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:

Friday, May 11, 2012

How does the condemnation process work?

The process of land condemnation in Texas involves several steps. If the condemnor and condemnee cannot agree on the value of the condemned property, the condemnor must file a petition in condemnation in either the district court or county court at law. Tex. Prop. Code Ann. § 21.003 (West 2004).
The trial court will then appoint three special commissioners who hold an administrative hearing and file in the trial court an award that reflects the special commissioners' determination of the value of the condemned land. Tex. Prop. Code Ann. §§ 21.014, 21.015 (West Supp. 2011); § 21.018 (West. 2004). The condemnor must pay the amount of the award to the condemnee or deposit that amount in the registry of the trial court. If either party is dissatisfied with the award, the party may file objections with the trial court. Tex. Prop. Code Ann. § 21.018(a). After citing the adverse party, the trial court then tries the case in the same manner as other civil cases. Id. at 21.018(b). Once objections are filed and citation is served, the special commissioners' award is vacated and may not be reinstated. Amason v. Natural Gas Pipeline Co., 682 S.W.2d 240, 242 (Tex. 1984); see also State v. Carlton, 901 S.W.2d 736, 739 (Tex. Civ. App.-Austin 1995, no pet.) (filing of objections coupled with service of citation on the adverse party signals the end of the administrative proceeding and prevents reinstatement of the special commissioners' award). Service of citation triggers the condemnor's legal obligation to proceed to trial and prove its right to condemn the property. Denton Cnty. v. Brammer, 361 S.W.2d 198, 200 (Tex. 1962).
SOURCE: DALLAS COURT OF APPEALS - 05-10-00601-CV – 5/9/2012
When, as here, the amount of the special commissioners' award deposited by the condemnor into the registry of the court is withdrawn by the condemnee, the issue for litigation is adequate compensation. See State v. Jackson, 388 S.W.2d 924, 925-26 (Tex. 1965). Since adequate compensation is an issue on which the condemnee has the burden of proof, withdrawal of funds deposited in the registry of the court has the effect of shifting the burden of proof and the burden of proceeding to trial to the condemnee. Stuart v. Harris Cnty. Flood Control Dist., 537 S.W.2d 352, 354 (Tex. Civ. App.-Houston [14th Dist.] 1976, writ ref'd n.r.e.); see also Phillips v. Sw. Bell Tel. Co., 559 S.W.2d 464, 465 (Tex. Civ. App.-Houston [14th Dist.] 1977, no writ) (in condemnation proceeding, where the only questions submitted relate to market value and damages, the condemnee has the right to open and close the jury argument). However, the shifting of the burden does not cause the condemnee to become the plaintiff in the trial court. Brammer, 361 S.W.2d at 200.
The controversy between the parties in this case arose because the County sought to take the Partnership's real property. The County initiated the condemnation process by petitioning the trial court to appoint special commissioners to determine the value of the Partnership land to be taken. The Partnership did not agree with the award of the special commissioners, and it was entitled to a judicial determination concerning the value of the land. The Partnership's challenge to the special commissioners' awards caused the matter to transition from a special condemnation proceeding to a cause pending in the county court to be tried and determined as other civil cases. Since at that point in the process the special commissioners' award was vacated, it was necessary that the County obtain a judgment from the trial court authorizing the taking of the Partnership's real property at a price that reflected the fair market value of the property. See Tex. Prop. Code Ann. § 2.018(b). Accordingly, the County was the plaintiff in the lawsuit and the Partnership was the defendant. Brammer, 361 S.W.2d at 200.
This conclusion is fatal to the County's jurisdictional argument because under Texas law, the forfeiture of a limited partnership's right to transact business does not “prevent the limited partnership from defending an action, suit, or proceeding in a court of this state.” Tex. Bus. Orgs. Code Ann. § 153.309(b)(2) (emphasis added); See Footnote 4 Manning v. Enbridge Pipelines (E. Tex.) L.P., 345 S.W.3d 718, 723 (Tex. App.-Beaumont 2001, pet. denied) (forfeiture of the limited partnership's right to transact business does not prevent it from defending an action, suit, or proceeding in this state). Because the partnership was the defendant in the consolidated condemnation action and was not precluded by the laws governing Texas limited partnerships from defending the action, the County's claim that the trial court was without subject matter jurisdiction must fail. We resolve the County's first issue against it.

SOURCE: DALLAS COURT OF APPEALS - 05-10-00601-CV – 5/9/2012

Condemnation of privately-owned land by government [elsewhere called expropriation]


What is the land owner entitled to when the government takes his or her property?
Under the Texas Constitution, governmental entities are required to adequately compensate landowners when real property is taken for public use. Tex. Const. art. I, § 17; Cnty. of Bexar v. Santikos, 144 S.W.3d 455, 459 (Tex. 2004).
When a governmental entity condemns real property, the normal measure of damages is the fair market value of the land at the time of the taking. Tex. Prop. Code Ann. § 21.042(b); Zwahr, 88 S.W.3d at 627.  Thus, the central issue in the typical condemnation case is how to measure the market value of the condemned property. See City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182 (Tex. 2001).
Market value is “the price the property will bring when offered for sale by one who desires to sell, but is not obligated to sell, and is bought by one who desires to buy, but is under no necessity of buying.” Id.

The three traditional approaches to determining market value are the comparable sales method, the cost method, and the income method. Id. Regardless of the appraisal method used by an expert, the goal of the inquiry is always to find the fair market value of the condemned property. Id. at 183. An appraisal method is valid only if it produces an amount that a willing buyer would actually pay to a willing seller. Id.
Courts have long favored the comparable sales method when determining the market value of real property: If the goal of an appraisal is to ascertain market value, then logically there can be no better guide than the prices that willing buyers and sellers actually negotiate in the relevant market.
Under a comparable sales analysis, the appraiser finds data for sales of similar property, then makes upward or downward adjustments to these sales prices based on differences in the subject property. Id. Comparable sales must be voluntary and should take place near in time to the condemnation, occur in the vicinity of the condemned property, and involve land with similar characteristics. Id. at 182.
Comparable sales need not be in the immediate vicinity of the subject land, so long as they meet the test of similarity. See City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808, 815 (1954). But if the comparison is so attenuated that the appraiser and the fact finder cannot make adjustments for differences, a court should refuse to admit evidence of a “comparable” sale. See, e.g., Holiday Inns, Inc. v. State, 931 S.W.2d 614, 623-24 (Tex. App.-Amarillo 1996, writ denied) (remoteness in time); Urban Renewal Agency v. Georgetown Sav. & Loan Ass'n, 509 S.W.2d 419, 421-22 (Tex. Civ. App.-Austin 1974, writ ref'd n.r.e.) (similarity of neighborhood).

Texas courts have long held it appropriate, in the context of condemnation proceedings, for a jury to consider “all factors . . . which would reasonably be given weight in negotiations between a seller and a buyer” of the property. Cannizzo, 267 S.W.2d at 814, 815 (instructing the fact finder to consider all uses to which the land is “reasonably adaptable and for which it either is or in all reasonable probability will become available within the reasonable future”). Courts should admit as market-value evidence “such matters as suitability and adaptability, surroundings, conditions before and after, and all circumstances which tend to increase or diminish” market value. Coble v. City of Mansfield, 134 S.W.3d 449, 454 (Tex. App.-Fort Worth 2004, no pet.) (citing State v. Carpenter, 126 Tex. 604, 89 S.W.2d 194, 200 (1936)). See also State v. McCarley, 247 S.W.3d 323, 325-26 (Tex. App.-Austin 2007, pet. denied) (jury determining fair market value in a condemnation proceeding may consider current and reasonably probable future potential uses of the property, and consequential damages that in reasonable foreseeability will result from the condemnor's uses of the condemned property, “as such factors would ordinarily be given weight by willing buyers and sellers and, therefore, would be reflected in the property's fair market value.”). A jury hearing opinion and “all testimony bearing on the issues of [condemned property's market] value” is “enlightened to give weight to the evidence and render its own conclusion.” Reeves v. City of Dallas, 195 S.W.2d 575, 579 (Tex. Civ. App.-Dallas 1946, writ ref'd n.r.e.). This Court noted an expert witness and a jury would consider: [t]he location and environment of the property, the purchase and sale price in an open market of similar property in the same or near-by vicinity, the price that was voluntarily paid for the property taken, the availability of the property for similarly zoned business, the kind and character of occupancy, the encumbrances, contracts, liens, leases, etc., and many other elements . . . .Id.

SOURCE: DALLAS COURT OF APPEALS - 05-10-00601-CV – 5/9/2012

SOURCE: DALLAS COURT OF APPEALS - 05-10-00601-CV – 5/9/2012

Failure to state a claim / cause of action as a basis for dismissal in the absence of a specific rule comparable to the federal rule


“A special exception is a proper method to determine whether a plaintiff has pleaded a cause of action.”  Alpert v. Crain, Canton & James, P.C., 178 S.W.3d 398, 405 (Tex. App.—Houston [1st Dist.] 2005, pet. denied).  “Generally, when the trial court sustains special exceptions, it must give the pleader an opportunity to amend the pleading, unless the pleading defect is of a type that amendment cannot cure.”  Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007).  In such a case, the court may render a judgment dismissing the case.  See Friesenhahn v. Ryan, 960 S.W.2d 656, 658 (Tex. 1998); Alpert, 178 S.W.3d at 408.  “We review a trial court’s dismissal of a case upon special exceptions for failure to state a cause of action as an issue of law, using a de novo standard of review.”  Alpert, 178 S.W.3d at 405.  “We accept all of the plaintiff’s material factual allegations and all reasonable inferences from those allegations as true.”  Id.

SOURCE: HOUSTON COURT OF APPEALS - 01-10-01067-CV – 5/10/12

Is the plaintiff entitled to a second shot, i.e. amendment of the petition? – It depends.

Generally, a trial court must give the pleader an opportunity to replead defective claims before dismissing them upon special exceptions.  See Baylor Univ., 221 S.W.3d at 635; Friesenhahn, 960 S.W.2d at 658.  However, the opportunity to amend is available only when the defect is curable.  See Baylor Univ., 221 S.W.3d at 635.  In this case, the petition reveals that the alleged factual basis underlying the suit is that the Locke Lord attorneys and the Thompson Coe attorneys filed a “pretend lawsuit” and procured a void temporary restraining order and a void temporary injunction.  As previously noted, when attorneys file suits and pleadings in the course of representing clients, they enjoy qualified immunity from liability to non-clients.  Given that the alleged acts of the attorney-defendants in this case consisted of filing suits and pleadings on behalf of their clients, amendment of the pleadings would not “cure” the underlying facts triggering qualified immunity.  See Alpert, 178 S.W.3d at 408 (affirming dismissal of conspiracy-to-defraud claim upon attorney’s special exceptions when the attorney’s alleged acts included filing lawsuits and alleging baseless claims).  We accordingly hold that the trial court did not err in dismissing Easton’s and Whatley’s claims without allowing an opportunity to amend.  See id.; see also Baylor Univ., 221 S.W.3d 635–36 (affirming trial court’s dismissal upon special exceptions of breach-of-contract claim barred by statute of frauds).  

SOURCE: HOUSTON COURT OF APPEALS - 01-10-01067-CV – 5/10/12
CASE STYLE: Michael Easton and Dawn Johnson Whatley, Individually and as Executrix of the Estate of Perry Lee Whatley v. Shawn Phelan; Thompson Coe Cousins & Irons, LLP; David Cabrales; Rachel Hope Stinson; Locke Lord Bissell & Liddell, LLP. -- Appeal from 190th District Court of Harris County 

Wednesday, May 9, 2012

When is a debtor's transfer of property fraudulent under TUFTA?


TUFTA section 24.005(a) provides that a transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or within a reasonable time after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation (1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or (2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor: (a) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(b) intended to incur, or believed, or reasonably should have believed the debtor would incur, debts beyond the debtor's ability to pay as they became due. Tex. Bus. & Com. Code Ann § 24.005(a)(1), (2) (West 2009).
The judgment creditor has the burden to prove the fraudulent transfer by a preponderance of the evidence. Walker v. Anderson, 232 S.W.3d 899, 913 (Tex. App.--Dallas 2007, no pet.); G.M Houser, Inc. v. Rodgers, 204 S.W.3d 836, 842 (Tex. App.--Dallas 2006, no pet.). It is the creditor's burden to offer evidence addressing the elements of fraudulent transfer as to each transfer. Walker, 232 S.W.3d at 913; G.M Houser, 204 S.W.3d at 843.
“Ordinarily, whether the transfer was made with the actual intent to defraud creditors is a fact question.” Walker, 232 S.W.3d at 914. Direct proof of a fraudulent intent is often unavailable, so circumstantial evidence may be used to prove fraudulent intent. Id.; G.M. Houser, 204 S.W.3d at 842; Mladenka v. Mladenka, 130 S.W.3d 397, 405 (Tex. App.--Houston [14th Dist.] 2004, no pet.). TUFTA section 24.005(b) sets out a non-exclusive list of “badges of fraud” to be considered in determining whether a transfer was made with actual intent to defraud. Walker, 232 S.W.3d at 914; G.M. Houser, 204 S.W.3d at 842. They include:

(1) the transfer or obligation was to an insider;

(2) the debtor retained possession or control of the property transferred after the transfer;

(3) the transfer or obligation was concealed;

(4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

(5) the transfer was of substantially all the debtor's assets;

(6) the debtor absconded;

(7) the debtor removed or concealed assets;

(8) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;

(9) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

(10) the transfer occurred shortly before or shortly after a substantial debt was incurred; and

(11) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.

Tex. Bus. & Com. Code Ann § 24.005(b). Under TUFTA, “reasonably equivalent value” is defined as including, “without limitation, a transfer or obligation that is within the range of values for which the transferor would have sold the assets in an arm's length transaction.” Id. § 24.004. Value is determined as of the date of the transfer. Mladenka, 130 S.W.3d at 407.

An individual badge of fraud is not conclusive but a concurrence of many badges of fraud in the same case can make a strong case of fraud. See G.M. Houser, 204 S.W.3d at 843; see also Tex. Sand Co. v. Shield, 381 S.W.2d 48, 53 (Tex. 1964). While evidence of a transfer to an insider is one factor to consider in determining actual intent to defraud, that fact alone does not support a conclusion the transfer constitutes a fraudulent transfer. See G.M. Houser, 204 S.W.3d at 843. Fraudulent intent is deduced from facts and circumstances that “the law considers as mere badges of fraud and not fraud per se,” so “these must be submitted to the trier of fact, which draws the inference as to the fairness or fraudulent characterization of the transaction.” Flores v. Robinson Roofing & Const. Co., Inc., 161 S.W.3d 750, 755 (Tex. App.--Fort Worth 2005, pet. denied).

SOURCE: DALLAS COURT OF APPEALS - 05-10-01510-CV - 5/8/2012

Doyle did not present any evidence contesting the value of KBI's Ford F-150, Dodge Dakota, or its computer, office furniture, and equipment. She also failed to present evidence regarding the value, if any, of KBI's goodwill, or that any goodwill of KBI was transferred to Elegant without reasonably equivalent value in exchange for the transfer or obligation. As the fact finder, the trial court was the judge of the weight and credibility of Bains's testimony, so we defer to the trial court's determination. After reviewing the evidence under the appropriate standards of review, we conclude the evidence is legally and factually sufficient to support the trial court's findings that Bains did not conspire with Elegant or engage in any fraudulent transfer to Elegant. We overrule Doyle's first issue.

Suit to enforce guaranty agreement upon default on promissory note or other contract by maker or obligor


“A guaranty creates a secondary obligation whereby the guarantor promises to answer for the debt of another and may be called upon to perform once the primary obligor has failed to perform.” Dann v. Team Bank, 788 S.W.2d 182, 183 (Tex. App.-Dallas 1990, no writ).
To recover under a guaranty, a claimant must prove (1) the existence and ownership of the guaranty agreement, (2) the terms of the underlying contract by the holder, (3) the occurrence of the conditions upon which liability is based, and (4) the guarantor's failure or refusal to perform the promise. Marshall v. Ford Motor Co., 878 S.W.2d 629, 631 (Tex. App.-Dallas 1994, no writ).
SOURCE: DALLAS COURT OF APPEALS - 05-10-00693-CV - 5/8/2012

Does Application for Turnover Order require a hearing?

Is the Defendant entitled to a hearing when the Plaintiff requests that the Court sign a Turnover Order?

Houston Court of Appeals says 'No'.


On August 10, 2009, Seeman moved for post-judgment relief under the Texas Turnover Statute, and apparently, a hearing was held on his motion on August 14, 2009.  In issues 25 and 26, Cantu complains that he did not receive notice of the hearing and that the turnover was erroneously granted ex parte.
However, due process does not require that a complainant who has been granted an opportunity to be heard and has had his day in court should, after a judgment has been rendered against him, have further notice and hearing before supplemental proceedings are taken to reach his property in satisfaction of the judgment against him. See Endicott–Johnson Corp. v. Encyclopedia Press, Inc., 266 U.S. 285, 288, 45 S. Ct. 61, 62–63 (1924); In re Guardianship of Bays, 355 S.W.3d 715, 720 (Tex. App.—Fort Worth 2011, no pet.).

The turnover statute itself does not require notice and a hearing. See TEX. CIV. PRAC. & REM. CODE ANN. § 31.002; Sivley v. Sivley, 972 S.W.2d 850, 861 (Tex. App.—Tyler 1998, no pet.). In the absence of a statutory requirement, it is not essential that a complainant be given notice before the issuance of an execution against his tangible property; after the rendition of the judgment, he must take notice of what will follow, no further notice being necessary to advance justice. Endicott–Johnson Corp, 266 U.S. at 288, 45 S. Ct. at 62–63; In re Guardianship of Bays, 355 S.W.3d at 720.

We overrule issues 25 and 26.

SOURCE: HOUSTON COURT OF APPEALS - 01-09-00545-CV - 5/3/12

On August 10, 2009, Seeman moved for post-judgment relief under the Texas Turnover Statute, and apparently, a hearing was held on his motion on August 14, 2009. In issues 25 and 26, Cantu complains that he did not receive notice of the hearing and that the turnover was erroneously granted ex parte.

Res judicata defense requires proof of the prior judgment in suit between the same parties or their privies

The supreme court has admonished that, “[c]ertainly in courts of law, a claimant generally cannot pursue one remedy to an unfavorable conclusion and then pursue the same remedy in another proceeding before the same or a different tribunal.” Igal v. Brightstar Info. Tech. Grp., Inc., 250 S.W.3d 78, 86 (Tex. 2008). “Res judicata bars the relitigation of claims that have been finally adjudicated or that could have been litigated in the prior action.” Id. (citing Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex.1992)).
For res judicata to apply under Texas state law, the following elements must be present: (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) the same parties or those in privity with them; and (3) a second action based on the same claims as were raised or could have been raised in the first action. Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007). Thus, a party may not pursue a claim determined by the final judgment of a court of competent jurisdiction in a prior suit as a ground of recovery in a later suit against the same parties. Tex. Water Rights Comm’n v. Crow Iron Works, 582 S.W.2d 768, 771 (Tex. 1979).
Because [party] argues that the issues here were first decided in a federal tribunal, federal law controls the determination of whether res judicata will bar the later state court proceeding. See Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 718 (Tex. 1990).

Similar to Texas law, under federal law, res judicata will apply if: (1) the parties are identical in both suits; (2) the prior judgment is rendered by a court of competent jurisdiction; (3) there is a final judgment on the merits; and (4) the same cause of action is involved in both cases. Id.
SOURCE: HOUSTON COURT OF APPEALS - 01-11-00096-CV - 5/9/12
[Appellant] has not brought forth a prior final judgment on the merits of any issue that is the subject of the underlying litigation. Thus, he failed to raise a fact issue on res judicata. We need not reach [Appellee's] other arguments about why res judicata does not apply.

Judicial estoppel explained


The doctrine of judicial estoppel “precludes a party from adopting a position inconsistent with one that it maintained successfully in an earlier proceeding.” Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1, 6 (Tex. 2008) (quoting 2 Roy W. McDonald & Elaine G. Carlson, Texas Civil Practice § 9.51 at 576 (2d ed. 2003)).


The doctrine is not strictly speaking estoppel, but rather is a rule of procedure based on justice and sound public policy. Id.; Long v. Knox, 155 Tex. 581, 291 S.W.2d 292, 295 (1956). Its essential function “is to prevent the use of intentional self-contradiction as a means of obtaining unfair advantage.” Pleasant Glade Assembly of God, 264 S.W.3d at 6; Andrews v. Diamond, Rash, Leslie & Smith, 959 S.W.2d 646, 650 (Tex. App.—El Paso 1997, writ denied); Hall v. GE Plastic Pac. PTE Ltd., 327 F.3d 391, 396 (5th Cir. 2003) (noting basis for estoppel is the assertion of a position clearly inconsistent with a previous position accepted by the court); Tenneco Chems., Inc. v. William T. Burnett & Co., 691 F.2d 658, 665 (4th Cir.1982) (finding “the determinative factor is whether the appellant intentionally misled the court to gain an unfair advantage”).


This doctrine requires that: (1) a sworn, inconsistent statement be made in a prior judicial proceeding; (2) the party making the statement gained some advantage by it; (3) the statement was not made inadvertently or because of mistake, fraud, or duress; and (4) the statement was deliberate, clear, and unequivocal. Galley v. Apollo Associated Servs., Ltd., 177 S.W.3d 523, 528–29 (Tex. App.—Houston [1st Dist.] 2005, no pet.); see also Pagosa Oil & Gas, L.L.C. v. Marrs & Smith P’ship, 323 S.W.3d 203, 218 (Tex. App.—El Paso 2010, pet. denied) (holding same).

SOURCE: HOUSTON COURT OF APPEALS - 01-10-01016-CV - 5/2/12

The species of judicial estoppel alleged in this case is “based on the principle that a party should not be permitted to abuse the judicial process by obtaining one recovery based first on affirming a certain state of facts, and then another recovery based on denying the same set of facts.” Metroflight, Inc. v. Shaffer, 581 S.W.2d 704, 709 (Tex. Civ. App.—Dallas 1979, writ ref’d n.r.e).

Because the doctrines of double recovery and judicial estoppel do not entitle Ormiston and Allied to judgment as a matter of law, the trial court erred in granting a directed verdict in their favor. Accordingly, we reverse the judgment of the trial court and remand for further proceedings.

LEGAL TERMS: judicial estoppel, equitable estoppel 

Friday, May 4, 2012

Will courts enforce Rule 11 Agreements that don't have signatures? Does agreement have to be in writing?

Does an agreement under Rule 11 of the Texas Rules of Civil Procedure always have to be signed by both parties or their attorneys to become binding and enforceable?

A Rule 11 agreement is an agreement between parties or attorneys "touching any pending suit" that, to be enforceable, must be either (1) in writing, signed, and filed as part of the record, or (2) made in open court and entered of record. Tex. R. Civ. P. 11. Whether a Rule 11 agreement is legally enforceable is a question of law. Ronin v. Lerner, 7 S.W.3d 883, 886 (Tex. App.--Houston [1st Dist.]  1999, no pet.).
The purpose of Rule 11 is to avoid misunderstandings and controversies that often flow from oral agreements. Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995). Parties may enter into a binding settlement agreement even if they contemplate that a more formal document memorializing the agreement will be executed at a later date. See Ronin, 7 S.W.3d at 886; McLendon v. McLendon, 847 S.W.2d 601, 606-07 (Tex. App.--Dallas 1992, writ denied) ("[Party] understood that he was  obligated to execute documents to implement the agreement being submitted to the court.
SOURCE: AUSTIN COURT OF APPEALS - 03-11-00271-CV - 5/3/2012
There is no indication in the record that the parties contemplated that their agreement would not be binding until it was reduced to writing."). The exchange between Andrews, her attorney, Deutsche Bank's attorney, and the district court constitutes an enforceable Rule 11 agreement. Although the parties contemplated that the attorneys would later reduce the Rule 11 agreement to writing, the reporter's record reflects that the parties were aware that they were entering into a settlement agreement in court. See McLendon, 847 S.W.2d at 606-07. Specifically, both Andrews and her counsel agreed that she would release her lien and dismiss her appeal in exchange for receiving the money from the court registry.
Andrews does not dispute that she reached a settlement agreement in open court in compliance with Rule 11. Instead, she asserts that there is no evidence that she ever received any money from the court registry, the consideration for her dismissal of her appeal. To the contrary, however, the record contains an order commanding the district court clerk to withdraw the money from the court registry and pay it to Andrews's attorney.

Thursday, May 3, 2012

Inverse Condemnation Claim – The intentional act element

“Inverse condemnation occurs when (1) a property owner seeks (2) compensation for (3) property taken for public use (4) without process or a proper condemnation proceeding.”  City of Houston v. Norcini, 317 S.W.3d 287, 292 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (quoting Villarreal v. Harris Cnty., 226 S.W.3d 537, 541 (Tex. App.—Houston [1st Dist.] 2006, no pet.)); see City of Abilene v. Burk Royalty Co., 470 S.W.2d 643, 646 (Tex. 1971). 
To state a cause of action for inverse condemnation under the Texas constitution, a plaintiff must allege (1) an intentional governmental act; (2) that resulted in his property being taken, damaged, or destroyed; (3) for public use.  Gen. Servs. Comm’n, 39 S.W.3d at 598.
SOURCE: EASTLAND COURT OF APPEALS - 11-11-00137-CV – 5/3/2012
The City asserts that appellee failed to allege facts that show an intentional act of the City.  If the government knows that specific damage is substantially certain to result from its conduct, then takings liability may arise even when the government did not particularly desire the property to be damaged.  Jennings, 142 S.W.3d at 314.  Thus, when a governmental entity physically damages private property in order to confer a public benefit, that entity may be liable under Article I, section 17 if it (1) knows that a specific act is causing identifiable harm or (2) knows that the specific property damage is substantially certain to result from an authorized government action—that is, that the damage is “necessarily an incident to, or necessarily a consequential result of” the government’s action.  Tex. Highway Dep’t v. Weber, 219 S.W.2d 70, 71 (Tex. 1949); accord Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 555 (Tex. 2004).

Appellee alleged that the City inspector knew she had a leak inside her property; her pleadings state that an inspector initially found only one leak, and it was inside appellee’s property at the toilet cutoff.  Appellee also alleged that she told the City that she was still being billed for water usage and that, at some point, the City replaced a pipe in the alley on the outside of her property.  Her pleadings describe a leak, in addition to the one inside her property, that the City admitted was “in their plumbing.”
However, appellee has not alleged that the City took a specific action that it knew was substantially certain to result in specific property damage to her property.  Appellee does not explain, in relation to when her property was damaged, when the repair to the leak in the alley was made or when her calls to the City were made.  Appellee did not live at the property in question and did not discover the damage until after its occurrence, and her pleadings did not state with any specificity when or how the damage was alleged to have occurred.  Her claim that the City’s representatives knowingly misrepresented facts about the existence of a leak or about checking the property is, thus, unsupported by factual allegations.

Taken as true, all that appellee’s pleadings establish is that there was a leak at some point in the City’s plumbing and that, at some point, the City repaired it. Appellee did not allege that the City intentionally caused the leak.  At most, the City’s actions in discovering and repairing the leak were negligent.  See Coyne v. Kaufman Cnty., 144 S.W.3d 129, 135 (Tex. App.—Eastland 2004, no pet.) (“An allegation that a person or entity failed to undertake an act it should have taken constitutes an allegation of negligent conduct.”).  Viewed in the light most favorable to appellee, the pleadings fail to allege an intentional act of the City rising to the level required to maintain a claim for inverse condemnation.  The trial court erred when it denied the City’s plea to the jurisdiction as it pertained to the inverse condemnation claim.  The City’s first issue on appeal is sustained.  If the exaction claim is a takings claim as argued by appellee, then for the same reasons (in addition to the ones earlier stated when we discussed a constitutional exactions case), we sustain the City’s Issue No. 3.   

SOURCE: EASTLAND COURT OF APPEALS - 11-11-00137-CV – 5/3/2012

Nuisance claim against governmental entity (variant of takings claim)

Governmental liability for nuisance arises from Article I, section 17 of the Texas Constitution.  Gotcher v. City of Farmersville, 139 S.W.2d 361, 362–63 (Tex. Civ. App.—Dallas 1940), aff'd, 151 S.W.2d 565 (Tex. 1941).  A city may be held liable for a nuisance that rises to the level of a constitutional taking.  Jennings, 142 S.W.3d at 316 (citing City of Abilene v. Downs, 367 S.W.2d 153, 159 (Tex. 1963)). 
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.  Holubec v. Brandenberger, 111 S.W.3d 32, 37 (Tex. 2003).  For an act of a governmental entity to qualify as a nuisance without being defeated by the doctrine of governmental immunity, the condition created by the entity must in some way constitute an unlawful invasion of property or the rights of others beyond that arising merely from its negligent or improper use.  Shade v. City of Dallas, 819 S.W.2d 578, 581–82 (Tex. App.—Dallas 1991, no writ)  (reversing summary judgment for the city on the plaintiff’s nuisance claim because the city failed to prove that its act was negligent and, therefore, shielded by sovereign immunity).  Nonnegligent or intentional nuisance is actionable, and the City is not immune under the Texas Tort Claims Act, Tex. Civ. Prac. & Rem. Code Ann. ch. 101 (West 2011 & Supp. 2011).  See Bible Baptist Church v. City of Cleburne, 848 S.W.2d 826 (Tex. App.—Waco 1993, writ denied).
SOURCE: EASTLAND COURT OF APPEALS - 11-11-00137-CV – 5/3/2012
Here, appellee has not shown or otherwise pleaded that the City created or maintained a nuisance in the course of nonnegligent performance of governmental functions.  As discussed above, appellee did not allege an intentional act and has at most alleged that the City acted negligently.  Furthermore, appellee did not allege that the line itself was inherently subject to frequent breaks or that the City kept the water system running in bad repair.  Rather, appellee alleged only that the City continued the “intentional running of the water system for the public use when they knew it was harming Plaintiff’s property.”  The water system itself was not a nuisance.  It did not create the condition that caused discomfort and annoyance to appellee.  This was done by the leak in appellee’s toilet cutoff pipe.  Viewed in the light most favorable to appellee, the pleadings fail to establish a claim for nuisance that rises to the level of a constitutional taking.  The trial court erred when it denied the City’s plea to the jurisdiction as it related to appellee’s constitutional nuisance claims.  We sustain the City’s second issue on appeal.
The judgment of the trial court is reversed, and judgment is rendered that appellee take nothing by her claims.

SOURCE: EASTLAND COURT OF APPEALS - 11-11-00137-CV – 5/3/2012

Capacity to sue and standing are distinct, and also have different procedural implications

A corporation's authority to bring a lawsuit on a claim is an issue of capacity, not standing to sue. See El T. Mexican Rests., Inc. v. Bacon, 921 S.W.2d 247, 249 (Tex. App.-Houston [1st Dist.] 1995, writ denied) (capacity is a party's legal authority to go into court to prosecute or defend a suit). A party must challenge a corporation's capacity to file suit by a verified denial under rule 93. See id.; see also Sixth RMA Partners v. Sibley, 111 S.W.3d 46, 56 (Tex. 2003) (“When capacity is contested, Rule 93 requires that a verified plea be filed unless the truth of the matter appears of record.”).
SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12
Gutierrez's first three issues claim TWLF could not recover on the contract because its corporate privileges were forfeited by the secretary of state in 2004 for non-payment of franchise taxes. Gutierrez did not raise these arguments in a verified denial under rule 93; instead he raised them for the first time in a supplemental motion for new trial filed more than thirty days after the judgment was signed. Thus, the issues were not timely raised in the trial court and are not preserved for appeal. See Tex. R. Civ. P. 93(1), (2), (6), 329b(b); Tex. R. App. P. 33.1(a).
Gutierrez argues this is an issue of standing to sue and can be raised at any time. We disagree.

Tuesday, May 1, 2012

Proving Lost Profits as a Category of Damages in a Lawsuit

The general rules regarding adequate evidence of lost profit damages are well known:
Recovery for lost profits does not require that the loss be susceptible of exact calculation. However, the injured party must do more than show that they suffered some lost profits. The amount of the loss must be shown by competent evidence with reasonable certainty. What constitutes reasonably certain evidence of lost profits is a fact intensive determination. As a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Although supporting documentation may affect the weight of the evidence, it is not necessary to produce in court the documents supporting the opinions or estimates.
Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992) (citations omitted); see also ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010) (citing Holt Atherton). The injured party must do more than show it suffered “some” lost profits. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 504 (Tex. 2001). Lost profits are damages for the loss of net income to a business and, broadly speaking, reflect income from lost business activity, less expenses that would have been attributable to that activity. Bowen v. Robinson, 227 S.W.3d 86, 96 (Tex. App.--Houston [1st Dist.] 2006, pet. denied). The calculation of lost profits must be based on net profits, not gross revenues. Holt Atherton, 835 S.W.2d at 83 n.1; Texaco, Inc. v. Phan, 137 S.W.3d 763, 771 (Tex. App.--Houston 2004, no pet.).
SOURCE: DALLAS COURT OF APPEALS – 05-10-00777-CV – 4/27/2012
In this appeal, [Appellant] asserts [Plaintiff] presented no evidence from which the jury could determine lost profits with any reasonable certainty. We agree. [Plaintiff] did not present any expert testimony regarding lost profits nor did it provide a damage model to the jury or otherwise inform the jury how it should determine lost profits, and our own review of the record does not reveal any objective facts, figures, or data from which lost profits could have been determined with reasonable certainty.

Can contract be enforced if it contains an illegal provision?


Dallas Court of Appeals has this to say in case involving attorney fee contract:  
We have held “that where an otherwise legal contract contains an illegal provision that is not an essential feature of the agreement, thus being clearly severable from other valid provisions, the other provisions of the agreement will not be deemed to be invalid simply because of the presence of the illegal provision.” Rogers v. Wolfson, 763 S.W.2d 922, 925 (Tex. App.-Dallas 1989, writ denied); see also Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 662 (Tex. App.-Dallas 1992, no writ) (“Where a contracting party agrees to perform separable acts, and one is void, the invalid provision may be severed from the valid provision and the valid provision enforced if the intent of the parties is not thereby frustrated.”); Mandril v. Kasishke, 620 S.W.2d 238, 247 (Tex. Civ. App.-Amarillo 1981, writ ref'd n.r.e.). 
SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12
[Father of client in criminal case] does not challenge the trial court's finding of fact that he signed the fee agreement. In another unchallenged finding, the trial court found that the fee agreement is “a valid contract and enforceable.” We conclude that the fee agreement is clearly severable from the irrevocable assignment and is valid regardless of the validity of the irrevocable assignment.
[Parent of client in criminal case]  agreed “to be responsible for my sons Atty Fees as set out in this Contract and Irrevocable Assignment” signed the same date. The fee is set out in both the fee agreement and the irrevocable assignment. But [Parent's] agreement to be responsible for those fees is not contingent of the validity of the irrevocable assignment. The irrevocable assignment was merely a means of payment of or security for the attorney's fees under the fee agreement. It was not an essential feature of the agreement to pay TWLF for its services in representing [son] in the federal criminal prosecution. The fee agreement is clearly enforceable without the irrevocable assignment. Nothing is illegal about a contract to pay an attorney for his services or an agreement by a parent to be responsible for the fees for representing his child in a criminal proceeding. 

Just what is a retainer? – Apparently, it depends, as there are multiple usages


The word “retainer” has a variety of meanings, including a client's authorization for the attorney to act in matter, a fee paid simply to have the attorney available when the client needs legal help, a lump-sum fee paid to engage the lawyer at the outset of the matter, and an advance payment for work to be performed in the future. Black's Law Dictionary 1341-42 (8th ed. 2004). Indeed,

Over the years, attorneys have used the term “retainer” in so many conflicting senses that it should be banished from the legal vocabulary. . . . If some primordial urge drives you to use the term “retainer,” at least explain what you mean in terms that both you and the client will understand.

Id. (quoting Mortimer D. Schwartz & Richard C. Wydick, Problems in Legal Ethics 100, 101 (2d ed. 1988)).

SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12

Grounds to avoid arbitration

Affirmative Defenses to Arbitration: duress, fraudulent inducement, revocation
These defenses can be invoked, if applicable, after the movant for arbitration has discharged its burden to show that an arbitration agreement exists. The most basic defense of a party seeking to avoid arbitration, by contrast, involves contract-formation, i.e. the contention that an agreement to arbitrate was never reached in the first place and that there is accordingly no valid and enforceable arbitration agreement.  
If the party seeking arbitration carries its initial burden, then the burden shifts to the party opposing arbitration to present evidence on an affirmative defense to the arbitration agreement. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). In the context of enforcement of an arbitration agreement, defenses refer to unconscionability, duress, fraudulent inducement, and revocation. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 756 (Tex. 2001). Because the law favors arbitration, the burden of proving a defense to arbitration is on the party opposing it. See J.M. Davidson, Inc., 128 S.W.3d at 227.
SOURCE:  EL PASO COURT OF APPEALS -  No. 08-11-00091-CV – 4/25/2012
[Employee-Plaintiff] has not offered evidence as to any of the applicable affirmative defenses. Her only claims related to issues of arbitrability which we have already determined must be presented to the arbitrator. We conclude that the trial court erred in refusing to compel arbitration. We sustain both issues for review and reverse and remand for orders compelling arbitration.

Monday, April 30, 2012

Payment of commission in real estate transaction governed by statute of frauds in RELA

REAL Estate License Act requires commission agreement to be in writing and to contain specific items of essential information.
Written agreement compliant with statute of frauds provision of the Real Estate License Act (RELA) required for payment of commission for sale/purchase of real estate to be enforceable.
The statute of frauds provision of RELA provides,
A person may not maintain an action in this state to recover a commission for the sale or purchase of real estate unless the promise or agreement on which the action is based, or a memorandum, is in writing and signed by the party against whom the action is brought or by a person authorized by that party to sign the document.

Tex. Occ. Code Ann. § 1101.806(c) (West 2012).
To comply with this section, an agreement or memorandum must: (1) be in writing and must be signed by the person to be charged with the commission; (2) promise that a definite commission will be paid, or must refer to a written commission schedule; (3) state the name of the broker to whom the commission is to be paid; and (4) either itself or by reference to some other existing writing, identify with reasonable certainty the land to be conveyed. Lathem v. Kruse, 290 S.W.3d 922, 925 (Tex. App.-Dallas 2009, no pet.). Strict compliance with RELA is required; the agreement to pay a real estate commission must be in writing or it is not enforceable. Id. The essential elements of the agreement may not be supplied by parol evidence. Boyert v. Tauber, 834 S.W.2d 60, 62 (Tex. 1992).
SOURCE: DALLAS COURT OF APPEALS - 05-10-00675-CV – 4/26/12
None of the documents on which appellees rely contains a promise to pay a real estate commission or identifies appellees as brokers to whom a commission will be paid. Accordingly, there is no evidence of a written agreement complying with the statute of frauds provision of RELA. See Tex. Occ. Code Ann. § 1101.806(c); Lathem, 290 S.W.3d 925. We sustain Litton's third issue. Having sustained Litton's third issue, we need not consider its other issues. Tex. R. App. P. 47.1.

Friday, April 27, 2012

Fraudulent Lien - Statutory Cause of Action & Damages


The fraudulent-lien statute provides:

(a) A person may not make, present, or use a document or other record with:

(1) knowledge that the document or other record is a fraudulent court record or a fraudulent lien or claim against real or personal property or an interest in real or personal property;

(2) intent that the document or other record be given the same legal effect as a court record or document of a court created by or established under the constitution or laws of this state or the United States or another entity listed in Section 37.01, Penal Code, evidencing a valid lien or claim against real or personal property or an interest in real or personal property; and

(3) intent to cause another person to suffer:

(A) physical injury;

(B) financial injury; or

(C) mental anguish or emotional distress.

See TEX. CIV. PRAC. & REM.CODE ANN. § 12.002(a) (Vernon Supp. 2011).

The party asserting that a claimed lien is a fraudulent lien has the burden to prove the requisite elements in the statute. Aland v. Martin, 271 S.W.3d 424, 430 (Tex. App.—Dallas 2008, no pet.). A party who satisfies the section 12.002(a) requirements may recover $10,000 or the actual damages caused by the violation, whichever is greater, in addition to court costs, attorney’s fees, and exemplary damages. See TEX. CIV. PRAC. & REM. CODE ANN. § 12.002(b).


Thursday, April 26, 2012

Waiver of Governmental Immunity [Statutory immunity waiver applicable to local governmental units]


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. See 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).

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)). Immunity from suit bars a suit against a governmental entity unless the Legislature expressly consents to the suit by resolution or by clear and unambiguous statutory language. Tooke, 197 S.W.3d at 332–33; see also Tex. Gov’t Code Ann. § 311.034 (Vernon Supp. 2011) (providing that statute shall not be construed as waiving sovereign immunity unless waiver is effected by clear and unambiguous language).

Local Government Code Section 271.152 waives a governmental entity’s immunity from suit for certain contracts:

A local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract, subject to the terms and conditions of this subchapter.
Tex. Loc. Gov’t Code Ann. § 271.152 (Vernon 2005).
The Local Government Code defines “a contract subject to this subchapter” as “a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity.” Id. § 271.151(2) (Vernon 2005).


[f]or section 271.152’s waiver of immunity to apply, three elements must be established: (1) the party against whom the waiver is asserted must be a “local governmental entity” as defined by section 271.151(3), (2) the entity must be authorized by statute or by the Constitution to enter into contracts, and (3) the entity must in fact have entered into a contract that is “subject to this subchapter,” as defined by section 271.151(2).

City of Houston v. Williams, 353 S.W.3d 128, 134–35 (Tex. 2011). A contract must meet five elements in order to be a contract subject to section 271.152’s waiver of immunity: “(1) the contract must be in writing, (2) state the essential terms of the agreement, (3) provide for goods or services, (4) to the local governmental entity, and (5) be executed on behalf of the local governmental entity.” Id. at 135.

Section 271.153 provides “Limitations on Adjudication Awards”:

(a) The total amount of money awarded in an adjudication brought against a local governmental entity for breach of a contract subject to this subchapter is limited to the following:

(1) the balance due and owed by the local governmental entity under the contract as it may have been amended, including any amount owed as compensation for the increased cost to perform the work as a direct result of owner-caused delays or acceleration;

(2) the amount owed for change orders or additional work the contractor is directed to perform by a local governmental entity in connection with the contract;

(3) reasonable and necessary attorney’s fees that are equitable and just; and

(4) interest as allowed by law. . . .

Tex. Loc. Gov’t Code Ann. § 271.153 (Vernon Supp. 2011).

Section 271.154 provides:

Adjudication procedures, including requirements for serving notices or engaging in alternative dispute resolution proceedings before bringing a suit or an arbitration proceeding, that are stated in the contract subject to this subchapter or that are established by the local governmental entity and expressly incorporated into the contract or incorporated by reference are enforceable except to the extent those procedures conflict with the terms of this subchapter. Id. § 271.154 (Vernon 2005).

The statute does not define “adjudication procedures,” but it provides:

“Adjudication” of a claim means the bringing of a civil suit and prosecution to final judgment in county or state court and includes the bringing of an authorized arbitration proceeding and prosecution to final resolution in accordance with any mandatory procedures established in the contract subject to this subchapter for the arbitration proceedings. Id. § 271.151(1).

Port Freeport f/k/a Brazos River Harbor Navigation District v. RLB Contracting Inc.,  
NO. 01-11-00778-CV (Tex.App.- Houston [1st Dist.] April 26, 2012) (port authority's jurisdictional plea in contract dispute properly denied by the trial court)

Domestication & Enforcement of Foreign Judgments [judgments entered by courts of other countries to which full-faith-and-credit clause of US constitution does not apply]

When is recognition / nonrecognition proper? What are grounds for avoiding recognition?

Under the Uniform Foreign Money–Judgments Recognition Act (the “Act”), a judgment creditor may seek recognition of a foreign country judgment [6] in Texas by filing a final, authenticated copy of the foreign country judgment in the judgment debtor’s county of residence. Sanchez v. Palau, 317 S.W.3d 780, 785 (Tex. App.—Houston [1st Dist.] 2010, pet. denied) (citing TEX. CIV. PRAC. & REM. CODE ANN. §§ 36.0041–42 (Vernon 2008)).
The Act applies to a foreign country judgment that “is final and conclusive and enforceable where rendered, even though an appeal is pending or the judgment is subject to appeal.” TEX. CIV. PRAC. & REM. CODE ANN. § 36.002(a)(1) (Vernon 2008).
The Act further provides that when a qualifying foreign country judgment is filed in accord with the Act, notice of the filing is given as provided by the Act, and a foreign country judgment is not otherwise “refused recognition” under the Act, then the judgment is “is conclusive between the parties to the extent that it grants or denies recovery of a sum of money” and is “enforceable in the same manner as a judgment of a sister state that is entitled to full faith and credit.” See id. § 36.004 (Vernon 2008).
The Act sets forth the grounds for “nonrecognition” of a foreign country judgment. See id. § 36.005 (Vernon 2008). Relevant to the instant case, a foreign country judgment is “not conclusive” if it “was rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law.” See id. § 36.005(a)(1). And a foreign country judgment “need not be recognized” if “the proceeding in the foreign country court was contrary to an agreement between the parties under which the dispute in question was to be settled otherwise than by proceedings in that court.” See id. § 36.005(b)(5). A party contesting recognition of a foreign country judgment may file and serve a motion for nonrecognition no later than the 30th day after the date of service of the notice of filing of judgment is provided under the Act. See id. § 36.0044(a) (Vernon 2008). The party filing the motion for nonrecognition shall include with the motion all supporting affidavits, briefs, and other documentation; the party opposing the motion must file any response, including supporting affidavits, briefs, and other documentation not later than the 20th day after the date of service on that party of a copy of the motion for nonrecognition. See id. § 36.0044(b), (c).
The party seeking to avoid recognition has the burden of proving a ground for nonrecognition and, unless that party satisfies his burden of proof by establishing one or more of the specific grounds for nonrecognition, the court is required to recognize the foreign country judgment. Courage Co. v. Chemshare Corp., 93 S.W.3d 323, 331 (Tex. App.—Houston [14th Dist.] 2002, no pet.). By limiting the defenses available to a judgment debtor, the Act creates standards for recognizing foreign country judgments and prevents parties from relitigating issues that were conclusively settled by courts of foreign countries, unless such issues create an exception to recognition. Beluga Chartering, B.V. v. Timber S.A., 294 S.W.3d 300, 304 (Tex. App.—Houston [14th Dist.] 2009, no pet.); Dart v. Balaam, 953 S.W.2d 478, 480 (Tex. App.—Fort Worth 1997, no writ). A trial court’s enforcement of a foreign country judgment presents a question of law, and, thus, we review de novo a trial court’s recognition of a foreign country judgment. Sanchez, 317 S.W.3d at 785; Courage Co., 93 S.W.3d at 331.
Recognition of a foreign country judgment under the Act “does not require that the procedures used in the courts of a foreign country be identical to those used in the courts of the United States.” The Society of Lloyds v. Webb, 156 F.Supp.2d 632, 639–40 (N.D. Tex. 2001). Rather, the Act requires only that the foreign procedures are “compatible with the requirements of due process of law” and do “not offend against basic fairness.” Id. at 640 (internal quotations and citations omitted). To establish a prima facie case that conclusive effect should be given to a foreign country judgment, courts have explained that a party may demonstrate that “the rendering court had jurisdiction over the person and subject matter, that there was timely notice and an opportunity to present a defense, that no fraud was involved, that the proceedings were according to a civilized jurisprudence are the same for both favored and nonfavored systems.” Id. (citation omitted).
SOURCE: HOUSTON COURT OF APPEALS - 1ST DIST - 01-11-00636-CV - 4/26/12

The record reflects that Presley appeared in the Belgium court proceedings, and the Belgium courts considered and addressed Presley’s arguments that the entire matter should be submitted to arbitration pursuant to the joint venture agreement’s arbitration clause. The record further reflects that the Belgium courts ruled that Presley’s counterclaim for breach of the joint venture agreement against Masureel should be pursued in arbitration. Although Presley disputes the Belgium court’s determination that Masureel’s request for reimbursement under the loan agreements and the other disputes arising from the joint venture agreement are not “indivisible,” we conclude that the record does not support Presley’s assertions that the Belgium courts failed to provide her with an impartial tribunal and the procedures used by the Belgium courts were “incompatible” with due process of law. Presley has not cited any authority for the proposition that a ruling like that reached by the Belgium courts under the circumstance here, in which Presley was directed to pursue her affirmative claims in accord with an arbitration clause, renders the foreign country’s procedures fundamentally unfair. [7] In sum, we hold that the trial court did not err in recognizing the Belgium court’s judgment on the ground that it was rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law. See id. § 36.005(a)(1).

We overrule Presley’s first and second issues.

Jones Act Claim in Texas State Court [cause of action for maritime personal injury to seamen]

The Jones Act provides a cause of action for maritime workers injured by an employer’s negligence. Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 405 (Tex. 1998); Diamond Offshore Mgmt. Co. v. Horton, 193 S.W.3d 76, 78 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). Federal law provides that a party asserting an admiralty action may bring the action in state court. Ellis, 971 S.W.2d at 405–06; Horton, 193 S.W.3d at 78; see 28 U.S.C. § 1333(1) (2000). When a state court hears an admiralty case, that court occupies essentially the same position occupied by a federal court sitting in diversity: the state court must apply substantive federal maritime law but follow state procedure. Ellis, 971 S.W.2d at 406; Horton, 193 S.W.3d at 78.
A fundamental duty of a Jones Act employer is to provide its seamen employees with a reasonably safe place to work. Noble Drilling (US) Inc. v. Fountain, 238 S.W.3d 432, 439 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (citing Colburn v. Bunge Towing, Inc., 883 F.2d 372, 374 (5th Cir. 1989)). The proper standard for determining the duty of care owed by an employer or a seaman is ordinary prudence under the circumstances. Id. (citing Offshore Pipelines, Inc. v. Schooley, 984 S.W.2d 654, 658 (Tex. App.—Houston [1st Dist.] 1998, no pet.) (citing Gautreaux v. Scurlock Marine, Inc., 107 F.3d 331, 335, 339 (5th Cir. 1997))). The circumstances of a seaman’s employment include not only his reliance on his employer to provide a safe work environment but also his own experience, training, or education. Id. (citing Gautreaux, 107 F.3d at 339). Thus, the reasonable person standard applies, and the standard in a Jones Act negligence action “becomes one of the reasonable seaman in like circumstances.” Id. (quoting Gautreaux, 107 F.3d at 339).

The Jones Act expressly incorporates the Federal Employers’ Liability Act (“FELA”) and the case law developing that statute, and thus the causation standard under the Jones Act is the same as that under FELA. Ellis, 971 S.W.2d at 406; Horton, 193 S.W.3d at 79. Under FELA, the causation burden is not the common law proximate cause standard; rather, the causation burden is “whether the proof justifies with reason the conclusion that employer negligence played any part, even the slightest, in producing the injury for which the claimant seeks damages.” Ellis, 971 S.W.2d at 406; Horton, 193 S.W.3d at 79; see also Fountain, 238 S.W.3d at 439–40 (“Under the Jones Act, a seaman is entitled to recovery if his employer’s negligence is the cause, in whole or in part, of his injury.”) (citing Gautreaux, 107 F.3d at 335). This burden has been termed “featherweight.” Ellis, 971 S.W.2d at 406; Horton, 193 S.W.3d at 79. Thus, to prove negligence, an employee must prove: (1) personal injury in the course of his employment; (2) negligence by his employer or an officer, agent, or employee; and (3) causation to the extent that his employer’s negligence was the cause “in whole or in part” of his injury. Rigdon Marine Corp. v. Roberts, 270 S.W.3d 220, 226 (Tex. App.—Texarkana 2008, pet. denied) (citing Hernandez v. Trawler Miss Vertie Mae, Inc., 187 F.3d 432, 436 (4th Cir. 1999) and Gautreaux, 107 F.3d at 335).

In addition to a less stringent burden of proof, the standard of appellate review in Jones Act cases, as provided under FELA, is also less stringent than under the common law. Ellis, 971 S.W.2d at 406; Horton, 193 S.W.3d at 79. The purpose of the Jones Act standard of review is to vest the fact-finder with complete discretion on factual issues about liability. Ellis, 971 S.W.2d at 406 (citing Rogers v. Mo. Pac. R.R. Co., 352 U.S. 500, 506–07, 77 S. Ct. 443, 448–49 (1957) (discussing standard of review under FELA, which was incorporated into Jones Act)); Horton, 193 S.W.3d at 79. Once the appellate court determines that some evidence about which reasonable minds could differ supports the verdict, the appellate court’s review is complete. Ellis, 971 S.W.2d at 406; Horton, 193 S.W.3d at 79; see also Davis v. Odeco, Inc., 18 F.3d 1237, 1243 (5th Cir. 1994) (holding that some evidence of “causal nexus” between negligence and injury is all that is required to survive appellate review of favorable verdict on Jones Act negligence claim). We apply this less-stringent standard rather than a traditional factual sufficiency review of a finding of liability under the Texas “weight and preponderance” standard. Ellis, 971 S.W.2d at 406; Horton, 193 S.W.3d at 79.


Friday, April 20, 2012

Punitive Damages may be awarded in Sabine-Pilot Wrongful Termination-of-Employment Suit -- Safeshred, Inc. v. Martinez (Tex. April 20, 2012)

Texas Supreme Court says, in opinion released today (Friday April, 20, 2012), that punitive damages are available in successful wrongful termination claim by employee fired for refusing to perform an illegal act because it is a tort, not a contract claim, and exemplary damages are available in tort cases as a general rule. The Court nevertheless reverses the court of appeals’ affirmance of exemplary damages in the case under review, finding that there was not legally sufficient evidence of malice in the employee's termination by his employer.  

Safeshred, Inc. v. Martinez (Tex. April 20, 2012)

This case requires us to clarify the nature and scope of the cause of action for wrongful termination of an employee for refusing to perform an illegal act that we recognized in Sabine Pilot Service, Inc. v. Hauck, 687 S.W.2d 733 (Tex. 1985). In particular, we must determine whether a plaintiff in a Sabine Pilot action may recover punitive damages, and if so, what must be shown as a prerequisite for those damages.

We agree with the court of appeals’ conclusion that a Sabine Pilot cause of action sounds in tort and allows punitive damages upon proper proof. However, because we hold that Martinez failed to present legally sufficient evidence of malice relating to his firing, we reverse the court of appeals’ judgment insofar as it affirms the award of exemplary damages.


A. The Availability of Punitive Damages

 1. Tort or contract

The first question we must answer is whether a Sabine Pilot claim sounds in tort or contract, because the answer to that question will decide whether exemplary damages are recoverable. While exemplary or punitive damages may generally be awarded for torts involving malicious or grossly negligent conduct, they are not available for breach of contract claims. Amoco Prod. Co. v. Alexander, 622 S.W.2d 563, 571 (Tex. 1981). Safeshred argues that the employment relationship is inherently contractual, and that Sabine Pilot essentially supplements that relationship with an implied contractual provision preventing discharge for refusal to perform an illegal act. Martinez, on the other hand, notes that every Texas case to categorize a Sabine Pilot claim has labeled it a tort,2 and that comparisons to other statutory wrongful termination causes of action support that characterization.

Courts outside of Texas are split on whether a public policy exception to the employment-at-will doctrine, like a Sabine Pilot claim, sounds in tort or contract. Compare Brockmeyer v. Dun & Bradstreet, 335 N.W.2d 834, 841 (Wis. 1983) (contract), and Monge v. Beebe Rubber Co., 316 A.2d 549, 551 (N.H. 1974) (same), with Thompson v. St. Regis Paper Co., 685 P.2d 1081, 1089 (Wash. 1984) (en banc) (tort), and Parnar v. Americana Hotels, Inc., 652 P.2d 625, 631 (Haw. 1982) (same).

We conclude that such claims sound in tort.

Apart from Sabine Pilot, this Court has steadfastly adhered to the employment-at-will doctrine. See, e.g., Ed Rachal Found. v. D’Unger, 207 S.W.3d 330, 332 (Tex. 2006). In that vein, we have consistently refused to expand Sabine Pilot beyond the “narrow exception” we recognized in that case. See id. at 332–33 (refusing to expand Sabine Pilot liability to cover whistleblower actions not already authorized by statute); Winters, 795 S.W.2d at 725 (same). Safeshred argues that, in order to maintain that narrow interpretation, we must call a Sabine Pilot claim a contract claim.

But, in fact, the opposite is true. To say the cause of action sounds in contract, we would need to drastically alter our view of the at-will employment relationship in general, rather than merely recognize a narrow exception to the at-will doctrine. E.g., Physio GP, Inc. v. Naifeh, 306 S.W.3d 886, 887-888 (Tex. App.—Houston [14 Dist.] 2 2010, no pet.); Draker v. Schreiber, 271 S.W.3d 318, 323 (Tex. App.—San Antonio 2008, no pet.) (citing Louis v. Mobil Chem. Co., 254 S.W.3d 602, 610 (Tex. App.—Beaumont 2008, pet. denied)); Miller v. Raytheon Aircraft Co., 229 S.W.3d 358, 373 (Tex. App.—Houston [1st Dist.] 2007, no pet.); see also Garcia v. Sun Belt Rentals, Inc., 310 F.3d 403, 404 (5th Cir. 2002); Hanold v. Raytheon Co., 662 F. Supp. 2d 793, 803 (S.D. Tex. 2009).

This is so because, to say that Sabine Pilot created an implied contractual provision would presume, in the first place, that there is a contract between at-will employees and their employers in which to place an implied provision. We have never recognized such a proposition. See, e.g., Montgomery Cnty. Hosp. Dist. v. Brown, 965 S.W.2d 501, 502–03 (Tex. 1998) (treating the implied employment contract urged by petitioners as a significant departure from at-will employment); Garcia v. Sunbelt Rentals, Inc., 310 F.3d 403, 404 (5th Cir. 2002) (“[N]o Texas court has held that an at-will employment relationship constitutes an oral contract . . . .”). On the contrary, we have long held firm to the principle that, in Texas, an at-will employee may be fired for a good reason, a bad reason, or no reason at all. Brown, 965 S.W.2d at 502. And where the promise of continued employment is illusory, it cannot form the basis of an enforceable contract. Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 660–61 (Tex. 2006) (citing RESTATEMENT (SECOND) OF CONTRACTS § 77 cmt. a (1981); 3 WILLISTON ON CONTRACTS § 7.7 (4th ed. 1992)). It would be inconsistent to call Sabine Pilot an implied contractual restriction on a relationship that is not even contractual. Cf. City of Midland v. O’Bryant, 18 S.W.3d 209, 216 (Tex. 2000) (“[A] contractual limitation [like a duty of good faith and fair dealing] would afford more rights to the plaintiffs than at-will employees possess.”).

Instead, we conclude that Sabine Pilot claims are not contractual in nature, but sound in tort, providing a remedy when an employee refuses to comply with an employer’s directive to violate the law and is subsequently fired for that refusal. This approach is consistent with our treatment of a statutory workers’ compensation retaliation claim (another narrow exception to employment-at-will), which we have labeled an intentional tort. See Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d  444, 453 (Tex. 1996) (discussing TEX. LAB. CODE § 451.001). It also gives due attention to the fact that Sabine Pilot liability stems not from an agreement between employer and employee (the subject of contract), but from legislatively expressed public policies embodied in the criminal law. For these reasons, we hold that a Sabine Pilot claim sounds in tort, not in contract.

2. Punitive Damages for This Tort

Safeshred contends that, even if we recognize a Sabine Pilot claim as a tort, allowing exemplary or punitive damages would constitute an expansion of the claim that we did not intend in Sabine Pilot, and one better left to the Legislature. But punitive damages are generally available for common law torts so long as the traditional prerequisites are met: a finding of actual damages, Doubleday & Co. v. Rogers, 674 S.W.2d 751, 754 (Tex. 1984); and outrageous, malicious, or otherwise reprehensible conduct, Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 16 (Tex. 1994). Rather than expanding the claim, allowing punitive damages would merely avoid arbitrarily excluding a category of damages that is otherwise presumptively available. In a similar situation, where the Legislature only specified the availability of “reasonable damages” for workers’ compensation retaliation claims, we interpreted that term to include punitive damages, which “have long been seen as an important policy tool and a valid measure of damages.” Azar Nut Co. v. Caille, 734 S.W.2d 667, 669 (Tex. 1987) (citing Hofer v. Lavender, 679 S.W.2d 470, 474–75 (Tex. 1984)). Here, we face similar policy concerns to those presented by the statute at issue in Azar Nut (deterring employers from wrongfully terminating employees), as well as the additional objective of deterring violations of the criminal law. We hold that, in the proper case, Sabine Pilot plaintiffs may recover any reasonable tort damages, including punitive damages.

SOURCE: TEXAS SUPREME COURT - Safeshred, Inc. v. Louis Martinez, III (Tex. April 20, 2012)(Opinion by Lehrmann) (on petition for review from the Austin Court of Appeals)
LEGAL TERMS AND LINKS: Sabine Pilot Exception to Employment at Will Doctrine  Employment at Will