Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

Need a little legal ammo? Search for caselaw on legal theories and defenses here:

Sunday, July 31, 2011

Equitable interest claim with respect to land / real estate

Equitable Interest in Real Property

When is such a claim viable, when not?   


A person owns an “equitable interest” in property by virtue of “an equitable title or claim [] on equitable grounds, such as the interest held by a trust beneficiary.” Longoria v. Lasater, 292 S.W.3d 156, 165 (Tex. App.-San Antonio 2009, pet. denied ).

Equitable vs. legal tilte to real property

“Equitable title” is “a title that indicates a beneficial interest in property and that gives the holder the right to acquire formal legal title.” Id. On the other hand, a “legal interest” is “an interest recognized by law, such as legal title.” Id. “Legal title” is “a title that evidences apparent ownership but does not necessarily signify full and complete title or a beneficial interest.” Id.

As a general rule, a judgment lien attaches only to the interest in the land owned by the judgment debtor. Martin v. Cadle Co., 133 S.W.3d 897, 906 (Tex. App.-Dallas 2004, pet. denied). An equitable title is superior to legal title to the property and may be asserted as a complete defense against the lien of a debtor's judgment creditor. Cadle Co. v. Harvey, 46 S.W.3d 282, 287 (Tex. App.-Fort Worth 2001, pet. denied ).

“Equitable rights in real property owned by someone other than the debtor, which rest in parol, will be protected against a judgment lien.” Gaona v. Gonzales, 997 S.W.2d 784, 787 (Tex. App.-Austin 1999, no pet. ); Carlisle v. Holland, 289 S.W.116, 118 (Tex. Civ. App.-El Paso 1926, writ ref'd); see First State Bank of Amarillo v. Jones, 107 Tex. 623, 183 S.W. 874, 876 (1916).

Does a Contract for Sale of land create an equitable interest?

A contract for the sale of real estate is an agreement that binds the purchaser to buy and the seller to sell in accordance with the terms of the contract. Greve v. Cox, 683 S.W.2d 535, 536 (Tex. Civ. App.-Dallas 1984, no writ). The purchaser under a contract for conveyance of property does not acquire equitable title to the property until he pays the purchase price and fully performs the obligations under the contract. Johnson v. Wood, 138 Tex. 106, 109-10, 157 S.W.2d 146, 148 (1941); Cullins v. Foster, 171 S.W.3d 521, 534 (Tex. App.-Houston [14th Dist. 2005, pet. denied). Upon such performance, he becomes vested with equitable title to the property. Cullins, 171 S.W.3d at 534. Until such time, however, the purchaser has only an equitable right to acquire title by carrying out the agreement. See Wood, 157 S.W.2d at 148.

Resulting trust: what is it and how does it relate to equitable interest claims?

A resulting trust is an equitable remedy arising by operation of law when title is conveyed to one person but the purchase price or a portion thereof is paid by another. Cohrs v. Scott, 338 S.W.2d 127, 130 (Tex. 1960); Smith v. Deneve, 285 S.W.3d 904, 912 (Tex. App.-Dallas 2009, no pet.). The parties are presumed to have intended that the grantee hold title for the use of the person who paid the purchase price and whom equity deems to be the true owner. Cohrs, 338 S.W.2d at 130; Troxel v. Bishop, 201 S.W.3d 290, 298 (Tex. App.-Dallas 2006, no pet.). The trust arises out of the transaction and must arise at the time when the title passes. Cohrs, 338 S.W.2d at 130; Smith, 285 S.W.3d at 912. The doctrine of resulting trusts is invoked to prevent unjust enrichment. Nolana Dev. Ass'n v. Corsi, 682 S.W.2d 246, 250 (Tex. 1984).

Legal effect of recorded abstract of judgment - judgment lien

An abstract of judgment recorded in accordance with the provisions of the property code, if the judgment is not dormant, “constitutes a lien on the real property of the defendant located in the county in which the abstract is recorded and indexed, including real property acquired after such recording and indexing.” Tex. Prop. Code Ann. § 52.001 (West Supp. 2010). The property code requires the county clerk to record properly authenticated abstracts of judgment in the county real property records and, at the same time, enter on the alphabetical index to the real property records the name of each plaintiff and each defendant, and the volume and page or instrument number in the records in which the abstract is recorded. Tex. Prop. Code Ann. § 52.004(a)-(b) (West 2007).

Recordation of abstract of judgment and lien priorty

Because a judgment lien is created by statute, substantial compliance with the statutory requirements is mandatory before a judgment creditor's lien will attach. Murray v. Cadle Co., 257 S.W.3d 291, 296 (Tex. App.-Dallas 2008, pet. denied). The purpose of the index is to provide notice to subsequent purchasers of the existence of the judgment and to indicate the source from which the full information about the judgment may be obtained. Id. at 296-97. When properly recorded and indexed, an abstract of judgment creates a judgment lien that is superior to the rights of subsequent purchasers and lienholders. Wilson v. Dvorak, 228 S.W.3d 228, 233 (Tex. App.-San Antonio 2007, pet. denied). The party seeking to foreclose a judgment lien has the burden of proving the abstract of judgment was properly recorded and indexed. Murray, 257 S.W.3d at 296. A party has constructive notice of instruments properly recorded in the proper county. Tex. Prop. Code Ann. § 13.002 (West 2004); AMC Mortg. Servs., Inc. v. Watts, 260 S.W.3d 582, 586 (Tex. App.-Dallas 2008, no pet.).

SOURCE: Dallas Court of Appeals - 05-09-00581-CV - 7/29/11

RELATED LEGAL TERMS: equitable vs. legal title, contract for sale of land, resulting trust, lien and lien priority, judgment lien, recorded lien, instrument, contructive notice of lien, interest in property, encumbrances

Lawyer lingo: What is the meaning of novation?

 
CONTRACT LAW: NOVATION DEFINED
   
What is novation?
 
“Novation is the creation of a new obligation in the place of an old one, by which the parties agree that a new obligor will be substituted to perform the duties agreed upon by the old contract, while the original obligor is released from performing those duties.” Vandeventer v. All Am. Life & Cas. Co., 101 S.W.3d 703, 712 (Tex. App.-Fort Worth 2003, no pet.).
 
Elements of novation as a defense
  
A party that raises the affirmative defense of novation must prove (1) the validity of a previous obligation; (2) an agreement among all parties to accept a new contract; (3) the extinguishment of the previous obligation; and (4) the validity of the new agreement. Vickery v. Vickery, 999 S.W.2d 342, 356 (Tex. 1999).

SOURCE: Dallas Court of Appeals - 05-10-00234-CV - 7/29/11

Breach of oral contract vs agreement in writing: is there a difference?

ORAL CONTRACT - CONTRACT IN WRITING
SAME ELEMENTS (though different evidence may be needed as proof)

The elements of a breach of contract claim are: (1) a valid contract, (2) plaintiff performed or tendered performance, (3) defendant breached the contract, and (4) plaintiff was damaged as a result of the breach. Critchfield v. Smith, 151 S.W.3d 225, 233 (Tex. App.-Tyler 2004, pet. denied); Richter v. Wagner Oil Co., 90 S.W.3d 890, 898 (Tex. App.-San Antonio 2002, no pet.).
The following elements are required for the formation of a valid and binding contract: (1) an offer, (2) acceptance in strict compliance with the terms of the offer, (3) a meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. Cessna Aircraft Co. v. Aircraft Network, L.L.C., 213 S.W.3d 455, 465 (Tex. App.-Dallas 2006, pet. denied) ; Hubbard v. Shankle, 138 S.W.3d 474, 481 (Tex. App.-Fort Worth 2004, pet. denied).

The elements of written and oral contracts are the same and must be present for a contract to be binding. Critchfield, 151 S.W.3d at 233. In determining the existence of an oral contract, the court looks to the communications between the parties and to the acts and circumstances surrounding the communications. Cessna Aircraft Co., 213 S.W.3d at 465.

SOURCE: Dallas Court of Appeals - 05-10-00041-CV - 7/29/11 (evidence found legally and factually sufficient to support claim for breach of oral contract)

Friday, July 29, 2011

Legal lingo: Consideration in the context of a contract

CONSIDERATION AS AN ESSENTIAL ELEMENT OF A VALID CONTRACT

Generally, a contract must be supported by consideration to be enforceable. Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 659 (Tex. 2006).

What constitutes consideration?

Consideration consists of a benefit to the promisor or a detriment to the promisee. N. Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 607 (Tex. 1998). Consideration for a promise may be either a performance or a return promise bargained for in a present exchange. Johnson, 209 S.W.3d at 659 (citing Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991); Restatement (Second) of Contracts § 71(1) (1981)).

Lack of consideration may defeat contract claim

Lack of consideration for a contract is an affirmative defense to its enforcement; therefore, [ LITIGANT ] was required to raise a fact issue on lack of consideration. See Tex. R. Civ. P. 94; Kaye/Bassman Intern. Corp. v. Help Desk Now, Inc., 321 S.W.3d 806, 814 (Tex. App.—Dallas 2010, pet. denied).

Consideration for execution of promissory note

[A] written instrument reciting a consideration imports one, and with such a recitation we presume the consideration [to be] sufficient. Hoagland v. Finholt, 773 S.W.2d 740, 743 (Tex. App.—Dallas 1989, no writ). However, parol evidence is admissible to show want or failure of consideration and establish the actual consideration given for the instrument. DeLuca v. Munzel, 673 S.W.2d 373, 376 (Tex. App.—Houston [1st Dist.] 1984, writ ref‘d n.r.e.) (citing Fire Ins. Ass’n v. Wickham, 141 U.S. 564, 579–82 (1891); Gaines Motor Sales Co. v. Hastings Mfg. Co., 104 S.W.2d 548, 551 (Tex. Civ. App.—Fort Worth 1937, writ dism‘d)).

To constitute consideration, . . . [t]he performance or return promise . . . may be given by the promisee or by some other person. Restatement (Second) of Contracts § 71 (1981) (emphasis added). ―It matters not from whom the consideration moves or to whom it goes. If it is bargained for and given in exchange for the promise, the promise is not gratuitous. Id. cmt. c.

SOURCE: Houston Court of Appeals - 14-09-00312-CV - 7/26/11 - McLernon v. Dynegy Inc.

Avoiding contract based on fraud in the inducement

FRAUDULENT INDUCEMENT AS DEFENSE TO ENFORCEMENT OF CONTRACT

A contract is subject to avoidance on the ground of fraud. Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990); see Cecil v. Zivley, 683 S.W.2d 853, 857 (Tex. App.—Houston [14th Dist.] 1984, no writ).

To prevail on a fraudulent-inducement contention, a party must establish the elements of fraud ―as they relate to an agreement between the parties. Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001).

The elements of fraud are (1) a material misrepresentation, (2) made with knowledge of its falsity or without any knowledge of the truth and as a positive assertion, (3) made with the intention that it should be acted on by the other party, and (4) the other party acts in reliance on the misrepresentation and thereby suffers injury. See Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47–48 (Tex. 1998).

SOURCE: Houston Court of Appeals - 14-09-00312-CV - 7/26/11 - McLernon v. Dynegy Inc.

Thursday, July 28, 2011

What is Judicial Immunity?

THE JUDICIAL IMMUNITY DEFENSE BELONGS TO JUDGES
 
The immunity defense that judicial offers may invoke when made defendants in a civil suit - similar to the official-immunity defense applicable to government agents generally -  must not  be confused with judicial proceedings privilege, which is sometimes also referred as "immunity" and provides a defense in suits complaining of conduct or communications made by others in the course of a court proceeding.


JUDICIAL IMMUNITY DEFENSE

Judges acting in their official judicial capacity have immunity from liability and suit [Fn3] for judicial acts performed within the scope of their jurisdiction. Twilligear v. Carrell, 148 S.W.3d 502, 504 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (citing Dallas Cnty v. Halsey, 87 S.W.3d 552, 554 (Tex. 2002)).

Fn3: Mireles v. Waco, 502 U.S. 9, 11 (1991).

This immunity extends to actions that are taken in error, maliciously, and even in excess of the judge‘s authority. Id. (citing Stump v. Sparkman, 435 U.S. 349, 356–57 (1978)). Immunity is overcome only for actions that are: (1) nonjudicial, i.e., not taken in the judge‘s official capacity; or (2) taken in the complete absence of all jurisdiction. Id. (citing Mireles v. Waco, 502 U.S. 9, 11–12 (1991)).

Whether an act is judicial or nonjudicial for this purpose is determined by the nature of the act — whether it is a function normally performed by a judge and to the expectations of the parties — as contrasted from other administrative, legislative, orexecutive acts that simply happen to be done by judges. Mireles, 502 U.S. at 11–12; Forrester v. White, 484 U.S. 219, 227 (1988); Twilligear, 148 S.W.3d at 504-05.

Judicial acts include those performed by judges in adjudicating, or otherwise exercising their judicial authority over, proceedings pending in their courts. Twilligear, 148 S.W.3d at 505.

Conversely, nonjudicial acts include other tasks, even though essential to the functioning of courts and required by law to be performed by a judge, such as: (1) selecting jurors for a county‘s courts; (2) promulgating and enforcing a code of conduct for attorneys; and (3) making personnel decisions regarding court employees and officers. Id. (citing Forrester, 484 U.S. at 228–31).

SOURCE: Houston Court of Appeals - 14-10-00900-CV - 7/26/11

Attorney-Client: What is the nature of the relationship between lawyer and client?

NATURE OF THE ATTORNEY-CLIENT RELATIONSHIP:

Contractual and fiduciary


How does Texas law view the relationship between a lawyer and his or her retained client?

An attorney-client relationship is a contractual agreement that can be created by an express contract or implied from the actions of the parties. See Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105 S.W.3d 244, 254 (Tex. App.-Houston [14th Dist.] 2003, pet. denied). In determining whether a contract which creates an attorney-client relationship should be implied, the court should use an objective standard, looking at what the parties said and did, and does not consider their unstated, subjective beliefs. See Span Enterprises v. Wood, 274 S.W.3d 854, 857-58 (Tex. App.-Houston [1st Dist.] 2008, no pet.).

In certain formal relationships, such as an attorney-client relationship, a fiduciary duty arises as a matter of law. See Esty v. Beal Bank S.S.B., 298 S.W.3d 280, 303 (Tex. App.-Dallas 2008, no pet.).

SOURCE: Dallas Court of Appeals - 05-10-00856-CV - 7/26/11

Wednesday, July 27, 2011

Premises Liability as to Invitees

ELEMENTS OF PREMISES LIABILITY CLAIM BY INVITEE 
& STANDARD OF PROOF

In a premises liability case, the plaintiff must establish (1) a legal duty owed to the plaintiff, (2) breach of that duty, and (3) damages proximately caused by the breach. See Del Lago Partners, Inc. v. Smith, 307 S.W.3d 762, 767 (Tex. 2010).

Status of Plaintiff with respect to the property on which injury happened or accident occurred 

The scope of the duty owed to plaintiff depends on the status of the plaintiff at the time the incident occurred. See Western Investments, Inc. v. Urena, 162 S.W.3d 547, 550 (Tex. 2005); M.O. Dental Lab, 139 S.W.3d at 675.

Invitee Status

When [...] the plaintiff is an invitee, a property owner has a duty to use ordinary care to reduce or eliminate an unreasonable risk of harm created by a premises condition about which the property owner knew or should have known. Del Lago Partners, 307 S.W.3d at 767.

SOURCE: Dallas Court of Appeals - 05-10-00123-CV - 7/26/11

Does shareholder have the right to sue for injury to corporation, decline in value of stock?

   
GENERAL RULE REGARDING SHAREHOLDER STANDING IN TEXAS
  
"The general rule in Texas is that 'individual shareholders have no separate and independent right of action for injuries suffered by the corporation which merely result in the depreciation of the value of their stock.'" Perry v. Cohen, 285 S.W.3d 137, 144 (Tex.App.--Austin 2009, pet. denied) (quoting Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex. 1990)).[Fn4]


"[A] cause of action for injury to the property of a corporation or for impairment or destruction of its business is vested in the corporation, as distinguished from its shareholders, even though the harm may result indirectly in the loss of earnings to the shareholders." Redmon v. Griffith, 202 S.W.3d 225, 233 (Tex.App.--Tyler 2006, pet. denied).


As a result, to recover for wrongs done to the corporation, a shareholder must bring the suit derivatively in the name of the corporation to ensure that each shareholder is made whole if the corporation obtains compensation from a wrongdoer. Swank v. Cunningham, 258 S.W.3d 647, 661 (Tex.App.--Eastland 2008, pet. denied). If a claim belongs to the corporation, shareholders lack standing to seek redress in their individual capacities, because individual shareholders have no separate and independent right of action for wrongs to the corporation that merely result in depreciation in the value of their stock. Id. at 662; Redmon, 202 S.W.3d at 233.


Fn4: This general rule applies even if the corporation is wholly-owned. Lamajak, Inc. v. Frazin, 230 S.W.3d 786, 794 (Tex.App.--Dallas 2007, no pet.).


SOURCE: Amarillo Court of Appeals - NO. 07-10-0027-CV - 7/26/11


RELATED LEGAL TERMS: Shareholder derivative action, derivative actions, suit against corporate directors, executives.  

Summary Judgment Based on Guaranty Agreement

ELEMENTS OF SUIT ON PERSONAL OR CORPORATE GUARANTY AGREEMENT

To obtain summary judgment on a guaranty agreement, a party must conclusively prove: (1) the existence and ownership of the guaranty contract, (2) the performance of the terms of the contract by plaintiff, (3) the occurrence of the condition on which liability is based, and (4) guarantor's failure or refusal to perform the promise. Barclay v. Waxahachie Bank & Trust Co., 568 S.W.2d 721, 723 (Tex.Civ.App.--Waco 1978, no writ).

SOURCE: Amarillo Court of Appeals - 07-10-0027-CV - 7/26/11


RELATED TERMS AND PHRASES: guaranteeing payment, signing loan documents for another, agreeing to be held liable for the debt of a loan applicant, borrower in the event of default

Proving common-law negligence cause of action in Texas

ELEMENTS OF COMMON-LAW NEGLIGENCE CLAIM

The essential elements of a common law negligence cause of action are duty, breach of that duty, and damages proximately caused by the breach. D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). Whether or not a breach has occurred is determined by comparison to the applicable standard of care. See Doe v. Boys Club of Greater Dallas, Inc., 907 S.W.2d 472, 477 (Tex. 1995).

The “ordinary care” standard is generally defined as that which an ordinarily prudent person, exercising ordinary care would have done under the same circumstances. See Lincoln Prop. Co. v. DeShazo, 4 S.W.3d 55, 61 (Tex.App.--Fort Worth 1999, pet. denied).

SOURCE: El Paso Court of Appeals - 08-09-00192-CV - 7/20/11

Monday, July 25, 2011

Settled claims and governmental immunity: Can governments be held to their agreements upon settling a case


Can a governmental unit settle a claim against it and then assert immunity to avoid performing the terms of the settlement, and defeat the plaintiff's cause of action for breach of settlement agreement based on governmental immunity?


City Hall - City of Houston
GOVERNMENTAL IMMUNITY - WAIVERS -  AND SETTLEMENT OF CLAIMS NOT BARRED BY IMMUNITY

City of Houston v. Rhule    

EXCERPT FROM 14TH COURT OF APPEALS OPINIONS
  
Governmental immunity has two components—immunity from liability and immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). A unit of state government is immune from suit and liability unless the state consents. Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). Immunity from suit defeats a trial court’s subject matter jurisdiction and is properly asserted in a plea to the jurisdiction. Id. at 639. Immunity from liability protects the state from money judgments even if the Legislature has expressly given consent to sue. Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 853 (Tex. 2002).

B. Waiver of Immunity

By entering into a contract, a governmental entity waives its immunity from liability for breach of the contract, "but does not, merely by entering into a contract, waive immunity from suit." Tex. A&M Univ.–Kingsville v. Lawson, 87 S.W.3d 518, 520 (Tex. 2002); Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001). When a state contracts, it is liable on contracts made for its benefit as if it were a private person. Little-Tex Insulation Co., 39 S.W.3d at 594 (citing Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997)). However, a plurality of the supreme court has held that "when a governmental entity is exposed to suit because of a waiver of immunity, it cannot nullify that waiver by settling the claim with an agreement on which it cannot be sued." Lawson, 87 S.W.3d at 521. Thus, "enforcement of a settlement of a liability for which immunity is waived should not be barred by immunity." Id.

Here, by entering into the agreement settling Rhule’s worker’s compensation claim, the City has waived its immunity from liability under that agreement. See id. at 520. Furthermore, the Legislature’s waiver of the City’s immunity from suit for the purposes of Rhule’s original worker’s compensation claim also waives the City’s immunity from suit for Rhule’s suit to enforce the Settlement Agreement. Id. at 521; see also City of La Porte v. Barfield, 898 S.W.2d 288, 294 (Tex. 1995) (recognizing legislature’s "express waiver" of governmental unit’s immunity from liability and suit for worker’s compensation benefits claims).

However, the City argues that this waiver of immunity from suit is limited and that "[t]he scope of the waiver in connection with a breach of the [Settlement Agreement] should be limited to the initial scope of the waiver. Specifically, the waiver provided by the [Worker’s Compensation] Act." Thus, the City argues that its liability should be limited to the benefits that were authorized by the Worker’s Compensation Act and that the trial court lacked subject matter jurisdiction over Rhule’s claims for damages falling outside those limits.

The City cites Reata Construction v. City of Dallas to support its claim. See 197 S.W.3d 371 (Tex. 2006). However, Reata Construction is distinguishable from the present case as it involved the City of Dallas’s waiver of its immunity by seeking affirmative relief. See id. at 373. This case is more analogous to cases interpreting the effect of limitations on breach of contract damages under section 271.153 of the Local Government Code. In City of Mesquite v. PKG Contracting, Inc., the Dallas Court of Appeals concluded that "statutory limitations on PKG’s recoverable damages do not deprive the trial court of subject matter jurisdiction to adjudicate PKG’s breach of contract claims." 263 S.W.3d 444, 448 (Tex. App—Dallas 2008, pet. denied); see also Kirby Lake Dev. Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 840 (Tex. 2010) ("The purpose of section 271.153. is to limit the amount due by a governmental agency on a contract once liability has been established, not to foreclose the determination of whether liability exists."); City of Houston v. S. Elec. Servs., Inc., 273 S.W.3d 739, 744 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (holding pleadings alleged sufficient facts to establish waiver of immunity from suit and to defeat plea to jurisdiction and declining to determine plaintiff’s damage claim through plea to jurisdiction).

As we have already discussed, in the instant case, Rhule established that the City waived its immunity from suit on his claim for breach of the Settlement Agreement. See Jones, 8 S.W.3d at 638–39; S. Elec. Servs., Inc., 273 S.W.3d at 744. Any alleged limitations on Rhule’s recoverable damages did not deprive the trial court of subject matter jurisdiction to adjudicate Rhule’s breach of contract claims. See PKG Contracting, 263 S.W.3d at 448. Thus, the trial court had subject matter jurisdiction over the entirety of the suit and it did not err in denying the City’s plea to the jurisdiction.

We overrule the City’s first issue.

SOURCE: Houston Court of Appeals - 01-09-01079-CV - 7/21/11

MAJORITY OPINION

["Firefighter" substituted for Appellee's name]  

In 1990, appellant, the City of Houston (“the City”), and appellee, Christopher Rhule ["Firefighter"], a former firefighter for the Houston Fire Department, entered an agreed judgment settling their dispute regarding Firefighter’s worker’s compensation claim. The City subsequently breached the settlement agreement, and Firefighter filed suit to enforce it. The City now appeals the jury verdict in Firefighter’s favor for damages of $127,500 for the City’s breach of the settlement agreement.

In four issues, the City argues that (1) the trial court lacked subject matter jurisdiction over Firefighter’s damages to the extent that the requested damages exceeded remedies allowed by the Worker’s Compensation Act, and, thus, the trial court erred in denying the City’s plea to the jurisdiction; (2) the trial court erred in submitting a question to the jury that allowed it to award Firefighter damages for physical pain as a result of the City’s breach of the settlement agreement; (3) the trial court erred in entering judgment on the jury’s award of damages for mental anguish because there was no evidence of Firefighter’s propensity for mental anguish at the time the parties entered into the settlement agreement; and (4) the trial court’s award of attorney’s fees was erroneous because Firefighter failed to establish any damages that would support an award of attorney’s fees, or, alternatively, Chapter 38 of the Civil Practice and Remedies Code does not authorize an award of attorney’s fees against a municipality.


We modify the judgment of the trial court and affirm as modified.


Background


Firefighter’s back was injured in 1988 while he was acting within the course and scope of his duties with the Houston Fire Department. A dispute about his workers’ compensation benefits was handled through the administrative process in place at that time. The City appealed the results of the administrative proceedings to the 281st District Court of Harris County in cause number 89-26686.


The parties reached a settlement agreement in which the City agreed to pay Firefighter $36,000 and reasonable and necessary medical care for his lifetime for the injuries he had sustained in exchange for Firefighter’s release of all claims against the City (the “Settlement Agreement”). The trial court entered an agreed judgment to this effect for cause number 89-26686 on August 31, 1990 (the “Agreed Judgment”). The Agreed Judgment set aside the final award made in the administrative proceedings and reflected that Firefighter was to receive $36,000 and that the City was discharged and released from any claim Firefighter might have for worker’s compensation benefits or for other claims arising from his injury, “except that CHRISTOPHER A. FIREFIGHTER shall receive lifetime open reasonable and necessary medical [expenses] for the injuries made the basis of this claim as provided by the Texas Worker’s Compensation Act with a mutually agreed upon doctor beginning as of the date of execution of Mr. Firefighter’s Affidavit.”


More than a decade later, Firefighter and the City again began to disagree regarding Firefighter’s entitlement to payment for his medical care related to his 1988 injury. Specifically, the City determined that the pain pump and other medications and treatments sought by Firefighter and his physician were not reasonable, necessary, and related to the 1988 work injury.


Firefighter eventually filed a second suit against the City in the 281st District Court of Harris County, cause number 2005-79440. Firefighter alleged a breach of contract action against the City, seeking damages for “out-of-pocket expenses, incidental expenses, loss of the ‘benefit of the bargain,’ cost of reasonable medical care and treatment in the past, cost of medical care and treatment which will in all reasonable medical probability be required in the future, physical pain and suffering in the past . . . , mental anguish damages . . . , nominal damages, attorney’s fees necessary to bring and prosecute this action, [and] costs of court.” Alternatively, Firefighter sought specific performance of the Agreed Judgment and actual damages, costs of court, and attorney’s fees. Firefighter also sought a declaratory judgment to clarify his rights under the existing agreement between himself and the City, specifically including his right to ongoing lifetime medical expenses relating to his injury. Firefighter also specifically sought attorney’s fees under Chapters 37 and 38 of the Civil Practice and Remedies Code.


The City filed a plea to the jurisdiction, arguing that Firefighter’s breach of contract claim and request for declaratory relief were barred. The trial court denied the plea to the jurisdiction and the parties proceeded to a trial before a jury.[1] The jury found that the City failed to comply with its settlement agreement with Firefighter, and it determined that Firefighter was entitled to $50,000 for past physical pain, $75,000 for past mental anguish, and $2,500 for out of pocket expenses. The jury also found that Firefighter was entitled to attorney’s fees in the amount of $53,000 for trial, $10,000 for an appeal to the Court of Appeals, and $20,000 for an appeal to the Texas Supreme Court.


The City filed a motion for judgment notwithstanding the verdict, asking the trial court to eliminate the award for past physical pain and past mental anguish and to enter judgment that “Firefighter recover mental anguish damages, out of pocket expenses, and attorney’s fees only.” The City argued that damages for physical pain cannot be recovered on a breach of contract claim and that Firefighter had failed to provide any evidence to show that he was entitled to mental anguish damages for breach of contract. The trial court denied the City’s motion and entered judgment on the verdict.


Plea to the Jurisdiction


In its first issue, the City argues that the trial court lacked subject matter jurisdiction over Firefighter’s damages to the extent that the requested damages exceeded remedies allowed by the Worker’s Compensation Act and that, therefore, the trial court erred in denying the City’s plea to the jurisdiction. Specifically, the City argues that its conduct in handling the medical treatment for Firefighter’s worker’s compensation injury is protected by governmental immunity and that the scope of the waiver of that governmental immunity is limited to compensation Firefighter would have been entitled to under the Worker’s Compensation Act. Thus, the City argues, the trial court erred in denying the City’s plea to the jurisdiction on Firefighter’s claims for attorney’s fees, physical pain, and mental anguish damages.


A. Standard of Review


A plea to the jurisdiction challenges the trial court’s subject matter jurisdiction to hear the case. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). Subject matter jurisdiction is essential to the authority of a court to decide a case and is never presumed. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44 (Tex. 1993). The existence of subject matter jurisdiction is a question of law. State Dep’t of Hwys & Pub. Transp. v. Gonzales, 82 S.W.3d 322, 327 (Tex. 2002). Therefore, we review the trial court’s ruling on a plea to the jurisdiction de novo. Id.


Governmental immunity has two components—immunity from liability and immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). A unit of state government is immune from suit and liability unless the state consents. Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). Immunity from suit defeats a trial court’s subject matter jurisdiction and is properly asserted in a plea to the jurisdiction. Id. at 639. Immunity from liability protects the state from money judgments even if the Legislature has expressly given consent to sue. Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 853 (Tex. 2002).


B. Waiver of Immunity


By entering into a contract, a governmental entity waives its immunity from liability for breach of the contract, “but does not, merely by entering into a contract, waive immunity from suit.” Tex. A&M Univ.–Kingsville v. Lawson, 87 S.W.3d 518, 520 (Tex. 2002); Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001). When a state contracts, it is liable on contracts made for its benefit as if it were a private person. Little-Tex Insulation Co., 39 S.W.3d at 594 (citing Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997)). However, a plurality of the supreme court has held that “when a governmental entity is exposed to suit because of a waiver of immunity, it cannot nullify that waiver by settling the claim with an agreement on which it cannot be sued.” Lawson, 87 S.W.3d at 521. Thus, “enforcement of a settlement of a liability for which immunity is waived should not be barred by immunity.” Id.


Here, by entering into the agreement settling Firefighter’s worker’s compensation claim, the City has waived its immunity from liability under that agreement. See id. at 520. Furthermore, the Legislature’s waiver of the City’s immunity from suit for the purposes of Firefighter’s original worker’s compensation claim also waives the City’s immunity from suit for Firefighter’s suit to enforce the Settlement Agreement. Id. at 521; see also City of La Porte v. Barfield, 898 S.W.2d 288, 294 (Tex. 1995) (recognizing legislature’s “express waiver” of governmental unit’s immunity from liability and suit for worker’s compensation benefits claims).


However, the City argues that this waiver of immunity from suit is limited and that “[t]he scope of the waiver in connection with a breach of the [Settlement Agreement] should be limited to the initial scope of the waiver. Specifically, the waiver provided by the [Worker’s Compensation] Act.” Thus, the City argues that its liability should be limited to the benefits that were authorized by the Worker’s Compensation Act and that the trial court lacked subject matter jurisdiction over Firefighter’s claims for damages falling outside those limits.


The City cites Reata Construction v. City of Dallas to support its claim. See 197 S.W.3d 371 (Tex. 2006). However, Reata Construction is distinguishable from the present case as it involved the City of Dallas’s waiver of its immunity by seeking affirmative relief. See id. at 373. This case is more analogous to cases interpreting the effect of limitations on breach of contract damages under section 271.153 of the Local Government Code. In City of Mesquite v. PKG Contracting, Inc., the Dallas Court of Appeals concluded that “statutory limitations on PKG’s recoverable damages do not deprive the trial court of subject matter jurisdiction to adjudicate PKG’s breach of contract claims.” 263 S.W.3d 444, 448 (Tex. App—Dallas 2008, pet. denied); see also Kirby Lake Dev. Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 840 (Tex. 2010) (“The purpose of section 271.153. is to limit the amount due by a governmental agency on a contract once liability has been established, not to foreclose the determination of whether liability exists.”); City of Houston v. S. Elec. Servs., Inc., 273 S.W.3d 739, 744 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (holding pleadings alleged sufficient facts to establish waiver of immunity from suit and to defeat plea to jurisdiction and declining to determine plaintiff’s damage claim through plea to jurisdiction).


As we have already discussed, in the instant case, Firefighter established that the City waived its immunity from suit on his claim for breach of the Settlement Agreement. See Jones, 8 S.W.3d at 638–39; S. Elec. Servs., Inc., 273 S.W.3d at 744. Any alleged limitations on Firefighter’s recoverable damages did not deprive the trial court of subject matter jurisdiction to adjudicate Firefighter’s breach of contract claims. See PKG Contracting, 263 S.W.3d at 448. Thus, the trial court had subject matter jurisdiction over the entirety of the suit and it did not err in denying the City’s plea to the jurisdiction.


We overrule the City’s first issue.

Recoverable Damages


In its second and third issues, the City argues that Firefighter was not entitled to damages for past physical pain or for mental anguish. The City argues in its second issue that the trial court erred in submitting a jury question permitting an award of damages for physical pain on Firefighter’s breach of contract claim. In its third issue, the City argues that the evidence was insufficient to support the jury’s award of mental anguish damages on Firefighter’s breach of contract claim.


The City first argues that it can only be liable for damages to the same extent it would have been liable under the worker’s compensation act in effect at the time it settled its claim with Firefighter. The City argues that this is so because the courts of this State defer to the legislature regarding waiver of immunity and the legislature waives immunity only sparingly. We acknowledge that we must defer to the legislature on the issue of waiver of immunity—in the context of a claim for a breach of contract, the legislature must have waived immunity from suit as to the claim in question by clear and unambiguous language. See TEX. GOV’T CODE ANN. § 311.034 (Vernon 2008) (providing that statute shall not be construed as a waiver of sovereign immunity unless waiver is effected by clear and unambiguous language); Tooke, 197 S.W.3d at 332–33 (requiring clear and unambiguous language to waive governmental immunity).


However, we have already determined that the legislature’s waiver of a governmental entity’s immunity from suit on a worker’s compensation claim also applies to waive immunity from suit for enforcement of a settlement of that claim. See Lawson, 87 S.W.3d at 521–22; see Barfield, 898 S.W.2d at 294. Having determined that the City was susceptible to suit on Firefighter’s breach of contract claim, we recognize that “[w]hen the state contracts, it is liable on contracts made for its benefit as if it were a private person.” Little Tex. Insulation Co., 39 S.W.3d at 594. Furthermore, the court in Lawson addressed the reasoning the City uses here. See 87 S.W.3d at 521–22. The supreme court acknowledged that “a suit for breach of a settlement agreement is separate and apart from the suit on the settled claim” and reasoned that “[a]llowing suit against the government for breach of an agreement settling a claim for which immunity has been waived does not interfere with the Legislature’s policy choices.” The supreme court further stated,


This all assumes, of course, that a governmental entity would not, in settling a suit for which immunity has been waived, undertake an obligation that exposes it to liability much greater or different than that which it faced from the original claim. But we think this assumption is a realistic one. A settlement of a claim trades unknowns—such as what the evidence will be, and how a jury will view it—for knowns—obligations that are more accurately assessable. In reaching a settlement, the government is guided by local counsel to help gauge the degree of exposure to liability and the fairness of the settlement. Once the Legislature has decided to waive immunity for a class of claims, the inclusion of settlements within the waiver is consistent with that decision. Id. at 522.


Thus, we conclude that the City is liable for its breach of the Settlement Agreement just as any private entity would be. See id.; Little Tex. Insulation Co., 39 S.W.3d at 594; see also Liberty Mut. Fire Ins. Co. v. Crane, 898 S.W.2d 944, 948 (Tex. App.—Beaumont 1995, no writ) (stating, in context of breach of settlement agreement of worker’s compensation claim, “This suit is based on a settlement agreement that was incorporated into an agreed judgment. Because a consent judgment is a written agreement, it should be interpreted as a contract with general rules relating to construction of contracts applicable.”).


Generally, the measure of damages for breach of contract is that which restores the injured person to the economic position he would have enjoyed if the contract had been performed. Mood v. Kronos Prods., Inc., 245 S.W.3d 8, 12 (Tex. App.—Dallas 2007, pet. denied). Consequential damages are those damages that “result naturally, but not necessarily, from the defendant’s wrongful acts.” Stuart v. Bayless, 964 S.W.2d 920, 921 (Tex. 1998) (per curiam) (quoting Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997)). Consequential damages are not recoverable unless the parties contemplated at the time they made the contract that such damages would be a probable result of the breach. Id. Thus, to be recoverable, consequential damages must be foreseeable and directly traceable to the wrongful act and must result from it. Id.
A. Propriety of Jury Charge on Physical Pain Damages


We review the trial court’s submission of instructions and jury questions for an abuse of discretion. Moss v. Waste Mgmt. of Tex., Inc., 305 S.W.3d 76, 81 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). A trial court abuses its discretion when it acts in an arbitrary or unreasonable manner, or if it acts without reference to any guiding rules or principles. Id. A trial court has wide discretion in submitting instructions and jury questions. Id.


Here, the City objected to the charge question allowing the jury to find an amount of damages to compensate Firefighter for his physical pain resulting from the City’s breach of the Settlement Agreement. Firefighter argues that the City’s refusal to comply with its obligation to pay for his medical expenses denied him access to the pain pump, which had been managing his pain effectively and allowing him to work and perform other day-to-day tasks. Thus, because he could not afford the pain pump on his own and was forced to rely on other, less-effective pain management treatments, he suffered unnecessary pain while he was required to wait for his dispute with the City to be resolved, and thus his physical pain was actual damage that resulted from the City’s breach of the agreement.


However, damages for physical pain are not traditionally recovered in a breach of contract suit. See Mood, 245 S.W.3d at 12 (holding that measure of damages for breach of contract is that which restores injured person to economic position he would have enjoyed if contract had been performed) (emphasis added). Thus, we conclude that the trial court abused its discretion in submitting a question to the jury allowing it to assess damages for physical pain. See Moss, 305 S.W.3d at 81.


We reverse the judgment of the trial court awarding Firefighter $50,000 for physical pain sustained as a result of the City’s breach of the Settlement Agreement.


We sustain the City’s second issue.


B. Sufficiency of Evidence Supporting Mental Anguish Damages


In its third issue, the City complains that the evidence supporting the jury’s award for mental anguish damages was insufficient, and the trial court should have granted the City’s judgment notwithstanding the verdict.


A trial court may disregard a jury verdict and render a judgment notwithstanding the verdict if no evidence supports the jury finding on an issue. TEX. R. CIV. P. 301; Tiller v. McLure, 121 S.W.3d 709, 713 (Tex. 2003). We may sustain a “no-evidence” or legal sufficiency challenge only when (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or rules of evidences from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of a vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). In determining whether there is legally sufficient evidence to support the finding under review, we must consider evidence favorable to the finding if a reasonable fact-finder could and disregard evidence contrary to the finding unless a reasonable fact-finder could not. Id. at 807, 827.


The jury charge stated, “What sum of money, if any, if paid now in cash, would fairly and reasonably compensate [Firefighter] for his damages if any, that resulted from [the City’s] failure to comply [with the Settlement Agreement]? . . . Only include such amounts for mental anguish that you find would have been within the contemplation of the City at the time the contract was made.”


The City did not object before the trial court to this portion of the charge. The City now argues on appeal that “[t]here was absolutely no evidence, or the evidence was so weak that it did nothing more than create a surmise or suspicion, the Firefighter had a particular susceptibility to emotional distress and the City knew about his particular susceptibility.” It relies on Lions Eye Bank of Tex. v. Perry, 56 S.W.3d 872 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) to support its claims. However, because the City did not object to the portion of the charge instructing the jury on mental anguish damages, we evaluate the sufficiency of the evidence based on the charge and instructions that were actually submitted to the jury.[2] See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000). Thus, we must determine whether there was any evidence that would allow the jurors to conclude that mental anguish damages were within the contemplation of the City at the time it entered into the Settlement Agreement with Firefighter.


In response to the damages question, the jury answered that Firefighter was entitled to $75,000 for his mental anguish. Thus, to overturn the jury’s award, we must determine that there was no evidence that mental anguish damages would have been within the contemplation of the City at the time it entered into the Settlement Agreement with Firefighter. See City of Keller, 168 S.W.3d at 810; Tiller, 121 S.W.3d at 713; see also Osterberg, 12 S.W.3d at 55 (holding that when there is no relevant objection to jury charge, we evaluate sufficiency of evidence based on charge and instructions that were submitted to jury).


At trial, Firefighter testified, regarding the Settlement Agreement with the City, that it was important to him that he receive lifetime medical treatment for his back injury because the doctor told him that he had an ongoing problem that would require treatment for the rest of his life. Firefighter testified that when the City originally decided to file suit appealing the administrative proceeding determination that he was entitled to lifetime medical expenses, he was very concerned because the City only wanted to give him ten years’ worth of medical expenses. Firefighter testified that he eventually settled his claim with the City under the terms related in the Agreed Judgment.[3] He further testified that he relied on the payment of his medical expenses to effectively manage his pain, including the City’s approval of his first pain pump. He testified that when the City denied the replacement of the battery in his pain pump, and eventually denied other forms of treatment as well, he experienced significant pain, fear that he would never be able to adequately treat the pain he was suffering if the City did not pay his expenses, difficulty sleeping, eating and digestion problems, and other stress-related and psychological problems. Finally, Firefighter testified that he was seeking $108,000 for his mental anguish—a number he arrived at because it was “three times what they paid [him] many years ago for [his] mental anguish.”


Firefighter’s testimony and other documents indicated that the City was aware from the time of the original Settlement Agreement of the nature and severity of Firefighter’s injury and of the fact that he would require extensive treatment for his injury. We conclude, therefore, that Firefighter’s testimony that it was important to him that he receive lifetime medical treatment for his injury, that he was not willing to accept the City’s offer of ten years’ medical expenses because his doctor had already told him his back injury would require care for the rest of his life, and that he did suffer mental anguish when the City subsequently refused to pay his medical expenses, combined with the City’s awareness of the severity of his injury, is sufficient to show that mental anguish damages would have been a foreseeable consequence of the City’s breach of the Settlement Agreement that was within the contemplation of the City at the time it entered into the Settlement Agreement with Firefighter.


We overrule the City’s third issue.


Attorney’s Fees


In its fourth issue, the City argues that Firefighter was not entitled to an award of attorney’s fees. However, the City did not make any objection to the award of attorney’s fees in the trial court, and it affirmatively stated in its motion for judgment notwithstanding the verdict that the trial court should enter judgment for Firefighter awarding “mental anguish damages, out of pocket expenses, and attorney fees only.” SeeTEX. R. APP. P. 33.1; Marcus v. Smith, 313 S.W.3d 408, 417 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (“In order to preserve certain complaints regarding an award of attorney’s fees, a party must make a timely and sufficiently specific objection to such an award in the trial court.”). Therefore, the City waived any complaint regarding attorney’s fees.


We overrule the City’s fourth issue.


Conclusion


We modify the trial court’s judgment by deleting the portion of the judgment awarding Firefighter $50,000 in damages for physical pain. We affirm the judgment of the trial court as modified.
Evelyn V. Keyes


Justice

Panel consists of Justices Keyes, Sharp, and Massengale.
Justice Massengale, dissenting.

________________________________________


[1] The record does not contain the trial court’s ruling on the plea to the jurisdiction, and it is not clear when or how the declaratory judgment claims were dropped. The case was tried on Firefighter’s breach of contract claims, and no declaratory judgment was issued.


[2] We note that mental anguish damages generally are not recoverable for breach of contract claims. Latham v. Castillo, 972 S.W.2d 66, 72 (Tex. 1998). However, the City failed to present this argument to the trial court or to this Court on appeal, and the City instead argues that the evidence of mental anguish was insufficient. In our review of the trial court’s proceedings, we are limited to considering issues objected to in the trial court and properly presented to this Court on appeal. See TEX. R. APP. P. 33.1, 38.1. This opinion should not be interpreted as attempting to expand damages typically available for breach of contract claims.

We also note that application of the traditional measure of damages for breach of contract—that which restores the injured person to the economic position he would have enjoyed if the contract had been performed—limits the damages a litigant generally can obtain in prosecuting a claim against a governmental unit for breach of a settlement agreement. See Mood v. Kronos Prods., Inc., 245 S.W.3d 8, 12 (Tex. App.—Dallas 2007, pet. denied) (providing general measure of damages). This inherent limitation on breach of contract damages addresses the dissent’s argument that our holding in this case will discourage governmental entities from settling cases with agreements to provide lifetime medical benefits due to the fear of being subjected to mental anguish and other remedies not recoverable under the statutory scheme that originally waived their liability from suit. SeeTex. A&M Univ.–Kingsville v. Lawson, 87 S.W.3d 518, 521–22 (Tex. 2002) (making “realistic” assumption that “a governmental entity would not, in settling a suit for which immunity has been waived, undertake an obligation that exposes it to liability much greater or different than that which it faced from the original claim” and holding that “when a governmental entity is exposed to suit because of a waiver of immunity, it cannot nullify that waiver by settling the claim with an agreement on which it cannot be sued”).


[3] As Firefighter’s counsel was questioning him at trial, and Firefighter began to testify regarding the circumstances surrounding the original suit and Settlement Agreement, counsel for the City interjected, “Your Honor, he’s getting into settlement negotiations which, I think, are inadmissible, 408.” Thus the City’s argument on appeal that neither Firefighter’s original attorney or the City’s original attorney testified regarding the circumstances surrounding the formation of the settlement agreement is misleading.

TTCA: No waiver of immunity for intentional torts by government officials, officers, employees

The statutory sovereign immunity waiver effected by Texas Tort Claims Act (TTCA) is limited:
 
  
INTENTIONAL TORTS AND SOVEREIGN IMMUNITY UNDER THE TTCA      
  
Because immunity from suit defeats a trial court's subject-matter jurisdiction, it may be properly asserted in a jurisdictional plea. Miranda, 133 S.W.3d at 225-26. In a suit against the government, the plaintiff must affirmatively demonstrate the court's jurisdiction by alleging facts demonstrating a valid waiver of immunity. Whitley, 104 S.W.3d at 542. "State agencies are immune from liability in Texas unless the Legislature has waived that immunity." Kerrville State Hosp. v. Fernandez, 28 S.W.3d 1, 3 (Tex. 2000).

Specifically, the TTCA waives the State's immunity for negligence arising "from the operation or use of a motor-driven vehicle" and personal injury "caused by a condition or use of tangible person or real property." TEX. CIV. PRAC. & REM. CODE ANN. § 101.021(1)-(2) (West 2011).

The TTCA expressly retains the State's sovereign immunity for claims "arising out of assault, battery, false imprisonment, or any other intentional tort," including claims for intentional infliction of emotional distress. Id. § 101.057(2); see Nueces County v. Ferguson, 97 S.W.3d 205, 223 (Tex. App.—Corpus Christi 2002, no pet.) ("[T]he Texas Tort Claims Act specifically preserves sovereign immunity as to intentional torts . . . . Thus sovereign immunity is not waived for a claim of intentional infliction of emotional distress.").

SOURCE: Corpus Christi Court of Appeals - 13-11-00091-CV - 7/21/11

  

Saturday, July 23, 2011

When is a plaintiff's lawsuit an HCLC [i.e. a med-mal claim as defined and governed by the CPRC]?

  
HEALTH CARE LIABILITY CLAIMS: STATUTORY DEFINITION
 
Tex. Civ. Prac. & Rem. Code Ann. § 74.351(a)-(b) (West 2011).

Whether a claim is a health care liability claim under section 74.351 is a question of law, which this Court reviews de novo. Tesoro v. Alvarez, 281 S.W.3d 654, 656 (Tex. App.—Corpus Christi 2009, no pet.); Gomez v. Matey, 55 S.W.3d 732, 735 (Tex. App.—Corpus Christi 2001, no pet.).

A health care liability claim is defined as:

[A] cause of action against a health care provider . . . for treatment, lack of treatment, or other claimed departure from accepted standards of medical care, or health care, or safety or professional or administrative services directly related to health care, which proximately results in injury to or death of a claimant, whether the claimant's claim or cause of action sounds in tort or contract.

TEX. CIV. PRAC. & REM. CODE ANN. § 74.001(a)(13).

When determining whether a claim is a health care liability claim, "courts are not bound by the form of the pleading." Harris Methodist Fort Worth v. Ollie, No. 09-0025, 2011 WL 1820880, at *2 (Tex. May 13, 2011); see Yamada v. Friend, 335 S.W.3d 192, 195-196 (Tex. 2010). It is the gravamen of the claim that determines whether the claim is for a departure from accepted standards of safety. Ollie, 2011 WL 1820880, at *2. "[I]f the act or omission that gave rise to the claim is so integral to the rendition of medical services by the provider to be an inseparable part of those services, it constitutes a breach of the standard of care." Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 849 (Tex. 2005). "Services that a [health care provider] provides its patients necessarily include those services required to meet patients' fundamental needs . . . and safety." Ollie, 2011 WL 1820880, at *2. Finally, whether expert medical testimony is necessary "may also be an important factor in determining whether a cause of action is an inseparable part of the rendition of medical or health care services." Diversicare, 185 S.W.3d at 848.

For purposes of section 74.001, a "health care institution []," includes "a home and community support services agency." TEX. CIV. PRAC. & REM. CODE ANN. § 74.001(a)(12)(A)(vii), (11)(E) (West 2011).

SOURCE: Corpus Christi Court of Appeals - 13-10-00633-CV - 7/21/11

Proving breach of fiduciary duty (BoFD) claim


Breach of fiduciary duty: What does it take to prevail with such a claim?
        
To prevail on a breach of fiduciary duty claim, a plaintiff must first prove the existence of a fiduciary relationship between the plaintiff and the defendant.  See Lundy v. Masson, 260 S.W.3d 482, 501 (Tex. App.—Houston [14th Dist.] 2008, pet. denied).  “[A] fiduciary duty arises out of agency law based upon a special relationship between the two parties.”  In re Bass, 113 S.W.3d 735, 743 (Tex. 2003) (orig. proceeding) (citing Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 200 (Tex. 2002)); see also Shands v. Tex. State Bank, 121 S.W.3d 75, 77 (Tex. App.—San Antonio 2003, pet. denied) (stating that an agency relationship creates a fiduciary relationship as a matter of law). 

Agency

An agent is a person who is authorized to act for another and is subject to the control of the other.  SITQ E.U., Inc. v. Reata Rests., Inc., 111 S.W.3d 638, 652 (Tex. App.—Fort Worth 2003, pet. denied) (noting that agency is generally a question of fact and that the trial court, as factfinder, was free to resolve any inconsistencies in the conflicting testimony to support its implied finding of agency).  “Texas law does not presume agency, and the party who alleges it has the burden of proving it.”  IRA Res. Inc. v. Griego, 221 S.W.3d 592, 597 (Tex. 2007); Tex. Cityview Care Ctr., L.P. v. Fryer, 227 S.W.3d 345, 352 (Tex. App.—Fort Worth 2007, pet. dism’d) (same).

SOURCE: Fort Worth Court of Appeals - 02-10-00045-CV - 7/21/11

Friday, July 22, 2011

Contract Construction as a matter of law vs. resolution of contract ambiguity

INTERPRETING WRITTEN INSTRUMENTS



The question of whether a written instrument is ambiguous is a question of law. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). “If the written instrument is so worded that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and the court will construe the contract as a matter of law.” SAS Institute, Inc. v. Breitenfeld, 167 S.W.3d 840, 841 (Tex. 2005).


An ambiguity does not arise simply because the parties advance conflicting interpretations of the contract. Columbia Gas Trans. Corp. v. New Ulm Gas, 940 S.W.2d 587, 589 (Tex. 1996). If the contract is subject to two or more reasonable interpretations after applying the pertinent rules of construction, the contract is ambiguous. Id. But if after we apply the relevant rules of construction, a contract can be given a definite legal meaning, the contract is unambiguous, and we construe it as a matter of law. Frost Nat’l Bank v. L & F Distributors, Ltd., 165 S.W.3d 310, 312 (Tex. 2005).


SOURCE: Tyler Court of Appeals - 12-10-00250-CV - 7/13/11

Thursday, July 21, 2011

Partition Suit: Lawsuit to divide land have special quirks

  
PARTITION SUITS ARE PECULIAR

  
A partition case, unlike other proceedings, has two final judgments, and the first one is appealable as a final judgment. Griffin v. Wolfe, 610 S.W.2d 466, 466 (Tex. 1980).

The first decree determines the interest of each of the joint owners or claimants, all questions of law affecting the title, and appoints commissioners and gives them appropriate directions. Ellis v. First City Nat’l Bank, 864 S.W.2d 555, 557 (Tex. App.–Tyler 1993, writ denied); see also TEX. R. CIV. P. 760, 761.

The second decree approves the report of the commissioners and sets aside to the parties their separate shares. Ellis, 864 S.W.2d at 557.

In addition to determining the basic issues of partitionability in kind and the fractional interest of the parties, the trial court also has the power during the initial stage of the partition proceeding to adjust all equities between the parties. Yturria v. Kimbro, 921 S.W.2d 338, 342 (Tex. App.–Corpus Christi 1996, no writ); see also Snow v. Donelson, 242 S.W.3d 570, 572 (Tex. App.–Waco 2007, no pet.) (“The trial court applies the rules of equity in determining the broad question of how property is to be partitioned”).
Proof is made to the fact finder at trial of the existence and value of improvements to the property at the time of partition and of other equitable considerations that may warrant awarding a particular portion of the property to one of the parties. Id. The general rule is that where improvements have been made upon the property sought to be partitioned, the improved portion will be allotted to the part owner who has made the improvements if this can be done without prejudice to the other owners. Price v. Price, 394 S.W.2d 855, 858 (Tex. Civ. App.–Tyler 1965, writ ref’d n.r.e.).

SOURCE: Tyler Court of Appeals - 12-10-00270-CV - 7/13/11

Wednesday, July 20, 2011

Trade Secrets and Trade Secret Privilege in Texas


THE TRADE SECRET PRIVILEGE GENERALLY

The trade secret privilege is governed generally by Texas Rule of Evidence 507:

A person has a privilege, which may be claimed by the person or the person’s agent or employee, to refuse to disclose and to prevent other persons from disclosing a trade secret owned by the person, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice. When disclosure is directed, the judge shall take such protective measure as the interests of the holder of the privilege and of the parties and the furtherance of justice may require.

TEX. R. EVID. 507.

In the trial court, the party resisting discovery on the basis of the trade secret privilege must establish that the information is a trade secret. In re Cont’l Gen. Tire, 979 S.W.2d at 613. The burden then shifts to the requesting party to establish that the information is necessary for a fair adjudication of its claims. Id. If the requesting party meets this burden, the trial court should ordinarily compel disclosure of the information, subject to an appropriate protective order. Id. In each circumstance, the trial court must weigh the degree of the requesting party’s need for the information with the potential harm of disclosure to the resisting party. Id. In other words, when trade secret privilege is asserted as the basis for resisting production, the trial court must determine whether the requested production constitutes a trade secret; if so, the court must require the party seeking production to show reasonable necessity for the requested materials. In re Union Pac. R.R. Co., 294 S.W.3d 589, 591 (Tex. 2009) (orig. proceeding) (quoting In re Bass, 113 S.W.3d at 738).

WHAT CONSTITUTES A TRADE SECRET?

Is the information sought trade secret?

A trade secret is "any formula, pattern, device or compilation of information which is used in one’s business and presents an opportunity to obtain an advantage over competitors who do not know or use it." In re Bass, 113 S.W.3d at 739 (quoting Computer Assocs. Int’l. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1994)).

Texas courts consider the following factors in determining whether the material at issue qualifies for the trade secret privilege: (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of the measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. In re Union Pac. R.R., 294 S.W.3d at 592; In re Bass, 113 S.W.3d at 739. Because trade secret materials may not always "fit neatly into each factor every time" and because other factors may also be relevant depending on the circumstances of a particular case, we will weigh the factors in the context to determine whether the materials qualify as trade secret. In re Bass, 113 S.W.3d at 740.

SOURCE: Amarillo Court of Appeals - 07-11-00066-CV - 7/19/11

Liability based on Joint Enterprise Claim

   
JOINT ENTERPRISE CLAIM / THEORY
  
Elements and Consequences
  
Parties form a joint enterprise when they (1) enter into an express or implied agreement, (2) with a common purpose, (3) a community of pecuniary interest in that purpose, and (4) an equal right to a voice in the direction of the enterprise giving each an equal right of control. Tex. Dep’t of Transp. v. Able, 35 S.W.3d 608, 613 (Tex. 2000).
  
Parties to a joint enterprise are agents of each other, and thus, liable for the negligent acts of each other. Tex. Dep’t of Transp. v. Able, 35 S.W.3d 608, 613 (Tex. 2000).
  
The elements necessary to form a binding contract are (1) an offer, (2) acceptance of the offer, (3) a meeting of the minds, (4) the parties’ consent to the terms, (5) execution and delivery with the intent that it be mutual and binding, and (6) consideration. Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d 21, 24 (Tex. App.–Houston [14th Dist.] 2005, no pet.). Whether an agreement was reached is a question of fact. Id.
  
A common pecuniary interest is a monetary interest shared without special or distinguishing characteristics among the members of the group. See St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 531 (Tex. 2002). An equal right to a voice in the direction of the enterprise giving each an equal right of control means an authoritative voice, some right to do more than make suggestions that could be adopted or rejected. Triplex Commc’ns, Inc. v. Riley, 900 S.W.2d 716, 719 (Tex. 1995).
  
SOURCE: Tyler Court of Appeals - 12-10-00167-CV - 7/13/11

Lawyer Lingo: Anticipatory breach [of existing contract] as defense to BoC claim

ANTICIPATORY BREACH - REPUDIATION - OF A CONTRACT:

When can it be invoked as a defense?  

With regard to anticipatory breaches of a contract, it has long been the law in Texas that before there can be an anticipatory breach, there must be an unconditional declaration of an intention not to perform the contract. Pollack v. Pollack, 39 S.W.2d 853, 857 (Tex. Comm’n App. 1931, holdings approved), reh’g denied, 46 S.W.2d 292 (1932); Moore v. Jenkins, 109 Tex. 461, 211 S.W. 975, 976 (1919); Kilgore v. Nw. Tex. Baptist Educational Society, 90 Tex. 139, 37 S.W. 598, 600 (1896); McKenzie v. Farr, 541 S.W.2d 879, 882 (Tex. Civ. App.—Beaumont 1976, writ ref’d n.r.e.).

Elements of anticipatory repudiation

The repudiation must be a distinct, positive, unequivocal, and absolute refusal to perform the contract in the future. El Paso Prod. Co. v. Valence Operating Co., 112 S.W.3d 616, 621 (Tex. App.—Houston [1st Dist.] 2003, pet. denied) (citing Van Polen v. Wisch, 23 S.W.3d 510, 516 (Tex. App.—Houston [1st Dist.] 2000, pet. denied)); Jenkins v. Jenkins, 991 S.W.2d 440, 447 (Tex. App.—Fort Worth 1999, pet. denied). The party who is alleged to have committed an anticipatory breach must show a fixed intention to abandon, renounce, and refuse to perform the contract. Jenkins, 991 S.W.2d at 447.

As stated in 1896 by the supreme court in Kilgore:


But a mere assertion that the party will be unable or will refuse to perform his contract is not sufficient. It must be a distinct and unequivocal absolute refusal to perform the promise[.]

37 S.W. at 600.

SOURCE: San Antonio Court of Appeals - 04-10-00725-CV - 7/13/11

RELATED LEGAL TERMS: contract and contract defenses, breach and anticipatory breach, repudiation of contract, contractual duty to perform, prior breach by the other party to the contract as defense to BoC

Tuesday, July 19, 2011

Noise as Nuisance: How bad does it have to be before judicial relief can be granted?


  
NUISANCE DEFINED
  

What constitutes a nuisance, legally speaking?

  
 A “nuisance” is a condition that substantially interferes with the use and enjoyment of land by causing unreasonable discomfort or annoyance to persons of ordinary sensibilities.  Schneider Nat’l Carriers, Inc. v. Bates, 147 S.W.3d 264, 269 (Tex. 2004).  
  
Distinct types of nuisance claims: Excessive noise may qualify
 
Courts have divided actionable nuisance into three classifications:  (1) negligent invasion of another’s interest; (2) intentional invasion of another’s interest; or (3) other conduct, culpable because abnormal and out of place in its surroundings, that invades another’s interests.  See City of Tyler v. Likes, 962 S.W.2d 489, 503 (Tex. 1997).  

Noise, if sufficiently extreme, may constitute a nuisance.  See Schneider, 147 S.W.3d at 269; see also Kane v. Cameron Int’l Corp. 331 S.W.3d 145, 148 (Tex. App.–Houston [14th Dist.] 2011, no pet.) (nuisance may arise when person’s senses are physically assaulted).
   
A business that is lawful in and of itself may become a nuisance because of the locality in which it is carried on.  See Storey, 226 S.W.2d at 618.  A business may also be a nuisance because the place where it is located is uncongenial to that type of enterprise.  Id.   The law does not allow one to be driven from his home or compelled to live in substantial danger or discomfort even though the danger or discomfort is caused by a lawful and useful business.  Id.  The right to acquire a known property and to deal with it and use it as the owner chooses, so long as the use harms nobody, is a natural right. Spann v. City of Dallas, 235 S.W. 513, 515 (Tex. 1921).  However, it is a right that takes into account the equal rights of others, for it is qualified by the obligation that the use of the property shall not be to the prejudice of others.  Id
SOURCE: Tyler Court of Appeals - 12-09-00291-CV  -7/13/11 


When is quantum meruit recovery available even if there was a valid contract?

CONTRACT CLAIM vs. RECOVERY ON COMMON-LAW THEORY OF QUANTUM MERUIT

What is a Quantum Meruit Claim?
    
Quantum meruit is an equitable theory of recovery which is based on an implied agreement to pay for benefits received.  Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992); Iron Mountain Bison Ranch, Inc. v. Easley Trailer Mfg., Inc., 42 S.W.3d 149, 159 (Tex.App.—Amarillo 2000, no pet.). 

Elements of a viable quantum meruit claim:

To establish a claim for quantum meruit damages in Texas, a plaintiff must prove that it (1) provided valuable services or materials, (2) for the benefit of the defendant, (3) that were accepted by the defendant, and (4) the defendant had reasonable notice that the plaintiff expected compensation for the services or materials.  Heldenfels Bros., Inc., 832 S.W.2d at 41; Iron Mountain Bison Ranch, 42 S.W.3d at 159-60.

Express contract generally precludes recovery in quantum meruit, but there are exceptions    

The right to recover in quantum meruit is based upon a promise implied by law to pay for beneficial services rendered and knowingly accepted.  Davidson v. Clearman, 391 S.W.2d 48, 50 (Tex. 1965).  However, when a valid express contract covers the services or materials upon which recovery is sought, recovery in quantum meruit will not be permitted.  Truly, 744 S.W.2d at 936.  But, the existence of an express contract does not preclude recovery in quantum meruit for the reasonable value of services rendered and accepted which are not covered by the contract.  Black Lake Pipe Line Co. v. Union Constr. Co., 538 S.W.2d 80, 86 (Tex. 1976), overruled on other grounds by Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989).

SOURCE: Amarillo Court of Appeals - 07-10-00332-CV - 7/18/11

The trial court’s findings of fact make it clear that the extra work exceeded the scope of the work covered by the express contracts.  Specifically, the trial court found that the work covered by the express contracts could be performed “with the use of ‘glove bags’ that do not involve area containment and donning of hazmat suits.”  However, the extra work that was requested by Scheuerer “included removal of carpet, which did require these extra precautions.”  Appellants’ argument simply states that the express contracts covered “asbestos abatement to be conducted by Appellee” and that, because the express contracts covered asbestos abatement, AMS is precluded from recovery in quantum meruit based on the provision of any asbestos abatement services.  Appellants’ argument, however, wholly fails to address the trial court’s finding that the scope of the asbestos abatement covered by the express contracts was exceeded by the extra work as evidenced by the necessity that AMS take the specified extra precautions.  Finding that there is significant evidence in the record to support the trial court’s finding that the extra work exceeded the scope of the express contracts, we are bound by the trial court’s factual finding.  See McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986) (when a finding of fact is unchallenged, it is binding on an appellate court unless the contrary is established as a matter of law or there is no evidence to support the finding).  Consequently, we overrule appellants’ ninth issue.

SOURCE: Amarillo Court of Appeals - 07-10-00332-CV - 7/18/11

The Economic Loss Rule explained: Contract vs. Tort Claim

 

What is the significance of the economic-loss rule?

When a party's acts breach a contract and the only alleged injury is economic loss to the subject of the contract itself, the action sounds in contract alone. Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 495 (Tex. 1991); Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986); see also Mickens v. Longhorn DFW Moving, Inc., 264 S.W.3d 875, 879 (Tex. App.-Dallas 2008, pet. denied) ("When a negligence claim is made alleging the breach of the very duties encompassed in a contract between the parties, the action is for breach of contract and not tort.") (internal quotations omitted).

SOURCE: Dallas Court of Appeals - 05-10-00047-CV - 7/15/11

Although [ Appellant's ] brief includes some discussion of the economic-loss rule, its briefing consists only of an abstract discussion of the law. [ Appellant ] does not explain why its negligence, gross negligence, and fraud claims are not barred by the economic-loss rule on the particular facts of this case. See In re Estate of Miller, 243 S.W.3d 831, 840 (Tex. App.-Dallas 2008, no pet.) (holding issue waived because appellant did not analyze legal authority and made "no suggested application of it to the facts"). Nor does[ Appellant ] support its argument with any citations to the record as required by Texas Rule of Appellate Procedure 38.1(i). See In re B.A.B., 124 S.W.3d 417, 420 (Tex. App.-Dallas 2004, no pet.) ("The failure to adequately brief an issue, either by failing to specifically argue and analyze one's position or provide authorities and record citations, waives any error on appeal.").

We conclude that [ Appellant ] has effectively failed to challenge [ Appellee's ] invocation of the economic- loss rule, and so we will not disturb the summary judgment with respect to[ Appellant ]'s claims for negligence, gross negligence, and fraud. See Adams v. First Nat'l Bank of Bells/Savoy, 154 S.W.3d 859, 875 (Tex. App.-Dallas 2005, no pet.) ("[A] reviewing court will affirm the summary judgment as to a particular claim if an appellant does not present argument challenging all grounds on which the summary judgment could have been granted."); see also Jarvis v. Rocanville Corp., 298 S.W.3d 305, 313 (Tex. App.-Dallas 2009, pet. denied) (stating that a general issue challenging summary judgment must be supported by argument "negating all possible grounds upon which summary judgment could have been granted").

SOURCE: Dallas Court of Appeals - 05-10-00047-CV - 7/15/11