIC.CODE
which barred Turner and his corporation from selling either ANN. § 76.001(18) (Vernon 1982) (emphasis added).
aaNKILL 44 or Plus. Turner then began marketing a product
which he labelled “DLT Mound Leveler” and which contains Since the Code itself does not define the word “intended,” a
essentially the same ingredients as aaNKILL 44 and Plus. key term in understanding this section, we look to the Code
Construction Act which states that the ordinary meaning of
*212 In its petition, the State alleged 579 acts of unlawful the word should be deemed as having been intended by the
distribution of the three products discussed above. The State Legislature. TEX.GOV'T CODE ANN. § 311.011 (Vernon
stipulated that it sought damages only in the amount of the 1988). The trial court correctly did not attempt to define the
minimum statutory fine of $50 per violation. The State also word “intended” in its charge to the jury, but it did charge that
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Turner v. State, 850 S.W.2d 210 (1993)
words not specifically defined *213 by the court should be him must be construed as binding upon him, and not merely
2 as raising issues of fact.”)
construed according to common usage.
Turner asserts that the testimony that he gave at trial supports Here, Turner admits that his product is intended to prevent
the jury's findings indicating that Plus and DLT Mound ants from eating, thus causing their death. The evidence
Leveler are not pesticides. Turner testified that although he conclusively shows that Plus and DLT Mound Leveler were
originally believed that his formula killed fire ants, later sold as pesticides. Based upon Turner's judicial admissions,
experiments revealed that, in fact, it did not kill them. He the trial court correctly found these products to be pesticides
said that most pesticides work by either breaking down the as a matter of law. We overrule this point of error.
outer shell of the ants or by attacking their nervous systems,
but that his product did neither. Instead, according to Turner, In his second point of error, Turner contends that the trial
aaNKILL 44 and its progeny immobilize the ants for a while court erred in drafting the injunctive order in that it exceeded
so that they cannot eat. the scope of the pleadings and the evidence produced at
trial. Specifically, Turner complains that the language in the
Turner further described the effect of his formula on the ants injunction unnecessarily enlarged the statutory definition of
by saying that it “switches off [their] power,” that it “stops “distribute” and improperly defined “pesticide.”
power from getting to them,” and that the ants switch off “like
an electric light” and they “don't ever turn on again,” unless [4] A permanent injunction should not be more
placed in direct sunlight within four hours of having been comprehensive or restrictive than justified by the pleadings,
“deactivated.” evidence, and usages of equity. *214 Gonzales v. Zamora,
791 S.W.2d 258 (Tex.App.—Corpus Christi 1990, no writ).
Turner further testified that he sold the formula as Plus and
DLT Mound Leveler after he arrived at the conclusion that [5] In its petition, the State requested injunctive relief in
it did not actually kill the ants and was thus not a pesticide. order to prevent Turner from distributing aaNKILL 44, Plus,
Turner stated that the purpose of the DLT Mound Leveler or DLT Mound Leveler, as well as any other pesticide unless
was, in fact, to level mounds. He admitted, however, that it is registered with the Department of Agriculture. The
this explanation “raised eyebrows” among his customers, and only definition of “distribute” or “pesticide” in the petition
when customers pressed him about the formula's effect on the is by reference to Section 76.001 of the Agriculture Code.
ants, he told them “I suppose they die.” Furthermore, Turner TEX.AGRIC.CODE ANN. § 76.001 (Vernon 1982).
has at no point suggested that his product may have alternative
Section 76.001(7) defines “distribute” as “offer for sale, hold
uses. 3
for sale, sell, barter, or supply.” Section 76.001(18) defines
“pesticide” as “a substance or mixture of substances intended
We agree with the trial court that Turner's testimony, rather
to prevent, destroy, repel, or mitigate any pest.” The trial
than supporting the jury's findings, demonstrates conclusively
court's order, however, states that:
that Turner's formula was intended to be used to “prevent,
repel, or mitigate” fire ants. The formula kills the fire ants by
preventing them from eating and this reaches the same end
result as any other pesticide. Turner's statements regarding his III.
formula are mere euphemisms for the fact that it is a pesticide.
.....
[3] This Court is bound by the principle that when a litigant
B. In this injunction, “distribute” shall have the meaning
admits positive facts which defeat his right to recover, and
given in Chapter 76 of the Texas Agriculture Code, namely
such admissions are not subsequently modified by the litigant,
“offer for sale, hold for sale, sell, barter, or supply”, and
then he or she is conclusively bound by such admissions.
shall include, without implying the exclusion of other
Jones v. Underwood & Weld Co., 406 S.W.2d 491, 493
conduct, the following conduct:
(Tex.Civ.App.—Beaumont 1966, no writ); see also, Texas &
P. Ry. Co. v. Wood, 145 Tex. 534, 199 S.W.2d 652 (1947) 1) sell;
(“The testimony of a party to a suit and admissions made by
2) deliver;
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Turner v. State, 850 S.W.2d 210 (1993)
3) give away;
The State contends that the trial court correctly detailed the
4) give to; prohibited conduct in light of Turner's persistent attempts to
find a loophole in the law. The State argues that Turner should
5) allow to take; not be allowed to complain that he was given too much notice.
6) turn over to;
The record, however, reveals no support for the expanded
7) make available to; definition of “distribute” nor have we found any in statutory
or case law. We therefore reform paragraph III.B of the
8) exchange for goods, services, or a promise to provide injunction so that it now reads: “In this injunction, ‘distribute’
goods or services; shall have the meaning given in Chapter 76 of the Texas
Agriculture Code, namely ‘offer for sale, hold for sale, sell,
9) advertise; barter, or supply.’ ”
10) market;
Furthermore, we see no reason for expanding the definition of
11) promote; “pesticide” beyond the statutory definition. 4 Paragraph III.C
of the injunction is therefore reformed so that it now reads:
12) provide;
13) provide a sample of; In this injunction ‘pesticide’ shall have the meaning given
in Chapter 76 of the Texas Agriculture Code, namely, ‘any
14) give permission or authorization to any other person
substance or mixture of substances intended to prevent,
or entity to commit any of these enumerated acts; or
destroy, repel or mitigate any pest.’
15) offer to commit any of these enumerated acts, either Because of the foregoing holdings, which are dispositive of
conditionally or unconditionally. all issues in the case, we do not reach the cross-points filed
by the State.
C. In this injunction “pesticide” shall have the meaning
given in Chapter 76 of the Texas Agriculture Code, *215 The judgment of the trial court is affirmed in part and
namely, “any substance or mixture of substances intended reformed in part.
to prevent, destroy, repel or mitigate any pest....” In
determining the intended purpose of a substance or
mixture of substances, the intent that shall be examined All Citations
is not the subjective intent of the actor, but rather that
850 S.W.2d 210
person's objective intent, taking into account any and all
circumstances.
Footnotes
1 This is sometimes erroneously addressed as a no evidence point. However, Turner did not have the burden of proof
on this issue and even if there was no evidence introduced to support his position, the State would still not be entitled
to have a motion granted to disregard a jury finding unless it had established all vital facts in support of that issue as
a matter of law.
Calling matter-of-law points no evidence points is a misnomer. See R.W. Calvert, “No Evidence” and “Insufficient
Evidence” Points of Error, 38 TEX.L.REV. 361, 363 (1960). These points of error should be referred to as conclusive
evidence points. See W. Powers, Jr. & J. Ratliff, Another Look at “No Evidence” and “Insufficient Evidence,” 69
TEX.L.REV. 515, 518 (1991). We recognize that Rule 301 of the Texas Rules of Civil Procedure refers to disregarding
the jury finding on a question “that has no support in evidence.” This term has been applied broadly to matter-of-law
challenges. See Roger Townsend, W. Wendell Hall, & Madelyn Dewoody, Standards of Review and Reversible Error,
inSTATE BAR OF TEXAS PROF. DEV. PROGRAM, 1 ADVANCED APPELLATE PRACTICE COURSE F (1990).
This same principle has been recognized in judgment non obstante veredicto cases in which the party moving for
judgment n.o.v. had the burden of proof. See Southwestern Bell Telephone Co. v. Hertz Equipment Rental Co., 533
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Turner v. State, 850 S.W.2d 210 (1993)
S.W.2d 853 (Tex.Civ.App.—Fort Worth 1976, writ ref'd n.r.e.); Morris v. Brown, 337 S.W.2d 759 (Tex.Civ.App.—
Eastland 1960, no writ).
This legal insufficiency contention raises a matter of law point that the converse of the finding was established
conclusively as a matter of law. See W.J. Cornelius, Appellate Review of Sufficiency Of the Evidence Challenges In
Civil and Criminal Cases, 46 TEX.B.J. 439, 440 (1983).
2 RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE 991 (2nd ed. 1987) defines intend as: “1. to have in
mind as something to be done or brought about ... 2. to design or mean for a particular purpose, use ... 3. to design to
express or indicate, as by one's words; refer to....”
It defines intended as: “1. purposed; designed; intentional ... 2. prospective....”
3 At trial, Turner also presented the labels placed on his products. The Plus label features statements such as “Don't Kill
Fire Ants Stop Power From Getting To Them,” “WATER IS THE ACTIVE INGREDIENT!” and “Plus produces no pesticidal
effects when used as directed.”
The label for DLT Mound Leveler is much simpler and suggests that you should “Rid Your Property of Unsightly and
Hazardous Mounds with DLT MOUND LEVELER.”
4 The State urges this Court to adopt the federal standard used in defining “intended” in a similar federal pesticide statute.
See N. Jonas & Co., Inc. v. U.S. Environmental Protection Agency, 666 F.2d 829, 833 (3d Cir.1981); 7 U.S.C.A. § 136(u)
(West Supp.1992). Since deciding this case does not require a definition other than the ordinary usage of the term, we
do not grant the State's request.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
FFF
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
[4] apportionment of liability statute did not revive time-
barred claims against brokerage service that were based on
KeyCite Yellow Flag - Negative Treatment respondeat superior; and
Distinguished by Challenger Gaming Solutions, Inc. v. Earp, Tex.App.-
Dallas, May 15, 2013
[5] beneficiaries were not required to establish that broker
315 S.W.3d 109 or brokerage service owed them a fiduciary duty in order to
Court of Appeals of Texas, maintain that broker and service knowingly assisted trustee in
Houston (1st Dist.). breaching his fiduciary duties to beneficiaries.
Olga (Chapa) VILLARREAL
and Isreal Chapa, Appellants, Affirmed in part, reversed in part, and remanded.
v.
WELLS FARGO BROKERAGE SERVICES,
LLC, Wells Fargo Investments, LLC, West Headnotes (26)
and Charles J. Lewis, Jr., Appellees.
No. 01–08–00258–CV. | March 11, 2010. [1] Judgment
Particular defenses
Synopsis A defendant moving for summary judgment
Background: Beneficiaries of trust brought breach of on the affirmative defense of limitations must
fiduciary duty, breach of the duty of good faith and fair conclusively establish the date on which the
dealing, negligent misrepresentation, negligence, fraud, and limitations commenced; that is, the date on
statutory violations action against investment broker and which the cause of action accrued.
brokerage service, after beneficiaries learned that trust had
lost a substantial amount of money when investing in high risk 3 Cases that cite this headnote
investments. The 55th District Court, Harris County, Jeffrey
Brown, J., granted broker and brokerage service summary
[2] Limitation of Actions
judgment, and beneficiaries appealed.
Questions for Jury
He determination of the date on which a cause
of action accrued for purposes of limitations is
Holdings: The Court of Appeals, Laura Carter Higley, J., held typically a question of law.
that:
Cases that cite this headnote
[1] claims that beneficiaries brought against broker and
brokerage service on behalf of trustee accrued, and statutes of
[3] Limitation of Actions
limitations began to run, when trustee in writing directed that
Causes of action in general
the funds exit from high risk investments;
As a general rule, a cause of action accrues, and
the statute of limitations begins to run, when
[2] otherwise time-barred claims for breach of fiduciary
facts come into existence that authorize a party
duty, fraud and violations of securities statute that trust
to seek a judicial remedy.
beneficiaries asserted against broker were revived when
trustee designated broker as a responsible third party; 1 Cases that cite this headnote
[3] time-barred claims which were subject to two-year
statutes of limitations were not revived when trustee [4] Limitation of Actions
designated broker as a responsible third party, as limitations Causes of action in general
had already expired on such claims when apportionment of Limitation of Actions
liability statute was enacted; In general; what constitutes discovery
Limitation of Actions
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
Knowledge as to extent of harm or damage
2 Cases that cite this headnote
In most cases, claims accrue for limitations
purposes when a wrongful act causes some legal
injury, and this is true even if the fact of injury is [9] Judgment
not discovered until later, and even if all resulting Particular defenses
damages have not yet occurred. If a movant for summary judgment establishes
that limitations bars the action, the nonmovant
Cases that cite this headnote
must then adduce summary judgment proof
raising a fact issue to avoid limitations.
[5] Limitation of Actions
In general; what constitutes discovery 1 Cases that cite this headnote
The discovery rule defers the accrual of a
cause of action for limitations purposes until [10] Limitation of Actions
the plaintiff knows, or by exercising reasonable Fraud of person acting in official or
diligence, should know of the facts giving rise to fiduciary capacity
the claim. When analyzing the applicability of the
discovery rule for limitations purposes in
Cases that cite this headnote
cases in which the alleged injuries arise from
a breach of fiduciary duty, the claims are
[6] Limitation of Actions generally considered inherently undiscoverable;
In general; what constitutes discovery nonetheless, once the fiduciary's misconduct
For the discovery rule to apply and defer the becomes apparent, the claimant cannot ignore
accrual of a cause of action, the injury must it, regardless of the fiduciary nature of the
be inherently undiscoverable and objectively relationship.
verifiable.
1 Cases that cite this headnote
Cases that cite this headnote
[11] Limitation of Actions
[7] Judgment Fraud of person acting in official or
Particular defenses fiduciary capacity
If a plaintiff pleads the discovery rule as an Claims in which the alleged injuries arise from
exception to limitations, a defendant moving for a breach of fiduciary duty accrue for limitations
summary judgment on limitations then has the purposes when the claimant knows or in the
dual burden of proving the date of accrual and of exercise of ordinary diligence should know of the
negating the discovery-rule exception. wrongful act and resulting injury.
1 Cases that cite this headnote 1 Cases that cite this headnote
[8] Judgment [12] Limitation of Actions
Particular defenses Fraud and concealment of cause of action
A defendant moving for summary judgment The date that a claimant knew or should have
on limitations may negate the discovery-rule known of an injury arising out of a breach
exception by proving, as a matter of law, that of fiduciary duty, for limitations purposes, is
no genuine issue of material fact exists regarding generally a fact question; however, if reasonable
when the plaintiff discovered, or in the exercise minds could not differ about the conclusion to be
of reasonable diligence should have discovered, drawn from the facts in the record, the start of the
the wrongful act and resulting injury. limitations period may be determined as a matter
of law.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
and claims that beneficiaries asserted against
2 Cases that cite this headnote trustee were timely. V.T.C.A., Civil Practice &
Remedies Code §§ 33.004(e), 33.011(6).
[13] Limitation of Actions
2 Cases that cite this headnote
Securities; corporations
Limitation of Actions
What constitutes discovery of fraud [15] Statutes
Plain Language; Plain, Ordinary, or
Claims for breach of fiduciary duty, breach
Common Meaning
of the duty of good faith and fair dealing,
negligent misrepresentation, negligence, fraud Statutes
and statutory violations that beneficiaries of trust Absent terms; silence; omissions
brought on behalf of trustee against investment Courts must construe a statute according to its
broker and brokerage service, arising out of plain language, and may not add language that
advice from broker and service that trustee is not implicitly contained in the language of the
engage in margin trading and invest in high-risk statute.
technology mutual funds, accrued, and two and
four year statutes of limitations on such claims 2 Cases that cite this headnote
began to run, when, following month in which
trust lost $152,886.26, trustee signed investment [16] Statutes
replacement authorization form directing that Construction as written
brokerage account's funds exit from technology
Statutes
mutual funds due to such funds' volatility, as
Context
when trustee signed such authorization he knew
Statutes
or should have known of the unsuitable nature of
Unintended or unreasonable results;
the investments recommended by broker.
absurdity
Cases that cite this headnote Courts are to apply a statute as written, unless the
context or an absurd result requires a different
[14] Limitation of Actions construction.
Intervention or bringing in new parties
Cases that cite this headnote
Otherwise time-barred claims of breach of
fiduciary duty, fraud, and violations of securities
[17] Limitation of Actions
statute that trust beneficiaries asserted against
Intervention or bringing in new parties
investment broker, arising out of broker's advice
that trustee engage in margin trading and high Time-barred claims for breach of the duty
risk investments, were revived pursuant to of good faith and fair dealing, negligent
apportionment of liability statute when trustee misrepresentation, negligence, and deceptive
in beneficiaries' action designated broker as a trade act violations that trust beneficiaries
responsible third party and beneficiaries sought asserted against investment broker, arising out
to join broker within 60 days of designation, of broker's advice that trustee engage in margin
though broker alleged beneficiaries and trustee trading and high risk investments, were not
colluded to join broker after beneficiaries revived pursuant to apportionment of liability
realized claims against broker were time-barred, statute when trustee in beneficiaries' action
as statute expressly allowed revival of previously designated broker as a responsible third party
time-barred claims, statute did not preclude and beneficiaries sought to join broker within 60
responsible third party designations based on days of the designation, as such claims, which
intent of designators, such claims against broker were subject to two-year statutes of limitations,
were not time-barred when statute was enacted, were time-barred when apportionment statute
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
was enacted, and broker had a vested right to rely in beneficiaries' action, as such statutory claims
on statutes of limitations barring such claims. were based in tort, and the subject statutes did
V.T.C.A., Civil Practice & Remedies Code not contain a separate and conflicting legislative
§§ 33.004(e), 33.011(6); Vernon's Ann.Texas fault allocation scheme. V.T.C.A., Civil Practice
Const. Art. 1, § 16. & Remedies Code §§ 33.002(a), 33.004(e).
Cases that cite this headnote 2 Cases that cite this headnote
[18] Appeal and Error [21] Limitation of Actions
Judgment Intervention or bringing in new parties
Court of Appeals would not address argument Time-barred claims for breach of fiduciary
by investment broker and brokerage service duty, fraud, and violations of securities act that
that apportionment of liability statute, which trust beneficiaries asserted against brokerage
allowed revival of otherwise time-barred claims service based on respondeat superior, arising
if a defendant made a responsible third party out of advice by broker employed by service
designation, did not apply to fraud claims, that trustee engage in margin trading and high
in appeal of summary judgment for broker risk investments, were not revived pursuant to
and brokerage service in action by trust apportionment of liability statute when trustee
beneficiaries asserting breach of fiduciary duty, in beneficiaries' action designated broker and
fraud and other claims against trustee, broker and brokerage service as responsible third parties,
brokerage service, where broker and brokerage though statute revived such claims against
service did not raise such argument in the trial broker, as statute's intent was to apportion
court to support summary judgment. V.T.C.A., responsibility based on a person's harm-causing
Civil Practice & Remedies Code §§ 33.002(a), conduct, and allowing revival of claims based on
33.004(e). respondeat superior, under which an employer
was vicariously liable regardless of fault, was
Cases that cite this headnote incongruent with statute's purpose. V.T.C.A.,
Civil Practice & Remedies Code § 33.004(e).
[19] Appeal and Error
Cases that cite this headnote
Grounds for Sustaining Decision Not
Considered
The Court of Appeals may not affirm a summary [22] Labor and Employment
judgment on grounds not expressly set out in the Nature of liability in general
motion or response. Pursuant to the doctrine of respondeat superior,
an employer will be held vicariously liable for
Cases that cite this headnote the negligence of its employee regardless of any
allegation of fault on the part of the employer.
[20] Limitation of Actions
Cases that cite this headnote
Intervention or bringing in new parties
Apportionment of liability statute, which
allowed revival of otherwise time-barred claims [23] Judgment
if a defendant made a responsible third party Motion or Other Application
designation, applied to violations of securities Judgment
act and trust act claims that trust beneficiaries Particular defenses
asserted against investment broker, arising out Summary judgment could not be granted on
of broker's advice that trustee engage in margin limitations grounds to investment brokerage
trading and high risk investments, when trustee and brokerage service, who advised trustee to
designated broker as a responsible third party engage in margin trading and invest in high risk
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
mutual funds, on claim by trust beneficiaries
that broker and service knowingly assisted Attorneys and Law Firms
trustee in breaching his fiduciary duties to
*112 Leonard J. Meyer, Leslie K. Hillendahl, Zimmerman,
beneficiaries, when such claim was not brought
Axelrad, Meyer, Stern & Wise, P.C., Houston, TX, for
by beneficiaries on trustee's behalf, and there
Appellants.
was no evidence or argument offered to establish
the accrual date for the assisting-in-breach-of- Lindsey Eubank Simmons, Joyce McFarland & McFarland
fiduciary-duty claim. LLP, Yasmin Islam Atasi, Winstead PC, Houston, TX,
Michael L. Scanes, Scanes, Routh & James, LLP, Waco, TX,
Cases that cite this headnote
for Appellees.
[24] Appeal and Error Panel consists of Chief Justice RADACK and Justices
Grounds for Sustaining Decision Not ALCALA and HIGLEY.
Considered
In an appeal of a summary judgment, the Court of
Appeals may consider, in the interest of justice, *113 OPINION
grounds that the movant preserved for review
LAURA CARTER HIGLEY, Justice.
and on which the trial court did not rule.
In this appeal, plaintiffs/appellants, Olga (Chapa) Villarreal
Cases that cite this headnote
and Israel Chapa, present three issues challenging the
trial court's order granting summary judgment in favor of
[25] Fraud defendants/appellees, Wells Fargo Brokerage Services, LLC,
Persons liable Wells Fargo Investments, LLC (collectively, “Wells Fargo”),
When a third party knowingly participates in and Charles J. Lewis, Jr.
the breach of a fiduciary duty, the third party
becomes a joint tortfeasor and is liable as such. We affirm in part and reverse in part.
Cases that cite this headnote
Factual & Procedural Background
[26] Brokers
Nature of broker's obligation Pete David Chapa (“Mr. Chapa”) developed silicosis after
working at a glass plant for 20 years. Mr. Chapa filed suit
Brokers
based on his silicosis injuries and obtained a settlement for
Purchases and Sales on Margin
$650,000. The settlement funded shortly after his death in
Trust beneficiaries were not required to establish February 1997. As directed by Mr. Chapa, the settlement
that investment broker and brokerage service funds were placed in a testamentary trust for the benefit of his
owed them a fiduciary duty or that broker and two adult children, Olga (Chapa) Villarreal and Israel Chapa
service breached such duty, in order to assert a (collectively, “the Chapas”). Mr. Chapa named a family
claim against broker and service, who advised friend, Ramiro Pena, Jr. (“Pena”), to act as trustee.
trustee to engage in margin trading and invest
in high risk mutual funds, that broker and Pena opened a non-discretionary brokerage account with
service knowingly assisted trustee in breaching investment broker Charles J. Lewis, Jr. (“Lewis”) at Wells
his fiduciary duties to beneficiaries. Fargo. Pena deposited $634,000 into the account on May 19,
1997. In August 1997, Pena began margin trading with the
Cases that cite this headnote
account's funds. Pena signed a margin trading agreement with
Wells Fargo. The agreement explained that margin trading
allowed Pena to borrow money from Wells Fargo and that
such loans were secured by the brokerage account's assets.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
In late 1999 and early 2000, Pena authorized Wells Fargo to In addition, the Chapas set forth a cause of action against
invest the account's funds in technology mutual funds. From Wells Fargo for assisting Pena in breaching his fiduciary duty
December 31, 1999 to January 31, 2001, the value of the to the Chapas.
brokerage account went from $653,214.87 to $361,538.98.
In their petition, the Chapas further asserted that Wells Fargo
Pena closed the brokerage account with Wells Fargo on was vicariously liable for Lewis's acts based on respondeat
November 1, 2001. Pena then invested the funds with Jubilee superior and based on a “negligent failure to supervise.” The
Investments. Chapas also alleged that the discovery rule and “fraudulent
concealment” had served to toll the statute of limitations on
On June 21, 2005, Israel Chapa's attorney sent a letter to their claims.
Pena regarding the trust's assets. The letter indicated that the
beneficiaries had never received an accounting of the trust's After the Chapas filed their third amended petition, Pena
funds, but had received only “a few general comments about filed a motion to designate Lewis as a “responsible third
some money being lost in investments.” The letter also stated party” pursuant to Civil Practices and Remedies Code section
that Israel had stopped receiving monthly payments from the 33.004. The Chapas also filed a motion to join Lewis as a
trust and had been told by Pena that the money was “tied up” defendant based on section 33.004(e). After the trial court
in Jubilee Investments. Israel's counsel demanded that Pena granted the motion to join, the Chapas filed their fourth
provide an accounting of the trust's assets since its creation. amended petition, adding Lewis as a defendant. The Chapas
Pena provided information to the beneficiaries, but not until asserted the same causes action against Lewis as they had
six months after receiving Israel's request. previously asserted against Wells Fargo. The Chapas also
added a cause of action for fraud against Wells Fargo and
The Chapas filed suit against Pena, Wells Fargo, and the Lewis.
principals of Jubilee Investments on August 17, 2006. The
Chapas alleged that Pena breached his fiduciary duty as Wells Fargo and Lewis filed a “traditional” rule 166a(c)
trustee by failing to properly invest, manage, and preserve the motion for summary judgment against the Chapas. The
trust's assets. The Chapas also alleged that Pena breached his summary judgment movants asserted, “as a threshold matter,”
fiduciary duty by failing to “institute[ ] legal action” against that they did not owe an independent fiduciary duty to the
Wells Fargo and by failing to fully disclose “material facts” Chapas because Pena was the account holder, not the Chapas.
to the Chapas regarding the losses sustained by the trust.
Wells Fargo and Lewis asserted the affirmative defense of
The Chapas also alleged that Wells Fargo owed a fiduciary limitations as the primary basis for summary judgment. They
duty to Pena in his capacity as trustee of the testamentary argued that the applicable statutes of limitation had expired
trust and, by extension, to them as beneficiaries of the trust. on all of the Chapas' causes of action. Wells Fargo and Lewis
The Chapas asserted that Wells Fargo, through the acts of contended that the discovery rule and fraudulent concealment
its employee, investment broker Charles Lewis, had breached did not operate to toll the various limitations periods.
that duty by advising Pena to make “unsuitable” high-risk
investments with the trust's funds, despite Pena's request that The summary judgment movants asserted that, because
the funds be placed in low-risk investments. Specifically, the the Chapas' alleged injuries were not “inherently
Chapas identified the technology mutual *114 funds and undiscoverable,” the discovery rule did not apply to toll the
the margin trading as “unsuitable” investments for the trust's statutes of limitation. Wells Fargo and Lewis acknowledged
assets. The Chapas claimed that, when Pena had questioned Pena's deposition testimony in which he testified that he
Lewis about the suitability of these investments, Lewis had was unaware that investing in technology mutual funds or
continually assured him that they were suitable investments margin trading were not “suitable” investments for the trust's
for the trust's funds. assets until he consulted an attorney in 2005 after receiving
the Chapas' demand letter requesting an accounting for the
Besides breach of fiduciary duty, the Chapas also sued Wells trust. Wells Fargo and Lewis averred that Pena's claim
Fargo for breach of the duty of good faith and fair dealing, was “misplaced.” The movants asserted, “[A]ny injury or
negligent misrepresentation, negligence, and violations of the wrongdoing caused by Wells Fargo or Lewis was clearly
Deceptive Trade Practices Act and the Texas Securities Act. evident on the face of the bank statements, which showed all
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
activity in the margin account, the funds in which the account established that they did not learn of their injury until
was invested, and gains and losses to the account.” December 2005 when [Pena] finally provided an accounting
to the Plaintiffs.”
To support this assertion, Wells Fargo and Lewis offered, as
evidence, monthly and quarterly account statements received In their summary judgment response, the Chapas also
by Pena from December 1999 through January 2001. The reasserted their claim that “the various statutes of limitations
statements show a noticeable decline in the brokerage are tolled due to fraudulent concealment.” They asserted that
account's funds. They also offered a document signed by Pena they had “produced evidence of a breach of trust/breach of
on December 4, 2000, which directed Wells Fargo to transfer fiduciary duty by Lewis, Wells Fargo, and [Pena] in picking
funds from Internet and technology mutual funds into a “unit out investments for the trust that were prima facie unsuitable.”
investment trust” that had “greater diversification and less The Chapas argued that the defendants “knew of the tort, but
overall *115 volatility.” The movants pointed to the monthly used deception to conceal the tort.” They further asserted that
account statement following this transaction, which reflected “a fiduciary has an affirmative duty to disclose material facts
that proceeds from this sale had been used to pay monies owed to the beneficiaries and a breach of the duty to disclose is
on the margin account balance. tantamount to concealment.” The Chapas averred that Pena
had “failed to provide periodic statements regarding the trusts
With regard to fraudulent concealment, Wells Fargo and to Plaintiffs and did not disclose the losses occasioned by
Lewis argued that nothing had been concealed from Pena. Lewis's negligence until long after they occurred.” They
They again pointed to the monthly and quarterly statements asserted that they had “relied on Lewis's and Pena's deception
received by Pena, which showed the decline in the brokerage to their detriment.” For these reasons, the Chapas concluded,
account's value. “[T]he applicable statute of limitations for the various causes
of action were tolled during the time that the losses were
Wells Fargo and Lewis argued that “any claims Pena may fraudulently concealed.”
have had against Wells Fargo or Lewis accrued in 2000 when
Pena received the monthly statements and quarterly reports In their motion for summary judgment, Wells Fargo and
reflecting the losses in technology funds, and certainly no Lewis also argued that Lewis could not properly be joined
later than December 4, 2000, when Pena decided to move the pursuant to Civil Practice and Remedies Code section 33.004.
brokerage account investments out of the technology funds The movants acknowledged that section 33.004 provides that
into more conservative investments, as a result of the losses.” a claimant (plaintiff) is not barred by limitations from seeking
Wells Fargo and Lewis concluded that the Chapas' claims first to join a responsible third party within 60 days after that
asserted in their August 17, 2006 lawsuit were “barred by the person is designated as a responsible third party.
statutes of limitations, as the longest period for any cause of
action they allege is four years.” *116 Wells Fargo and Lewis argued that the Chapas should
not be permitted to join Lewis because such joinder was a
The Chapas responded to the motion for summary judgment “fraudulent” attempt to avoid limitations. They alleged that
by first clarifying that they, as the trust's beneficiaries, had the Chapas and Pena had conspired to circumvent limitations.
the legal right to pursue claims on behalf of the trust which
the trustee, Pena, had not pursued. The Chapas also reminded Wells Fargo and Lewis also argued that allowing joinder
Wells Fargo and Lewis that they had asserted a claim against of a defendant against whom limitations had run before the
both defendants for assisting Pena in breaching his fiduciary lawsuit was initially filed would be an “absurd result” and a
duty as trustee to the Chapas. “nonsensical” interpretation of the statute.
The Chapas reasserted their claim that the discovery rule The movants also asserted that section 33.004 did not apply
tolled the running of limitations. They argued that “a to those causes of action asserted by the Chapas for which
fiduciary's misconduct is inherently undiscoverable.” The limitations had expired prior to the section's effective date.
Chapas again pointed out that Pena, as trustee, owed them a Wells Fargo and Lewis further asserted that section 33.004
fiduciary duty. They asserted, “Pena actively concealed from did not apply to certain statutory claims asserted by the
them the fact and extent of the injury they suffered through Chapas.
the misfeasance of Lewis.” They continued, “Plaintiffs have
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
The Chapas responded that the plain language of section
33.004(e) permitted their joinder of Lewis and appeared The Chapas appealed. They present three issues challenging
to “contemplate[ ] the very issue of bringing in a person the summary judgment order. In their first two issues, *117
who limitations may have run against.” The Chapas further the Chapas contend that summary judgment was not proper
asserted that Wells Fargo was “liable under the doctrine of based on limitations. In their third issue, the Chapas assert
respondeat superior to the extent that [Lewis] is found liable.” that summary judgment could not be based on the ground
that there was no evidence to support their claim that Wells
Wells Fargo and Lewis filed a reply to the Chapas' Fargo and Lewis participated or assisted Pena in breaching
summary judgment response. In addition to reasserting their his fiduciary duty.
initial summary judgment arguments, the summary judgment
movants pointed out that, in their response, the Chapas “do
not dispute that they stand in the shoes of Pena, the trustee,
Summary Judgment Based on Limitations
for purposes of their claims.” Wells Fargo and Lewis agreed
that the Chapas could assert claims based on their status as In their first and second issues, the Chapas contend that
beneficiaries of the testamentary trust. But, they disagreed the trial court erred by granting summary judgment because
that the Chapas had “individual claims against Wells Fargo Wells Fargo and Lewis failed to prove, as a matter of law,
and Lewis.” They asserted, “Plaintiff's stand in the trustee's that limitations bar the Chapas' claims, which they assert as
shoes, and Plaintiffs' limitations period is computed from the trust beneficiaries on behalf of the trustee. On appeal, the
time the trustee acquired his right to sue.” Chapas contend that a genuine issue of material fact exists
regarding whether the discovery rule deferred the accrual of
In their reply, Wells Fargo and Lewis also asserted, “[s]ection
these causes of action. 1
33.004 was clearly not intended to allow for the collusive
joinder of an employee of a previously-named defendant
where, as here, the claims against the employee and employer A. Legal Principles: Traditional Summary Judgment
are one and the same, and the employee was known to the and Limitations
parties all along, and Plaintiffs made a conscious decision not Because summary judgment is a question of law, a trial
to sue the employee at the outset.” They further alleged that, court's summary judgment decision is reviewed de novo.
even assuming that Lewis was properly joined, section 33.004 See Valence Operating Co. v. Dorsett, 164 S.W.3d 656,
does not operate to “revive” time-barred claims against Wells 661 (Tex.2005). In our review, we take the nonmovant's
Fargo “by virtue of respondeat superior.” competent evidence as true, indulge every reasonable
inference in favor of the nonmovant, and resolve all doubts
In addition to their traditional motion for summary judgment, in favor of the nonmovant. Diversicare Gen. Partner, Inc.
Wells Fargo and Lewis also asserted a no-evidence motion for v. Rubio, 185 S.W.3d 842, 846 (Tex.2005). To prevail on a
summary judgment with respect to one of the Chapas' causes “traditional” summary-judgment motion asserted under Rule
of action: the Chapas' claim that Wells Fargo and Lewis had 166a(c), a movant must prove that there is no genuine issue
participated or assisted in Pena's breach of his fiduciary duty as to any material fact and that it is entitled to judgment as
as trustee to the Chapas. Specifically, Wells Fargo and Lewis a matter of law. See TEX.R. CIV. P. 166a(c); Little v. Texas
asserted that the Chapas could produce no evidence that Wells Dep't of Criminal Justice, 148 S.W.3d 374, 381 (Tex.2004).
Fargo's and Lewis's conduct breached a duty to the Chapas.
[1] [2] A defendant moving for summary judgment on the
The trial court granted Wells Fargo's and Lewis's motion for affirmative defense of limitations must conclusively establish
summary judgment. In its order, the trial court specified that the date on which the limitations commenced; that is, the
“all claims asserted by Plaintiffs [the Chapas] against Wells date on which the cause of action accrued. See Pustejovsky
Fargo and Lewis are barred by the statutes of limitations.” The v. Rapid–American Corp., 35 S.W.3d 643, 646 (Tex.2000);
trial court ordered that all of the Chapas' claims against Wells Zale Corp. v. Rosenbaum, 520 S.W.2d 889, 891 (Tex.1975).
Fargo and Lewis “are hereby dismissed with prejudice, and The determination of this date is typically a question of law.
Plaintiffs shall take nothing by reason of those claims.” The Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211,
trial court then granted the movants' motion to sever, making 221 (Tex.2003).
the summary judgment order final for purposes of appeal.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
[3] [4] As a general rule, a cause of action accrues, and the period of the statute of limitations
the statute of limitations begins to run, when facts come into should be computed from the time the
existence that authorize a party to seek a judicial remedy. Id. trustee acquired his right to sue.
(citing Johnson & Higgins of Tex., Inc. v. Kenneco Energy,
Inc., 962 S.W.2d 507, 514 (Tex.1998)). In most cases, claims 699 S.W.2d 864, 874 (Tex.App.-Houston [1st Dist.] 1985,
accrue “when a wrongful act causes some legal injury.” Via writ ref'd n.r.e.).
Net v. TIG Ins. Co., 211 S.W.3d 310, 313 (Tex.2006). This is
true even if the fact of injury is not discovered until later, andIn this case, the Chapas asserted their claims against Wells
even if all resulting damages have not yet occurred. Knott, Fargo and Lewis for breach of fiduciary duty, breach
128 S.W.3d at 221 (citing S.V. v. R.V., 933 S.W.2d 1, 4 of the duty of good faith and fair dealing, negligent
(Tex.1996)). misrepresentation, negligence, fraud, and for statutory
violations, as trust beneficiaries on behalf of the trustee. See
[5] [6] The discovery rule defers the accrual of a cause of id. The parties agree that the limitations periods for these
action until the plaintiff knows, or by exercising reasonable claims began to run when Pena, as trustee, acquired his right
diligence, should know of the facts giving rise to the claim. to sue. See id. As a result, Wells Fargo and Lewis had to
Barker v. Eckman, 213 S.W.3d 306, 311–12 (Tex.2006). For show that no genuine issue of material fact exists regarding
the discovery rule to apply, the injury must be inherently when Pena, not the Chapas, discovered, or in the exercise of
undiscoverable and objectively verifiable. Id. at 312; Via Net, reasonable diligence should have discovered, the wrongful act
211 S.W.3d at 313. and resulting injury. 2 See id. Indeed, all of the arguments and
evidence offered by Wells Fargo and Lewis related to Pena's
*118 [7] [8] [9] If the plaintiff pleads the discovery knowledge, not the Chapas' knowledge.
rule as an exception to limitations, the moving defendant
then has the dual burden of proving the date of accrual The Chapas allege that Lewis owed a fiduciary duty to Pena
and of negating the discovery-rule exception. See Envtl. to correctly advise him regarding suitable investments for
Procedures, Inc. v. Guidry, 282 S.W.3d 602, 622 (Tex.App.- the testamentary trust funds. The Chapas allege that Lewis
Houston [14th Dist.] 2009, pet. denied). The defendant may breached this duty when he directed Pena to engage in margin
negate the exception by proving, as a matter of law, that trading and invest in high-risk technology mutual funds.
no genuine issue of material fact exists regarding when the
plaintiff discovered, or in the exercise of reasonable diligence *119 [10] [11] [12] The Chapas correctly point out
should have discovered, the wrongful act and resulting injury. that when analyzing the applicability of the discovery rule
See KPMG Peat Marwick v. Harrison County Hous. Fin. in cases in which the alleged injuries arise from a breach of
Corp., 988 S.W.2d 746, 748 (Tex.1999); see also Childs v. fiduciary duty, the claims are generally considered inherently
Haussecker, 974 S.W.2d 31, 37 (Tex.1998). If the movant undiscoverable. See S.V., 933 S.W.2d at 8; Computer
establishes that limitations bars the action, the nonmovant Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 456
must then adduce summary judgment proof raising a fact (Tex.1996). Nonetheless, once the fiduciary's misconduct
issue to avoid limitations. KPMG Peat Marwick, 988 S.W.2d becomes apparent, the claimant cannot ignore it, regardless of
at 748. the fiduciary nature of the relationship. See S.V., 933 S.W.2d
at 8; see also Computer Assocs., 918 S.W.2d at 456. In other
words, such claims accrue when the claimant knows or in the
B. Analysis of Whether Limitations had Expired exercise of ordinary diligence should know of the wrongful
In Interfirst Bank–Houston, N.A. v. Quintana Petroleum
act and resulting injury. 3 See Murphy v. Campbell, 964
Corporation, we explained,
S.W.2d 265, 271 (Tex.1997). The date that a claimant knew
It is only when the trustee cannot or or should have known of an injury is generally a fact question.
will not enforce the cause of action See Childs, 974 S.W.2d at 44. However, if reasonable minds
that he has against the third person that could not differ about the conclusion to be drawn from the
the beneficiary is allowed to enforce it. facts in the record, the start of the limitations period may be
In such a case, the beneficiary is not determined as a matter of law. See id.
acting on a cause of action vested in
him, but is acting for the trustee, and
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
[13] Here, Wells Fargo and Lewis offered evidence to show Based on the summary judgment proof offered, Wells Fargo
that, on December 4, 2000, Pena knew, or should have known, and Lewis conclusively established that Pena knew, or should
the risky and “unsuitable” nature of the subject investments have known of Lewis's alleged wrongdoing, and of the
and of the injury to the trust. To support summary judgment, resulting injury, on December 4, 2000. See Murphy, 964
the movants offered the monthly and quarterly statements S.W.2d at 271; S.V., 933 S.W.2d at 8; Computer Assocs.,
received by Pena from December 1999 through January 918 S.W.2d at 456; see also Freuden v. Hibernia Nat. Bank,
2001. The statements show that from December 31, 1999 No. 09–08–00398–CV, 2009 WL 2045158, at *3 (Tex.App.-
to November 30, 2000 the value of the brokerage account Beaumont July 16, 2009, pet. denied) (mem.op.). This is true
declined from $653,214.87 to $433,202.86. In the month of even when the evidence is viewed in favor of the Chapas.
November 2000, the account lost $152,886.26. The statement Thus, Wells Fargo and Lewis conclusively proved that the
dated December 29, 2000 indicates that account funds were Chapas' causes of action brought on behalf of Pena accrued
used to pay for losses sustained due to margin trading. on December 4, 2000.
The movants offered Pena's deposition testimony in which On appeal, the Chapas point to record evidence to show that,
Pena admitted that he was aware that the losses to the when viewed in the light most favorable to them, a genuine
brokerage account resulted from the investments in the issue of material fact exists regarding when their causes of
technology mutual funds. Pena acknowledged that he decided action accrued. The Chapas rely on Pena's testimony that he
to take the brokerage account's funds out of the technology did not realize that the trust's funds had not been suitably
sector investments in December 2000 because he knew invested until December 2005, when Pena consulted an
that the account had sustained losses from the technology attorney to respond to the Chapas' demand for an accounting
investments. of the trust.
The movants also offered the “Client Investment The Chapas also point to evidence that Pena was
Replacement Authorization” form signed by Pena on inexperienced as a trustee and as an investor. Pena testified
December 4, 2000. In the form, Pena directed that the that he told Lewis that he did not want to place the trust's
brokerage account's funds “exit” from the technology mutual funds in any risky investments. He stated that Lewis had
funds and be invested in a “unit investment trust.” The hand- assured him that the funds would be not be put at risk. Pena
written notation on the form indicates that the “reason for testified that, when he questioned Lewis regarding the losses
[the] change” was as follows: “Diversify from internet sector/ in the account, Lewis reassured him that the investments
technology funds into UIT with greater diversification and were suitable. In their brief, the Chapas point to testimony
less overall volatility.” that Lewis had “crafted the investment strategy specific for
the Trust to achieve ‘preservation’ of the principal for the
By the hand-written notation, the Client Investment benefit of the Chapas as beneficiaries, all the while knowing
Replacement Authorization form indicates that Pena was that Pena was relying on his expert advice as a ‘certified
aware that the technology investments were, as the Chapas financial planner.’ ” The Chapas also cite testimony that, on
allege, not “suitable” investments for the trust fund's assets one occasion, “Lewis made the decision to sell stock out of the
because of their volatility. Pena was also aware that the trust's Trust account to reduce the amount of margin without seeking
corpus had sustained substantial losses caused by investment the approval of Pena or even notifying him of such sale until
in the technology mutual funds. And he was aware that after the fact.”
margin trading was also depleting the trust fund's assets.
Here, the monthly account statements, coupled with the
Pena's awareness of these facts, at a minimum, would have Client Investment Replacement Authorization, shows that, on
caused a reasonably prudent trustee to further inquire into December 4, 2000, Pena had an affirmative awareness of the
Lewis's conduct. Even assuming a fiduciary relationship losses sustained by the trust's assets and of the cause of that
between Pena and Lewis, *120 Pena could not simply sit loss. When viewed in their favor, the evidence cited by the
back and ignore the very facts that the Chapas now, acting on Chapas may raise a fact issue regarding whether Pena knew,
his behalf, claim afford them a judicial remedy. or should have known, of the alleged unsuitable nature of
the investments before December 4, 2000, given the claimed
fiduciary relationship between Lewis and Pena. The evidence
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
cited by the Chapas may also be relevant to the underlying
merits of their claims. But, such evidence does not raise a (e) If a person is designated under this section as a
genuine issue of material fact regarding whether Pena knew, responsible third party, a claimant is not barred by
or should have known, of Lewis's alleged wrongdoing and of limitations from seeking to join that person, even though
the resulting injury on December 4, 2000. such joinder would otherwise be barred by limitations, if
the claimant seeks to join that person not later than 60 days
Viewing the evidence in the light most favorable to the after that person is designated as a responsible third party.
Chapas, Wells Fargo and Lewis established that Pena knew,
TEX. CIV. PRAC. REM.CODE ANN. § 33.004(a),(e)
or should have known, of Lewis's alleged wrongdoing and
(Vernon 2008).
of the resulting injury on December 4, 2000. See Murphy,
964 S.W.2d at 271; S.V., 933 S.W.2d at 8; Computer Assocs.,
It is undisputed that, pursuant to section 33.004(e), the Chapas
918 S.W.2d at 456. Accordingly, Wells Fargo and Lewis
joined Lewis within 60 days after he had been designated as a
conclusively proved that the Chapas' causes of action brought
responsible third party by Pena. In their motion for summary
on behalf of Pena accrued on December 4, 2000.
judgment, Wells Fargo and Lewis raised several grounds to
support their assertion that section 33.004(e) did not permit
It is undisputed that the Chapas' causes of action have
Lewis's joinder.
statutes of limitations ranging from two years to four years.
The *121 Chapas did not file suit until August 17, 2006.
Therefore, we conclude that the Chapas' claims against Wells 1. Public Policy
Fargo and Lewis, asserted by them on behalf of Pena, for The movants first characterize Lewis's joinder as
breach of fiduciary duty, breach of the duty of good faith and “fraudulent.” They alleged that the Chapas and Pena colluded
fair dealing, negligent misrepresentation, negligence, fraud, to join Lewis after the Chapas realized that their claims
and violating the Deceptive Trade Practices Act and the Texas against Wells Fargo were time-barred. The movants argued
Securities Act were barred by limitations when the suit was that section 33.004(e)'s joinder provision should not apply
filed. when, as here, a plaintiff's claims were time-barred before suit
was filed. Specifically, the movants asserted,
C. Civil Practices and Remedies Code Section 33.004 [I]nterpreted logically, the apparent
[14] In support of their first two issues challenging summary limitations savings clause [of section
judgment, the Chapas also contend that Civil Practices and 33.004(e) ] should only operate to
Remedies Code section 33.004 permits them to pursue their revive claims against later joined
claims against Lewis and Wells Fargo, regardless of whether responsible third parties in cases
those claims were time-barred at the time suit was initially where the initial lawsuit was timely
filed. Section 33.004 is part of Chapter 33, the statutory filed. Any suggestion to the contrary,
scheme for the apportionment of responsibility in tort and namely that limitations may be revived
deceptive trade practices actions. See TEX. CIV. PRAC. as to claims which were barred on
REM.CODE ANN. §§ 33.001–.017 (Vernon 2008). the date the lawsuit was first filed,
would essentially strip all defendants
Section 33.004 provides, in relevant part, who are joined as responsible third
parties from any limitations defense,
(a) A defendant may seek to designate a person as a
regardless of how far back the conduct
responsible third party by filing a motion for leave to
in question occurred. Taken to its end,
designate that person as a responsible third party. The
this argument would lead to absurd
motion must be filed on or before the 60th day before the
results and potential for collusion
trial date unless the court finds good cause to allow the
that the legislature could not have
motion to be filed at a later date.
possibly intended when they drafted §
.... 33.004(e).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
The movants acknowledged that no case law supports their an absurd result. To illustrate their point, they offered the
policy argument and that “the legislative history does not shed following example and argument:
any light on the limitations issue.”
Plaintiff (P) files suit in January
*122 Although the movants' policy argument has certain 2008 against D1, an individual driving
common sense appeal, it cannot serve to defeat the plain alone, and D2, a moving company,
language of the statute, which permitted the joinder of for negligence stemming from a May
Lewis in this case. Last year, the San Antonio Court of 1997 three-car automobile accident.
Appeals rejected a similar public policy argument in Flack P's claims against D1 and D2
v. Hanke, –––S.W.3d ––––, –––– (Tex.App.-San Antonio are clearly barred by the two-year
2009, no pet.). There, the designating defendant had agreed negligence statute of limitations. D1,
to designate the appellees as responsible third parties in the individual, files a motion to
exchange for being dismissed from the suit as part of a designate T, the employee driver of
settlement agreement with the plaintiff. See id. at ––––. The D2's moving company vehicle, as a
appellees argued that their designation as responsible third responsible third party. P then joins T
parties should be disallowed because such designation was as a defendant pursuant to 33.004(e),
an “attempt to manipulate the process” and to circumvent even though over 10 years have passed
their statutory limitations defense. Id. at ––––. The court since the accident, and any claims
of appeals acknowledged that the appellees were likely against T are clearly time-barred. By
designated as responsible third parties solely to “wash out” the Chapa Plaintiffs' logic, the claims
against T should survive pursuant to
the appellees' limitations defense. 4 Id. at ––––. Nonetheless,
the savings clause of 33.004(e), even
the San Antonio court of appeals rejected the appellees' policy
though the initial suit by P was not
argument, explaining, “[T]he statute does not specifically
timely filed. Thus, P would be able
preclude such designations based on the intent of the
to revive a completely dead case and
designor.” Id.
pursue his 10–year–old claims against
T. Clearly this *123 was not the
[15] We must construe section 33.004(e) according to its
intent of the legislature in drafting
plain language and may not add language that is not implicitly
33.004.
contained in the language of the statute. See Lee v. City of
Houston, 807 S.W.2d 290, 295 (Tex.1991). Here, we can
ascertain no legislative intent from the statutory scheme that Again, Wells Fargo and Lewis provide a compelling
the legislature meant to preclude the joinder of a responsible argument. Nonetheless, the underlying facts of this case are
third party, which had a valid limitations defense when the unlike those in the movants' example. Here, no allegation or
suit was filed. See TEX. CIV. PRAC. REM.CODE ANN. § proof has been offered to show that the Chapas' claims against
33.004(e); see also TEX. CIV. PRAC. REM.CODE ANN. § Pena, the defendant who designated Lewis as a responsible
33.002 (defining applicability of Chapter 33, including listing third party, were time-barred when suit was initially filed.
types of claims to which chapter does not apply). Rather, To the contrary, it appears accepted by the parties that the
the provision's plain language expressly allows, for a limited Chapas' claims against Pena were timely. In contrast, the
period, the revival of claims that were previously time-barred. defendant, D1, in the movants' example, who designated T as
See TEX. CIV. PRAC. REM.CODE ANN. § 33.004(e). a responsible third party, had a valid limitations defense when
suit was filed.
[16] We further note that our function is not to question
the wisdom of the statute or measure it for logic; we are to The distinction does have significance. Here, the case is not
apply the statute as written, unless the context or an absurd “completely dead,” as the movants characterized the claims
result requires a different construction. See City of Rockwall in their example. The Chapas had a “live” claim against Pena
v. Hughes, 246 S.W.3d 621, 629 (Tex.2008); Lee, 807 S.W.2d when they filed suit. Under the statutory scheme of Chapter
at 293. Wells Fargo and Lewis argued in their summary 33, Pena had the right to designate Lewis as a responsible
judgment motion that allowing Lewis's joinder leads to such third party to apportion responsibility. See TEX. CIV. PRAC.
REM.CODE ANN. § 33.004(a).
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
has become barred by the statute of limitation, the defendant
The legislature has chosen to permit a defendant to designate has a vested right to rely on such statute as a defense.” 12
a responsible third party, regardless of whether that party S.W.3d 1, 4 (Tex.1999) (citing Wilson v. Work, 122 Tex.
has a valid limitations defense. See TEX. CIV. PRAC. 545, 62 S.W.2d 490, 490 (1933); Cathey v. Weaver, 111
REM.CODE ANN. § 33.011(6) (Vernon 2008) (broadly Tex. 515, 242 S.W. 447, 453 (1922); Mellinger v. City of
defining “responsible third party”). In turn, the legislature Houston, 68 Tex. 37, 3 S.W. 249, 255 (1887)). The court
balanced out the rights of a claimant, such as the Chapas, by continued, “To permit barred claims to be revived years
giving the claimant a 60–day window to join a responsible later would undermine society's interest in repose, which is
third party, regardless of whether that party has a valid one of the principal justifications for statutes of limitations.”
limitations defense. See TEX. CIV. PRAC. REM.CODE Id. The court explained, “[W]e have written that a statute
ANN. § 33.004(e); see also Kimbrell v. Molinet, 288 S.W.3d extending the limitations period of a claim already barred
464, 470 (Tex.App.-San Antonio 2009, pet. filed) (Simmons, by limitations violates the Texas Constitution's prohibition
J., concurring) (discussing legislative history of Chapter 33 against retroactive laws, which is article I, section 16.” Id.
and balancing of parties' rights under statutory scheme). In
short, we conclude the movants' policy argument is without Here, the Chapas' claims against Lewis for breach of the duty
merit and did not prevent Lewis's joinder by the Chapas. of good faith and fair dealing, negligent misrepresentation,
negligence, and DTPA violations accrued, as discussed
above, on December 4, 2000. When the legislature enacted
2. Claims with Two–Year Limitations Period the 2003 amendments to Chapter 33, including section
In their motion for summary judgment, Wells Fargo and 33.004(e), these claims were already time-barred. At the time
Lewis also asserted that section 33.004(e) did not apply to the of 33.004(e)'s enactment, Lewis had a vested right to rely on
Chapas' claims governed by two-year statutes of limitations. the statutes of limitation barring these claims. See id. Reading
The movants pointed out, “The amendments to Chapter 33, section 33.004(e) to divest Lewis of that right violates article
including § 33.004(e), became effective September 1, 2003.” I, section 16 of the Texas Constitution. See id. Accordingly,
See Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 23.02, the Chapas' time-barred claims for breach of the duty of
2003 Tex. Gen. Laws 847, 898–99. The 2003 version governs good faith and fair dealing, negligent misrepresentation,
all cases filed on or after July 1, 2003. See Act of June 2, 2003, negligence, and DTPA violations may not, as a matter of
78th Leg., R.S., ch. 204, § 23.02(c), 2003 Tex. Gen. Laws law, be revived against Lewis pursuant to section 33.004(e).
847, 899. See id.; see also Mann v. Jack Roach Bissonnet, Inc., 623
S.W.2d 716, 718–19 (Tex.Civ.App.-Houston [1st Dist.] 1981,
Wells Fargo and Lewis further asserted, “It is well-settled no writ) (holding that legislature cannot extend limitations
that a new limitations statutory scheme cannot revive claims period for claims that are already time-barred).
on which limitations had expired prior to enactment of the
new statute.” They averred, “In the instant case, the [Chapas']
claims with a two-year statute of limitations had already 3. Statutory Claims
expired by September 1, 2003.” [18] [19] [20] Civil Practice and Remedies Code section
33.002(a) provides that Chapter 33 applies to
[17] It is undisputed that the following claims asserted by the
Chapas against Lewis had a two-year statute of limitations: (1) any cause of action based on tort in which a
breach of the duty of good faith and fair dealing, negligent defendant, settling person, or responsible third party is
found responsible for a percentage of the harm for which
misrepresentation, negligence, and DTPA violations. 5 The
relief is sought; or
movants asserted that, because these claims were time-barred
when the 2003 amendments to Chapter 33 were enacted, (2) any action brought under the Deceptive Trade
the Chapas could not assert these causes of action against Practices–Consumer Protection Act (Subchapter E,
Lewis when they joined him pursuant to section 33.004(e). Chapter 17, Business & Commerce Code) in which a
We agree. defendant, settling person, or responsible third party is
found responsible for a percentage of the harm for which
*124 In Baker Hughes, Inc. v. Keco R. & D., Inc., the Texas relief is sought.
supreme court reaffirmed “settled law” that, “after a cause
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 13
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
Fid. & Guar. Ins. Underwriters Inc. v. Wells Fargo Bank,
TEX. CIV. PRAC. REM.CODE ANN. § 33.002(a) (Vernon No. H–04–2833, 2006 WL 870683, at *5 (S.D.Tex. Mar.
2008). The movants argued that Chapter 33 does not apply 31, 2006) (noting that “courts and commentators alike
to the Chapas' statutory claims asserted under the Texas have recognized the difficulty in reconciling the language
Securities Act and the Texas Trust Act. 6 The movants' of the Proportionate Responsibility Statute with certain
assertions are not supported by the weight of authority. causes of actions, including vicarious and/or derivative
liability actions”); D. Underwood & Michael D. Morrison,
Article 33.002(a) provides that Chapter 33 applies to “any Apportioning Responsibility in Cases Involving Claims of
action based in tort.” TEX. CIV. PRAC. REM.CODE ANN. Vicarious Derivative, or Statutory Liability for Harm Directly
§ 33.002(a) (emphasis added). The Texas supreme court Caused by the Conduct of Another, 55 BAYLOR L.REV.
has applied Chapter 33 to statutory tort claims that do not 617, 647–48 (2003) (writing that the legislature, in enacting
include a separate *125 and conflicting legislative fault the original and present versions of section 33.003, did not
allocation scheme. 7 Compare JCW Elecs., Inc. v. Garza, consider derivative or vicarious liability cases).
257 S.W.3d 701, 705–06 (Tex.2008) (holding that Chapter
33 applied to UCC article 2 claims) with Sw. Bank v. Info. [22] As noted by the El Paso Court of Appeals, “The purpose
Support Concepts, Inc., 149 S.W.3d 104, 111 (Tex.2004) of Chapter 33 ... is to apportion the damages for which
(declining to apply Chapter 33 to UCC article 3 conversion joint tortfeasors are liable, according to the percentage *126
claims because article 3 contains “its own loss allocation of fault.” Gilcrease v. Garlock, Inc., 211 S.W.3d 448, 457
scheme uniquely applicable to conversion claims involving (Tex.App.-El Paso 2006, no pet.); see also TEX. CIV. PRAC.
negotiable instruments”); see also Werner v. KPMG, L.L.P., REM.CODE ANN. § 33.003 (directing that jury apportions
415 F.Supp.2d 688, 703 (S.D.Tex.2006). responsibility among only those persons whose conduct
caused or contributed to cause harm on which damages
Here, the movants made no assertion in their motion for sought). Pursuant to the doctrine of respondeat superior, an
summary judgment that the Chapas' statutory claims are not employer will be held vicariously liable for the negligence of
“based in tort.” Nor is there any argument that the subject its employee regardless of any allegation of fault on the part
statutes contained a separate and conflicting legislative fault of the employer. See Bedford v. Moore, 166 S.W.3d 454, 461
allocation scheme. Accordingly, we conclude that section (Tex.App.-Fort Worth 2005, no pet.). Allowing a plaintiff to
33.004(e) applied to the Chapas' statutory claims asserted use section 33.004(e) to revive a time-barred claim against
against Lewis. See JCW Elecs., 257 S.W.3d at 705–06. a party, not for its tortious conduct, but merely based on its
relationship with a tortfeasor, is incongruent with Chapter
33's statutory scheme to apportion responsibility based on the
4. Respondeat Superior person's harm-causing conduct. Cf. Rosell v. Cent. W. Motor
[21] In the trial court and on appeal, the Chapas contend Stages, Inc., 89 S.W.3d 643, 656–57 (Tex.App.-Dallas 2002,
that, to the extent that section 33.004(e) applies to Lewis, it pet. denied) (explaining that, “while the statute on its face
also applies to Wells Fargo, based on respondeat superior. 8 requires all defendants to be included in the apportionment
As a result, the Chapas contend that Wells Fargo remains a question, it would not be proper for an employer to be
defendant in the lawsuit, regardless of whether it has a valid included along with the driver if its only responsibility was
limitations defense. that of respondeat superior”).
In their opening brief, the Chapas contend that “the doctrine Moreover, section 33.004(e) permits a claimant to join a
of respondeat superior clearly and most logically applies to designated “responsible third party.” Under § 33.011(6), a
the context of Section 33.004(e).” They argue, “Permitting “responsible third party”
a claim against an employer based on vicarious liability
means [in pertinent part] any person
should be revived if the claim against the employee is
who is alleged to have caused or
revived as well.” The Chapas do not cite, nor can we
contributed to causing in any way the
locate, any authority determining this issue. Nor does Chapter
harm for which recovery of damages
33 generally, or section 33.004(e) specifically, address the
is sought, whether by negligent act
interplay between the proportionate liability scheme and
or omission, by any defective or
claims based on theories of vicarious liability. See generally
unreasonably dangerous product, by
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 14
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
other conduct or activity that violates Lewis breached a duty that they owed to the Chapas. Rather,
an applicable legal standard, or by any they allege that Wells Fargo and Lewis knowingly assisted
combination of these. Pena in breaching his fiduciary duty to the Chapas. Indeed, to
succeed on their assisting-in-breach-of-fiduciary-duty claim,
TEX. CIV. PRAC. REM.CODE ANN. § 33.011(6). A party the Chapas need not show that Wells Fargo and Lewis owed
that is liable based purely on respondeat superior does not them a fiduciary duty or that Wells Fargo's and Lewis's
fit this definition. The definition further underscores that conduct breached such a duty. See Denson, 262 S.W.3d at
section 33.004(e) should not be used to hold a party liable 851.
when no allegations have been made that the party caused
or contributed to the claimant's damages. Accordingly, we In a no-evidence motion for summary judgment, the movant
conclude that the Chapas' time-barred claims against Wells must state the elements as to which there is no evidence
Fargo based on respondeat superior are not revived by section for a claim. TEX.R. CIV. P. 166a(i); Roventini v. Ocular
33.004(e). Sciences, Inc., 111 S.W.3d 719, 722 (Tex.App.-Houston [1st
Dist.] 2003, no pet.) (noting that “motion must specify which
essential elements of the opponent's claim or defense lack
No Evidence Motion for Summary Judgment supporting evidence”). Here, the only element identified by
the movants as entitling them to summary judgment is not
[23] [24] In their third issue, the Chapas contend that an element of the Chapas' assisting-in-breach-of-fiduciary-
summary judgment cannot be based on Lewis's and Wells duty claim, as pleaded. 10 Accordingly, summary judgment
Fargo's no-evidence motion for summary judgment. The cannot be properly granted on the movants' no-evidence
movants filed a no-evidence motion for summary judgment summary judgment motion. See Denson, 262 S.W.3d
with respect to the Chapas' claim that Lewis and Wells at 851 (concluding that no-evidence summary judgment
Fargo assisted Pena in his breaching his fiduciary duty to the erroneously granted on assisting-in-breach-of-fiduciary-duty
Chapas. 9 claim because movant mischaracterized duty element of
claim).
[25] [26] “When a third party knowingly participates in
the breach of a fiduciary duty, the third party becomes a
joint tortfeasor and is liable as such.” Kastner v. Jenkens
Conclusion
& Gilchrist, P.C., 231 S.W.3d 571, 580 (Tex.App.-Dallas
2007, no pet.). In their fourth amended petition, the Chapas Based on the record and the foregoing analysis, we
*127 asserted a breach of fiduciary duty claim against Pena, summarize our conclusions as follows:
individually, and against Wells Fargo and Lewis as joint
tortfeasors. The Chapas claimed that Wells Fargo and Lewis, • The Chapas' claims against Wells Fargo and Lewis,
as third parties, knew that Pena was committing a breach of asserted on behalf of Pena, accrued on December 4,
his fiduciary duty. They alleged that Wells Fargo and Lewis 2000.
knowingly participated in Pena's breach. The Chapas further
alleged that Wells Fargo and Lewis became joint tortfeasors • The Chapas' claims against Wells Fargo and Lewis,
with Pena. They asserted that, as a result, Wells Fargo and asserted on behalf of Pena, were time-barred when suit
Lewis are liable for participating in Pena's breach of trust. See was filed.
Kinzbach Tool Co. v. Corbett–Wallace Corp., 138 Tex. 565,
• The Chapas' claims against Lewis for breach of fiduciary
160 S.W.2d 509, 514 (1942); Denson v. Dallas County Credit
duty, fraud, and violating the Texas Securities Act were
Union, 262 S.W.3d 846, 851 (Tex.App.-Dallas 2008, no pet.).
revived by Civil Practices and Remedies Code section
33.004(e).
In their no-evidence summary judgment motion, Wells Fargo
and Lewis alleged that there is no evidence that their conduct, • Because they were time-barred when the statute was
separate from Pena's conduct, breached a duty to the Chapas. enacted, the Chapas' claims against Lewis for breach of
In so doing, the movants misinterpreted the Chapas' cause of the duty of good faith and fair dealing, *128 negligent
action. With regard to their assisting-in-breach-of-fiduciary- misrepresentation, negligence, and DTPA violations,
duty claim, the Chapas do not allege that Wells Fargo and
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 15
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
breach of fiduciary duty, fraud, violating the Texas
which have two-year statutes of limitations, are not
Securities Act, and assisting Pena in the breach of his
revived by section 33.004(e).
fiduciary duty.
• The Chapas' claims against Wells Fargo, based
on respondeat superior, are not revived by section Accordingly, we affirm the judgment of the trial court to
33.004(e). the extent that it grants summary judgment on the Chapas'
claims against Wells Fargo for breach of fiduciary duty, fraud,
• The Chapas' claims against Wells Fargo and Lewis for breach of the duty of good faith and fair dealing, negligent
assisting Pena in breaching his fiduciary duty are not misrepresentation, negligence, and violating the DTPA and
time-barred, and the no-evidence motion for summary the Texas Securities Act. We also affirm the judgment of
judgment on this claim should not have been granted. the trial court to the extent that it grants summary judgment
on the Chapas' claims against Lewis for breach of the duty
• The trial court properly granted summary judgment based
of good faith and fair dealing, negligent misrepresentation,
on limitations with regard to the Chapas' claims against
negligence, and DTPA violations.
Wells Fargo for breach of fiduciary duty, fraud, breach
of the duty of good faith and fair dealing, negligent
We reverse the judgment of the trial court to the extent that
misrepresentation, negligence, and violating the DTPA
it grants summary judgment on the Chapas' claims against
and the Texas Securities Act.
Wells Fargo for assisting Pena in breaching his fiduciary duty.
• The trial court did not properly grant summary judgment We also reverse the judgment of the trial court to the extent
with regard to the Chapas' claim against Wells Fargo for that it grants summary judgment on the Chapas' claims against
assisting Pena in the breach of his fiduciary duty. Lewis for breach of fiduciary duty, fraud, violating the Texas
Securities Act, and assisting Pena in breaching his fiduciary.
• The trial court properly granted summary judgment based We remand the case for further proceedings.
on limitations with regard to the Chapas' claims against
Lewis for breach of the duty of good faith and fair
dealing, negligent misrepresentation, negligence, and All Citations
DTPA violations.
315 S.W.3d 109
• The trial court did not properly grant summary judgment
with regard to the Chapas' claims against Lewis for
Footnotes
1 In the trial court, the Chapas asserted that fraudulent concealment also served to toll the running of limitations. On appeal,
the Chapas do not separately brief fraudulent concealment, but incorporate certain aspects of it into their discovery-rule
argument.
2 In contrast, the Chapas prosecute the claim against Wells Fargo and Lewis for assisting or participating in Pena's breach
of his fiduciary duty in individual capacities, not on behalf of the trustee. We agree with the Chapas that the limitations
period for this claim began when the Chapas knew or should have known of facts that, in the exercise of reasonable
diligence, would have led to the discovery of Pena's alleged breach of his fiduciary duty. See Little v. Smith, 943 S.W.2d
414, 420 (Tex.1997); Slay v. Burnett Trust, 143 Tex. 621, 187 S.W.2d 377, 394 (1945). Wells Fargo and Lewis offered
no summary judgment argument or proof to show when the Chapas knew or should have known of facts that, in the
exercise of reasonable diligence, would have led to discovery of Pena's alleged breach of his fiduciary to them. Thus,
summary judgment was not proper on this claim based on limitations. As mentioned, Wells Fargo and Lewis asserted a
no-evidence motion for summary judgment regarding this cause of action. We discuss the propriety of the no-evidence
motion for summary judgment with respect to this claim infra.
3 The same rule applies by statute in DTPA claims. See TEX. BUS. & COM.CODE ANN. § 17.565 (Vernon 2002).
4 We note that, unlike in Flack, there is no evidence in this case that Pena and the Chapas had any express agreement
whereby Lewis would be designated by Pena as a responsible third party.
5 The parties also agree that the other causes of action asserted by the Chapas against Lewis and Wells Fargo are subject
to three- or four-year limitation periods.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
Villarreal v. Wells Fargo Brokerage Services, LLC, 315 S.W.3d 109 (2010)
6 Wells Fargo and Lewis also assert on appeal that Chapter 33 does not apply to fraud claims. The movants did not raise
this ground in the trial court to support summary judgment. As a result, we cannot reach this ground. The law is clear: we
may not affirm a summary judgment on grounds “not expressly set out in the motion or response.” Stiles v. Resolution
Trust Corp., 867 S.W.2d 24, 26 (Tex.1993). In any event, the Chapter 33 has been held to apply to fraud claims. See
Isaacs v. Bishop, 249 S.W.3d 100, 116 (Tex.App.-Texarkana 2008, pet. denied).
7 Wells Fargo and Lewis cite Davis v. Estridge, 85 S.W.3d 308, 311 (Tex.App.-Tyler 2001, pet. denied), for its conclusion
that Chapter 33 does not apply to a statutory fraud claim because the DTPA was the only statute expressly mentioned
in section 33.002(a). We do not find Davis persuasive. Since Davis, the Texas supreme court has held that Chapter 33
applied to a statutory tort claim in JCW Electronics, Inc. v. Garza, 257 S.W.3d 701, 705–06 (Tex.2008). Moreover, the
express language of section 33.002(a) provides that Chapter 33 applies “to any action based in tort.” TEX. CIV. PRAC.
REM.CODE ANN. § 33.002(a) (Vernon 2008) (emphasis added).
8 In the trial court, the Chapas also asserted that Wells Fargo was liable for Lewis's conduct based on Wells Fargo's alleged
negligent failure to supervise Lewis. The Chapas do not argue or brief this theory of vicarious liability on appeal.
9 As mentioned, unlike all their other claims against Wells Fargo and Lewis, the Chapas' claim for assisting Pena in the
breach of his fiduciary duty was not brought by the Chapas on behalf of Pena. Accordingly, the accrual date for this
claim would be different from the accrual date of Chapas' other claims. No argument or evidence has been offered to
show the accrual date for the Chapas' assisting-in-breach-of fiduciary-duty claim. Therefore, summary judgment based
on limitations was not proper on this claim. Although the trial court's order identified limitations as the only basis for
summary judgment, we may consider, in the interest of justice, grounds that the movant preserved for review and on
which the trial court did not rule. See Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex.1996).
10 In the trial court, Wells Fargo's and Lewis's no-evidence motion for summary judgment also identified other elements on
which there was no evidence. On appeal, the parties now disagree only regarding the propriety of the movants' assertion
that there is no evidence that the conduct of Wells Fargo and Lewis breached a duty that they owed to the Chapas. In
their brief, Wells Fargo and Lewis argue that they owed no fiduciary duty directly to the Chapas. They contend that, if
they owed any duty, it was owed only to Pena.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 17
GGG
CIVIL PRACTICE & REMEDIES CODE
CHAPTER 33. PROPORTIONATE RESPONSIBILITY
SUBCHAPTER A. PROPORTIONATE RESPONSIBILITY
§ 33.001. PROPORTIONATE RESPONSIBILITY.
In an action to which this chapter applies, a claimant may not recover damages if
his percentage of responsibility is greater than 50 percent.
Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985. Amended
by Acts 1987, 70th Leg., 1st C.S., ch. 2, § 2.04, eff. Sept. 2,
1987; Acts 1995, 74th Leg., ch. 136, § 1, eff. Sept. 1, 1995.
§ 33.002. APPLICABILITY.
(a) This chapter applies to:
(1) any cause of action based on tort in which a defendant, settling person,
or responsible third party is found responsible for a percentage of the harm for
which relief is sought; or
(2) any action brought under the Deceptive Trade Practices-Consumer
Protection Act (Subchapter E, Chapter 17, Business & Commerce Code) in which
a defendant, settling person, or responsible third party is found responsible for a
percentage of the harm for which relief is sought.
(b) Repealed by Acts 2003, 78th Leg., ch. 204, § 4.10(1).
(c) This chapter does not apply to:
(1) an action to collect workers' compensation benefits under the workers'
compensation laws of this state (Subtitle A, Title 5, Labor Code) or actions
against an employer for exemplary damages arising out of the death of an
employee;
(2) a claim for exemplary damages included in an action to which this
chapter otherwise applies; or
(3) a cause of action for damages arising from the manufacture of
methamphetamine as described by Chapter 99.
(d) to (h) Repealed by Acts 2003, 78th Leg., ch. 204, § 4.10(1).
Added by Acts 1987, 70th Leg., 1st C.S., ch. 2, § 2.05, eff. Sept. 2, 1987.
Amended by Acts 1989, 71st Leg., ch. 380, § 4, eff. Sept. 1, 1989; Acts 1995,
74th Leg., ch. 136, § 1, eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch. 414, § 17, eff.
Sept. 1, 1995; Acts 2001, 77th Leg., ch. 643, § 2, eff. Sept. 1, 2001; Acts 2003,
78th Leg., ch. 204, § 4.01, 4.10(1), eff. Sept. 1, 2003.
§ 33.003. DETERMINATION OF PERCENTAGE OF RESPONSIBILITY.
(a) The trier of fact, as to each cause of action asserted, shall determine the
percentage of responsibility, stated in whole numbers, for the following persons
with respect to each person's causing or contributing to cause 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:
(1) each claimant;
(2) each defendant;
(3) each settling person; and
(4) each responsible third party who has been
designated under Section 33.004.
(b) This section does not allow a submission to the jury of a question regarding
conduct by any person without sufficient evidence to support the submission.
Added by Acts 1987, 70th Leg., 1st C.S., ch. 2, § 2.06, eff. Sept. 2, 1987.
Amended by Acts 1995, 74th Leg., ch. 136, § 1,eff. Sept. 1, 1995; Acts 2003,
78th Leg., ch. 204, § 4.02, eff. Sept. 1, 2003.
§ 33.004. DESIGNATION OF RESPONSIBLE THIRD PARTY.
(a) A defendant may seek to designate a person as a responsible third
party by filing a motion for leave to designate that person as a responsible third
party. The motion must be filed on or before the 60th day before the trial date
unless the court finds good cause to allow the motion to be filed at a later date.
(b) Nothing in this section affects the third-party practice as previously
recognized in the rules and statutes of this state with regard to the assertion by a
defendant of rights to contribution or indemnity. Nothing in this section affects
the filing of cross-claims or counterclaims.
(c), (d) Repealed by Acts 2003, 78th Leg., ch. 204, § 4.10(2).
(e) If a person is designated under this section as a responsible third party, a
claimant is not barred by limitations from seeking to join that person, even though
such joinder would otherwise be barred by limitations, if the claimant seeks to join
that person not later than 60 days after that person is designatedas a responsible
third party.
(f) A court shall grant leave to designate the named person as a responsible third
party unless another party files an objection to the motion for leave on or before
the 15th day after the date the motion is served.
(g) If an objection to the motion for leave is timely filed, the court shall grant
leave to designate the person as a responsible third party unless the objecting party
establishes:
(1) the defendant did not plead sufficient facts concerning the alleged
responsibility of the person to satisfy the pleading requirement of the Texas Rules
of Civil Procedure; and
(2) after having been granted leave to replead, the defendant failed to plead
sufficient facts concerning the alleged responsibility of the person to satisfy the
pleading requirements of the Texas Rules of Civil Procedure.
(h) By granting a motion for leave to designate a person as a responsible third
party, the person named in the motion is designated as a responsible third party for
purposes of this chapter without further action by the court or any party.
(i) The filing or granting of a motion for leave to designate a person as a
responsible third party or a finding of fault against the person:
(1) does not by itself impose liability on the person; and
(2) may not be used in any other proceeding, on the basis of res judicata,
collateral estoppel, or any other legal theory, to impose liability on the person.
(j) Notwithstanding any other provision of this section, if, not later than 60 days
after the filing of the defendant's original answer, the defendant alleges in an
answer filed with the court that an unknown person committed a criminal act that
was a cause of the loss or injury that is the subject of the lawsuit, the court shall
grant a motion for leave to designate the unknown person as a responsible third
party if:
(1) the court determines that the defendant has pleaded facts sufficient for
the court to determine that there is a reasonable probability that the act of the
unknown person was criminal;
(2) the defendant has stated in the answer all identifying characteristics of
the unknown person, known at the time of the answer; and
(3) the allegation satisfies the pleading requirements of the Texas Rules of
Civil Procedure.
(k) An unknown person designated as a responsible thirdparty under Subsection
(j) is denominated as "Jane Doe" or "John Doe" until the person's identity is
known.
(l) After adequate time for discovery, a party may move to strike the designation
of a responsible third party on the ground that there is no evidence that the
designated person is responsible for any portion of the claimant's alleged injury or
damage. The court shall grant the motion to strike unless a defendant produces
sufficient evidence to raise a genuine issue of fact regarding the designated
person's responsibility for the claimant's injury or damage.
Added by Acts 1995, 74th Leg., ch. 136, § 1, eff. Sept. 1, 1995.
Amended by Acts 2003, 78th Leg., ch. 204, § 4.03, 4.04, 4.10(2),
eff. Sept. 1, 2003.
SUBCHAPTER B. CONTRIBUTION
§ 33.011. DEFINITIONS.
In this chapter:
(1) "Claimant" means a person seeking recovery of damages, including a
plaintiff, counterclaimant, cross-claimant, or third-party plaintiff. In an action in
which a party seeks recovery of damages for injury to another person, damage to
the property of another person, death of another person, or other harm to another
person, "claimant" includes:
(A) the person who was injured, was harmed, or died or whose
property was damaged; and
(B) any person who is seeking, has sought, or could seek recovery of
damages for the injury, harm, or death of that person or for the damage to the
property of that person.
(2) "Defendant" includes any person from whom, at the time of the
submission of the case to the trier of fact, a claimant seeks recovery of damages.
(3) "Liable defendant" means a defendant against whom a judgment can be
entered for at least a portion of the damages awarded to the claimant.
(4) "Percentage of responsibility" means that percentage, stated in whole
numbers, attributed by the trier of fact to each claimant, each defendant, each
settling person, or each responsible third party with respect to causing or
contributing to cause in any way, whether by negligent act or omission, by any
defective or unreasonably dangerous product, by other conduct or activity
violative of the applicable legal standard, or by any combination of the foregoing,
the personal injury, property damage, death, or other harm for which recovery of
damages is sought.
(5) "Settling person" means a person who has, at any time, paid or promised
to pay money or anything of monetary value to a claimant in consideration of
potential liability with respect to the personal injury, property damage, death, or
other harm for which recovery of damages is sought.
(6) "Responsible third party" means 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. The term "responsible
third party" does not include a seller eligible for indemnity under Section 82.002.
(7) Repealed by Acts 2003, 78th Leg., ch. 204, § 4.10(3).
Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985. Amended by Acts 1987,
70th Leg., 1st C.S., ch. 2, § 2.07, eff. Sept. 2, 1987; Acts 1995, 74th Leg., ch. 136,
§ 1, eff. Sept. 1, 1995; Acts 2003, 78th Leg., ch. 204, § 4.05, 4.10(3), eff. Sept. 1,
2003.
§ 33.012. AMOUNT OF RECOVERY.
(a) If the claimant is not barred from recovery under Section 33.001, the court
shall reduce the amount of damages to be recovered by the claimant with respect
to a cause of action by a percentage equal to the claimant's percentage of
responsibility.
(b) If the claimant has settled with one or more persons, the court shall further
reduce the amount of damages to be recovered by the claimant with respect to a
cause of action by the sum of the dollar amounts of all settlements.
(c) Notwithstanding Subsection (b), if the claimant in a health care liability
claim filed under Chapter 74 has settled with one or more persons, the court shall
further reduce the amount of damages to be recovered by the claimant with respect
to a cause of action by an amount equal to one of the following, as elected by the
defendant:
(1) the sum of the dollar amounts of all settlements; or
(2) a percentage equal to each settling person's percentage of responsibility
as found by the trier of fact.
(d) An election made under Subsection (c) shall be made by any defendant filing
a written election before the issues of the action are submitted to the trier of fact
and when made, shall be binding on all defendants. If no defendant makes this
election or if conflicting elections are made, all defendants are considered to
have elected Subsection (c)(1).
(e) This section shall not apply to benefits paid by or on behalf of an employer to
an employee pursuant to workers' compensation insurance coverage, as defined in
Section 401.011(44), Labor Code, in effect at the time of the act, event, or
occurrence made the basis of claimant's suit.
Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985. Amended by Acts 1987,
70th Leg., 1st C.S., ch. 2, § 2.08, eff. Sept. 2, 1987; Acts 1995, 74th Leg., ch. 136,
§ 1, eff. Sept. 1, 1995; Acts 2003, 78th Leg., ch. 204, § 4.06, 4.10(4), eff. Sept. 1,
2003; Acts 2005, 79th Leg., ch. 277, § 1, eff. June 9, 2005; Acts 2005, 79th Leg.,
ch. 728, § 23.001(6), eff. Sept. 1, 2005.
§ 33.013. AMOUNT OF LIABILITY.
(a) Except as provided in Subsection (b), a liable defendant is liable to a claimant
only for the percentage of the damages found by the trier of fact equal to that
defendant's percentage of responsibility with respect to the personal injury,
property damage, death, or other harm for which the damages are allowed.
(b) Notwithstanding Subsection (a), each liable defendant is, in addition to his
liability under Subsection (a), jointly and severally liable for the damages
recoverable by the claimant under Section 33.012 with respect to a cause of action
if:
(1) the percentage of responsibility attributed to the defendant with respect
to a cause of action is greater than 50 percent; or
(2) the defendant, with the specific intent to do harm to others, acted in
concert with another person to engage in the conduct described in the following
provisions of the Penal Code and in so doing proximately caused the damages
legally recoverable by the claimant:
(A) Section 19.02 (murder);
(B) Section 19.03 (capital murder);
(C) Section 20.04 (aggravated kidnapping);
(D) Section 22.02 (aggravated assault);
(E) Section 22.011 (sexual assault);
(F) Section 22.021 (aggravated sexual assault);
(G) Section 22.04 (injury to a child, elderly individual, or disabled
individual);
(H) Section 32.21 (forgery);
(I) Section 32.43 (commercial bribery);
(J) Section 32.45 (misapplication of fiduciary property or property of
financial institution);
(K) Section 32.46 (securing execution of document by deception);
(L) Section 32.47 (fraudulent destruction, removal, or concealment
of writing); or
(M) conduct described in Chapter 31 the punishment level for which
is a felony of the third degree or higher.
(c) Repealed by Acts 2003, 78th Leg., ch. 204, § 4.10(5).
(d) This section does not create a cause of action.
(e) Notwithstanding anything to the contrary stated in the provisions of the Penal
Code listed in Subsection (b)(2), that subsection applies only if the claimant
proves the defendant acted or failed to act with specific intent to do harm. A
defendant acts with specific intent to do harm with respect to the nature of the
defendant's conduct and the result of the person's conduct when it is the person's
conscious effort or desire to engage in the conduct for the purpose of doing
substantial harm to others.
(f) The jury may not be made aware through voir dire, introduction into
evidence, instruction, or any other means that the conduct to which Subsection
(b)(2) refers is defined by the Penal Code.
Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985. Amended by Acts 1987,
70th Leg., 1st C.S., ch. 2, § 2.09, eff. Sept. 2, 1987; Acts 1995, 74th Leg., ch. 136,
§ 1, eff. Sept. 1, 1995; Acts 2003, 78th Leg., ch. 204, § 4.07, 4.10(5), eff. Sept. 1,
2003.
§ 33.015. CONTRIBUTION.
(a) If a defendant who is jointly and severally liable under Section 33.013 pays a
percentage of the damages for which the defendant is jointly and severally
liable greater than his percentage of responsibility, that defendant has a right of
contribution for the overpayment against each other liable defendant to the extent
that the other liable defendant has not paid the percentage of the damages found
by the trier of fact equal to that other defendant's percentage of responsibility.
(b) As among themselves, each of the defendants who is jointly and severally
liable under Section 33.013 is liable for the damages recoverable by the claimant
under Section 33.012 in proportion to his respective percentage of responsibility.
If a defendant who is jointly and severally liable pays a larger proportion of those
damages than is required by his percentage of responsibility, that defendant has a
right of contribution for the overpayment against each other defendant with whom
he is jointly and severally liable under Section 33.013 to the extent that the other
defendant has not paid the proportion of those damages required by that other
defendant's percentage of responsibility.
(c) If for any reason a liable defendant does not pay or contribute the portion of
the damages required by his percentage of responsibility, the amount of the
damages not paid or contributed by that defendant shall be paid or contributed by
the remaining defendants who are jointly and severally liable for those damages.
The additional amount to be paid or contributed by each of the defendants who is
jointly and severally liable for those damages shall be in proportion to his
respective percentage of responsibility.
(d) No defendant has a right of contribution against any settling person.
Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985. Amended
by Acts 1987, 70th Leg., 1st C.S., ch. 2, § 2.11, eff. Sept. 2,
1987; Acts 1995, 74th Leg., ch. 136, § 1, eff. Sept. 1, 1995.
§ 33.016. CLAIM AGAINST CONTRIBUTION DEFENDANT.
(a) In this section, "contribution defendant" means any defendant,
counterdefendant, or third-party defendant from whom any party seeks
contribution with respect to any portion of damages for which that party may be
liable, but from whom the claimant seeks no relief at the time of submission.
(b) Each liable defendant is entitled to contribution from each person who is not
a settling person and who is liable to the claimant for a percentage of
responsibility but from whom the claimant seeks no relief at the time of
submission. A party may assert this contribution right against any such person as
a contribution defendant in the claimant's action.
(c) The trier of fact shall determine as a separate issue or finding of fact the
percentage of responsibility with respect to each contribution defendant and these
findings shall be solely for purposes of this section and Section 33.015 and not as
a part of the percentages of responsibility determined under Section 33.003. Only
the percentage of responsibility of each defendant and contribution defendant shall
be included in this determination.
(d) As among liable defendants, including each defendant who is jointly and
severally liable under Section 33.013, each contribution defendant's percentage of
responsibility is to be included for all purposes of Section 33.015. The amount to
be contributed by each contribution defendant pursuant to Section 33.015 shall be
in proportion to his respective percentage of responsibility relative to the sum of
percentages of responsibility of all liable defendants and liable contribution
defendants.
Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985. Amended
by Acts 1987, 70th Leg., 1st C.S., ch. 2, § 2.11A, eff. Sept. 2,
1987; Acts 1995, 74th Leg., ch. 136, § 1, eff. Sept. 1, 1995.
§ 33.017. PRESERVATION OF EXISTING RIGHTS OF INDEMNITY.
Nothing in this chapter shall be construed to affect any rights of indemnity granted
by any statute, by contract, or by common law. To the extent of any conflict
between this chapter and any right to indemnification granted by statute, contract,
or common law, those rights of indemnification shall prevail over the provisions
of this chapter.
Added by Acts 1995, 74th Leg., ch. 136, § 1, eff. Sept. 1, 1995.
Amended by Acts 2003, 78th Leg., ch. 204, § 4.08, eff. Sept. 1,
2003.
HHH
§ 311.011. Common and Technical Usage of Words, TX GOVT § 311.011
Vernon's Texas Statutes and Codes Annotated
Government Code (Refs & Annos)
Title 3. Legislative Branch (Refs & Annos)
Subtitle B. Legislation
Chapter 311. Code Construction Act (Refs & Annos)
Subchapter B. Construction of Words and Phrases (Refs & Annos)
V.T.C.A., Government Code § 311.011
§ 311.011. Common and Technical Usage of Words
Currentness
(a) Words and phrases shall be read in context and construed according to the rules of grammar and common usage.
(b) Words and phrases that have acquired a technical or particular meaning, whether by legislative definition or otherwise, shall
be construed accordingly.
Credits
Acts 1985, 69th Leg., ch. 479, § 1, eff. Sept. 1, 1985.
Notes of Decisions (49)
V. T. C. A., Government Code § 311.011, TX GOVT § 311.011
Current through the end of the 2015 Regular Session of the 84th Legislature
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
III
Rule 38. Third-Party Practice, TX R RCP Rule 38
Vernon's Texas Rules Annotated
Texas Rules of Civil Procedure
Part II. Rules of Practice in District and County Courts
Section 3. Parties to Suits
TX Rules of Civil Procedure, Rule 38
Rule 38. Third-Party Practice
Currentness
(a) When defendant may bring in third party. At any time after commencement of the action a defending party, as a third-
party plaintiff, may cause a citation and petition to be served upon a person not a party to the action who is or may be liable to
him or to the plaintiff for all or part of the plaintiff's claim against him. The third-party plaintiff need not obtain leave to make
the service if he files the third-party petition not later than thirty (30) days after he serves his original answer. Otherwise, he must
obtain leave on motion upon notice to all parties to the action. The person served, hereinafter called the third-party defendant,
shall make his defenses to the third-party plaintiff's claim under the rules applicable to the defendant, and his counterclaims
against the third-party plaintiff and cross-claims against other third-party defendants as provided in Rule 97. The third-party
defendant may assert against the plaintiff any defenses which the third-party plaintiff has to the plaintiff's claim. The third-party
defendant may also assert any claim against the plaintiff arising out of the transaction or occurrence that is the subject matter of
the plaintiff's claim against the third-party plaintiff. The plaintiff may assert any claim against the third-party defendant arising
out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff, and the
third-party defendant thereupon shall assert his defenses and his counterclaims and cross-claims. Any party may move to strike
the third-party claim, or for its severance or separate trial. A third-party defendant may proceed under this rule against any
person not a party to the action who is or who may be liable to him or to the third-party plaintiff for all or part of the claim
made in the action against the third-party defendant.
(b) When plaintiff may bring in third party. When a counterclaim is asserted against a plaintiff, he may cause a third party
to be brought in under circumstances which under this rule would entitle a defendant to do so.
(c) This rule shall not be applied, in tort cases, so as to permit the joinder of a liability or indemnity insurance company, unless
such company is by statute or contract liable to the person injured or damaged.
(d) This rule shall not be applied so as to violate any venue statute, as venue would exist absent this rule.
Credits
Oct. 29, 1940, eff. Sept. 1, 1941. Amended by orders of March 31, 1941, eff. Sept. 1, 1941; Dec. 5, 1983, eff. April 1, 1984.
Notes of Decisions (94)
Vernon's Ann. Texas Rules Civ. Proc., Rule 38, TX R RCP Rule 38
Rules of Civil Procedure, Rules of Evidence, and Rules of Appellate Procedure are current with amendments received through
September 1, 2015. Bar Rules, Rules of Disciplinary Procedure, Code of Judicial Conduct, and Rules of Judicial Administration
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Rule 38. Third-Party Practice, TX R RCP Rule 38
are current with amendments received through September 1, 2015. Other state court rules and selected county rules are current
with rules verified through June 1, 2015.
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
City National Bank of Sulphur Springs v. John Alexander Smith
Combined Opinion