Texas Supreme Court Upholds Class Representative's Authority to Dispose of Unclaimed Settlement Proceeds

A sharply divided Texas Supreme Court recently held that unclaimed class action settlement funds may be disposed of in the manner selected by the parties and are not subject to the state’s Unclaimed Property Act. In Highland Homes Ltd. v. The State of Texas, the court considered a settlement between a prominent Texas home builder and a class of subcontractors arising from a dispute over deductions in pay made by the homebuilder to cover the cost of providing adequate liability insurance coverage. The settlement required the defendant to establish a fund to pay claims. Recognizing that some class members might remain unlocated or fail to file a timely claim, the settlement provided that any settlement checks not negotiated within 90 days would be void and that these and any other unclaimed funds would be given to the Nature Conservancy. This type of cy pres settlement procedure has proven controversial recently and some court and commentators have criticized such arrangements. Nevertheless the trial court approved the settlement..

The state of Texas intervened in the case, asserting that the disposition of unclaimed settlement funds violated the Texas Unclaimed Property Act. Under the Act property not claimed within three years is presumed abandoned and is placed in the custody of the Comptroller to hold for the owner. The state argued that regardless of the terms of the settlement, any unclaimed settlement funds must be disposed of according to the statute. The court of appeals agreed with the state and ordered that the undistributed funds be held by the claims administrator for three years and then remitted to the Comptroller.

The Supreme Court reversed. In an opinion authored by Chief Justice Hecht, the five-justice majority reasoned that the Unclaimed Property Act did not apply because the funds were not really unclaimed. The class members had asserted claims and exercised ownership of the funds through the class representative. Once the class was certified the representative has the authority to dispose of any claims including the ability to direct the disposition of funds that could not be paid directly to the class members. 

Justice Devine penned a dissent on behalf of four justices. In their view the class certification rules were trumped by the Unclaimed Property Act because a procedural rule cannot enlarge or diminish any substantive rights. Once the settlement was funded, the dissent reasoned, the proceeds became the property of the individual class members and because subject to the Act.

The Highland Homes opinion upholds the ability of class representatives and defendants to strike class action settlements. If state unclaimed property statutes necessarily apply to all unclaimed settlement proceeds, parties to class litigation will have lost a considerable degree of flexibility in crafting settlements. Cy pres provisions would be difficult or impossible to enforce, as would provisions where the defendant obtains a reversion of the unclaimed funds. While fund-and-claim class action settlement arrangements are subject to some legitimate criticism, especially where the claims process is made unduly burdensome, the inability to use such an arrangement would deprive litigants of what is often a reasonable means of resolving disputes, especially in cases where the scope of actual loss by the class members is in dispute or cannot be readily ascertained. 

Image courtesy of Flickr by J.R.

Fifth Circuit Applies Punitive Damages Limitations to Statutory Civil Penalties

It’s not uncommon for state and federal regulatory schemes to provide for an award of statutory civil penalties to deter and punish certain conduct that it is difficult to monetize in a suit for damages. Frequently penalties may be assessed on a per-violation or per-day basis, permitting an astronomical award that bears little relation to the actual harm sustained by the persons for whose benefit the statute has been enacted. The Telephone Consumer Protection Act with its $500 per violation penalty for sending unsolicited fax advertisements is perhaps the best well known of these statutes but numerous others appear in the United States Code and among the state statutes.

Since these penalties are not intended primarily to compensate the victim of the unlawful practice and exist largely for the public purposes of punishing conduct deemed socially unacceptable the question arises of whether laws governing punitive damages awards constrain the courts in determining the total amount of punitive damages that may be awarded.

In Forte v. Wal-Mart Stores [pdf] four optometrists alleged that Wal-Mart had violated the Texas Optometry Act by writing into lease agreements with the optometrists a provision providing a minimum number of hours that the optometrists’ in-store offices would be opened. The optometrists conceded that they had sustained no damages but the jury awarded them nearly 4 million, amounting to a civil penalty of $1000 per day for each day the offending leases were in effect. The district court entered a remittitur reducing the civil penalty to approximately $1.4 million.

The Fifth Circuit reversed the civil penalty award under Chapter 41 of the Texas Civil Practice and Remedies Code, which governs the award of punitive damages. The court applied the Code’s definition of punitive damages which encompass any damages awarded as a penalty but not for compensatory purposes. The Optometry Act’s penalty provisions were specifically penal and nature and were not intended as compensation. The Fifth Circuit distinguished the case from a prior holding that had held Chapter 41 did not extend to civil penalties for the filing of false liens because in the prior case statutory damages provision expressly mentioned punitive damages indicating that the statutory penalty itself was no considered punitive damages by the legislature and because the statutory damages provision in the false liens case was not characterized as a penalty.

The Fifth Circuit then determined that the punitive damages cap under Chapter 41 was zero because the Chapter provided that punitive damage could only be recovered when the plaintiff received some non-nominal award of actual damages.

The result of the holding is dramatic. In effect, Chapter 41’s general provision that punitive damages may not be recovered in the absence of actual damages is permitted to trump a specific statutory provision allowing for the recovery of a civil penalty in the absence of actual damages. It will be necessary to carefully examine every Texas statute providing for a civil penalty to determine whether it is subject to Chapter 41’s zero cap.

Because Wal-Mart prevailed on its statutory argument the Fifth Circuit was not required to rule upon the interesting constitutional question of whether Due Process constrains a state’s ability to impose a civil penalty disproportionate to the actual harm caused by the unlawful activity. If Due Process limits a jury’s ability to award punitive damages to some reasonable ratio of the actual damages, it would seem that the legislature’s ability to meet out punishment through civil penalties is similarly limited.

Addressing the "Consolation Prize" - A Dilemma For Appellate Advocates

One more note on National Gas Pipeline Co. v. Justiss is appropriate. The Texas Supreme Court held that the landowners had failed to present admissible evidence that the permanent nuisance caused by the defendant had diminished the value of their property. Normally, the loss of such a “no-evidence” point leads to the appellate court reversing the judgment and rendering judgment for the defendant. The Texas Supreme Court, however, did not render judgment. It remanded the case for a new trial, reasoning that the prior jurisprudence may have misled the landowners into believing that their damages evidence was sufficient.

Thus, instead of being tossed out of court, plaintiffs were provided a second opportunity—with a roadmap opinion from the Supreme Court--indicating how their damages should be proved up. While the landowners may have preferred a recovery under the first verdict, the chance for a “do‑over” provided an important consolation prize.

This result raises questions for appellate advocates. Should the appellee be prepared to argue for a remand as a fall-back position? This is psychologically difficult. The party has already won the trial and obtained the judgment. Arguing for a remand in the event the appellate court believes the case should be reversed may seem unduly passive or negative. Nevertheless, if the case appears reasonably close and the appellant’s position seeks to change existing law, clarify a substantial ambiguity in the law, or resolve a conflict existing in the lower courts, appellees should consider mentioning remand as an alternative case resolution.

By the same token, appellants seeking a rendition of judgment should consider whether the appellate court may consider a remand and, if so, present arguments to preempt such a remedy. The appellant might wish to emphasize that the underlying law was clear and the appellee was warned in advance that its evidence would be insufficient. Appellants might also point out that the age of the case or the situations of the parties make remand for new trial an unsatisfactory remedy.

When "Undisputed" Evidence Is Not "Conclusive" Evidence

The Texas Supreme Court’s opinion in Natural Gas Pipeline Company of America v. Justiss highlights a subtle but important point regarding the way appellate courts treat undisputed facts. The case concerned claims by neighboring landowners that a natural gas plant created offensive odors, thus constituting a permanent nuisance. The statute of limitations for permanent nuisance is two years. It was undisputed that the defendant began receiving odor complaints well before two years prior to suit. Nevertheless, the jury selected a date for the accrual of the cause of action that was within the limitations period.

The defendant contended on appeal that the undisputed evidence of prior complaints conclusively demonstrated that any cause of action for permanent nuisance accrued beyond the limitations period. The Supreme Court, however, disagreed. While the jury was not free to disregard the fact that some complaints had been made, it was not forced to draw the conclusion that a cause of action existed at that time. The jury could have determined that the earlier complaints were from hypersensitive persons and that a reasonable person would not have been offended by the odors until less than two years prior to suit. This possible conclusion was bolstered by evidence that the odor conditions had worsened over time.

The Justiss case highlights the need to distinguish between facts concerning discrete events (a complaint occurring on a particular date) and factual conclusions (a reasonable person would have had cause to complain on a particular date). Only when an undisputed fact can lead to a simple valid conclusion is it “conclusive” in a legal sense. In arguing the effect of undisputed facts, the advocate must take the next step and show how only one conclusion may be drawn from it.


Texas Supreme Court Applies Daubert-Type Standards to Lay Testimony

Texas has long adhered to the “Property Owner Rule,” permitting property owners to testify as to the value of their property. Recent cases have emphasized that the testimony must relate to market value, rather than intrinsic or other value.

In Natural Gas Pipeline Co. of America v. Justiss, the Texas Supreme Court clarified that the Property Owner Rule only serves to relieve the property owner of the need to retain a qualified expert. In effect, each owner is deemed a qualified expert as to his or her own property. Critically, however, all other requirements of admissibility of opinion testimony remain in effect. The property owner must show that the testimony is grounded in the facts of the market and is not speculative or conclusory.

The Supreme Court held that the property owners before it—who were bringing a permanent nuisance suit against a malodorous gas plant—did not adequately explain the factual basis of their testimony regarding reduction in value. Rather than render judgment for the defendant, the Supreme Court remanded the action to the trial court, explaining that its prior case may have misled the property owners into believing their testimony was sufficient.

Many Texas practitioners have assumed that the valuation testimony of a property owner is per se admissible. The Justiss case provides a pointed reminder that even a property owner must show some kind of appropriate methodology to testify about the value of property.

Tags: ,

Is Texas Going Federal? Statutory Changes Erode The Distinctiveness of Texas Practice

The Texas legislature has recently passed civil justice reform legislation. While most of the publicity concerning the legislation focused on the “loser pays” provisions, other changes also deserve note.

The new statutes permit an interlocutory appeal of a ruling on a controlling legal issue where such an appeal is approved by the trial court and accepted by the appellate court. The procedure is essentially the same as in federal cases. Texas previously allowed such interlocutory appeals only where all the parties agreed to appellate jurisdiction. This greatly limited the number and effectiveness of interlocutory appeals.

The legislature also directed the Texas Supreme Court to enact rules to implement a motion-to-dismiss practice. Until now, Texas did not have an efficient mechanism for attacking substantive deficiencies in the pleading. Apparently, the legislature contemplates a procedure similar to Federal Rule of Civil Procedure 12. The introduction of the motion to dismiss practice represents a radical departure for Texas practice.

These changes continue a trend in Texas law. Texas law is increasingly becoming “federalized.” The features that make Texas law “unique” or “quirky” or “loco” (depending on one’s perspective) are gradually being eliminated.


Civil Justice Reform in the Texas Legislature

The Texas Legislature is currently considering House Bill 274, containing several measures that could alter the landscape of civil litigation. HB274 would, if enacted:

  • Require the Texas Supreme Court to adopt rules creating a motion-to-dismiss practice patterned on Rules 9 and 12 of the Federal Rules of Civil Procedure (Texas currently does not have a procedure that permits a dispositive motion for failure to state a claim)
  • Permit a prevailing defendant to recover attorneys’ fees and costs when the trier of fact finds that the plaintiff has engaged in an “abusive civil action,” defined as an action that “a reasonable person would conclude is an abuse of the civil justice process.” The provision allows for recovery from a claimant’s attorney if the attorney has a financial interest in the case
  • Provide for permissive interlocutory appeal of an order that involves a controlling question of law when an immediate appeal would materially advance the termination of litigation
  • Permit claimants in cases with between $10,000 and 100,000 to elect to proceed under expedited trial and discovery procedures
  • Forbid courts from construing statutes as creating a cause of action in the absence of clear and unambiguous language

It remains to be seen whether these reforms will make progress in a legislative session that will necessarily focus on the state’s budgetary woes.


When "Ocean View" Suddenly Becomes "On the Beach": Texas Supreme Court Tackles Rolling Easements

Under Texas law, the public has an easement to access dry beaches. This easement extends landward to the vegetation line. A recent Texas Supreme Court case examined the validity of the easement when a hurricane suddenly alters the beachfront.

The property owner had constructed a house behind the vegetation line in the West Beach area of Galveston Island. Hurricane Rita caused sudden and dramatic beach erosion and the house was now seaward of the vegetation line. When the state attempted to enforce the public easement, the property owner initiated litigation in federal court arguing that the state was engaged in an unconstitutional “taking” of private property. Ultimately, the Fifth Circuit certified a question to the Texas Supreme Court regarding whether the public beach access easement “rolled” into previously unencumbered private property when storms altered the shoreline.

The Supreme Court distinguished between mere beach erosion and avulsion, a sudden and dramatic change in the shoreline. The beachfront is constantly changing due to natural forces and both the public and the property owner are properly charged with notice that their respective rights may be altered. In avulsion cases, however, the change is too sudden for the parties to adjust their behavior. Consequently, the public beach easement does not roll landward into previously unencumbered private property.

While the opinion provides some protection for property owners who build near beaches, it also places the precise boundary of the public easement into doubt. The vegetation line is no longer a reliable boundary in all cases.

Too Many Courts, not Enough Judges? A Proposal to Rationalize the Texas Appellate Courts

Texas has 14 intermediate appellate courts, more than any other state. In a recent Texas Tech Law Review article and in CLE presentations, Jones Day attorney, David Schenck, has questioned whether the state needs so many appellate courts. This large number of courts was created over many years on an ad hoc basis, seemingly due to the sprawling nature of Texas itself and a growing population. Mr. Schenck has reasoned that the large number of courts necessarily increases the odds of the development of circuit conflicts. This is particularly problematic in the Houston area, which is governed by two separate courts of appeal within the same geographical area. A trial court judge could find himself faced with conflicting opinions, both of which would be “controlling.”

Other anomalies exist as well. There is a substantial difference in case loads between the courts of appeals. While transfers for the purpose of docket equalization occur, these transfers can create thorny questions regarding the application of legal rules of the transferor’s court. Finally, a handful of counties have been placed in more than one appellate district. Aside from the possible conflicts problem, this situation has occasionally resulted in a “race to the court of appeal,” as litigants attempt to jockey for a more favorable court.

Continue Reading...

Texas Supreme Court: Cattle Rustling Justifies Punitive Damages ... But Amount is Constitutionally Excessive

Two Texas ranchers had a long-standing feud. During a drought, 13 of plaintiff’s cattle strayed from plaintiff’s ranch to defendant’s property along a dry river bed. Defendant rounded up the cattle and sold them, despite warnings from the ranch hands that the cattle were not his.

Plaintiff brought a conversion action and prevailed at trial. The jury awarded $5,327.11, the price of the cattle and $1.25 million in punitive damages. Because the jury also found that defendant had violated a felony statute, the statutory caps on punitive damages did not apply and the trial court awarded the entire amount of the verdict.

In Bennett v. Reynolds (.pdf), the Texas Supreme Court held that the facts warranted the imposition of punitive damages despite the absence of bodily injury or crushing pecuniary loss. The deliberate taking of another person’s cattle fit the statutory definition of “malice.”

The court also considered the extent to which a fact-finder could consider conduct separate from the underlying tort in determining liability for punitive damages. Defendant had allegedly attempted to bribe and threaten witnesses, tamper with the evidence, and bring meritless litigation against witnesses. The court held that the jury could consider these acts in determining the reprehensibility of the defendant’s conduct. “Obviously, a tortfeasor’s attempts to cover his tracks and escape responsibility can imply willfulness.”

Nevertheless, the court reversed the judgment. The award exceeded the permissible ratio of compensatory to actual damages established in State Farm Mut. Auto. Ins. Co. v. Campbell (.pdf). That case held that, except for particularly egregious cases, a 4:1 ratio neared the outer bounds of constitutionally permitted punishment. The case before the court was not sufficiently serious to warrant a deviation from this guideline. The court remanded the case for reassessment of punitive damages in light of the opinion.

AUTHOR’S NOTE: The great-grandfather of the author of this post was forced to leave Texas for a brief time after he and a neighbor captured a livestock thief on his ranch. They issued a “summary judgment” which led to the kind of punitive measures that cannot be corrected on appeal.

Texas Supreme Court Grants Review in Four Cases

On May 28, 2010, the Texas Supreme Court granted petitions for review in the following cases:

  • Anglo-Dutch Petroleum Int’l v. Greenberg Peden P.C.—This case concerns the construction of a contingency fee agreement and the circumstances under which a court can conclude that an agreement is ambiguous.
  • Hyde Park Baptist Church v. Turner—This case concerns the sufficiency of the evidence to support an award of future mental anguish damages and the qualifications of a clinical psychologist to render an opinion in such a case. In addition, the case will consider whether a jury may properly apportion more responsibility to a negligent tortfeasor than an intentional tortfeasor.
  • American Home Assurance v. Maryland Cas. Co.—The case will consider the application of the notice and settlement-without-consent provisions of a liability policy covering an additional insured where the additional insured’s own liability insurers have paid a claim and seek subrogation.
  • Molinet v. Kimbrell—This case will resolve the conflict between the absolute two-year statute of limitations applicable to healthcare claims and the 60-day window for asserting claims against persons designated as responsible third parties under the proportionate responsibility statute.

Oral argument has not been set for these cases.

Texas Supreme Court Grants Review in Six Cases

On April 9, the Texas Supreme Court granted petitions for review in the following cases:

  • Offshore Specialty Fabricators v. Wellington Underwriting Associates. The case addresses whether an all-risk insurance policy covers weather stand-by charges incurred by the insured.
  • XTO Energy Inc. v. Smith Production Inc. The case will determine whether joint operating agreements for oil and gas drilling operations are construed according to their language only or whether industry custom should also be considered.  A possibly fundamental case in the oil and gas field.  
  • Haygood v. de Escabedo. This case turns on whether the statute limiting recovery of medical damages to those “actually incurred” permits recovery of amounts charged but later written off by the provider.  The courts of appeals are divided on the issue, which arises in many personal injury cases.
  • Reid Road Municipal Utility Dist. No. 2 v. Speedy Stop Food Stores Inc. The case will determine whether the “property owner rule” which permits property owners who are not qualified as experts to testify as to the market value of the property applies to corporate property owners.
  • Andrade v. NAACP of Austin.  The underlying case is a challenge to the Secretary of State’s certification of certain paperless voting machines.  The case addresses whether voters have standing to challenge the Secretary’s certification and whether the Secretary enjoys sovereign immunity from such a suit.
  • Marsh USA Inc. v. Cook. The case turns on the enforceability of non-solicitation agreements upon a former employee and whether the agreement was supported by independent consideration.

Oral argument has not yet been set for any of these cases.

Two New Features on The Appellate Strategist

The Appellate Strategist was the first blog to offer a comprehensive, regularly-updated database of civil issues -- broken down by category and subject matter -- that the California Supreme Court has agreed to hear and decide.

We are proud to announce two new features.

  1. Since this "preview of coming attractions" has been one of our most popular features, we have expanded our reach to track and report on civil issues pending before the Texas Supreme Court and the Illinois Supreme Court.
  2. In the coming months, we will be adding Florida, New York and New Jersey to our coverage of state Supreme Courts. 

We welcome your comments.

Can't Get An Opinion?: Sue the Court!

A party in case before the Texas Supreme Court grew so frustrated by waiting for an opinion almost three years after oral argument that it sued the justices in federal court, alleging due process violations. Coincidentally (or not) the Supreme Court issued an opinion eight days later.

The court heard oral arguments in Southwestern Bell Tel. Co. v. Marketing on Hold, Inc. in March, 2007. The case was an interlocutory appeal of a class certification order entered in litigation challenging Southwestern Bell's right to charge certain municipal fees. The issues on appeal centered on whether Marketing on Hold, a phone bill auditing firm that had an taken assignment of rights as part of its fee to its business customers had standing in the case and whether it constituted an "adequate" class representative.

The parties had heard nothing further from the case by February, 2010. Marketing on Hold took the unusual step of of suing the justices of the Texas Supreme Court in a federal district court in Austin. It argued that the lengthy delay in rendering a decision would cause documentary evidence to be lost and the memory of witnesses to fade, thereby violating its federal due process rights. The case sought only declaratory relief.

Only eight days after the suit was filed the Supreme Court issued its opinion in the case, No. 05-0748, February 19, 2010. The court held that the assignment of rights was valid and conferred standing on Marketing On Hold. Nevertheless, because Marketing On Hold had only a fractional interest in the claim by virtue of its assignment, it had an incentive to settle for less consideration and to minimize its own expenses. It was not, therefore, an adequate class representative. The certification order was reversed. The case divided the court, 5-3.

The frustration of litigants involved in seemingly interminable proceedings is understandable. The tactic of suing an appellate court to force an opinion is both extreme and likely to be ineffective. Not only is a federal district court extremely unlikely to intervene in the internal procedures of a state appellate court, the suit is apt to make a bad impression on the appellate court justices. As Marketing On Hold learned, "be careful what you wish for..."


Texas Supreme Court Civil Issues Pending: Punitive Damages


Sexual Harassment.
Did plaintiff submit sufficient evidence to establish the elements of a sexual harassment claim?  Was plaintiff constructively discharged under the facts of the case?  Or was the evidence sufficient to support the jury's finding of malice and a subsequent award of punitive damages against a corporate defendant for failure to properly investigation sexual harassment claim?  Waffle House, Inc. v. Williams, No. 07 0205, formerly 2007 WL 290808 (Tex. App. -- Fort Worth 2007), review granted 02/13/09.


Texas Supreme Court Civil Issues Pending: Public Utilities


Stranded Costs, Transition to Competitive Marketplace.
Is utility entitled to recover interest on certain “stranded costs” it incurred during transition from land-regulated to competitive marketplace? Is utility permitted to recover a valuation panel fee as an expense? Must new on-site generators of electricity continue to pay utility to offset its stranded costs? State of Texas v. Public Utility Commission, No. 08 0421, formerly 263 S.W.3d 448 (Tex. App.—Austin 2008), review granted 06/19/09, and Texas Industrial Energy Consumers v. CenterPoint Energy, No. 08 1727, review granted 06/19/09. 

Texas Supreme Court Civil Issues Pending: Products Liability


Causation, Preemption, Safer Alternative Design, Jury Misconduct.
Was claimant required to introduce into evidence at least two statistically significant scientific studies showing that Vioxx more than doubled the risk of heart attack, or is evidence from a clinical trial sufficient? Did claimant’s expert sufficiently account for alternate causes of account for potential alternate causes of heart attack to support a finding of specific causation? Was the evidence sufficient to show that a “proper” warning of the risk of Vioxx would have changed the physician’s decision to prescribe it? Does the Food and Drug Act preempt claims that Vioxx was defectively marketed? Did plaintiff present sufficient proof of a safer alternative design by introducing evidence of a patent application into evidence? Did jury misconduct require a new trial where one of the jurors failed to reveal that he had accepted several interest-free loans from one of the parties? Merck & Co. v. Garza, No. 09 0073, formerly 277 S.W.3d 430 (Tex. App.—San Antonio 2008), review granted 10/23/09.

Seller’s Indemnity.
Were component parts of exterior insulation and finish system a “product” within the meaning of the Products Liability Act? Was an independent contractor a “seller” for purposes of Tex. Civ. Prac. & Rem. Code § 82.002? Was a contractor entitled to receive indemnity when its liability to the homeowner arose solely out of contract? Fresh Coat Inc. v. K 2 Inc., No. 08 0592, formerly 253 S.W.3d 386 (Tex. App.—Beaumont 2008), review granted 09/25/08. 


Texas Supreme Court Civil Issues Pending: Other Issues


Civil Forfeiture.
Did the court of appeals err in determining that the trial court incorrectly disregarded the jury’s findings that currency found in a truck was not contraband where there was no direct evidence linking the currency to any drug transaction? If the currency is not contraband, is an innocent bailee of truck where currency was found entitled to currency by right of possession? State of Texas v. $281,420 in U.S. Currency, No. 08 0465, formerly 2008 WL 907565 (Tex. App.—Corpus Christi 2008), review granted 04/17/09.

Lottery, Statutory Construction.
Does Tex. Bus. & Com. Code § 9.406(f), providing for the assignability of “accounts,” including lottery winnings, pre-empt Tex. Govt. Code § 466.406 and 406.410 which prohibit such assignments? Texas Lottery Commission v. First State Bank of DeQueen, No. 08 0523, formerly 254 S.W.3d 677 (Tex. App.—Austin 2008), review granted 09/25/09.

Open Records Act.
Did the court of appeals properly determine that state employee birthdate information was not private and was therefore subject to disclosure under the Texas Public Information Act, Tex. Govt. Code § 552.001 et seq.? Was the prevailing party entitled to attorney’s fees as a matter of law? Texas Comptroller of Public Accounts v. Attorney General of Texas, No. 08 0172, formerly 244 S.W.2d 629 (Tex. App.—Austin 2008), review granted 02/27/09. 


Texas Supreme Court Civil Issues Pending: Negligence


Equine Activity Act.
Do provisions of the Equine Activity Act, Tex. Civ. Prac. & Rem. Code § 87.001 et seq., providing that certain persons are not liable for damages resulting from risks inherent to an equine activity apply to a claim that defendant was negligent in leading plaintiff into a boggy area that frightened the horse? Did the defendant fail to make a reasonable efforts to determine plaintiff’s ability to engage in the equine activity in a safe manner so as to trigger an exception to the protection of the Equine Activity Act? Loftin v. Lee, No. 09 0313, formerly 277 S.W.3d 519 (Tex. App.—Tyler 2009), review granted 10/23/09.


Texas Supreme Court Civil Issues Pending: Local Government


Governmental Immunity and Waiver, Declaratory Judgment Act.
Did the Dallas City Charter and/or Tex. Loc. Gov. Code § 51.075, providing that a municipality may “plea and be impleaded in any court,” waive governmental immunity? May a municipality which has waived governmental immunity through asserting a counterclaim reinstate that immunity by dismissing the counterclaim? Does the Declaratory Judgment Act permit a suit to determine the party’s rights despite governmental immunity? City of Dallas v. Martin, No. 07 0288, formerly 214 S.W.3d 638 (Tex. App.—Dallas 2006), review granted 10/23/09.

Judicial Review of Education Commissioner’s Decision, Jurisdiction, Necessary Parties.
In a suit to judicially review the decision of a Commissioner of Education pursuant to Tex. Educ. Code § 21.307, is the Commissioner considered a party to the suit who must consent to venue in Travis County? Presidio Ind. Sch. Dist. v. Scott, No. 08 0958, formerly 266 S.W.3d 531 (Tex. App.—Austin 2008), review granted 08/21/09.

Standing, Municipal Propositions.
Did citizens who sponsored a citizen-initiated referendum have standing to seek a declaratory judgment that the proposition is valid and must be enforced? May a provision included within the proposition, that any taxpayer may maintain an action to prevail expenditures made in violation of a proposition, suffice to confer standing? Robinson v. White, No. 08 0658, formerly 260 S.W.3d 463 (Tex. App.—Houston [14th Dist.] 2008), review granted 06/26/09.

Takings, Res Judicata.
Does the finding by the Dallas Urban Rehabilitation Standards Board, subsequently affirmed by a district court, that certain property constituted an urban nuisance, constitute res judicata, precluding a subsequent takings claim? City of Dallas v. Stewart, No. 09 0257, formerly 2008 WL 5177168 (Tex. App.—Dallas 2008), review granted 11/20/09.

Waiver of Governmental Immunity, Bond Contract.
Does section 271.152 of the Local Government Code waive governmental immunity? Does the bond contract in question require the governmental entity to place the bond issue on the next bond election following the contract, or is it required to place the issue on all subsequent bond elections until passed? Kirby Lake Development, Ltd. v. Clear Lake City Water Authority, No. 08 1003, formerly 278 S.W.3d 41 (Tex. App.—Houston [14th Dist. 2008), review granted 10/23/08. 


Texas Supreme Court Civil Issues Pending: Juvenile Law


May a 13-year-old juvenile be adjudicated delinquent for the offense of prostitution, even though juvenile could not have given valid consent to sexual acts? In re B.W., No. 08 1044, formerly 274 S.W.3d 179 (Tex. App.—Houston [1st Dist.] 2008), review granted 10/23/09.

Texas Supreme Court Civil Issues Pending: Jurisdiction


Personal Jurisdiction Over Corporate Officers.
Are corporate officers subject to personal jurisdiction in Texas for claims arising under the Texas Trust Fund Act where officers controlled trust funds intended for payments of persons providing labor or material to Texas construction projects? May Texas assert personal jurisdiction over corporate officers with respect to a fraud claim where it is alleged that corporate officers permitted claimant to continue work on project when they knew he would not be paid? Kelly v. General Interior Construction, No. 08 0669, formerly 262 S.W.3d 79 (Tex. App.—Houston [14th Dist.] 2008, review granted 06/05/09. 

Texas Supreme Court Civil Issues Pending: Judicial Administration


Law of the Case Doctrine, Jurisdiction of State Courts After Removal, Recusal.
Does a federal court order establish law of the case with respect to whether remand had properly been carried out? Did appeal of remand order in federal court deprive the state court of jurisdiction? Did judge err in ruling on his own recusal motion when he was referred to hear a recusal motion directed at another judge? Gonzalez v. Gonzalez, No. 08 0961, formerly 267 S.W.3d 556 (Tex. App.—Houston [14th Dist.] 2008), review granted 11/20/09.

Texas Supreme Court Civil Issues Pending: Intentional Torts


Conversion, Punitive Damages.
Does probative evidence support the finding that defendant stole 13 cattle? Did evidence support finding that defendant acted with malice under the “clear and convincing standard?” Is award of over $1 million in punitive damages constitutionally excessive in case involving theft of cattle worth approximately $5,000? Bennett v. Reynolds, No. 08-0074, formerly 242 S.W.3d 866 (Tex. App.—Austin 2007), review granted 08/28/09. 

Texas Supreme Court Civil Issues Pending: Insurance


Assumption of Liability Exclusion.
Where the insured is immune from tort liability as a government contractor and the alleged contractual liability mirrors tort liability, does the insurance policy’s assumption of contractual liability exclusion apply? Did insurer waive its coverage defenses by associating in the defense of the insured? Gilbert Texas Construction v. Certain Underwriters of Lloyds, No. 08 0246, formerly 245 S.W.3d 29 (Tex. App.—Dallas 2007), review granted 04/17/09.

Mold Exclusion, Expert Qualifications.
Does a mold exclusion in a homeowner’s policy apply for mold caused by plumbing leak? Was expert relied upon by insured to establish causation qualified and reliable? State Farm Lloyds v. Page, No. 08-0799, formerly 249 S.W.3d 257 (Tex. App.—Waco 2008), review granted 06/19/09.

Workers' Compensation, Causation, Attorney’s Fees.
Did claimant’s causation expert properly employ differential diagnosis to determine that work-related knee injury was a producing cause of the worker’s death? Did the trial court submit an incorrect definition of “producing cause” by failing to include the concept of “substantial factor?” Does the Texas Constitution guarantee a jury trial on the issue of attorney’s fees in worker’s compensation cases? Transcontinental Ins. Co. v. Crump, No. 09 0005, formerly 274 S.W.3d 86 (Tex. App.—Houston [14th Dist.] 2008), review granted 10/23/09.

Texas Supreme Court Civil Issues Pending: Healthcare


Application of Expert Report Requirements.
Does section 74.531 of the Civil Practice & Remedies Code, which requires the production of an expert report in the early stages of a healthcare liability claim, apply to the claims against a water park with respect to the placement of a defibrillator and the device’s use by its employees and to claims that the park’s medical advisor was negligent in failing to provide certain advice and recommendations to the water park concerning the defibrillator? Yamada v. Friend, No. 08 0262, formerly 2008 WL 5583690 (Tex. App.—Fort Worth 2008), review granted 02/13/09.

Attorney’s Fees.
Was physician entitled to award of attorney’s fees pursuant to section 74.351 of the Civil Practice and Remedies Code, permitting an award of fees incurred by the physician in a case where the claimant fails to provide a timely expert report, where the physician’s attorney did not testify regarding the reasonableness of the requested fee? Garcia v. Gomez, No. 09 0139, formerly 286 S.W.3d 445 (Tex. App.—Corpus Christi 2008), review granted 10/23/09.

Constitutionality of Limitations Provision.
Does the two-year statute of limitations for healthcare liability claims in Tex. Civ. Prac. & Rem. Code § 74.251 violate the open courts provision of the Texas Constitution in a case involving a sponge left in a surgical patient? Walters v. Cleveland Regional Med. Center, No. 08 0169, formerly 264 S.W.3d 154 (Tex. App.—Houston [1st Dist.] 2007), review granted 03/27/09.

Constitutionality of Statute of Repose.
Is the two-year statute of repose applicable to health care claims under Tex. Prac. & Rem. Code § 74.051(b) violate the open courts provision of the Texas Constitution? Methodist Health Care System of San Antonio v. Rankin, No. 08 0316, formerly 261 S.W.3d 93 (Tex. App.—San Antonio 2008), review granted 03/27/09.

Expert Reports, Extension of Time.
Was patient entitled to an extension of time to cure deficiency in an expert’s report that failed to state a causal link between the physician’s alleged breaches of duty and the patient’s injury? Samlowski v. Wooten, No. 08 0667, formerly 282 S.W.3d 82 (Tex. App.—Waco 2008), review granted 06/19/09.

Does the “relation back” doctrine apply to save claims against Health Science Center first asserted in an amended pleading where original pleading had only the named physician, who was an employee of the center? University of Texas Health Science Center at San Antonio v. Bailey, No. 08 0419, formerly 261 S.W.3d 147 (Tex. App.—San Antonio 2008), review granted 06/26/09. 


Texas Supreme Court Civil Issues Pending: Government Immunity


Availability of Interlocutory Appeal.
Were a private hospital and a resident employed by the hospital entitled to bring an interlocutory appeal of a denial of a summary judgment based upon governmental immunity? Based on sections 3.12006 and 3.12007 of the Texas Health Code, when did the hospital or government unit and the resident, a government employee for purposes of the governmental immunity defense? Klein v. Hernandez, No. 08 0453, formerly 260 S.W.3d 1 (Tex. App.—Houston [1st Dist.] 2008), review granted 04/17/09.

Inverse Condemnation.
Did state’s easement give it the right to remove soil or did the removal of such soil give rise to a separate inverse condemnation claim, thereby avoiding governmental immunity? State of Texas v. Brownlow, No. 08-0551, formerly 251 S.W.3d 756 (Tex. App.—Houston [14th Dist.] 2008), review granted 08/28/09.

Retroactivity of Statutes. 
Did an amendment to Tex. Loc. Govt. Code § 411.034, providing that compliance with the notice provisions of the Texas Tort Claims Act was a prerequisite to subject matter jurisdiction, apply to a lawsuit filed before the amendment’s effective date? University of Texas Southwestern Medical Center at Dallas v. Estate of Arancibia, No. 08 0215, formerly 244 S.W.3d 455 (Tex. App.—Dallas 2007), review granted 06/26/09.

Texas Supreme Court Civil Issues Pending: Family Law


Availability of Free Record.
Were petitioner’s due process rights violated when the trial court denied him a free clerk’s record and reporter’s record pursuant to Tex. Civ. Prac. & Rem. Code § 13.003? Did petitioner waive his complaint by failing to raise constitutional arguments at the hearing on his request for a free record? In the Interest of B.G., No. 07 0960, formerly 2007 WL 2713764 (Tex. App.—Tyler 2007), review granted 05/05/09.

Texas Supreme Court Civil Issues Pending: Employment


Retaliatory Discharge.
Does the Anti-Retaliation Act, Tex. Lab. Code § 451.003, require a worker to exhaust administrative remedies before filing suit? Travis Central Appraisal District v. Norman, No. 09 0108, formerly 274 S.W.3d 902 (Tex. App.—Austin 2008), review granted 08/28/09.

Sexual Harassment.
Did plaintiff submit sufficient evidence to establish the elements of a sexual harassment claim? Was plaintiff constructively discharged under the facts of the case? Or was the evidence sufficient to support the jury’s finding of malice and a subsequent award of punitive damages against a corporate defendant for failure to properly investigate sexual harassment claim? Waffle House, Inc. v. Williams, No. 07 0205, formerly 2007 WL 290808 (Tex. App.—Fort Worth 2007), review granted 02/13/09. 

Texas Supreme Court Civil Issues Pending: Contracts


Depository Contracts, Probate Code.
Did bank breach a depository contract as a matter of law when it granted access to an estate’s account to a person presenting false Letter of Administration? Does section 186 of the Texas Probate Code, providing that Letters of Administration are sufficient evidence of the appointment and qualification of a person to serve as representative of an estate, provide a defense to the bank’s actions? Jefferson State Bank v. Lenk, No. 09 0269, formerly 2009 WL 618693 (Tex. App.—San Antonio 2009), review granted 11/20/09.

Parol Evidence Rule, Fraud, Measure of Damages.
Is argument that payment of money, the recovery of which was the only damage sought, was made by entity other than plaintiff an issue of capacity that is waivable if an issue of standing that is not waivable? Was the testimony supporting certain categories of damages inadmissible parol evidence? Did claimant fail to present sufficient evidence out-of-pocket or benefit-of-the-bargain damages? ERI Consulting Engineers, Inc. v. Swinnea, No. 07 1042, formerly 236 S.W.3d 825 (Tex. App.—Tyler 2007), review granted 10/23/09.

Third-Party Beneficiary Status, Consequential Damages.
Did the trial court correctly disregard the jury’s damages findings when plaintiff failed to obtain a finding that it was a party to the agreement? With certain trusts, courts have related to the contractual parties, entitled to enforce the contract of third-party beneficiaries? Under the record, were plaintiffs entitled to recover consequential damages in the form of lost opportunity damages when they did not present evidence that defendant was aware that plaintiffs could not have obtained financing from other sources? Basic Capital Management v. Dynex Commercial, No. 08 0244, formerly 254 S.W.3d 588 (Tex. App.—Dallas 2008), review granted 04/17/09. 

Texas Supreme Court Civil Issues Pending: Consumer Protection


Jury Instructions—Mitigation of Damages—Usury—Consumer Status.
Did the trial court correctly submit the issue of causation in its jury instruction? Was lender’s oral agreement to pay delinquent property taxes supported by consideration? Did lender’s agreement to pay taxes amount to the provision of an escrow service thereby conferring consumer status on borrower under the Deceptive Trade Practices Act? Did lender commit usury by sending a demand in the absence of proof the debtor actually received and read the document? American General Finance, Inc. v. Allen, No. 08 0110, formerly 251 S.W.3d 676 (Tex. App.—San Antonio), review granted 02/27/09. 

Texas Supreme Court Civil Issues Pending: Constitutional Law


Takings, Standing.
Does the operator of non-consent towing and storage facility have a sufficient property interest in the stored vehicles to support a takings claim? May the operator assert a claim under the Declaratory Judgment Act? Are operator’s claims moot since it is no longer licensed to operate a vehicle storage facility? City of Dallas v. VSC, LLC, No. 08 0265, formerly 242 S.W.3d 584 (Tex. App.—Dallas 2008), review granted 10/23/09.

Takings, Breach Access Easements.
Does Texas recognize a “rolling” public beachfront access easement which migrates according to the naturally-caused changes in the location of the vegetation line? Is any such easement derived from common law doctrines or from a construction of the Open Beaches Act? To what extent is a landowner entitled to receive compensation under Texas law where any limitations on the use of the property are affected by a landward migration of a rolling easement?Severance v. Patterson, No. 09 0387, formerly 566 F.3d 490 (5th Cir. 2009), review granted 05/15/09. 

Texas Supreme Court Civil Issues Pending: Commercial Law


Commercially Reasonable Sales Upon Repossession.
Did the evidence establish that the sale of repossessed vehicles were commercially reasonable under the Uniform Commercial Code § 9.610. Regal Finance v. Tex Star Motors, No. 08 0148, formerly 246 S.W.3d 745 (Tex. App.—Houston [14th Dist.] 2008), review granted 03/27/09.

Texas Supreme Court Civil Issues Pending: Alternative Dispute Resolution


Expanded Scope of Judicial Review in Arbitration.
Does the Texas Arbitration Act permit enforcement of a contractual provision expanding the scope of judicial review of an arbitration award? NAFTA Traders v. Quinn, No. 08 0613, formerly 275 S.W.3d 795 (Tex. App.—Dallas 2008), review granted 03/27/09.