Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Saturday, May 19, 2012

Lack of consideration vs. failure of consideration: important differences

     
THIS ISSUE OF CONSIDERATION IN THE CONTEXT OF A CONTRACT DISPUTE
  
A want or lack of consideration is different from a failure of consideration. A lack of consideration occurs when a contract, at its inception, does not impose obligations on both parties. See Burges v. Mosley, 304 S.W.3d 623, 628 (Tex. App.-Tyler 2010, no pet.). Without a mutuality of obligation, a contract is unenforceable. Id. In contrast, a failure of consideration occurs when, because of some supervening cause arising after the contract is formed, the promised performance fails. Id.
 
In this case, there is no dispute that the lease, as written, imposed obligations on both parties; Cheung-Loon was required to provide Primo's with use of the parking lot at 3321 McKinney Avenue and appellees were required to, among other things, pay rent for Primo's use of the lot. Appellees provided no evidence that the contract was unenforceable due to a lack of consideration at its inception.  Accordingly, the trial court erred in failing to grant Cheung-Loon a no-evidence summary judgment on the affirmative defense of want of consideration.
 
A failure of consideration occurring after a contract's inception constitutes a defense to an action on the written agreement. See McGraw v. Brown Realty Co., 195 S.W.3d 271, 276 (Tex. App.-Dallas 2006, no pet.). The affirmative defense defeats summary judgment if the nonmovant presents evidence that it did not receive the consideration set forth in the agreement. Id. A failure of consideration may be either partial or total. A total failure of consideration is ground for cancellation or recission of the contract. See Food Mach. Corp. v. Moon, 165 S.W.2d 773, 775 (Tex. Civ. App.-Amarillo 1942, no writ). A partial failure of consideration will not invalidate the contract and prevent recovery thereon, but is a defense pro tanto. See Huff v. Speer, 554 S.W.2d 259, 263 (Tex. Civ. App.-Houston [1st Dist.] 1977, writ ref'd n.r.e.).
 
The dispute here centers on whether Primo's was able to use the parking lot to the extent it bargained for. Appellees provided evidence that, one year into the lease term, Cheung-Loon's other tenants began using most, if not all, of the parking spaces in the lot Primo's leased for its own use. Even if Primo's was not entitled to exclusive use of the lot, which we do not decide, the lease clearly entitled it to use the lot for its customers' parking. Because appellees provided some evidence showing it was either totally or partially prevented from using the lot, we conclude appellees raised a fact issue on failure of consideration. Accordingly, the trial court correctly denied Cheung-Loon's motion for a no-evidence summary judgment on this affirmative defense. Furthermore, because appellees raised a fact issue on this affirmative defense, the trial court correctly denied Cheung- Loon's motion for summary judgment on its claim for breach of contract.
 
SOURCE: DALLAS COURT OF APPEALS - 05-10-01171-CV – 5/15/12
 

When is turnover relief warranted to enforce a money judgment?

  
REQUIREMENTS FOR GRANT OF TURNOVER ORDER
  
A turnover order is proper if the conditions of section 31.002 of the Texas Civil Practice and Remedies Code are met. See Suttles v. Vestin Realty Mortg. I, Inc., 317 S.W.3d 412, 416 (Tex. App.-Houston [1st Dist.] 2010, no pet.). Among the requirements of section 31.002 is that the creditor must show that the debtor owns property, including present or future rights to property, that cannot readily be attached or levied on by ordinary legal process. See Tex. Civ. Prac. & Rem. Code Ann. § 31.002(a) (West 2012); see also Europa Int'l, Ltd. v. Direct Access Trader Corp., 315 S.W.3d 654, 656-57 (Tex. App.-Dallas 2010, no pet.).
  
SOURCE: DALLAS COURT OF APPEALS - 05-10-01161-CV – 5/16/12 

In this case, Barclay presented no evidence to show that HSM had any present or future rights to the property it sought to have turned over.
 

Friday, May 18, 2012

Tim Cole Act Compensation Claim for Innocents who ended up in jail as a result of wrongful conviction - In re Allen (Tex. 2012)

 
In re Billy Frederick Allen (Tex. May 18, 2012) (State Comptroller ordered to pay compensation to exonerated former inmate, who was wrongfully convicted and imprisoned)

This Supreme Court decision is bound to be all over the news nationwide. Here is the essence of what the statutory remedy for exonerated former inmates is all about [excerpt from today’s opinion], followed by a similar snippet from an earlier Tex. Sup. Ct. case, and the text of the relevant legislation, as codified in the Texas Civil Practice and Remedies Code.   
CLAIM FOR COMPENSATION FOR WRONGFUL IMPRISONMENT
Under the Tim Cole Act (Act or TCA), formerly known as the Texas Wrongful Imprisonment Act, a wrongfully imprisoned person may seek compensation from the state for the period of wrongful imprisonment. TEX. CIV. PRAC. & REM. CODE § 103.001(a). A person is entitled to compensation if the person 1) has served in whole or in part a sentence in prison under the laws of this state, and 2) has been granted habeas relief on a court determination that he is “actually innocent” of the crime for which he was sentenced.2 TEX. CIV. PRAC. & REM. CODE § 103.001(a)(1), (a)(2)(B). Additionally, the applicant’s supporting documentation must clearly indicate on its face that the person is entitled to compensation. TEX. CIV. PRAC. & REM. CODE § 103.051 (b-1).
For the reasons that follow, we hold that Billy Frederick Allen is entitled to compensation under the TCA, and we conditionally grant the petition for writ of mandamus.
[…]
The statute’s namesake, Timothy Cole, was convicted and sentenced to twenty-five years in prison for aggravated sexual assault. He maintained his innocence, but died of an asthma attack in 1999 while incarcerated. He was exonerated years later by DNA evidence, and in 2010, Governor Rick Perry granted him the state’s first posthumous pardon. See In re Smith, 333 S.W.3d 582, 583 n.1 (Tex. 2011); Act of May 27, 2009, 81st Leg., R.S., ch. 180, § 1, 2009 Tex. Gen. Laws 523 (naming the Act after Tim Cole).
[…]
We do not read the Court of Criminal Appeals’ opinion as indicating it failed to find actual innocence as to Allen’s conviction. Therefore, because the Court of Criminal Appeals granted habeas relief on a Schlup claim, Allen’s court order clearly indicates on its face that relief was based on actual innocence.
[…]
The petition for writ of mandamus is conditionally granted, and we instruct the Comptroller to comply with this opinion and compensate Allen under the terms of the Tim Cole Act. A writ of mandamus will issue only upon the failure to do so.
SOURCE: SUPREME COURT OF TEXAS – No. 10-0886 – 5/18/2012
EXCERPT FROM PRIOR TEXAS  SUPREME COURT OPINION
Under the Texas Wrongful Imprisonment Act, which is now known as the Tim Cole[1] Act, a wrongfully-imprisoned person may seek compensation from the state for the period of wrongful imprisonment. TEX. CIV. PRAC. & REM.CODE § 103.001(a). Application is made to the Texas Comptroller of Public Accounts, who is authorized to determine eligibility and the amount owed to the claimant. Id. § 103.051(b). The amount owed is determined by multiplying a fixed amount, currently set at $80,000 per year, by the period of wrongful imprisonment. Id. § 103.052(a)(1). In calculating the wrongful-imprisonment period, the Act excludes any period for which the claimant was serving a concurrent sentence. Id. § 103.001(b).
SOURCE: TEXAS SUPREME COURT - In re Smith, 333 S.W.3d 582, 585 (Tex. June 21, 2011).
STATUTUORY TEXT:
CIVIL PRACTICE AND REMEDIES CODETITLE 5. GOVERNMENTAL LIABILITYCHAPTER 103. COMPENSATION TO PERSONS WRONGFULLY IMPRISONED 
SUBCHAPTER A. ELIGIBILITY; NOTICE OF ELIGIBILITY
Sec. 103.001.  CLAIMANTS ENTITLED TO COMPENSATION AND HEALTH BENEFITS COVERAGE.  (a)  A person is entitled to compensation if:(1)  the person has served in whole or in part a sentence in prison under the laws of this state; and(2)  the person:(A)  has received a full pardon on the basis of innocence for the crime for which the person was sentenced;(B)  has been granted relief in accordance with a writ of habeas corpus that is based on a court finding or determination that the person is actually innocent  of the crime for which the person was sentenced; or(C)  has been granted relief in accordance with a writ of habeas corpus and:(i)  the state district court in which the charge against the person was pending has entered an order dismissing the charge; and(ii)  the district court's dismissal order is based on a motion to dismiss in which the state's attorney states that no credible evidence exists that inculpates the defendant and, either in the motion or in an affidavit, the state's attorney states that the state's attorney believes that the defendant is actually innocent of the crime for which the person was sentenced.(b)  A person is not entitled to compensation under Subsection (a) for any part of a sentence in prison during which the person was also serving a concurrent sentence for another crime to which Subsection (a) does not apply. (c)  If a deceased person would be entitled to compensation under Subsection (a)(2) if living, including a person who received a posthumous pardon, the person's heirs, legal representatives, and estate are entitled to lump-sum compensation under Section 103.052.(d)  Subject to this section, a person entitled to compensation under Subsection (a) is also eligible to obtain group health benefit plan coverage through the Texas Department of Criminal Justice as if the person were an employee of the department.  This subsection does not entitle the person's spouse or other dependent or family member to group health benefit plan coverage.  Coverage may be obtained under this subsection for a period of time equal to the total period the claimant served for the crime for which the claimant was wrongfully imprisoned, including any period during which the claimant was released on parole or to mandatory supervision or required to register under Chapter 62, Code of Criminal Procedure.  A person who elects to obtain coverage under this subsection shall pay a monthly contribution equal to the total amount of the monthly contributions for that coverage for an employee of the department.(e)  Notwithstanding Section 103.053(c), annuity payments may be reduced by an amount necessary to make the payments required by Subsection (d), and that amount shall be transferred to an appropriate account as provided by the comptroller by rule to fund that coverage.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.  Amended by Acts 2001, 77th Leg., ch. 1488, Sec. 1, eff. June 15, 2001.Amended by: Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 2, eff. September 1, 2009.Acts 2011, 82nd Leg., R.S., Ch. 698, Sec. 2, eff. June 17, 2011.Acts 2011, 82nd Leg., R.S., Ch. 1107, Sec. 1, eff. September 1, 2011.Acts 2011, 82nd Leg., R.S., Ch. 1107, Sec. 2, eff. September 1, 2011.
Sec. 103.002.  NOTICE TO WRONGFULLY IMPRISONED PERSON.  (a)  In this section:(1)  "Department" means the Texas Department of Criminal Justice.(2)  "Penal institution" has the meaning assigned by Article 62.001, Code of Criminal Procedure.(3)  "Wrongfully imprisoned person" has the meaning assigned by Section 501.091, Government Code, as added by Chapter 1389 (S.B. 1847), Acts of the 81st Legislature, Regular Session, 2009.(b)  The department shall provide to each wrongfully imprisoned person information, both orally and in writing, that includes:(1)  guidance on how to obtain compensation under this chapter; and(2)  a list of and contact information for nonprofit advocacy groups, identified by the department, that assist wrongfully imprisoned persons in filing claims for compensation under this chapter.(c)  The department must provide the information required under Subsection (b):(1)  at the time of the release of the wrongfully imprisoned person from a penal institution; or(2)  as soon as practicable after the department has reason to believe that the person is entitled to compensation under Section 103.001(a).
Added by Acts 2011, 82nd Leg., R.S., Ch. 698, Sec. 3, eff. June 17, 2011.
Sec. 103.003.  LIMITATION ON TIME TO FILE.  A person seeking compensation under this chapter must file an application with the comptroller for compensation under Subchapter B not later than the third anniversary of the date:(1)  the person on whose imprisonment the claim is based received a pardon as provided by Section 103.001(a)(2)(A);(2)  the person's application for a writ of habeas corpus was granted as provided by Section 103.001(a)(2)(B); or(3)  an order of dismissal described by Section 103.001(a)(2)(C) was signed.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.  Amended by Acts 2001, 77th Leg., ch. 1488, Sec. 1, eff. June 15, 2001.Amended by: Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 3, eff. September 1, 2009.Acts 2011, 82nd Leg., R.S., Ch. 698, Sec. 4, eff. June 17, 2011.
SUBCHAPTER B. ADMINISTRATIVE PROCEEDING
Sec. 103.051.  APPLICATION PROCEDURE.(a)  To apply for compensation under this subchapter, the claimant must file with the comptroller's judiciary section:(1)  an application for compensation provided for that purpose by the comptroller;(2)  a verified copy of the pardon, court order, motion to dismiss, and affidavit, as applicable, justifying the application for compensation;(3)  a statement provided by the Texas Department of Criminal Justice and any county or municipality that incarcerated the person on whose imprisonment the claim is based in connection with the relevant sentence verifying the length of incarceration;(4)  if applicable, a statement from the Department of Public Safety verifying registration as a sex offender and length of registration;(5)  if applicable, a statement from the Texas Department of Criminal Justice verifying the length of time spent on parole; and(6)  if the claimant is applying for compensation under Section 103.052(a)(2), a certified copy of each child support order under which child support payments became due during the time the claimant served in prison and copies of the official child support payment records described by Section 234.009, Family Code, for that period.(b)  The comptroller shall determine:(1)  the eligibility of the claimant;  and(2)  the amount of compensation owed to an eligible claimant.(b-1)  In determining the eligibility of a claimant, the comptroller shall consider only the verified copies of documents filed under Subsection (a)(2).  If the filed documents do not clearly indicate on their face that the person is entitled to compensation under Section 103.001(a)(2), the comptroller shall deny the claim.  The comptroller's duty to determine the eligibility of a claimant under this section is purely ministerial.(c)  The comptroller must make a determination of eligibility and the amount owed as required by Subsection (b) not later than the 45th day after the date the application is received.(d)  If the comptroller denies the claim, the comptroller must state the reason for the denial.  Not later than the 30th day after the date the denial is received, the claimant must submit an application to cure any problem identified.  Not later than the 45th day after the date an application is received under this subsection, the comptroller shall determine the claimant's eligibility and the amount owed.(e)  If the comptroller denies a claim after the claimant submits an application under Subsection (d), the claimant may bring an action for mandamus relief.(f)  To apply for coverage through the Texas Department of Criminal Justice under Section 103.001(d), the claimant must file with the department:(1)  an application for coverage provided for that purpose by the department; and(2)  a statement by the comptroller that the comptroller has determined the claimant to be eligible for compensation under this subchapter.
Added by Acts 2001, 77th Leg., ch. 1488, Sec. 1, eff. June 15, 2001.  Amended by Acts 2003, 78th Leg., ch. 1310, Sec. 1, eff. June 20, 2003.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1190, Sec. 1, eff. September 1, 2007.Acts 2007, 80th Leg., R.S., Ch. 1388, Sec. 2, eff. September 1, 2007.Acts 2009, 81st Leg., R.S., Ch. 87, Sec. 5.003, eff. September 1, 2009.Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 4, eff. September 1, 2009.Acts 2011, 82nd Leg., R.S., Ch. 698, Sec. 5, eff. June 17, 2011.Acts 2011, 82nd Leg., R.S., Ch. 1107, Sec. 3, eff. September 1, 2011.
Sec. 103.052.  LUMP-SUM COMPENSATION.  (a)  A person who meets the requirements of Section 103.001 is entitled to compensation in an amount equal to:(1)  $80,000 multiplied by the number of years served in prison, expressed as a fraction to reflect partial years; and(2)  compensation for child support payments owed by the person on whose imprisonment the claim is based that became due and interest on child support arrearages that accrued during the time served in prison but were not paid.(b)  A person who, after serving a sentence in a Texas prison for which the person is entitled to compensation under Subsection (a)(1), was released on parole or required to register as a sex offender under Chapter 62, Code of Criminal Procedure, is entitled to compensation in an amount equal to $25,000 multiplied by the number of years served either on parole or as a registered sex offender, expressed as a fraction to reflect partial years.(c)   The amount of compensation under Subsection (a)(2) to which a person is entitled shall be paid on the person's behalf in a lump-sum payment to the state disbursement unit, as defined by Section 101.0302, Family Code, for distribution to the obligee under the child support order.
Added by Acts 2001, 77th Leg., ch. 1488, Sec. 1, eff. June 15, 2001.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1190, Sec. 2, eff. September 1, 2007.Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 5, eff. September 1, 2009.
Sec. 103.053.  ANNUITY COMPENSATION.  (a)  A person entitled to compensation under Section 103.001(a) is entitled to annuity payments, based on a present value sum equal to the amount to which the person is entitled under Sections 103.052(a)(1) and (b).(b)  The annuity payments under this section are payable in equal monthly installments for the life of the claimant and must be based on a five percent per annum interest rate and other actuarial factors within the discretion of the comptroller.(c)  The annuity payments may not be accelerated, deferred, increased, or decreased.  The applicant may not sell, mortgage or otherwise encumber, or anticipate the payments, wholly or partly, by assignment or otherwise.
Added by Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 6, eff. September 1, 2009.
Sec. 103.054.  PAYMENT OF CERTAIN TUITION AND FEES.  If requested by the claimant before the seventh anniversary of the relevant date described by Section 103.003, tuition for up to 120 credit hours, including tuition charged under Section 54.0513, Education Code, or any other law granting an educational institution discretion to set the tuition rate, and any mandatory fees associated with attendance at the institution, charged by a career center or public institution of higher education shall be paid on behalf of the claimant.
Added by Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 6, eff. September 1, 2009.Amended by: Acts 2011, 82nd Leg., R.S., Ch. 698, Sec. 6, eff. June 17, 2011.
SUBCHAPTER C.  FEES
Sec. 103.101.  FEES LIMITED; PREREQUISITES TO FEE AGREEMENT.  (a)  A person, including an attorney, may not charge or collect a fee for preparing, filing, or curing a claimant's application under Section 103.051 unless the fee is based on a reasonable hourly rate.(b)  An attorney may enter into a fee agreement with a claimant for services related to an application under Section 103.051 only after the attorney has disclosed in writing to the claimant the hourly rate that will be charged for the services.(c)  An attorney may not collect a fee for preparing, filing, or curing a claimant's application under Section 103.051 before a final determination is made by the comptroller that the claimant is eligible or ineligible for compensation under this chapter.
Added by Acts 2011, 82nd Leg., R.S., Ch. 698, Sec. 7, eff. June 17, 2011.
Sec. 103.102.  SUBMISSION OF FEE REPORT.  (a) Together with an application for compensation under this chapter or not later than the 14th day after the date the application or cured application is filed, a person seeking payment for preparing, filing, or curing the application must file a fee report with the comptroller's judiciary section.(b)  A fee report under this section must include:(1)  the total dollar amount sought for fees;(2)  the number of hours the person worked preparing, filing, or curing the application; and(3)  the name of the applicant.(c)  A fee report under this section is public information subject to Chapter 552, Government Code.
Added by Acts 2011, 82nd Leg., R.S., Ch. 698, Sec. 7, eff. June 17, 2011.
SUBCHAPTER D. PAYMENTS AND LIMITATIONS
Sec. 103.151.  ADMINISTRATIVE PAYMENT OF COMPENSATION.  (a)  The comptroller shall make the compensation due a claimant under Section 103.052 and the lump-sum payment, if any, to be paid to the state disbursement unit, as defined by Section 101.0302, Family Code, under Subchapter B, to the extent that funds are available and appropriated for that purpose, not later than the 30th day after the date the comptroller grants the application.  A claim for lump-sum compensation payable under Section 103.052(a) or (b) shall survive the death of the claimant in favor of the heirs, legal representatives, and estate of the claimant.(b)  The comptroller shall begin making annuity payments to a claimant under Section 103.053(a) on the first anniversary of the date of payment of the compensation due under Section 103.052.(c)  If appropriated funds are insufficient to pay the amount due a claimant and the amount to be paid to the state disbursement unit, as defined by Section 101.0302, Family Code, money shall be paid under the procedure described by Section 103.152.
Added by Acts 2001, 77th Leg., ch. 1488, Sec. 1, eff. June 15, 2001.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1190, Sec. 5, eff. September 1, 2007.Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 7, eff. September 1, 2009.
Sec. 103.152.  PAYMENT OF COMPENSATION.  (a)  Not later than November 1 of each even-numbered year, the comptroller shall provide a list of claimants entitled to payment under Subchapter B and the amounts due for each claimant to the governor, the lieutenant governor, and the chair of the appropriate committee in each house of the legislature so that the legislature may appropriate the amount needed to pay the amount owed to each claimant and the amount to be paid to the state disbursement unit, as defined by Section 101.0302, Family Code, on the claimant's behalf.(b)  Not later than September 1 of the year in which an appropriation under this chapter has been made by the legislature, the comptroller shall pay the required amount to each claimant and the state disbursement unit, as defined by Section 101.0302, Family Code.(c)  Repealed by Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 12(3), eff. September 1, 2009.
Added by Acts 2001, 77th Leg., ch. 1488, Sec. 1, eff. June 15, 2001.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1190, Sec. 6, eff. September 1, 2007.Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 8, eff. September 1, 2009.Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 12(3), eff. September 1, 2009.
Sec. 103.153.  EMPLOYEES NOT LIABLE AFTER PAYMENT OF COMPENSATION.  (a)  In this section, "employee" and "governmental unit" have the meanings assigned by Section 101.001.(b)  A person who receives compensation under this chapter may not bring any action involving the same subject matter, including an action involving the person's arrest, conviction, or length of confinement, against any governmental unit or an employee of any governmental unit.
Added by Acts 2001, 77th Leg., ch. 1488, Sec. 1, eff. June 15, 2001.
Sec. 103.154.  TERMINATION OF PAYMENTS.  (a)  Except as provided by Subsection (c), compensation payments to a person under this chapter terminate if, after the date the person becomes eligible for compensation under Section 103.001, the person is convicted of a crime punishable as a felony.  Compensation payments terminate under this subsection on the date of the subsequent conviction.(b)  Annuity payments to a person under Section 103.151(b) terminate on the date of the person's death.  Any payments scheduled to be paid after that date are credited to the state and may not be paid to any other person, including the person's surviving spouse, heirs, devisees, or beneficiaries under the person's will, or to the person's estate.(c)  This section does not apply to compensation for child support payments and interest on child support arrearages to be paid on a person's behalf under this chapter to the state disbursement unit, as defined by Section 101.0302, Family Code.
Added by Acts 2001, 77th Leg., ch. 1488, Sec. 1, eff. June 15, 2001.Amended by: Acts 2007, 80th Leg., R.S., Ch. 1190, Sec. 7, eff. September 1, 2007.Acts 2009, 81st Leg., R.S., Ch. 180, Sec. 9, eff. September 1, 2009.

[No] Legal standing to complain: Texas Supreme Court nixes citizen's suit to challenge balloting process that favors political parties as unconstitutional

 
SUPREMES SAY WOULD-BE ELECTION-SYSTEM REFORMER WHO TOOK A STAND AGAINST PARTISAN BALLOTING DID NOT HAVE STANDING
    
Honorable Hope Andrade v. [Average Joe tax-paying Citizen] Don Veneable (Tex. May 18, 2012)
  
In an anonymous per curiam opinion, the Texas Supreme Court this morning disposed of a Dallas resident's constitutional challenge to partisan identification of candidates and straight-ticket voting option on the general election ballot on standing grounds. The challenged feature of the general election ballot process allows voters to vote for all candidates of the same political party simultaneously rather than making a choice between competing candidates in each race. The straight-ticket option, no doubt, strengthens the parties. [Texas uses nonpartisan ballots in some local elections].   
NO SPECIAL INTEREST
The Supremes, who are among those elected on partisan ballots in Texas, collectively conclude that the election system critic who brought the underlying suit in Dallas County was no different from any other Mr. Joe Public, and that he did not satisfy the requirements for tax-payer standing under existing precedent either. Holding that the citizen had no special interest, the justices render judgment for the election official who defended the status quo.  
  
OPINION EXCERPT
  
Don Venable seeks to enjoin Dallas County from identifying candidates’ political party affiliations and providing a “straight-party” option on general election ballots. We must decide whether Venable has standing to pursue these claims. Because Venable has no interest distinct from that of the general public and has not established taxpayer standing under Williams v. Lara, 52 S.W.3d 171, 179 (Tex. 2001), we reverse in part the court of appeals’ judgment and render judgment dismissing Venable’s claims against Secretary of State Hope Andrade.
  
Venable has not pleaded facts showing that measurable and significant public funds were being spent on the activity he challenges, and thus, has failed to affirmatively demonstrate taxpayer standing. Because Venable has no interest distinct from that of the public generally, and his claims fall outside the narrow taxpayer exception to the bar against generalized grievances, he lacks the requisite and particularized stake to warrant standing. Accordingly, we grant the petition for review, and without hearing oral argument, we reverse in part the court of appeals’ judgment and render judgment dismissing Venable’s claims against Andrade. TEX. R. APP. P. 59.1, 60.2(c).

SOURCE: TEXAS SUPREME COURT - Honorable Hope Andrade v. Don Veneable, No. 11-0008  (Tex. May 18, 2012) Petition for Review from Dallas County; 5th district (051000303CV, ___ SW3d ___, 111510)
 
PER CURIAM OPINION

Thursday, May 17, 2012

Is there a cause of action for predatory lending?

 
CAN YOU SUE A CREDITOR FOR PREDATORY LENDING?
  
Federal judge in Texas says ‘No’ in suit against JPMorgan Chase Bank, N.A. involving a loan made on stated-income, and declines Plaintiff’s invitation to create such a cause of action. Chase, as successor servicer to EMC Mortgage LLC f/k/a EMC Mortgage Corporation ("EMC"), removed the borrower’s action from state court and secures dismissal for failure to state a claim.  
  
Predatory Lending Claim: no such thing, at least not yet    
  
EXCERPT FROM OPINION BY HON. JOHN McBRIDE, DISTRICT JUDGE  
  
The main thrust of plaintiff's predatory lending claim is that" [d]efendants engaged in predatory lending practices by, among other things, failing to make necessary disclosures to Plaintiff regarding their loan." Compl. at 7. Specifically, plaintiff alleges that defendants failed to provide certain disclosures allegedly required by TILA and RESPA three days after some initial meeting or submission of his loan application. Id. at 3, 7. Plaintiff, however, then alleges that he did receive disclosures at the loan's closing. Id. at 3, 7, 9. Plaintiff alleges that he "received some of these disclosures," without specifying which disclosures he received and which he did not. Id.
  
Plaintiff has not cited any state or applicable federal law, precedential or statutory, that creates a cause of action for "predatory lending." See, e.g., Brown v. Aurora Loan Servs., LLC, No. 4:11-CV-111, 2011 WL 2783992, at *4 (E.D. Tex. June 7, 2011), report and recommendation adopted at 2011 WL 2728384. Plaintiff even acknowledges that "predatory lending is not a recognized cause of action at this time." Compl. at 6.
 
Plaintiff argues that "predatory lending should be a recognized cause of action and this, a case of first impression subject to review by the Texas Supreme Court, is necessary, in order to lay the groundwork for future predatory lending claims." Id. The court is not persuaded by plaintiff's argument, as the court has found no case law in support of a cause of action for predatory lending. The court is not inclined to create a cause of action not previously recognized in Texas or federal law.

Moreover, plaintiff's conclusory allegations fail to allege sufficient facts to support his claim for "predatory lending." Plaintiff has not even stated what disclosures were not allegedly provided to him. Id. at 7. Accordingly, plaintiff's predatory lending claim must be dismissed.

SOURCE: United States District Court, N.D. Texas, Fort Worth Division. Civil Action No. 4:11-CV-812-A. DONALD BITTICK, Plaintiff, v. JPMORGAN CHASE BANK, NA, ET AL., Defendants. MEMORANDUM OPINION and ORDER of JOHN McBRYDE, District Judge. April 18, 2012. 

No wrongful foreclosure claim without actual foreclosure and proof of low selling price

   
ELEMENTS OF Wrongful Foreclosure UNDER TEXAS LAW
  
To succeed on a claim for wrongful foreclosure under Texas law, a plaintiff must show: (1) a defect in the foreclosure sale; (2) a grossly inadequate selling price; and (3) a causal connection between the defect in the sale and the grossly inadequate selling price. Charter Nat'l Bank-Houston v. Stevens, 781 S.W.2d 368, 371 (Tex.App.-Houston [14th Dist.] 1989, writ denied).
 
"A claim for `wrongful foreclosure' is not available based merely on showing a defect in the foreclosure process; it is also necessary that there be an inadequate selling price resulting from the defect. Texas courts have yet to recognize a claim for `attempted wrongful foreclosure'" Biggers v. BAC Home Loans Servicing, LP, 767 F.Supp.2d 725, 729 (N.D. Tex. 2011) (citing Port City State Bank v. Leyco Constr. Co., 561 S.W.2d 546, 547 (Tex.Civ.App. 1977, no writ); Peterson v. Black, 980 S.W.2d 818, 823 (Tex.App. 1998, no pet.). Because an inadequate selling price is a necessary element of a wrongful foreclosure action, "a foreclosure sale is a precondition to recovery." Biggers, 767 F.Supp.2d. at 730.
 
SOURCE:  United States District Court, Northern District of Texas, Dallas Division - May 9, 2012. Civil Action No. 3:11-CV-00603-M (BF) - FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE PAUL D. STICKNEY.
  
Here, there is no allegation that a foreclosure sale actually occurred. Instead, Plaintiff alleges a lack of standing on behalf of Defendants to foreclose on her property and defects in the notices of sale and acceleration. Plaintiff is, in fact, still residing at the property which is the subject of this lawsuit. Because Plaintiff only alleges defects in the foreclosure process, and not an actual foreclosure sale, Plaintiff cannot prove a necessary element of wrongful foreclosure. See Biggers, 767 F.Supp.2d at 729-30. Moreover, the Court finds that Defendants do have standing to foreclose on Plaintiff's property, as MERS assigned the Deed of Trust to RFC, and Defendants were acting on behalf of RFC in initiating foreclosure. There is no genuine issue of material fact that exists for trial, and thus, Plaintiff's claim of wrongful foreclosure fails as a matter of law.
  

Another snippet with case law on Civil Claim for Wrongful Foreclosure       
   
The elements of wrongful foreclosure are: (1) a defect in the foreclosure sale proceeding; (2) a grossly inadequate selling price; and (3) a causal connection between the defect and the grossly inadequate selling price. Charter Nat'l Bank-Houston v. Stevens, 781 S.W.2d 368, 371 (Tex.App.-Houston [14th Dist.] 1989, writ denied). A wrongful foreclosure claim does not always require proof of a grossly inadequate selling price if another substantive injury to the mortgagor exists. Id. Under Texas law, "a deed of trust is a mortgage with a power to sell on default." Starcrest Trust v. Berry, 926 S.W.2d 343, 351 (Tex.App.-Austin 1996, no writ) (internal quotation omitted). Mortgages, and therefore deeds of trust, are construed like contracts. Id. at 351-52. "Further, `[t]he note and deed of trust on . . . property should be construed together and effectively regarded as one instrument.'" Id. (quoting Chapa v. Herbster, 653 S.W.2d 594, 600 (Tex.App.-Tyler 1983, no writ)).
  
SOURCE: United States District Court, S.D. Texas, Houston Division. Civil Action H-11-3298. ORDER of GRAY H. MILLER, District Judge, January 9, 2012.
 
The court construes [PLAINTIFF-HOME OWNER’S] arguments to revolve around the ability of MERS to assign the note and the deed of trust. Because, she argues, the assignments were invalid, the note and the deed of trust became "bifurcated," in effect splitting the lien on the property away from the loan. As a result, [PLAINTIFF-HOME OWNER]  asserts that the previously secured loan became unsecured, extinguishing the right of foreclosure under the deed of trust. She offers no authority for her "bifurcation" theory and the court has found none.
  
Arguably, MERS had the right to assign the note to BAC. Texas law dictates that the note and deed of trust should be construed as a single document. The deed of trust expressly grants to MERS, as nominee for the lender (or note holder), all rights the lender had under the deed of trust. It would follow that since the documents are construed as a single document, MERS likely had the right to assign the note.
  
However, even if the note and the deed of trust became somehow separated, that does not affect the rights of the lien-creditor to foreclose based on the deed of trust. Well-established Texas law allows suit to be brought on the nonpayment of the note separate from suit for foreclosure of the lien without precluding a later suit for foreclosure. Stephens v. LPP Mortgage, Ltd., 316 S.W.3d 742, 746 (Tex.App.-Austin 2010, pet. denied) (citing Carter v. Gray, 125 Tex. 219, 81 S.W.2d 647, 648 (1935)). "When a debt is memorialized by a note that is secured by a lien, the note and lien constitute separate obligations." Id. at 747. The holder of a note and the lien-creditor hold different rights, may act at different times, and need not be the same entity. Id.; see also Athey v. Mortg. Elec. Registration Sys., Inc., 314 S.W.3d 161, 165-66 (Tex.App.-Eastland 2010, pet denied) (recognizing a nominee's authority under a deed of trust to authorize a mortgage servicer to proceed with a non-judicial foreclosure sale). MERS expressly held all rights of the Lender on the deed of trust, including the right to assign it. Accordingly, the "bifurcation" premise that is the basis of [PLAINTIFF-HOME OWNER’S] argument fails. 
   
Wrongful Foreclosure - One more case from a federal district court
 
CLAIM OF WRONGFUL FORECLOSURE REJECTED  
  
[PLAINTIFF-HOME OWNER] asserts a claim against these Defendants for wrongful foreclosure. Defendants maintain that summary judgment in their favor is appropriate because no, or insufficient, evidence exists to establish the requisite elements of this claim. (Dkt. No. 49 at 9-11).
  
To prevail on a wrongful foreclosure claim, a plaintiff must be able to establish that (1) there was a defect in the foreclosure proceedings, (2) the selling price at foreclosure was grossly inadequate, and (3) there is a causal connection between the defect in the foreclosure and the grossly inadequate selling price. Sauceda v. GMACMortgage Corp., 268 S.W.3d 135, 139 (Tex.App.-Corpus Christi 2008, no pet.).
  
Initially, [PLAINTIFF-HOME OWNER]  claims that the foreclosure must be set aside because there was a defect in the proceeding — namely, that he did not receive the notice of the sale. The law provides that notice is complete when it addressed to the debtor at that debtor's last known address as shown by the records of the holder of the debt and the notice is deposited in the mail. Tex. Prop. Code § 51.002(e). The evidence before the Court reflects that [PLAINTIFF-HOME OWNER] was sent the requisite notice of the January 5, 2010, foreclosure sale. (Dkt. No. 49, Ex. B). [PLAINTIFF-HOME OWNER]'s claim, therefore, lacks merit.[9] See, Adebo v. Litton Loan Servicing, L.P., No. 01-07-708-CV, 2008 WL 2209703, at * 4 (Tex. App.-Houston [1st Dist.] may 29, 2008, no pet.) (explaining that "[t]he dispositive inquiry under section 51.002(e) . . . is not receipt of notice, but, rather, service of notice.").[10] Nor does the evidence support [PLAINTIFF-HOME OWNER]'s other allegations that any defect existed in the notices.[11]
  
[PLAINTIFF-HOME OWNER] next alleges that the sale was wrongful because the Property was sold at foreclosure for a grossly inadequate price. In an attempt to support this claim, [PLAINTIFF-HOME OWNER] submits the valuation of the Property that was done after he entered into the purchase agreement with Trendmaker in 2006, but before he closed on the Property in February 2007. This is insufficient, however, to establish the value of the Property at the time of the foreclosure in 2010. Baker v. Countrywide Home Loans, Inc., No. 3:08-CV-0916-B, 2009 WL 1810336, at *4 (N.D. Tex. June 24, 2009). [PLAINTIFF-HOME OWNER] also attempts to shoulder his burden by pointing to posting on a website, however this evidence, unauthenticated and hearsay, is not sufficient to establish that the Property was sold at foreclosure in 2010 for a grossly inadequate price.
  
Finally, [PLAINTIFF-HOME OWNER] appears to suggest that the Property was wrongfully foreclosed in violation of Article 16, § 50 of the Texas Constitution. This claim has no merit. This provision in the Texas Constitution safeguards an individual's homestead from foreclosure for debts incurred, but it does not preclude a senior mortgagor from foreclosing on the Property, as was the case here, when the individual defaults on the note that purchased the homestead.

Accordingly, for all the reasons discussed, the Court concludes that Defendants' Motion must be granted on these claims.

SOURCE: United States District Court, S.D. Texas, Galveston Division. Civil Action No. G-10-304.
OPINION AND ORDER of JOHN R. FROESCHNER, Magistrate Judge. January 19, 2012.



Friday, May 11, 2012

How does the condemnation process work?

    
CONDEMNATION OF LAND PROCEDURE IN TEXAS
   
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]


CONDEMNATION OF REAL PROPERTY FOR PUBLIC USE IN TEXAS

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.

METHODS FOR DETERIMING FAIR-MARKET VALUE OF REAL PROPERTY
  
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


THE TEXAS WAY TO CHALLENGE PLEADINGS & PROCURE DISMISSAL: SPECIAL EXCEPTION
 

THE TEXAS APPROACH: SPECIAL EXCEPTION
 
“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?

 
TEXAS UNIFORM FRAUDULENT TRANSFER ACT (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

 
NATURE OF GUARANTY AND ELEMENTS OF CLAIM BASED ON IT

WHAT IS A GUARANTY AGREEMENT?
  
“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).
 
ELEMENTS OF PROOF
 
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?


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

Houston Court of Appeals says 'No'.

OPINION EXCERPT


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

  
RES JUDICATA UNDER TEXAS AND FEDERAL LAW
 
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)).
 
ELEMENTS OF RES JUDICATA UNDER TEXAS LAW
  
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).
 
ELEMENTS OF RES JUDICATA UNDER FEDERAL LAW   
  

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 IN TEXAS COURTS

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)).

RATIONALE FOR THE DOCTRINE, JURISPRUDENTIAL PURPOSE  

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”).

WHEN DOES IT APPLY? - ELEMENTS OF JUDICIAL ESTOPPEL   

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