Presumption of good faith in pleadings and sanctions for groundless suit and harrassment by litigation

GOOD FAITH IN PLEADINGS AND IMPOSITION OF SANCTIONS UNDER CHAPTER 10 OF THE CPRC AND/OR RULE 13 OF THE TRCP 

Chapter 10 of the Civil Practices and Remedies Code provides that the signing of a pleading or motion constitutes a certificate by the signatory that, to the best of the signatory's knowledge, "each allegation or other factual contention in the pleading or motion has evidentiary support or, for a specifically identified allegation or factual contention, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery." Low v. Henry, 221 S.W.3d 609, 614-15 (Tex. 2007) (citing TEX. CIV. PRAC. & REM. CODE ANN. § 10.001(3) (West 2002)). Each allegation and factual contention in a pleading or motion must have, or be likely to have, evidentiary support after a reasonable investigation. Id. at 615. A trial court may impose sanctions against a party if the court finds that the party has failed to comply with this requirement. Nolte, 348 S.W.3d at 269 (citing TEX. CIV. PRAC. & REM. CODE ANN. § 10.004(a) (West 2002)).

Rule 13 of the Rules of Civil Procedure allows a court to impose sanctions on a party, counsel, or both for pleadings, motions, or other papers signed and filed that are groundless and brought in bad faith or for the purpose of harassment. Loeffler v. Lytle Indep. Sch. Dist., 211 S.W.3d 331, 348 (Tex. App.-San Antonio 2006, pet. denied). The rule defines "groundless" as having no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law. TEX. R. CIV. PROC. 13. Groundlessness turns on the legal merits of a claim. Dike v. Peltier Chevrolet, Inc., 343 S.W.3d 179, 184 (Tex. App.-Texarkana 2011, no pet.). A claim without evidentiary support is groundless for purposes of Rule 13, as it has no basis in fact or law. Nath v. Texas Children's Hosp., 375 S.W.3d 403, 427 (Tex. App.-Houston [14th Dist.] 2012, pet. filed). To determine if a pleading was groundless, the trial court uses an objective standard: did the party and counsel make a reasonable inquiry into the legal and factual basis of the claim? Loeffler, 211 S.W.3d at 348; see Robson, 267 S.W.3d at 405. The court will look to the facts available to the litigant and the circumstances at the time the suit was filed. Robson, 267 S.W.3d at 405. There must have been a reasonable inquiry, which means the amount of examination that is reasonable under the circumstances. Robson, 267 S.W.3d at 406 (citing Monroe v. Grider, 884 S.W.2d 811, 817 (Tex. App.-Dallas 1994, writ denied)).

In deciding whether a pleading was filed in bad faith or for the purpose of harassment, the trial court must consider the acts or omissions of the represented party or counsel, not merely the legal merit of a pleading or motion. New York Underwriters Ins. Co. v. State Farm Mut. Auto. Ins. Co., 856 S.W.2d 194, 205 (Tex. App.-Dallas 1993, no writ.); see Davila v. World Car Five Star, 75 S.W.3d 537, 544 (Tex. App.-San Antonio 2002, no pet.). The party moving for sanctions must prove the pleading party's subjective state of mind. Thielemann v. Kethan, 371 S.W.3d 286, 294 (Tex. App.-Houston [1st Dist.] 2012, pet. denied) (citing Mattly v. Spiegel, Inc., 19 S.W.3d 890, 896 (Tex. App.-Houston [14th Dist.] 2002, no pet.)). Bad faith does not exist when a party merely exercises bad judgment or is negligent; rather bad faith is the conscious doing of a wrong for dishonest, discriminatory, or malicious purposes. Thielemann, 371 S.W.3d at 294. A party acts in bad faith if he has been put on notice that his claim may be groundless and he does not make reasonable inquiry before pursuing the claim further. See Robson, 267 S.W.3d at 407; Monroe, 884 S.W.2d at 818 (concluding public policy supports lesser standard for bad faith under Rule 13 than under DTPA). A court may therefore find bad faith where a party asserts a claim with knowledge that the evidence fails to support the claim. Nath, 375 S.W.3d at 427. "Harass" is used in a variety of legal contexts to describe words, gestures, and actions that tend to annoy, alarm, and verbally abuse another person. Thielemann, 371 S.W.3d at 294 (citing Elkins v. Stotts-Brown, 103 S.W.3d 664, 669 (Tex. App.-Dallas 2003, no pet.)).

Courts must presume that pleadings are filed in good faith, and the burden is on the party moving for sanctions to overcome that presumption. GTE Commc'n Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993). Under some circumstances, the trial court may be able to make such a determination by taking judicial notice of items in the case file. Texas-Ohio Gas, Inc. v. Mecom, 28 S.W.3d 129, 139 (Tex. App.-Texarkana 2000, no pet.). Circumstantial evidence will suffice to allow a trial court to infer bad faith and improper motive. Dike, 343 S.W.3d at 194. A party cannot avoid Rule 13 sanctions by claiming he was not actually aware of the facts making his claim groundless when he had not made reasonable inquiry, nor by claiming he was not acting with malicious or discriminatory purpose in bringing the claim. Robson, 267 S.W.3d at 407.

The imposition of sanctions is within the sound discretion of the trial court, and we set aside the order only upon a clear showing of abuse of discretion.[2] Low, 221 S.W.3d at 614; see Tanner, 856 S.W.2d at 730. The determination whether the court's imposition of sanctions constitutes an abuse of discretion requires an examination of the entire record. Loeffler, 211 S.W.3d at 347. A trial court abuses its discretion in imposing sanctions only if it bases the order on an erroneous view of the law or on a clearly erroneous assessment of the evidence. Id. at 347-48. An appellate court, therefore, will view the conflicting evidence in the light most favorable to the trial court's ruling and will draw all reasonable inferences in favor of the trial court's judgment. Id. at 348.

SOURCE: SAN ANTONIO COURT OF APPEALS – 04-11-00444-CV – 3/20/2013 

 

Statute of frauds not self-executing, must be invoked to serve as defense in lawsuit

STATUTE OF FRAUDS AS AFFIRMATIVE DEFENSE:
MUST BE INVOKED BY THE PLEADINGS  

The statute of frauds is an affirmative defense to the enforcement of a contract which must be pleaded or it is waived. TEX. R. CIV. P. 94; Swinehart v, Stubbeman, McRae, Sealy, Laughlin & Browder, Inc., 48 S.W.3d 865, 875 (Tex. App.-Houston [14th Dist.] 2001, pet. denied).

 

 

SOURCE: HOUSTON COURT OF APPEALS – 14-11-00895-CV – 4/30/2013

 

Because [the Defendant sued on guaranty] failed to plead the statute of frauds as an affirmative defense to the personal guarantee agreement, we conclude that [he] has waived it. See Adams v. H & H Meat Prods., Inc., 41 S.W.3d 762, 776 (Tex. App.-Corpus Christi 2001, no pet.) (holding the appellant waived the statute of frauds to enforcement of a personal guarantee). 

Testimony, affidavit about contract likely useless in court if it violates the Parol Evidence Rule

Parol Evidence Rule

Parol evidence may not be used to vary or contradict the express or implied terms of an unambiguous written agreement absent a showing of fraud, accident, or mutual mistake. Toler v. Sanders, 371 S.W.3d 477, 481 (Tex. App.-Houston [1st Dist.] 2012, no pet.); Hudson Buick, Pontiac, GMC Truck Co. v. Gooch, 7 S.W.3d 191, 198 (Tex. App.-Tyler 1999, pet. denied). Evidence admitted in violation of the parol evidence rule is incompetent and without any probative force. Johnson v. Driver, 198 S.W.3d 359, 364 (Tex. App.-Tyler 2006, no pet.).

SOURCE: HOUSTON COURT OF APPEALS – 14-11-00895-CV – 4/30/2013

Equitable estoppel based on inconsistent positions taken in court

First he claims this, then he claims that ...

EQUITABLE ESTOPPEL BASED ON INCONSISTENT POSITIONS IN LITIGATION

The elements of equitable estoppel arising from inconsistent positions taken in judicial proceedings are (1) a party takes a clearly inconsistent positions in the same or separate proceedings; (2) the position first asserted was successfully maintained or upheld; (3) the other party relied on the position first asserted; (4) adoption of the later position would result in injury or prejudice to the adverse party; and (5) where more than one action is involved, there is an identity of parties. Glattly v. Air Starter Components, Inc., 332 S.W.3d 620, 639 (Tex. App.-Houston [1st Dist.] 2010, pet. denied); In re Estate of Loveless, 64 S.W.3d 564, 578 (Tex. App.-Texarkana 2001, no pet.).

 

SOURCE: HOUSTON COURT OF APPEALS – 14-11-00895-CV – 4/30/2013

[Defendant asserting the defense] bears the burden of proving estoppel, and the failure to prove any one or more of the elements is fatal. See Santa Fe Petroleum, L.L.C. v. Star Canyon Corp., 156 S.W.3d 630, 640 (Tex. App.-Tyler 2004, no pet.).

Right to control details of work for purposes of respondeat superior liability of employer

RIGHT OF CONTROL FOR PURPOSE OF RESPONDEAT SUPERIOR LIABILITY

Under the doctrine of respondeat superior, an employer may be vicariously liable for the negligence of its agent or employee who was acting within the scope of employment even though the employer did not personally commit a wrong. See St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 541-42 (Tex. 2002).

But a person or entity that hires an independent contractor is generally not vicariously liable for the tort or negligence of that person. See Baptist Mem'l Hosp. Sys. v. Sampson, 969 S.W.2d 945, 947 (Tex. 1998). The right of control is the "supreme test" for determining whether a master-servant relationship exists. See Golden Spread Council, Inc. No. 562 of Boy Scouts of Am. v. Akins, 926 S.W.2d 287, 290 (Tex. 1996).

In determining whether a worker is an employee or independent contractor, the focus is on who had the right to control the details of the work. See Exxon Corp. v. Tidwell, 867 S.W.2d 19, 23 (Tex. 1993). An independent contractor is one who, in pursuit of an independent business, undertakes specific work for another using his or her own means and methods without submitting to the control of the other person as to the details of the work. Farlow v. Harris Methodist Fort Worth Hosp., 284 S.W.3d 903, 911 (Tex. App.-Fort Worth 2009, pet. denied).

We may consider several factors in determining the extent of the right of control: (1) the independent nature of the person's business; (2) the person's obligation to furnish necessary tools, supplies, and material to perform the job; (3) the right to control progress of the work, except as to final results; (4) the time for which the person is employed; and (5) the method of payment, whether by time or by the job. See Tex. A&M Univ. v. Bishop, 156 S.W.3d 580, 584-85 (Tex. 2005). However, to trigger vicarious liability, the right to control must extend to the specific activity from which the injury arose. Exxon, 867 S.W.2d at 23; Farlow, 284 S.W.3d at 911-12; Ely v. Gen. Motors Corp., 927 S.W.2d 774, 778 (Tex. App.-Texarkana 1996, writ denied).

A contract expressly providing that a person is an independent contractor is determinative of the relationship absent evidence that the contract is a mere sham or subterfuge designed to conceal the true legal status of the parties or that the contract has been modified by a subsequent agreement between the parties. See Bell v. VPSI, Inc., 205 S.W.3d 706, 713 (Tex. App.-Fort Worth 2006, no pet.); Id. (citing Newspapers, Inc. v. Love, 380 S.W.2d 582, 588-90 (Tex. 1964)). Evidence that the parties did not intend for an independent contractor relationship can come from the contract itself or from extrinsic evidence. See Farlow, 284 S.W.3d at 911.

The right to control is ordinarily a question of fact, but whether a contract gives a right to control is generally a question of law. See id. at 912

 

SOURCE: DALLAS COURT OF APPEALS - 05-10-00724-CV – 2/21/2013

Here, like in the Ely decision, the "activity" causing appellants' injuries was the test drive. See Ely, 927 S.W.2d at 778-79. See also Victoria Electric Cooperative, Inc. v. Williams, 100 S.W.3d 323, 327 (Tex. App.-San Antonio 2002, pet. denied). As we have already noted, to trigger vicarious liability, the right to control must extend to the specific activity from which the injury arose. Exxon, 867 S.W.2d at 23; Farlow, 284 S.W.3d at 911-12; Ely, 927 S.W.2d at 778. The referenced sections of the Center Agreement, however, provide no evidence of BMW NA's control of the test drive. Having determined the Center Agreement did not provide an agency relationship, we turn to appellants' argument that extrinsic evidence demonstrates BMW NA's agency relationship with Classic BMW and Homer. See Farlow, 284 S.W.3d at 911 (evidence parties did not intend an independent contractor relationship can come from extrinsic evidence).

In their brief, appellants assert that "[i]t is undisputed that [BMW NA] required salesmen like Homer to submit to its training and that it controlled how many of [Classic BMW's] salesmen were trained in particular areas or subjects." However, merely making recommendations is no evidence of a right of control. See Shell Oil Co. v. Khan, 138 S.W.3d 288, 294 (Tex. 2004). Furthermore, although BMW NA required Classic BMW to train its salespeople, the evidence, similar to that in the Ely case, establishes BMW NA was not responsible for hiring, training, and supervising Homer. See Ely, 927 S.W.2d at 778. Rather, Classic BMW's management team was responsible. In addition, the evidence before us shows BMW NA was not involved in the test drive, the injury-producing event. See Victoria Electric Co., 100 S.W.3d at 327.

Still, in an effort to demonstrate BMW NA's control, appellants refer us to evidence that BMW NA representatives would visit Classic BMW, select a topic for the visits, and then require Classic BMW's employees to sit down with him and evaluate its performance with relation to that topic. Our review of the record shows Smerek testified that examples of such topics included: customer satisfaction, sales, market share, service, service sales, warranty, warranty indexes, parts sales, and wholesale parts sales. Appellants also argue control was asserted through these visits when the representative reviewed Classic BMW's records to ensure it was in compliance with BMW NA's requirements under the Center Agreement. However, again, the evidence cited by appellants fails to establish BMW NA's control related to the injury-producing activity itself. See id.

Rather, the evidence shows that: (1) Classic BMW is an independently owned dealership that is not and has never been owned by BMW NA and (2) BMW NA did not play any role in the hiring of Homer, in training Homer on how to conduct test drives, or in supervising Homer's activities at Classic BMW. Thus, appellants have provided no summary judgment evidence that BMW NA had the right to control Homer or Classic BMW during the act resulting in appellants' injuries, namely the test drive. See Exxon, 867 S.W.2d at 23; Farlow, 284 S.W.3d at 911-12; Ely, 927 S.W.2d at 778. Because BMW NA has established the absence of an essential element of appellants' vicarious liability cause of action based on an agency relationship, BMW NA was entitled to summary judgment. See Ely, 927 S.W.2d at 779. We overrule appellants' second issue.

 

Res ipsa loquitur and HCLC expert report requirement

Dallas Court of Appeals says that pleading res ipsa loquitur does not suspend expert report requirement applicable to health care liability claims. Dismissal of suit was proper because no timely report was filed.

RES IPSA LOQUITUR [the thing speaks for itself}

Res ipsa loquitur is not a separate cause of action from negligence; it is a rule of evidence by which the jury may infer negligence. Haddock v. Arnspiger, 793 S.W.2d 948, 950 (Tex. 1990); Broxterman v. Carson, 309 S.W.3d 154, 158 (Tex. App.-Dallas 2010, pet. denied). It applies to situations in which (1) the character of the accident is such that it would not ordinarily occur in the absence of negligence, and (2) the instrumentality causing the injury is shown to have been under the management and control of the defendant. Haddock, 793 S.W.2d at 951. Further, it applies only when "the nature of the alleged malpractice and injuries are plainly within the common knowledge of laymen, requiring no expert testimony." Id.

The legislature specifically limited the applicability of the doctrine in health care claims only to those cases in which the doctrine had been applied by Texas appellate courts as of August 29, 1977. See TEX. CIV. PRAC. & REM. CODE ANN. § 74.201. The categories where appellate courts have typically applied the doctrine in health care claims are (1) negligence in the use of mechanical instruments, (2) operating on the wrong portion of the body, and (3) leaving surgical instruments or sponges within the body. Broxterman, 309 S.W.3d at 158-59.

SOURCE: DALLAS COURT OF APPEALS - No. 05-11-01039-CV – 4/2/2013

Sherman v. Healthsouth Specialty Hospital, Inc dba Healthsouth Dallas Rehab Hospital

We express no opinion on whether the use or non-use of a seatbelt for purposes of strapping a wheelchair in a van would fall within any of the three categories because even if the doctrine applies to Sherman's claims, section 74.351 still requires her to file an expert report. See Garcia v. Marichalar, 198 S.W.3d 250, 255-56 (Tex. App.-San Antonio 2006, no pet.). As previously noted, section 74.351's expert report requirement is a procedural threshold "over which a claimant must proceed to continue a lawsuit." Murphy, 167 S.W.3d at 838; Garcia, 198 S.W.3d at 255. While section 74.201 allows for the limited applicability of res ipsa loquitur in health care liability cases, it is not "an exception to section 74.351's expert report requirement." Garcia, 198 S.W.3d at 255 (citing Hector v. Christus Health Gulf Coast, 175 S.W.3d 832, 838 (Tex. App.-Houston [14th Dist.] 2005, pet. denied)). Nor was the section intended to allow Sherman to simply plead the doctrine as a way to eliminate the procedural requirement of an expert report at the commencement of the litigation. Hector, 175 S.W.3d at 839. Consequently, we overrule Sherman's second issue.

CONCLUSION

We conclude Sherman's petition alleges health care liability claims under chapter 74 and she therefore was required to serve an expert report. We also conclude the requirement that she file an expert report at the commencement of her suit is a procedural requirement that is not eliminated by pleading the doctrine of res ipsa loquitur. Because Sherman did not file an expert report within 120 days of filing suit, the trial court did not err in granting HealthSouth's motion to dismiss. Accordingly, we affirm the trial court's order.

Cites for elements of negligent misrepresentation cause of action and list thereof

Negligent Misrepresentation

The elements of a negligent misrepresentation cause of action are:

 1. the defendant made a representation to the plaintiff in the course of defendant's business or in a transaction in which the defendant had an interest;

 2. the defendant supplied false information for the guidance of others;

 3. the defendant did not exercise reasonable care or competence in obtaining or communicating the information;

 4. the plaintiff justifiably relied on the representation; and

 5. the defendant's negligent misrepresentation proximately caused the plaintiff's injury.

McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 791 (Tex. 1999); Miller v. LandAmerica Lawyers Title of El Paso, 362 S.W.3d 842, 845 (Tex.App.-El Paso 2012, no pet.). The type of false information contemplated in a negligent misrepresentation case is a misstatement of existing fact, not a promise of future conduct. Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141 (Tex.App.-Houston [14th Dist.] 1999, pet. denied); Airborne Freight Corp., Inc. v. C.R. Lee Enterprises, Inc., 847 S.W.2d 289, 294 (Tex.App.-El Paso 1992, writ denied).

SOURCE: EL PASO COURT OF APPEALS - 08-11-00069-CV – 3/20/2013

DTPA claim has 2-year SoL, tolling of limitations and fraudulement concealment exceptions for such claims are specified by statute

DTPA HAS TWO-YEAR LIMITATIONS PERIOD; STATUTE ALSO CODIFIES THE DISCOVERY RULE AND FRAUDULENT CONCEALMENT EXCEPTIONS. BUT THE LATTER IS LESS GENEROUS THAN THE COMMON-LAW DOCTRINE WHICH IT RENDERS UNAVAILABLE FOR DTPA CLAIMS  

The DTPA provides that suits under the chapter “must be commenced within two years after the date on which the false, misleading, or deceptive act or practice occurred or within two years after the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice.” TEX. BUS. & COM. CODE § 17.565.

In essence, the Legislature codified the discovery rule for DTPA claims. See KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 749 (Tex. 1999). We have explained that, “[o]nce a claimant learns of a wrongful injury, the statute of limitations begins to run even if the claimant does not yet know ‘the specific cause of the injury; the party responsible for it; the full extent of it; or the chances of avoiding it.’” Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 207 (Tex. 2011) (quoting PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 93 (Tex. 2004)); see also KPMG, 988 S.W.2d at 749 (holding that “accrual occurs when the plaintiff knew or should have known of the wrongfully caused injury,” not when the plaintiff knows “the specific nature of each wrongful act that may have caused the injury”).

Absent the application of an equitable tolling doctrine, the evidence conclusively established that [Consumer-Plaintiff]’s DTPA claims are time barred because she brought them more than two years after discovering her injury. See KPMG, 988 S.W.2d at 750; TEX. BUS. & COM. CODE § 17.565.

SOURCE: TEXAS SUPREME COURT – No. 11-0311 - 3/29/2013  (Gonzales v. Olshan)

[Consumer-Plaintiff] contends that Olshan engaged in fraudulent concealment, making her claim timely. We disagree. The doctrine of fraudulent concealment tolls limitations “because a person cannot be permitted to avoid liability for his actions by deceitfully concealing wrongdoing until limitations has run.” S.V. v. R.V., 933 S.W.2d 1, 6 (Tex. 1996). The DTPA establishes a 180-day limit on tolling for fraudulent concealment. TEX. BUS. & COM. CODE § 17.565 (providing that limitations “may be extended for a period of 180 days if the plaintiff proves that failure timely to commence the action was caused by the defendant’s knowingly engaging in conduct solely calculated to induce the plaintiff to refrain from or postpone the commencement of the action”). Even if limitations were tolled for 180 days on [Consumer-Plaintiff]’s DTPA claims, they would still have been filed at least two months late.

[Consumer-Plaintiff] also argues that the common-law doctrine of fraudulent concealment tolls limitations for DTPA claims and is not limited to 180 days as required by the DTPA limitations statute. We have previously rejected a similar argument. In Underkofler v. Vanasek, the plaintiff brought common-law and DTPA claims for legal malpractice against his law firm. 53 S.W.3d 343, 345 (Tex. 2001). We held that the common-law rule tolling limitations for legal malpractice claims until the underlying litigation concluded does not apply to DTPA claims. Id. at 346. We pronounced that the Legislature crafted only two exceptions to the rule that DTPA limitations begin to run when the injury occurs: the discovery rule and the fraudulent concealment rule (both specified in section 17.565 of the Business and Commerce Code). Id. at 346. Just as section 17.565 forecloses the application of the common-law tolling rule to legal malpractice claims under the DTPA, it forecloses the application of the common-law doctrine of fraudulent concealment to DTPA claims. The Legislature could have incorporated the common-law doctrine of fraudulent concealment into the DTPA’s limitations provision. Instead, it only incorporated the discovery rule and a version of the fraudulent concealment doctrine limited to 180 days, and “we will not rewrite the statute to add . . . a third” exception. Id. The common-law doctrine of fraudulent concealment does not apply to [Consumer-Plaintiff]’s DTPA claim, and it is time barred.

 

SOURCE: TEXAS SUPREME COURT – No. 11-0311- 3/29/2013 (Gonzales v. Olshan)