Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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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


FRAUDULENT LIEN STATUTE [CPRC § 12.002(a)]

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).

SOURCE: HOUSTON COURT OF APPEALS - 1ST DISTRICT - 01-11-00129-CV - 4/26/12

Thursday, April 26, 2012

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


 
IMMUNITY OF SUB-STATE GOVERNMENTAL UNITS (including local governments such as municipalities and special districts) AND LEGISLATIVE WAIVER OF SUCH IMMUNITY FOR CERTAIN CONTRACT CLAIMS 
  
GENERAL PRINCIPLES

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).

STATUTORY WAIVER
  
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).

Thus,

[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).

SOURCE: HOUSTON COURT OF APPEALS - FIRST DISTRICT:
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]


  
THE UNIFORM FOREIGN MONEY-JUDGMENTS RECOGNITION ACT   
  
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]

  
LAWSUIT UNDER THE JONES ACT IN TEXAS STATE COURT 
 
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.

SOURCE: HOUSTON COURT OF APPEALS - FIRST DISTRICT - NO. 01-10-01025-CV - 4/26/2012





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)

    
EXEMPLARY DAMAGES IN WRONGFUL TERMINATION SUIT UNDER SABINE-PILOT EXCEPTION TO EMLOYMENT-AT-WILL DOCTRINE 
   
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)

   
EXCERPTS FROM THE OPINION BY JUSTICE LEHRMANN
   
  
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

Does slander per se require proof of damages? Salinas v. Salinas, No. 11-0131 (Tex. April 20, 2012)

  
DAMAGES IN PER SE DEFAMATION CASE - If not merely nominal, what amount? 

Texas Supreme Court has this to say in case in which it reversed a $30,000 appellate court judgment in favor of defamation plaintiff this morning:   

“Our law presumes that statements that are defamatory per se injure the victim’s reputation and entitle him to recover general damages, including damages for loss of reputation and mental anguish.” Bentley v. Bunton, 94 S.W.3d 561, 604 (Tex. 2002) (plurality opinion). However, even if some mental anguish can be presumed in cases of defamation per se, and if we assume the Telemundo statement was defamatory per se, the law does not presume any particular amount of damages beyond nominal damages.2

2 We need not decide whether Norberto would have been entitled to nominal damages for slander per se if he had requested them. He did not request such an award from the trial court and did not request that the jury be instructed to award at least nominal damages. We note, however, that courts have not resolved this issue in an entirely consistent manner. See Tex. Disposal Sys. Landfill, Inc. v. Waste Mgmt. Holdings, Inc. 219 S.W.3d 563, 584–85 n.22 (Tex. App.—Austin 2007, pet. denied) (discussing cases

See Denton Publ’g Co. v. Boyd, 448 S.W.2d 145, 147 (Tex. Civ. App.—Fort Worth 1969) (holding that a plaintiff in a libel per se case is entitled to nominal damages and “such actual damages as might be shown to be the proximate result of the publication”), aff’d, 460 S.W.2d 881 (Tex. 1970); Tex. Disposal Sys., 219 S.W.3d at 584 (stating that in cases of defamation per se, “the amount of actual general damages remains a question for the jury”); Adolf Coors Co. v. Rodriguez, 780 S.W.2d 477, 488 (Tex. App—Corpus Christi 1989, writ denied) (noting that under presumption of damages applicable to libel per se, damages “are within the jury’s discretion, are purely personal, and cannot be measured by any fixed rule or standard”); Bradbury v. Scott, 788 S.W.2d 31, 39 (Tex. App.—Houston [1st Dist.] 1989), writ denied) (holding, in case of libel per se, “where the amount of the actual damages is not capable of definite ascertainment, and prima facie liability is established, the determination of the amount is necessarily lodged in the discretion of the jury”); Freeman v. Schwenker, 73 S.W.2d 609, 611 (Tex. Civ. App.—Austin 1934, no writ) (same).

SOURCE: TEXAS SUPREME COURT – Salinas v. Salinas, No. 11-0131 – 4/20/12

There is, in short, no jury verdict in support of an award of damages of $30,000 or any other amount for the Telemundo statement, and the court of appeals could not sua sponte make its own award of damages. See Freeman, 73 S.W.2d at 611 (holding, in libel per se case, that “[i]t is a well-settled rule that, where a case is submitted to a jury . . . judgment of the court must be rendered upon the verdict returned”); see also Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000) (holding that appellate court could not review sufficiency of evidence under a legal standard that was not submitted to the jury if no party objected to failure to charge jury under the standard). Even if mental anguish can be presumed, the determination of the amount of mental anguish damages is an inquiry left to the finder of fact. We therefore agree with Maria that the court of appeals was not authorized to award $30,000 in mental anguish damages for the Telemundo statement, without a damages finding by the jury supporting such an award.

SOURCE: SUPREME COURT OF TEXAS – Maria Ester Salinas vs. Norberto Salinas, No. 11-0131 – 4/20/12 

Is a promise not kept actionable as fraud?

  
BREACH OF PROMISE – FRAUD VS. CONTRACT CLAIM

In a fraud cause of action, “[a] promise of future performance constitutes an actionable misrepresentation if the promise was made with no intention of performing at the time it was made.” Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). Additionally, “the mere failure to perform a contract is not evidence of fraud.” Id. Instead, the non-movant must present evidence that the alleged misrepresentation was made with the intent to deceive and with no intention of performing as represented. Id.
ELEMENTS OF FRAUD CAUSE OF ACTION

The elements of fraud are: “(1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury.” Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009).

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-11-00544-CV - 4/18/12

ELEMENTS  OF CAUSE OF ACTION FOR BREACH OF CONTRACT

The elements of a breach of contract claim are: (1) the existence of a valid contract between the plaintiff and defendant; (2) the plaintiff’s performance or tender of performance; (3) the defendant’s breach of the contract; and (4) the plaintiff’s damage as a result of that breach. Esty v. Beal Bank S.S.B., 298 S.W.3d 280, 299 (Tex. App.—Dallas 2009, no pet.).


Difference between premises defect and negligent activity claim in a nutshell

PREMISES LIABILITY: Premises defect vs. negligent activity claim
 
Negligent activity and premises defect are independent theories of recovery. Clayton W. Williams, Jr., Inc. v. Olivo, 952 S.W.2d 523, 529 (Tex. 1997). “Generally, to recover on a negligent activity theory, one must have been injured by or as a contemporaneous result of an activity.” Rendleman v. Clarke, 909 S.W.2d 56, 60 (Tex. App.—Houston [14th Dist.] 1995, writ dism’d) (citing Keetch v. Kroger Co., 845 S.W.2d 262, 264 (Tex. 1992)). However, to recover on a premises defect theory, one must be injured by a condition on the property created by the activity. Keetch, 845 S.W.2d at 264.

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-11-00305-CV - April 18, 2012

Common law marriage in Texas - It's actually called informal marriage and now governed by statute (Tex. Family Code)

    
The requirements to prove an informal -- commonly called common-law  marriage -- have been codified. So, there is now a statutory basis for "common-law" marriage, just no marriage license. But formal registration is possible. 
  
ELEMENTS OF COMMON-LAW MARRIAGE IN TEXAS
  
“Common law marriages have been recognized in Texas since 1847.”2 Russell v. Russell, 865 S.W.2d 929, 931 (Tex. 1993) (citing Tarpley v. Poage’s Adm’r, 2 Tex. 139, 149 (1847)). A common law marriage has three requirements: (1) the parties agreed to be married; (2) the parties lived together as husband and wife in Texas after they agreed to be married; and (3) the parties represented to others that they were married. TEX. FAM. CODE ANN. § 2.401(a)(2) (West 2006); Russell, 865 S.W.2d at 932; Palacios v. Robbins, No. 04-02-00338-CV, 2003 WL 21502371, *3 (Tex. App.—San Antonio July 2, 2003, pet. denied) (mem. op.). All three elements must exist at the same time. Palacios, 2003 WL 21502371, at *3.

“Informal marriage” is the statutory term used to describe what is colloquially known as a common law marriage. See TEX. FAM. CODE ANN. § 2.401 (West 2006).

To establish an agreement to be married, “the evidence must show the parties intended to have a present, immediate, and permanent marital relationship and that they did in fact agree to be husband and wife.” Eris v. Phares, 39 S.W.3d 708, 714 (Tex. App.—Houston [1st Dist.] 2001, pet. denied). The agreement to be married may be established by direct or circumstantial evidence. Russell, 865 S.W.2d at 933. The testimony of one of the parties to the marriage constitutes direct evidence the parties agreed to be married. See Eris, 39 S.W.3d at 714; In re

Estate of Giessel, 734 S.W.2d 27, 32 (Tex. App.—Houston [1st Dist.] 1987, writ ref’d n.r.e.). The conduct of the parties and evidence of cohabitation and representations to others may constitute circumstantial evidence of an agreement depending upon the facts of the case. See Russell, 865 S.W.2d at 933; Eris, 39 S.W.3d at 714. Cohabitation need not be continuous. See Bolash v. Heid, 733 S.W.2d 698, 699 (Tex. App.—San Antonio 1987, no writ) (holding evidence sufficient to establish cohabitation where husband worked in Nigeria but lived with wife each time he returned to Texas). As with all of the elements of common law marriage, cohabitation is determined on a case-by-case basis. See Estate of Claveria v. Claveria, 615 S.W.2d 164, 166 (Tex. 1981).

The statutory requirement of “represent[ing] to others” is synonymous with the judicial requirement of “holding out to the public.” Compare TEX. FAM. CODE ANN. § 2.401(a)(2) (West 2006) with Claveria, 615 S.W.2d at 166. “‘Holding out’ may be established by the conduct and actions of the parties.” Eris, 39 S.W.3d at 715. “Spoken words are not necessary to establish representation as husband and wife.” Id. Written references to the marriage or to a party as “spouse” are evidence of “holding out.” See Claveria, 615 S.W.2d at 167 (holding recorded deed in which parties represented they were married was evidence of common law marriage); Persons v. Persons, 666 S.W.2d 560, 563 (Tex. App.—Houston [1st Dist.] 1984, writ ref’d n.r.e.) (holding reference to one party as “spouse” in credit application was evidence of holding out).
  
SOURCE: SAN ANTONIO COURT OF APPEALS - 04-11-00332-CV - 4/18/12
Carmen’s affidavits were not sham affidavits and were sufficient to raise a fact issues on each element of her claim that she and Francisco had an informal marriage. Accordingly, the summary judgment is reversed and the cause is remanded to the trial court. Additionally, we hold the trial court erred in expunging Carmen’s second notice of lis pendens.

Liz who? Liz what? - Lis Pendens ...

Lis pendens is Latin for pending lawsuit. The typical usage in English is "notice of lis pendens", -- a document putting interested parties (potential buyers of property) on notice that a particular piece of real estate is involving in litigation that is currently ongoing. 

LIS PENDENS IS NOT A CAUSE OF ACTION
 
A lis pendens may be filed during the pendency of an action involving title to real property, the establishment of an interest in real property, or an enforcement of an encumbrance against real property. TEX. PROP. CODE ANN. § 12.007 (West 2009). The purpose of a lis pendens is to put parties interested in a particular tract of land on notice as to the facts and issues involved in a suit or action concerning that particular tract. In re Jamail, 156 S.W.3d 104, 108 (Tex. App.—Austin 2004, orig. proceeding.); In re Collins, 172 S.W.3d 287, 292–93 (Tex. App.—Fort Worth 2005, orig. proceeding); Garza v. Pope, 949 S.W.2d 7, 8 (Tex. App.—San Antonio 1997, no writ). 
  
A lis pendens is not an independent claim, Collins v. Tex Mall, L.P., 297 S.W.3d 409, 419 (Tex. App.—Fort Worth 2009, no pet.), and has no existence separate and apart from the litigation of which it gives notice. Taliaferro v. Smith, 804 S.W.2d 548, 550 (Tex. App.—Houston [14th Dist.] 1991, no writ). Under Texas law, a lis pendens does not prevent a sale of the property; it merely places a purchaser on notice that a person other than the title holder claims an interest in the property. Group Purchases, Inc. v. Lance Inv., Inc., 685 S.W.2d 729, 731 (Tex. App.—Dallas 1985, writ ref’d n.r.e.). A lis pendens notice operates during the pendency of the lawsuit and terminates with the judgment, in the absence of appeal. Berg v. Wilson, 353 S.W.3d 166, 180 (Tex. App.—Texarkana 2011, pet. denied); see also Hartel v. Dishman, 135 Tex. 600, 145 S.W.2d 865, 869 (1940); Collins, 297 S.W.3d at 418.
Section 12.0071 of the Texas Property Code provides the statutory authority for expunging a lis pendens. TEX. PROP. CODE ANN. § 12.0071 (West Supp. 2011). Section 12.071 provides in part

(a) A party to an action in connection with which a notice of lis pendens has been filed may:

(1) apply to the court to expunge the notice; and

(2) file evidence, including declarations, with the motion to expunge the notice.

(b) The court may:

(1) permit evidence on the motion to be received in the form of oral testimony; and

(2) make any orders the court considers just to provide for discovery by a party affected by the motion.

(c) The court shall order the notice of lis pendens expunged if the court determines that:

(1) the pleading on which the notice is based does not contain a real property claim;

(2) the claimant fails to establish by a preponderance of the evidence the probable validity of the real property claim; or

(3) the person who filed the notice for record did not serve a copy of the notice on each party entitled to a copy under Section 12.007(d).

(d) Notice of a motion to expunge under Subsection (a) must be served on each affected party on or before the 20th day before the date of the hearing on the motion.

TEX. PROP. CODE ANN. § 12.0071 (West Supp. 2011). The record does not reflect that any party to the underlying action filed a motion to expunge the second lis pendens, nor do the children argue one was filed. It appears from the record the trial court sua sponte, only four days after the second lis pendens was filed, ordered the second lis pendens expunged.

Section 12.0071 allows a party to file a motion requesting the trial court expunge a notice lis pendens, but the statute requires that the motion be served on each affected person on or before the 20th day before a hearing on the matter. No party filed a motion and Carmen was not provided twenty days’ notice that the trial court was considering expunging the lis pendens. We hold the trial court erred in expunging the lis pendens sua sponte and without proper notice to each affected party.
  
SOURCE: SAN ANTONIO COURT OF APPEALS - 04-11-00332-CV - 4/18/12

Thursday, April 19, 2012

Does employee who does book-keeping have a fiduciary duty?

  
EXISTENCE OF FIDUCIARY DUTY AS ELEMENT OF BREACH OF FIDUCIARY DUTY CLAIM
  
A fiduciary duty is an extraordinary duty which will not be lightly created. Gillum v. Republic Health Corp., 778 S.W.2d 558, 567 (Tex. App.-Dallas 1989, no writ). Fiduciary duties arise as a matter of law in certain formal relationships, including attorney-client, partnership, and trustee relationships. Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 674 (Tex. 1998).
 
Appellees do not argue that there was a formal fiduciary relationship between the parties; rather, they argue an informal, confidential relationship existed between appellant and Woube and appellant and S-W Transportation.
   
In some circumstances, informal relationships may also give rise to a fiduciary duty. See Crim Truck & Tractor v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992). These informal relationships, termed “confidential relationships,” may arise “where one person trusts in and relies upon another, whether the relation is a moral, social, domestic, or merely personal one.” Id. A confidential relationship exists in those cases in which “influence has been acquired and abused, in which confidence has been reposed and betrayed.” Id. (quoting Tex. Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex. 1980)).
  
A person is justified in placing confidence in the belief that another party will act in his best interest only where he is accustomed to being guided by the other party's judgment and advice and there exists a long association in a business relationship as well as a personal friendship. Esty v. Beal Bank S.S.B., 298 S.W.3d 280, 304 (Tex. App.-Dallas 2009, no pet.). “The existence of the fiduciary relationship is to be determined by the actualities of the relationship between the persons involved.” Id. (quoting Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1963)). Although we recognize the existence of a confidential relationship is ordinarily a question of fact, when the issue is one of no evidence, it becomes a question of law. Crim Truck, 823 S.W.2d at 594.
  
SOURCE: DALLAS COURT OF APPEALS - 05-10-01119-CV – 4/19/12 (finding no fiduciary duty and reversing judgment for plaintiff)   
  

Real Estate Transactions: What degree of specificity is required to satisfy the statute of frauds?

  
STATUTE OF FRAUDS GOVERNING CONVEYANCE OF REAL ESTATE, PURCHASE-OPTION CONTRACTS
 
Under the applicable statute of frauds, a contract for the sale of real estate is not enforceable unless it, or a memorandum of it, is in writing and signed by the person to be charged with the contract.  Tex. Bus. & Com. Code Ann. § 26.01(a), (b)(4) (Vernon 2009).  For a contract concerning the conveyance of real estate to satisfy the statute of frauds, “the writing must furnish within itself, or by reference to some other existing writing, the means or data by which the particular land to be conveyed may be identified with reasonable certainty.”  Wilson v. Fisher, 188 S.W.2d 150, 152 (Tex. 1945).  This applies to a purchase option in a contract.  See Matney v. Odom, 210 S.W.2d 980, 981–82 (Tex. 1948) (applying statute of frauds analysis to purchase option in contract).  Whether a contract falls within the statute of frauds is a question of law.  Iacono v. Lyons, 16 S.W.3d 92, 94 (Tex. App.—Houston [1st Dist.] 2000, no pet.).
  
The purpose of a description in a written conveyance is not to identify the land, but to afford a means of identification.  Jones v. Kelley, 614 S.W.2d 95, 99–100 (Tex. 1983).  While we apply a strict application of the statute of frauds, we allow for a liberal construction of the words describing the land.  Gates v. Asher, 280 S.W.2d 247, 248 (Tex. 1955).   
  
A metes-and-bounds description is not required to satisfy the statute of frauds.  Tex. Builders v. Keller, 928 S.W.2d 479, 481 (Tex. 1996).  Similarly, a plat in a recorded property description is not required.  Nguyen v. Yovan, 317 S.W.3d 261, 269 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).  Nor does the description of the property require “[c]onviction beyond all peradventure of doubt.”  Gates, 280 S.W.2d at 249; see also Templeton v. Dreiss, 961 S.W.2d 645, 659 (Tex. App.—San Antonio 1998, pet. denied) (holding mathematical certainty not required).  Instead, only proof within “reasonable certainty” is required.  Gates, 280 S.W.2d at 249.
  
“If enough appears in the description so that a party familiar with the locality can identify the premises with reasonable certainty, it will be sufficient.”  Id. at 248–49.  Generally speaking, a property can be identified with reasonable certainty if it identifies the general area of the land and “contains information regarding the size, shape, and boundaries.”  Reiland v. Patrick Thomas Props., Inc., 213 S.W.3d 431, 437 (Tex. App.—Houston [1st Dist.] 2006, pet. denied); accord Fears v. Tex. Bank, 247 S.W.3d 729, 736 (Tex. App.—Texarkana 2008, pet. denied).
  
“[W]hen construing a conveyance, the court does not look at terms in isolation; rather, it must give effect to all parts of the conveyance and construe the document as a whole.”  Plainsman Trading Co. v. Crews, 898 S.W.2d 786, 789 (Tex. 1995).  When a contract includes a map of the property to be conveyed as a part of its description of the property, this is included in the analysis of whether the description satisfies the statute of frauds.  Matney, 210 S.W.2d at 984; U.S. Enters., Inc. v. Dauley, 535 S.W.2d 623, 628 (Tex. 1976).  “Whether a map is helpful in remedying descriptive defects of the contract depends on whether the missing details are shown on the map.”  U.S. Enters., 535 S.W.2d at 628.
   
While parol evidence may be considered under certain circumstances, it cannot be used to supply the “essential elements” of the contract.  Wilson, 188 S.W.2d at 152.  In contrast, it can be used to “explain or clarify the essential terms appearing in the” contract.  Id. 
   
If it does not sufficiently describe the land to be conveyed, a conveyance of an interest in real property is void and unenforceable under the statute of frauds.  Nguyen, 317 S.W.3d at 267.

SOURCE: HOUSTON COURT OF APPEALS – NO. 01-11-00328-CV   -- 4/19/12
(“The property description contained with the sublease is not so vague or ambiguous as to render its boundaries indeterminable.  Additionally, the record shows that a surveyor, using the information contained in or referenced by the sublease, was able to identify the property with reasonable certainty.  Accordingly, we hold that the trial court erred by determining, as a matter of law, that the property subject to the sublease’s purchase option could not be identified with a reasonable certainty.”) 

Third-Party-Beneficiary Status Under Force-Placed Insurance Policies (Hurricane Ike litigation)

       
Insurance contracts are subject to the same rules of construction as ordinary contracts.  ArchonInvs., Inc. v. Great Am. Lloyds Ins. Co., 174 S.W.3d 334, 338 (Tex. App.—Houston [1st Dist.] 2005, pet. denied) (citing Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 823 (Tex. 1997)).  When a policy permits only one reasonable interpretation, we construe it as a matter of law and enforce it as written.  Id. (citing Upshaw v. Trinity Cos., 842 S.W.2d 631, 633 (Tex. 1992)).  When construing an insurance policy, “[w]e must strive to effectuate the policy as the written expression of the parties’ intent.”  Id. (citing State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995)). To discern the intent of the parties to a contract, the court examines and considers the entire writing to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless, no single provision taken alone will be given controlling effect, and all the provisions will be considered with reference to the whole instrument.  In re Serv. Corp. Int’l, 355 S.W.3d 655, 661 (Tex. 2011).If the term to be construed is unambiguous and susceptible of only one construction, we “give the words in the policy their plain meaning.”  Archon, 174 S.W.3d at 338 (citing Devoe v.Great Am. Ins., 50 S.W.3d 567, 571 (Tex. App.—Austin 2001, no pet.)).
  
In determining whether a third party can enforce a contract, we look only to the intention of the contracting parties.  Basic Capital Mgmt., Inc. v. Dynex Commercial, Inc., 348 S.W.3d 894, 900 (Tex. 2011); MCI Telecomms.Corp. v. Tex. Utils.Elec. Co., 995 S.W.2d 647, 651 (Tex. 1999); Union Pac. R.R. Co. v. Novus Int’l, Inc., 113 S.W.3d 418, 421 (Tex. App.—Houston [1st Dist.] 2003, pet. denied).  The fact that a person might receive an incidental benefit from a contract to which he is not a party does not give that person a right to enforce the contract. Basic Capital Mgmt., 348 S.W.3d at 899–900; MCI Telecomms., 995 S.W.2d at 651; Union Pac., 113 S.W.3d at 421.  A third party may recover on a contract made between other parties only if the contracting parties intended to secure a benefit to the third party and only if the contracting parties entered into the contract directly for the third party’s benefit. Basic Capital Mgmt., 348 S.W.3d at 900; MCITelecomms., 995 S.W.2d at 651; Union Pac., 113 S.W.3d at 421.  The third party must show that he is either a donee or a creditor beneficiary of the contract, and not one who is only incidentally benefitted by its performance.  MCITelecomms., 995 S.W.2d at 651; Union Pac., 113 S.W.3d at 421.  A party is a donee beneficiary if the promised performance will, when rendered, come to him as pure donation.  MCITelecomms., 995 S.W.2d at 651; Union Pac., 113 S.W.3d at 421.  If that performance will come to him in satisfaction of a legal duty owed to him by the promisee, such as an “indebtedness, contractual obligation or other legally enforceable commitment,” he is a creditor beneficiary.  MCITelecomms., 995 S.W.2d at 651; Union Pac., 113 S.W.3d at 421.
  
 “We glean intent from what the parties said in their contract, not what they allegedly meant.”  Union Pac., 113 S.W.3d at 421.  We will not create a third-party beneficiary contract by implication.  Basic Capital Mgmt., 348 S.W.2d at 900; MCITelecomms., 995 S.W.2d at 651; Union Pac., 113 S.W.3d at 422; see also Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011) (“[I]n the absence of a clear and unequivocal expression of the contracting parties’ intent to directly benefit a third party, courts will not confer third-party beneficiary status by implication.”).  As the Texas Supreme Court held in MCITelcommunications,
   
The intention to contract or confer a direct benefit to a third party must be clearly and fully spelled out or enforcement by the third party must be denied.  Consequently, a presumption exists that parties contracted for themselves unless it “clearly appears” that they intended a third party to benefit from the contract.
   
995 S.W.2d at 651;see alsoBasic Capital Mgmt., 348 S.W.3d at 900 (quoting same).
   
Due to the presumption against finding third-party beneficiaries to contracts, courts will generally deny third-party-beneficiary claims unless:  (1) the obligation of the bargain-giver is fully spelled out, (2) it is unmistakable that a benefit to the third party was within the contemplation of the contracting parties, and (3) the contracting parties contemplated that the third party would be vested with the right to sue for enforcement of the contract.  Union Pac., 113 S.W.3d at 422.  We resolve all doubts against conferring third-party-beneficiary status.  Tawes, 340 S.W.3d at 425; see also First Union Nat’l Bank v. Richmont Capital Partners I, L.P., 168 S.W.3d 917, 929 (Tex. App.—Dallas 2005, no pet.) (“If there is any reasonable doubt as to the intent of the contracting parties to confer a direct benefit on the third party, then the third-party beneficiary claim must fail.”).
    
Texas’s third-party beneficiary policy was recently examined and explained by the Texas Supreme Court in Basic Capital Management.348 S.W.3d 894.  In that case, Basic managed real estate investment trusts, including American Realty Trust, Inc. (“ART”) and Transcontinental Realty Investors, Inc. (“TCI”).  Id. at 896.  Basic and Dynex signed a Commitment, in which Dynex agreed to loan funds to “single-asset, bankruptcy-remote entities” (“SABREs”) owned by ART and TCI if Basic would “propose other acceptable SABREs to borrow $160 million over a two-year period.”  Id. at 896–97.  The issue on appeal was whether ART and TCI could recover damages from Dynex for its alleged breach of the Commitment as third-party beneficiaries to the Commitment.  Id. at 898.
   
The supreme court reasoned that, because the intention to confer a direct benefit to a third party must be clearly and fully spelled out in the contract for that party to have standing as a third-party beneficiary, “a presumption exists that parties contracted for themselves unless it clearly appears that they intended a third party to benefit from the contract.”  Id. at 900.Although only Dynex and Basic had signed the Commitment, “Dynex knew that the purpose of the Commitment was to secure future financing for ART and TCI, real estate investment trusts that Basic managed and in which it held an ownership interest.”  Id.  Not only was Basic not intended to be the borrower, but the Commitment expressly required that the borrowers be SABREs acceptable to Dynex, and Dynex knew that Basic would not own the SABREs.  Id.  The court concluded that this requirement was for Dynex’s benefit, since SABREs are designed to provide more certain recourse to collateral in the event of default.  Id.  The court pointed out that “SABRE-borrowers provided a mechanism for ART and TCI to hold investment property directly but in a way that would provide Dynex greater security.”  Id.  Thus, “if Dynex and Basic did not intend the Commitment to benefit ART and TCI directly, then the Commitment had no purpose whatsoever.”  Id.  Moreover, the Commitment “clearly and fully spelled out the benefit to ART and TCI because their role was basic to Dynex’s and Basic’s agreement.”  Id. at 901.  The court concluded, “The Commitment itself, and the undisputed evidence regarding its negotiation and purpose, establish that ART and TCI were third-party beneficiaries.”  Id.
   
Although Texas state courts have addressed whether a party may be a third-party beneficiary in the general insurance policy context, they have not addressed the specific issue of whether a homeowner-borrower qualifies as a third-party beneficiary under a force-placed insurance policy entered into between the insurance company and the mortgage company.  See, e.g., Paragon Sales Co. v. N.H. Ins. Co., 774 S.W.2d 659, 660–61 (Tex. 1989) (holding distributor presented some evidence that it was third-party beneficiary of indemnity contract between insurance company and public motor carrier).  As a result of Hurricanes Dolly, Katrina, and Rita, however, some federal courts within the Fifth Circuit Court of Appeals’ jurisdiction, primarily in Louisiana, have addressed this issue and have reached differing conclusions as to the homeowner’s third-party-beneficiary status according to the specific terms of the policy and the facts of the case.
   
When deciding whether a homeowner-borrower is a third-party beneficiary under a force-placed insurance policy, the federal courts applying state law, like the Texas courts, have looked to the language of the policy to determine whether any of the provisions clearly confer a direct benefit upon the borrower.  Thus, the Fifth Circuit has found third-party beneficiary status to exist (1) when the policy, although only listing the mortgage company as a named insured, contains a subrogation clause providing that the homeowner-borrower will not be liable to the insurance company for any loss paid to the insured and (2) when the policy contains a provision allowing for temporary housing expenses to be paid to the homeowner-borrower.  See Palma v. Verex Assurance, Inc., 79 F.3d 1453, 1457–58 (5th Cir. 1996) (subrogation clause case decided under Texas law).  In Palma, the Fifth Circuit held that the inclusion of the subrogation clause within the insurance policy demonstrated a clear intention on the part of the contracting parties to benefit the homeowner-borrower.  Seeid.at 1458 (“[The subrogation clause] is written for the sole benefit of the borrower. . . .  We also find that the insurance contract was actually made, in part, for the benefit of Palma [the borrower].”); see also Henderson v. Certain Underwriters at Lloyds, London, Civil Action No. 09-1320, 2009 WL 3190710, at *3 (E.D. La. Sept. 30, 2009) (slip op.) (noting that plaintiff’s standing was limited solely to seeking temporary housing expenses because this was only clause in policy providing direct benefit to borrower).
   
Primarily, the federal district courts have focused on whether the policy contains one of two specific clauses that may benefit the borrower:  (1) an “excess loss” or “residual payment” clause or (2) a clause providing that the insurer will adjust all personal property losses with, and pay any such proceeds to, the borrower.  A common excess loss clause provides as follows:
   
We will adjust all losses with you [the mortgagee and named insured].  We will pay you but in no event more than the amount of your interest in the “insured location.”  Amounts payable in excess of your interest will be paid to the “borrower” unless some other person is named by the “borrower” to receive payment . . . .
  
See, e.g., Turner v. Gen. Ins. Co. of Am., Civil Action No. 5:09cv00057-DCB-JMR, 2009 WL 3247302, at *3 (S.D. Miss. Oct. 7, 2009) (slip op.).  If the policy provides coverage for personal property, the insurance policy may include a clause providing that the insurer will adjust all losses to personal property with the homeowner-borrower and will pay the borrower any proceeds for such loss, unless the borrower has named another person to receive payment.  Id.
   
A number of courts in the cases in which there were force-placed policies with such clauses have found third-party-beneficiary status for homeowners under the terms of the particular policy.  For example, in Lee v. Safeco Insurance Co. of America, the United States District Court for the Eastern District of Louisiana held that the excess loss clause, which “clearly stipulate[d] that the portion of any loss payment exceeding the value of [the mortgagee’s] interest in the property will be paid directly to [the homeowner-borrower],” manifested a “clear intent to benefit the borrower.”  Civil Action No. 08-1100, 2008 WL 2622997, at *4 (E.D. La. July 2, 2008) (not designated for publication); see Turner, 2009 WL 3247302, at *4; Beck v. State Farm Fire &Cas. Co., No. 2:07 CV 1998, 2008 WL 4155301, at *2 (W.D. La. Sept. 5, 2008) (not designated for publication) (finding third-party-beneficiary status when policy contained excess loss clause and provision allowing for adjustment of personal property losses with and payment of such losses to borrower); Navarrete v. Gen. Ins. Co. of Am., Civil Action No. 07-4865, 2008 WL 659477, at *2 (E.D. La. Mar. 7, 2008) (not designated for publication) (same); Peters v. Safeco Gen. Ins. of Am., Civil Action No. 07-5612, 2008 WL 544226, at *1 (E.D. La. Feb. 25, 2008) (not designated for publication) (same); Martin v. Safeco Ins. Co., Civil Action No. 06-6889, 2007 WL 2071662, at *3 (E.D. La. July 13, 2007) (not designated for publication) (same); see also Hickman v. Safeco Ins. Co. of Am., 695 N.W.2d 365, 370–71 (Minn. 2005) (holding same when policy contained excess loss clause, coverage for personal property, provision that insurer would adjust personal property losses with borrower and would pay borrower, and provision allowing borrower to seek arbitration of appraisal of covered loss).
  
The Eastern District of Louisiana has also held, however, that a homeowner-borrower was not a third-party beneficiary to an insurance policy containing an excess loss clause when the claimed damages did not exceed the mortgagee’s interest in the property, as required by the terms of the policy for her to be considered an additional insured.  Graphia v. Balboa Ins. Co., 517 F. Supp. 2d 854 (E.D. La. 2007).  In Graphia, the policy provided that the borrower “shall be considered an additional insured with respect to any residual amounts of insurance over and above [the mortgagee’s] insurable interest.”  Id. at 857.  The borrower claimed damages of $56,542.91, and she presented evidence that the balance remaining on her loan was $110,000.  Id.  The court noted that there was “no amount ‘due for the loss’ that exceeds [the mortgagee’s] insurable interest.”  Id.  The court concluded, “The contract does manifest a clear intention to benefit Graphia, but only to the extent that she has an insurable interest in the property.  The contract evidences no intent to give plaintiff personal rights in the insurance coverage for losses that do [not] exceed the mortgagee’s insurable interest.”  Id. at 858.  Because her losses did not exceed the mortgagee’s interest in the property, Graphia received only an incidental benefit from this policy and, therefore, could not enforce the contract.  Id.; cf. Mingo v. Meritplan Ins. Co., No. 2:06 CV 1914, 2007 WL 4292026, at *3 (W.D. La. Dec. 4, 2007) (not designated for publication) (denying insurer’s motion to dismiss for lack of standing because parties disputed amount of loss and record did not reflect either amount of mortgage or mortgagee’s interest in property).
  
The federal courts have also found the force-placed homeowner not to be a third-party beneficiary when the homeowner did not receive a direct benefit from the policy under the policy’s own terms.  Specifically, the federal courts have denied third-party beneficiary status when the insurance policy states (1) that it does not provide coverage for loss of use, personal liability, or personal property, (2) that the mortgagee is the sole insured, (3) that the policy is intended to protect the mortgagee’s interest only and not the borrower’s, or (4) that all losses will be adjusted with and made payable to the named insured, the mortgage company.  See Williams v. Certain Underwriters at Lloyd’s of London, 398 Fed. App’x 44, 48–49 (5th Cir. 2010) (not designated for publication) (policy specified that mortgagee was sole insured and all benefits were payable directly to mortgagee); Lumpkins v. Balboa Ins. Co., 812 F. Supp. 2d 1280, 1283–84 (N.D. Okla. 2011) (policy provided no coverage for contents, personal effects, personal living expenses, fair rental value or liability and stated that contract was only with named insured and only intended to protect named insured’s interest); Barrios v. Great Am. Assurance Co., Civil Action No. H-10-3511, 2011 WL 3608510, at *4 (S.D. Tex. Aug. 16, 2011) (slip op.) (policy specified that, unless homeowners coverage was specifically added by endorsement, homeowner-mortgagor was not insured under policy); Williams v. Fid. Nat’l Ins. Co., Civil Action No. 07-4428, 2009 WL 2922310, at *3 (E.D. La. Sept. 8, 2009) (not designated for publication) (policy specified that, despite insurable interests of homeowner, only mortgagee was insured under policy); Simpson v. Balboa Ins. Co., Civil Action No. 2:08cv281KS-MTP, 2009 WL 1291275, at *3–4 (S.D. Miss. May 7, 2009) (policy provided no coverage for loss of use, personal liability, or personal property and no right of borrower to participate in claim adjustment); Jones v. Proctor Fin. Ins. Corp., Civil Action No. 06-9503, 2007 WL 4206863, at *3 (E.D. La. Nov. 21, 2007) (not designated for publication) (policy provided no coverage for personal property, and adjustment of and payment for loss would be made solely to mortgagee); Paulk v. Balboa Ins. Co., No. 1:04CV97, 2006 WL 1994864, at *3 (S.D. Miss. July 14, 2006) (not designated for publication) (same); see also Scheaffer v. Balboa Ins. Co., 1 So. 3d 756, 759 (La. Ct. App. 2008) (notice of premium informed borrower that he was not insured under policy, that he was not entitled to receive proceeds, and that policy protected only mortgagee’s interest).  Mere payment of the force-placed-policy premiums by the homeowner-borrower, without more, does not necessarily confer third-party-beneficiary status on the borrower.  See Scheaffer, 1 So. 3d at 760; Lee, 2008 WL 2622997, at *3 (“Mere payment or reimbursement of insurance premiums by a plaintiff to an insurance provider does not create a right to recovery under an insurance policy when the plaintiff is not the named insured and is nowhere named in the policy.”).
  
SOURCE: HOUSTON COURT OF APPEALS - NO. 01-10-00740-CV and NO. 01-10-01150-CV – 4/19/12



Wednesday, April 18, 2012

Enforceability of Forum Selection Clauses in Texas

   
CONTRACTUAL CHOICE OF TEXAS AS FORUM FOR LITIGATION
  
Forum selection clauses are enforceable in Texas if the parties have contractually consented to submit to the exclusive jurisdiction of Texas. See In re Cornerstone Healthcare Holding Group, Inc., 348 S.W.3d 538, 540 (Tex. App.-Dallas 2011, orig. proceeding); Falk & Fish, L.L.P. v. Pinkston's Lawnmower & Equipment., Inc., 317 S.W.3d 523, 525 (Tex. App.-Dallas 2010, no pet.); My Café-CCC, Ltd. v. Lunchstop, Inc., 107 S.W.3d 860, 864 (Tex. App.-Dallas 2003, no pet.). We review a trial court's ruling concerning the validity and enforceability of a forum selection clause for an abuse of discretion. See Cornerstone, 348 S.W.3d at 540; Falk, 317 S.W.3d at 526. A trial court does not abuse its discretion if it bases its decision on conflicting evidence. My Café, 107 S.W.3d at 864.
  
SOURCE: DALLAS COURT OF APPEALS - 05-10-01385-CV – 4/2/12
 
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Is misappropriation of trade secrets actionable under the TTLA? [Texas Theft Liability Act]

   
TRADE SECRETS & Texas Theft Liability Act Claim

Is the misappropriation of trade secrets actionable under the TTLA?
  
The Texas Theft Liability Act. See Tex. Civ. Prac. & Rem. Code Ann. §§ 134.001-.005.

The Texas Theft  Liability Act imposes civil liability for, among other actions, “unlawfully appropriating property” as described by Texas Penal Code section 31.05. Id. §§ 134.002(2), 134.003.

Under penal code section 31.05(b), a person commits theft of trade secrets if, without the trade-secret owner's consent, he knowingly: (1) steals a trade secret; (2) copies an article representing a trade secret; or (3) communicates or transmits a trade secret. Tex. Penal Code Ann. § 31.05(b) (West  2011).
 
A person who sustains damages resulting from the unlawful appropriation of property under section 31.05 may recover actual damages, as well as additional damages not to exceed $1,000 and  attorney's fees. Tex. Civ. Prac. & Rem. Code Ann. § 134.005.

SOURCE: DALLAS COURT OF APPEALS – 05-11-00409-CV – 4/11/12

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Eviction Suit after Foreclosure – Does the tenant have any protection, rights?

   
FORCIBLE DETAINER ACTIONS – SUIT FOR POSSESSION OF PROPERTY [not suit over title or to resolve dispute over ownership interests]
   
A forcible detainer action is a procedure to determine the right to immediate possession of real property where there was no unlawful entry. Rice v. Pinney, 51 S.W.3d 705, 709 (Tex. App.-Dallas 2001, no pet.). It is intended to be a speedy, simple, and inexpensive means to obtain possession without resort to an action on the title. Scott v. Hewitt, 90 S.W.2d 816, 818-19 (Tex. 1936); Rice, 51 S.W.3d at 709. To maintain simplicity, the applicable rule of procedure provides that “the only issue shall be as to the right to actual possession; and the merits of the title shall not be adjudicated.” Tex. R. Civ. P. 746.
  
Accordingly, the only issue in a forcible detainer action is which party has the right to immediate possession of the property. Rice, 51 S.W.3d at 709. Whether a sale of property under a deed of trust is invalid may not be determined in a forcible detainer action but must be brought in a separate suit. Scott, 90 S.W.2d at 818; Rice, 51 S.W.3d at 710 (quoting Scott).
   
The Protecting Tenants at Foreclosure Act of 2009. See Pub. L. No. 111-22, 123 Stat. 1632, sec. 702 provides that, following a foreclosure, the immediate successor in interest pursuant to the foreclosure sale has the right demand that the tenant vacate the residence with ninety days' notice. Id
  
Any defects in the foreclosure process or with appellee's title to the property may not be considered in a forcible detainer action. Shutter, 318 S.W.3d at 471; Williams, 315 S.W.3d at 927.
  
SOURCE: DALLAS COURT OF APPEALS - 05-11-00067-CV – 4/11/12    
  
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