Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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

Wednesday, February 27, 2013

Illegality of contracts under Texas anti-trust statute - limits on freedom to contract


FREEDOM TO CONTRACT AND ANTI-TRUST RESTRICTIONS UNDER STATE LAW

"As a rule, parties have the right to contract as they see fit as long as their agreement does not violate the law or public policy." In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 129 (Tex. 2004) (orig. proceeding). As a fundamental matter, Texas law recognizes and protects a broad freedom of contract. Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 664 (Tex. 2008). However, freedom of contract is not unbounded. Id. The legislature determines public policy through the statutes it passes. Id. at 665.

The purpose of Chapter 15 of the Texas Business and Commerce Code, known as the Texas Free Enterprise and Antitrust Act, is to maintain and promote economic competition in trade and commerce occurring in Texas. TEX. BUS. & COM. CODE ANN. § 15.04 (West 2011).

Contracts in restraint of trade are illegal, and therefore, against public policy. TEX. BUS. & COM. CODE ANN. § 15.05 (West 2011). Unreasonable limitations on employees' abilities to change employers or solicit clients could hinder legitimate competition between businesses and the mobility of skilled employees. Marsh USA, Inc., 354 S.W.3d at 769. The legislature passed the Act to prohibit restrictions on employee mobility that impede competition, while allowing employers and employees to agree to reasonable restrictions on mobility that are ancillary to or part of a valid contract having a primary purpose that is unrelated to restraining competition between the parties. Id. at 770.

SOURCE: TYLER COURT OF APPEALS - No. 12-11-00133-CV 0 2/6/2013



When one party breaches the contract, is the other party excused from performing?


Tricky issue. Nonbreaching party has choices, but which is the best choice under the circumstances? Better consult an attorney promptly, lest the wrong choice is made unwittingly, unbenownst of the legal consequences in the event of subsequent litigation.  
   
REPUDIATION OF CONTRACT - EXCUSE DEFENSE - PRIOR BREACH OTHER PARTY - ANTICIPATORY BREACH
 
"[W]hen one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance." Henry v. Masson, 333 S.W.3d 825, 840 (Tex. App.-Houston [1st Dist.] 2010, pet. denied). If the non-breaching party continues to insist on performance by the party in default, the previous breach by the breaching party is not an excuse for nonperformance by the non-breaching party and the contract continues in full force. Id. The non-breaching party, therefore, must choose between continuing performance and ceasing performance. Id.
Repudiation or anticipatory breach is an unconditional refusal to perform the contract in the future, which can be expressed either before performance is due or after partial performance. Van Polen v. Wisch, 23 S.W.3d 510, 516 (Tex. App.-Houston [1st Dist.] 2000, pet. denied). "To constitute a repudiation or anticipatory breach, the party to the contract must have absolutely repudiated the contract without just cause." Id.
SOURCE: HOUSTON COURT OF APPEALS - No. 01-11-01034-CV – 2/21/2013




Tuesday, February 26, 2013

Oral modification of contract or novation barred if original contract falls under the statute of frauds


STATUTE OF FRAUDS CONTINUES TO APPLY IF ORIGINAL CONTRACT WAS SUBJECT TO IT, THUS PRECLUDING VERBAL MODIFICATION OF TERMS 

There can be no oral modification of an agreement that is required to be in writing under the statute of frauds. Columbia/HCA of Houston, Inc. v. Tea Cake French Bakery & Tea Room, 8 S.W.3d 18, 21 (Tex. App.-Houston [14th Dist.] 1999, pet. denied).

SOURCE: CORPUS CHRISTI COURT OF APPEALS - No. 13-11-00229-CV – 1/17/2013
An agreement that cannot be performed within one year of its making falls under the statute of frauds. TEX. BUS. & COM. CODE ANN. § 26.01(a), (b)(6) (West 2009).
Here, the leases that form the basis of XTRA's lawsuit are for thirty-six month terms. They therefore cannot be performed within one year and fall under the statute of frauds. As such, ATC's novation defense, based on an alleged oral modification of the lease terms by an XTRA vice-president, would have failed as a matter of law, so we cannot conclude that ATC was harmed by the exclusion of Alvarez's testimony relevant to the alleged oral modification. See TEX. R. APP. P. 44.1(a); Nissan Motor Co., 145 S.W.3d at 144; see also Columbia/HCA of Houston, Inc., 8 S.W.3d at 21. ATC's second issue is overruled.

Monday, February 25, 2013

What is novation and what are its legal consequences?



NOVATION AS A DEFENSE AGAINST ENFORCEMENT OF THE ORIGINAL CONTRACT

Novation is the substitution of a new agreement between the same parties or the substitution of a new party on an existing agreement. Honeycutt v. Billingsley, 992 S.W.2d 570, 576 (Tex. App.-Houston [1st Dist.] 1999, pet. denied).
Where a novation occurs, only the new agreement may be enforced. Id. To establish a novation, the party raising the defense must prove: (1) the existence of a previous, valid obligation; (2) a mutual agreement of the parties to a new contract; (3) the extinguishment of the old contract; and (4) the validity of the new contract. RM Crowe Prop., 348 S.W.3d at 448 (citing Vickery v. Vickery, 999 S.W.2d 342, 356 (Tex. 1999)).

SOURCE: HOUSTON COURT OF APPEALS - 01-11-01034-CV – 2/21/2013 



CITES FOR NOVATION ELEMENTS FROM OLDER CASES

A novation is:

. . . the substitution of a new agreement between the same parties or the substitution of a new party on an existing agreement. See Hidalgo County v. Pate, 443 S.W.2d 80, 89 (Tex. Civ. App.-Corpus Christi 1969, writ ref'd n.r.e.). Therefore, only the new obligation may be enforced. Priem v. Shires, 697 S.W.2d 860, 864-65 (Tex. App.-Austin 1985, no writ). The elements of novation are: (1) a previous, valid obligation; (2) an agreement of the parties to a new contract; (3) the extinguishment of the old contract; and (4) the validity of the new contract. Mandell v. Hamman Oil [&] Ref. Co., 822 S.W.2d 153, 163 (Tex. App.-Houston [1st Dist.] 1991, writ denied).

Honeycutt v. Billingsley, 992 S.W.2d 570, 576 (Tex. App.-Houston [1st Dist.] 1999, pet. denied).

A novation is the substitution of a new agreement between the same parties or the substitution of a new party on an existing agreement. See Hidalgo County v. Pate, 443 S.W.2d 80, 89 (Tex. Civ.App.-Corpus Christi 1969, writ ref'd n.r.e.). Therefore, only the new obligation may be enforced. Priem v. Shires, 697 S.W.2d 860, 864-65 (Tex.App.-Austin 1985, no writ).

Novation is an affirmative defense. Mandell, 822 S.W.2d at 163. Therefore, the burden of proof "is on the party asserting it." See Starcrest Trust v. Berry, 926 S.W.2d 343, 353 (Tex.App.-Austin 1996, no writ); see also Schwab v. Schlumberger Well Surveying Corp., 145 Tex. 379, 198 S.W.2d 79, 82 (1946).




Mutual mistake as a defense – unilateral mistake likely won’t work, not to mention second thoughts about signing the contract



THE ELEMENTS OF MUTUAL MISTAKE AS A DEFENSE

The defense is not available to undo a contract upon second thoughts about the wisdom of signing it, or after-the-fact regrets by one party.

The elements of mutual mistake are: (1) a mistake of fact; (2) held mutually by the parties; (3) which materially affects the agreed-on exchange. City of The Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699, 735 (Tex. App.-Fort Worth 2008, pet. dism'd).
A mutual mistake of fact occurs when the parties to an agreement have a common intention, but the written agreement does not accurately reflect that intention due to a mutual mistake. See Smith-Gilbard v. Perry, 332 S.W.3d 709, 713 (Tex. App.-Dallas 2011, no pet.); City of The Colony, 272 S.W.3d at 735. When mutual mistake is alleged, the party seeking relief must show what the parties' true agreement was and that the instrument incorrectly reflects that agreement because of a mutual mistake. Atlantic Lloyds Ins. Co. v. Butler, 137 S.W.3d 199, 213 (Tex. App.-Houston [1st Dist.] 2004 pet. denied). Under the doctrine of mutual mistake, when parties to an agreement have contracted under a misconception or ignorance of a material fact, the agreement will be voided. Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303, 326 (Tex. App.-Houston [14th Dist.] 2003, pet. denied).

To prove a mutual mistake, the evidence must show that both parties were acting under the same misunderstanding of the same material fact. Id. A unilateral mistake by one party, combined with knowledge of that mistake by the other party, is equivalent to mutual mistake. Davis v. Grammer, 750 S.W.2d 766, 768 (Tex. 1988). But, "[a] mistake by only one party to an agreement, not known or induced by acts of the other party[,] will not constitute grounds for relief." Smith-Gilbard, 332 S.W.3d at 713-14 (quoting Johnson v. Snell, 504 S.W.2d 397, 399 (Tex. 1974)).
Mutual mistake should not be available to avoid the results of an unhappy bargain. Williams v. Glash, 789 S.W.2d 261, 265 (Tex. 1990). Parties should be able to rely on the finality of freely bargained agreements. Id.
SOURCE: HOUSTON COURT OF APPEALS - No. 01-11-01034-CV – 2/21/2013

Friday, February 22, 2013

Winchek v. American Express: Proof requirements for Breach of contract (breach of credit card agreement)


Winchek v. Amex is a much-cited case for the elements of a breach of contract claim under Texas law, and the elements of contract formation. The case involved a credit card account, but the articulation of the relevant law applies generally, whether contracts are signed or not. American Express cardmember agreements typically have a Utah choice-of-law provision, but that rarely becomes an issue in debt collection litigation in Texas courts, which are routinely resolved under Texas law. 
  
To prove a claim for breach of contract, a party must establish: (a) a valid contract; (b) the party performed or tendered performance; (c) the opposing party breached the contract; and (d) the party was damaged as a result of that breach. Winchek v. Am. Express Travel Related Servs. Co., 232 S.W.3d 197, 202 (Tex. App.-Houston [1st Dist.] 2007, no pet.); Hackberry Creek Country Club, Inc. v. Hackberry Creek Home Owners Ass'n, 205 S.W.3d 46, 55 (Tex. App.-Dallas 2006, pet. denied).


To prevail on a breach of contract claim, a plaintiff must prove the following essential elements: (1) the existence of a valid contract, (2) performance or tendered performance by the plaintiff, (3) breach of the contract by the defendant, and (4) damages sustained as a result of the breach. Winchek v. Am. Express Travel Related Servs. Co., 232 S.W.3d 197, 202 (Tex. App.-Houston [1st Dist.] 2007, no pet.).


Parties form a binding contract when the following elements are present: (1) an offer, (2) an acceptance in strict compliance with the terms of the offer, (3) meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. Id. at 202. To be enforceable, a contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the parties. Id. (citing T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992)).


Wednesday, February 20, 2013

Eviction vs. title dispute - Difference implicates jurisdictional aspects


Eviction (forcible detainer) vs. title dispute – Distinction has jurisdictional ramifications 

 
The sole issue to be determined in a forcible detainer action is the entitlement to actual and immediate possession, and the merits of the title shall not be adjudicated. Hong Kong Dev., Inc. v. Nguyen, 229 S.W.3d 415, 434 (Tex. App.-Houston [1st Dist.] 2007, no pet.); Dass, Inc. v. Smith, 206 S.W.3d 197, 200 (Tex. App.-Dallas 2006, no pet.).

A justice court in the precinct in which real property is located has jurisdiction over a forcible detainer suit but is expressly deprived of jurisdiction to determine or adjudicate title to land. See TEX. PROP. CODE ANN. § 24.004 (West 2000); TEX. GOV'T CODE ANN. § 27.031(a)(2),(b)(4) (West Supp. 2011). A forcible detainer suit may be appealed to the county court, in which trial is de novo. TEX. R. CIV. P. 749; Hong Kong, 229 S.W.3d at 433-34. A county court's appellate jurisdiction is confined to the limits of the justice court. Hong Kong, 229 S.W.3d at 433-34. Thus, a county court that conducts a de novo review of a forcible detainer action is restricted to the jurisdictional limits that existed in the justice court, regardless of other statutory grants of jurisdiction to the county court. Black v. Washington Mut. Bank, 318 S.W.3d 414, 417 (Tex. App.-Houston [1st Dist.] 2010, pet. dism'd w.o.j.).

The justice court, and a county court on appeal, lack jurisdiction to resolve any questions of title beyond the immediate right to possession but a justice court is not deprived of jurisdiction merely by the existence of a title dispute. See Rice v. Pinney, 51 S.W.3d 705, 713 (Tex. App.-Dallas 2001, no pet.). Rather, it is only deprived of jurisdiction if the right to immediate possession necessarily requires the resolution of a title dispute. Id. Courts have specifically addressed whether a justice court has jurisdiction over a forcible detainer suit where the case also involves a dispute over a trustee's deed conveying property purchased at a foreclosure sale. Courts have explained:

[A] judgment of possession in a forcible detainer action is a determination only of the right to immediate possession of the premises, and does not determine the ultimate rights of the parties to any other issue in controversy relating to the realty in question. . . . [Parties] have the right to sue in the district court to determine whether the trustee's deed should be cancelled, independent of [the] award of possession of the premises in the forcible detainer action [.]

Id. at 710 (quoting Martinez v. Beasley, 572 S.W.2d 83, 85 (Tex. Civ. App.-Corpus Christi 1978, no writ)) (emphasis in original). "To prevail in a forcible detainer action, a plaintiff is not required to prove title, but is only required to show sufficient evidence of ownership to demonstrate a superior right to immediate possession." Id. at 709. In Rice, the Dallas Court of Appeals held that where a deed of trust established a landlord and tenant at sufferance relationship between the purchaser at the foreclosure sale and the previous owners or those holding under them, there was an "independent basis on which the trial court could determine the issue of immediate possession without resolving the issue of title to the property." Id. at 712.

SOURCE: HOUSTON COURT OF APPEALS - 01-11-00546-CV – 5/26/2012 

Notice Requirement prior to Eviction Suit



Eviction suit – Prior Notice Requirement

Under Texas Property Code section 24.005, the landlord must give a tenant at sufferance at least three days' written notice to vacate before the landlord files a forcible detainer action. See TEX. PROP. CODE ANN. § 24.005(b). The notice to vacate shall be given in person or by mail at the premises in question. Id. at § 24.005(f). Notice by mail may be "by regular mail, by registered mail, or by certified mail, return receipt requested, to the premises in question." Id. The notice period is calculated from the day on which the notice was delivered. Id. at § 24.005(g).
 
SOURCE: FIRST COURT OF APPEALS - 01-11-00546-CV – 4/26/2012

Friday, February 15, 2013

Attorney fees available in breach-of-contract cases in Texas courts in addition to damages


ATTORNEY’S FEES ON BREACH-OF-CONTRACT CLAIM
   
As one of the exceptions to “the American Rule”, attorneys fees are available to successful plaintiffs in breach of contract cases under the Texas Civil Practice and Remedies Code even if the contract itself does not provide for recovery of legal fees arising from disputes under the contract. Trial court judges must award some, if requested and supported with evidence, although the amount is discretionary. Certain requirements must be met.  
   
STATUTORY AUTHORIZATION AS EXCEPTION TO THE AMERICAN RULE

A party may recover reasonable attorney's fees if its claim is for "an oral or written contract." TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (Vernon 2008).

ELEMENTS OF CLAIM FOR ATTY’S FEES UNDER CHAPTER 38 OF THE CPRC

To recover attorney's fees under section 38.001(8), a claimant must: (1) be represented by an attorney; (2) present the claim to the opposing party or to a duly authorized agent of the opposing party; and (3) show that payment was not tendered before the expiration of the 30th day after the claim was presented. Id. § 38.002(1)-(3) (Vernon 2008). Presentment of a claim is required to allow the debtor to pay the claim before incurring an obligation to pay attorney's fees. Panizo v. Young Men's Christian Ass'n of the Greater Houston Area, 938 S.W.2d 163, 168 (Tex. App.-Houston [1st Dist.] 1996, no writ).

AMOUNT TO BE REASONABLE
"Reasonable" attorney's fees are available to a prevailing party on a breach of contract claim. Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8) (West 2008). Although the trial court has discretion to fix the amount of attorney's fees, it does not have discretion to deny attorney's fees entirely if they are proper. Hassell Constr. Co., Inc. v. Stature Comm. Co., Inc., 162 S.W.3d 664, 668 (Tex. App.-Houston [14th Dist.] 2005, no pet.).

CITE FOR FEE FACTORS CASE FROM THE TEXAS SUPREME COURT

Arthur Anderson & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (listing eight factors a factfinder should consider when determining the reasonableness of attorney's facts).

A litigant is not required to present evidence on each of these factors. Acad. Corp. v. Interior Buildout & Turnkey Constr., Inc., 21 S.W.3d 732, 742 (Tex. App.-Houston [14th Dist.] 2000, no pet.).



Thursday, February 7, 2013

Is a complaint about violation of a patient's medical privacy a med-mal claim? A new twist on scope of HCLC in Texas

 
A healthcare liability claim [HCLC] consists of three elements: "(1) a physician or health care provider must be a defendant; (2) the claim or claims at issue must concern treatment, lack of treatment, or a departure from accepted standards of medical care, or health care, or safety or professional or administrative services directly related to health care; and (3) the defendant's act or omission complained of must proximately cause the injury to the claimant." Tex. West Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 180 (Tex. 2012); Marks v. St. Luke's Episcopal Hosp., 319 S.W.3d 658, 662 (Tex. 2010).

So far so good; the provision mandating dismissal when an expert report is not timely filed is by now also pretty widely known, and has wrought havoc in the med-mal legal niche (at least on the plaintiffs' side).
 
But what is a health care liability claim? How far does the definition reach? There has been much litigation over that issue, and many cases have reached the Texas Supreme Court, usually with predictible results.
 
But here is a new twist: What if the state sues a doctor for violating a patient's privacy by releasing or discarding protected medical records carelessly? Is that an HCLC subject to the expert report requirement - and thus dismissal - when no report is filed?
Justices of the Corpus Christi Court of Appeals just had the opportunity to weigh in on the matter.
 
OPIONION EXCERPTS FROM HOLZMAN V. STATE OF TEXAS





I. BACKGROUND
The State of Texas, acting through the Office of the Attorney General, filed this suit against appellant after it discovered that appellant had allegedly discarded approximately 200 medical files containing sensitive personal information about her patients in a trash dumpster accessible to the public. The State asserted causes of action under the Deceptive Trade Practices Act and the Identity Theft Enforcement and Protection Act. See TEX. BUS. & COM. CODE ANN. §§ 17.01-.926 (West 2011 & West Supp. 2011); §§ 521.001-.152 (West 2011 & West Supp. 2011).
In its live petition, the State alleges in relevant part:
In the regular course of business, defendant[] provide[s] medical services to [her] patients. Defendant[] maintain[s] the patient's medical file, in [her] possession, custody, and control and has kept all of the files, as part of defendant[`]s[] business records, since the inception of the medical practice.
. . .
Although the medical files contain sensitive personal information that could be used to steal the identities of individuals or to permit access to an individual's private medical information, defendant[] failed to implement and maintain reasonable procedures to protect and safeguard from unlawful use or disclosure any sensitive personal information collected or maintained by defendant[] in the regular course of business. . . .
As a consequence of defendant[`]s[] failure to implement and maintain reasonable procedures to protect and safeguard such information, on or about May 2, 2009, approximately 200 of defendant[`]s[] medical files, containing sensitive personal information, were found in a trash dumpster that was readily accessible to the public in Corpus Christi, Texas.
One hundred and twenty days after the State filed suit, appellant filed a motion to dismiss the lawsuit, arguing that the claims alleged by the State were subject to the provisions of chapter 74 of the Texas Civil Practice and Remedies Code and that the claims should be dismissed because the State had failed to comply with the provisions of that chapter. See TEX. CIV. PRAC. & REM. CODE ANN. § 74.351. The trial court denied the motion, and this appeal ensued. See id. § 51.014(a)(9) (West 2011).






This case involves two distinct issues: (1) Are the claims in this case healthcare liability claims subject to the provisions of chapter 74? (2) If so, is the State of Texas subject to the provisions of chapter 74?

 
A healthcare liability claim consists of three element ... [OMITTED, SEE ABOVE]
In this case, the first element is not in dispute. The relevant inquiry concerns the second and third elements.
"A cause of action alleges a departure from accepted standards of safety if the act or omission complained of is an inseparable part of the rendition of medical services." Valley Baptist Med. Ctr. v. Azua, 198 S.W.3d 810, 814 (Tex. App.-Corpus Christi 2006, no pet.). If the essence of the suit is a healthcare liability claim, a party cannot avoid the requirements of chapter 74 through artful pleading. Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 851 (Tex. 2005). Therefore, in determining whether the claim is governed by chapter 74, we review the underlying nature of the claim and not the labels used by claimants. Azua, 198 S.W.3d at 814.
The core allegations in this case are that, in the course of providing healthcare to patients, (1) appellant maintained medical files, (2) the files contained private medical information, (3) appellant had a duty to keep the information confidential, and (4) appellant breached that duty with respect to 200 files by disposing of them in a trash dumpster accessible to the public.
The Dallas Court of Appeals has previously noted that "[m]aintaining the confidentiality of patient records is part of the core function of providing health care services." Sloan v. Farmer, 217 S.W.3d 763, 768 (Tex. App.-Dallas 2007, pet. denied). According to the court, "any duty [a healthcare provider] may have had to maintain the confidentiality of the health-care communication is inextricably intertwined with the physician-patient relationship and the health-care services to which the communication pertains." Id. Thus, in Sloan, the court concluded that chapter 74 was applicable to claims involving alleged breaches of confidentiality between physician and patient. Id. at 768-69.
Assuming the foregoing establishes the second element of a healthcare liability claim, what remains missing is an allegation of a patient's injury or death. See Marks, 319 S.W.3d at 662. Obviously, the State is not a patient. Nor has the State alleged that any patient suffered bodily injury or death. If any non-physical injury has been alleged in this suit, it arises from the medical files being deposited in a trash dumpster accessible to the public. However, the State did not allege that this act caused any person to suffer any injury. There is no allegation that any confidential information actually fell into the hands of any third-parties—only that the information could have potentially been accessed by the public. Thus, the injury, if any, is purely hypothetical. Moreover, it is not necessary for the State to allege any injury to a patient to recover the civil penalties it seeks in its live petition. See TEX. BUS. & COM. CODE ANN. §§ 17.47(c) (DTPA); 521.151(a) (ITEPA). Therefore, we conclude that the third element for a healthcare liability claim is absent in this case.
Accordingly, the trial court did not err in denying appellant's motion to dismiss. Appellant's two issues are overruled.
III. CONCLUSION
The judgment of the trial court is affirmed.

SOURCE: CORPUS CHRISTI COURT OF APPEALS - 13-11-00168-CV - 1/31/2013
But that's not all. One justice dissented …


DISSENTING MEMORANDUM OPINION

GINA M. BENAVIDES, Justice.

The Texas Supreme Court has issued two recent opinions, Loaisiga v. Cerda, 379 S.W.3d 248 (Tex. 2012), and Texas West Oaks Hospital v. Williams, 371 S.W.3d 171 (Tex. 2012), which take an expansive view of the Texas Medical Liability Act. Because the current case law from Texas's high court supports the propositions that chapter 74 of the Texas Civil Practices and Remedies code trumps the other causes of action pleaded in this case, and that chapter 74 applies to the State of Texas, I dissent.

I. BACKGROUND

The State of Texas, through the Office of the Attorney General, filed suit against Dr. Holzman when it discovered that her medical office discarded nearly two hundred medical files in a trash dumpster easily accessible to the public. The medical files contained sensitive personal health information, including full names, social security numbers, dates of birth, and medical conditions, of several of Dr. Holzman's patients and former patients. The medical conditions, in particular, revealed intensely personal information: these conditions included diagnoses for mental retardation; neurogenic bladder, or lack of bladder control; urinary tract infections; gross hematuria (blood in the urine); diabetes; incontinence; growths in the scrotum; and spermatocele, or scrotal cysts.

The State's lawsuit asserted causes of action under the Texas Deceptive Trade Practices Act (DTPA) and the Identity Theft Enforcement and Protection Act (ITEPA), claiming that Dr. Holzman promised, but breached, a statutory duty to implement and maintain reasonable procedures to protect her patients' personal information. See TEX. BUS. & COM. CODE ANN. §§ 17.01-.926; §§ 521.001-.152 (West 2011 & West Supp. 2011).

One-hundred twenty days after the State filed its suit, Dr. Holzman filed a motion to dismiss the lawsuit. Arguing that the State's lawsuit fell within the ambit of the Texas Medical Liability Act, Dr. Holzman contended that the case should be dismissed because of the State's failure to file a mandatory expert report as required by chapter 74. See TEX. CIV. PRAC. & REM. CODE ANN. § 74.351(a). Dr. Holzman argued that the lawsuit was "within the purview of Chapter 74's limitation of health care liability . . . [which] controls over all other law, including each statute relied on by Plaintiff." See id. § 74.002 (West 2011) (providing that "in the event of a conflict between this chapter and another law . . . this chapter controls to the extent of the conflict."). The trial court disagreed that this case was a health care liability lawsuit and denied the motion to dismiss.

I would hold that the trial court erred in this regard, and would grant the motion to dismiss.

II. WHICH STATUTE APPLIES

There are three statutes at issue in this lawsuit: the Texas Medical Liability Act (TMLA), the DTPA, and the ITEPA. By her first issue, Dr. Holzman claims that the trial court erred when it failed to recognize that this case is a health care liability claim under chapter 74 of the civil practice and remedies code and did not grant her motion to dismiss. I agree.

A. Standard of Review and Applicable Law

"The characterization of a claim as a health care liability claim is a threshold question" in chapter 74 interlocutory appeals. Pallares v. Magic Valley Coop., 267 S.W.3d 67, 70 (Tex. App.-Corpus Christi 2008, pet. denied). Whether a cause of action is a health care liability issue is reviewed de novo. Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011).

It is well-settled law in Texas that a "health care liability claim cannot be recast as another cause of action to avoid the requirements of the [medical liability act]." See Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 851 (Tex. 2005) (providing that courts are not "bound by niceties of pleadings . . ."). "When the essence of the suit is a health care liability claim, a party cannot avoid the requirements of the statute through the artful pleading of his claim." See Sloan v. Farmer, 217 S.W.3d 763, 767 (Tex. App.-Dallas 2007, pet. denied) (citing Diversicare, 185 S.W.3d at 848; Garland Cmty. Hosp. v. Rose, 156 S.W.3d 541, 543 (Tex. 2004); MacGregor Med. Ass'n v. Campbell, 985 S.W.2d 38, 40 (Tex. 1998)). The same underlying set of facts cannot give rise to separate DTPA, ITEPA, and health care liability claims. See Yamada v. Friend, 335 S.W.3d 192, 197 (Tex. 2009). If the same facts give rise to claims under multiple statutes or common-law torts, "then the [TMLA] and its procedures and limitations will be effectively negated." Id.; see also TEX. CIV. PRAC. & REM. CODE ANN. § 74.002 (providing that "in the event of a conflict between this chapter and another law . . . this chapter controls to the extent of the conflict.").

Whether a case falls under chapter 74 requires an examination of the underlying nature of the claim. See Sorokolit v. Rhodes, 889 S.W.2d 239, 242 (Tex. 1994). "If the act or omission that forms the basis of the complaint is an inseparable part of the rendition of health care services, or if it is based on a breach of the standard of care applicable to health care providers, then the claim is a health care liability claim." Sloan, 217 S.W.3d at 767 (citing Garland Cmty. Hosp., 156 S.W.3d at 544). The claim must have three elements. Marks v. St. Luke's Episcopal Hosp., 319 S.W.3d 658, 662 (Tex. 2010). First, a physician or healthcare provider must be the defendant. Id. Second, the suit must be about a "claimed departure from accepted standards of . . . professional or administrative services directly related to health care." Id. Third, the defendant's act or omission departure must proximately cause the patient's injury or death. Id.

B. Rebuttable Presumption in Health Care Liability Claims

Recently, the Texas Supreme Court handed down Loaisiga v. Cerda and reaffirmed that "the broad language of the [TMLA] evidences legislative intent for the statute to have expansive application." 379 S.W.3d 248 (Tex. 2012). Importantly, the high court announced in this case that "the breadth of the statute's text essentially creates a presumption that a claim is a [health care liability claim] if it is against a physician or health care provider and is based on facts implicating the defendant's conduct during the patient's care, treatment, or confinement". Id. at 256. This presumption is rebuttable, however. Id. For example, the supreme court noted that, "in some instances the only possible relationship between the conduct underlying a claim and the rendition of medical services or healthcare will be the healthcare setting . . ., the defendant's status as a doctor or health care provider, or both." Id.

The underlying case appears to meet all of the criteria for a chapter 74 claim. See Marks, 319 S.W.3d at 662. First, the defendant, Dr. Holzman, is a health care provider or physician. See id. Second, the State's claim is that Dr. Holzman had a duty to keep her patients' information private and dispose of it in a proper, lawful way, and that Dr. Holzman departed from that duty. See id.; Sloan, 217 S.W.3d at 767 (holding, in case where a treating physician released health information to a patient's employer, that a physician's "duty of confidentiality is inseparable from the health care services to be provided, and the claimed breach necessarily implicates the standard of care.").

The majority focuses on the third element for a chapter 74 claim, that of injury. See Marks, 319 S.W.3d at 662. I believe that Dr. Holzman's failure to protect her patients' medical records injured her patients' privacy rights by revealing sensitive personal and medical data. Admittedly, as the majority notes, there is nothing in the record documenting that any confidential information fell into the hands of third parties. It is obvious, however, that someone found these patient records—otherwise this lawsuit would not have materialized. The dangers of revealing full names, social security numbers, and dates of birth are well-documented. Disclosure of this information can lead to significant personal and financial ruin in the form of identity theft, credit card theft, and worse. See, e.g., Tex. Comptroller of Pub. Accounts v. AG of Tex., 354 S.W.3d 336, 345 (Tex. 2010) (recognizing that "[i]t is universally agreed that social security numbers are at the heart of identity theft and fraud, and in today's Internet world where information . . . can be instantly and anonymously obtained by anyone with access to the worldwide web, the danger is even greater"). Furthermore, third parties learning about personal medical conditions involving mental or reproductive health issues can cause severe embarrassment or mental anguish. These types of injuries are foreseeable if a patient's medical records are not properly stored or destroyed.

Because Loaisiga presumes that chapter 74 applies in cases involving physicians or health care providers and their conduct, here, I would presume that Dr. Holzman's patients were injured when their records were carelessly discarded in a trash bin accessible to the public. Loaisiga, 379 S.W.3d at 256. This presumption was not rebutted by the State. Id. Because all of the elements of a "health care liability claim" are met, see Marks, 319 S.W.3d at 662, I would hold that chapter 74 applies.

C. Definition of a "Person" Under Chapter 74

The State argues, however, that chapter 74 should not apply to it because it is not a "claimant" under the meaning of the TMLA. See TEX. CIV. PRAC. & REM. CODE ANN. § 74.001(a)(2). A "claimant," under the statute, is "a person, including a decedent's estate, seeking or who has sought recovery of damages in a health care liability claim." Id. The State contends that it is not a "person" under the statute. Instead, it asserts that it brought this lawsuit in its capacity as a sovereign entity to protect Texas patients and their private medical information.

Here again, I rely on another recent supreme court case. Texas West Oaks Hospital v. Williams expanded the meaning of a "claimant" under the TMLA. 371 S.W.3d at 175. In Texas West Oaks, a mentally ill patient, Mario Vidaurre, died at Texas West Oaks Hospital, a private mental health facility. Id. One of the hospital's technicians, Frank Williams, was injured in the events leading to Vidaurre's death. Id. Vidaurre's estate sued Texas West Oaks and Williams, and Williams countersued Texas West Oaks for failing to properly train, supervise, and protect its employees. Id. West Oaks filed a motion to dismiss on the grounds that Williams's claims constituted health care liability claims and he failed to serve an expert report. Id. at 175-76; see TEX. CIV. PRAC. & REM. CODE ANN. § 74.351(a). Williams contended that his claims were grounded in strict negligence and that his claims as an injured worker "`flow[ed] from the employment relationship' between Williams and West Oaks and [were] not `directly related' to health care." Tex. W. Oaks, 371 S.W.3d at 176.

The Texas Supreme Court disagreed. In its opinion, it explained as follows:

"Person" is not defined in the [Texas Medical Liability Act] and therefore must be given its common law meaning. Changing the term "patient" to "claimant" and defining "claimant" as a "person" expands the breadth of [health care liability claims] beyond the patient population. This in turn necessarily widened the reach of the expert report requirement. . . .

Id. at 178 (internal citations omitted). In sum, the court concluded that the TMLA "does not require that the claimant be a patient of the health care provider for his claims to fall under the Act, so long as the Act's other requirements are met." Id. at 174.

As previously stated, I believe that chapter 74's "other requirements are met" in the underlying case. Id.; see Marks, 319 S.W.3d at 662. The State, although not a "person" or a "patient", can be considered a "claimant" under the proper application of Texas West Oaks. Accordingly, chapter 74 should apply to the State.[1]

D. Conclusion

Because the presumption that this case is a health care liability claim has not been rebutted, see Loaisiga, 379 S.W.3d at 256, and the State is a "claimant" under the statute, see Tex. W. Oaks, 371 S.W.3d at 178, I would hold that chapter 74 applies to this lawsuit. Accordingly, the State was required to have produced an expert report within one-hundred twenty days after the lawsuit was filed. See TEX. CIV. PRAC. & REM. CODE ANN. § 74.351(a). I would sustain Dr. Holzman's first issue.

III. ATTORNEY'S FEES

Dr. Holzman also claims that she is entitled to attorney's fees because the State failed to file an expert report under section 74.351(b). Because I conclude that chapter 74 applies in this matter, I would also sustain Dr. Holzman's second issue.[2]

IV. CONCLUSION

Because I believe the majority failed to apply recent Texas Supreme Court law that makes chapter 74 applicable to this case, I would reverse the trial court's judgment and grant Dr. Holzman's motion to dismiss.

 
 
 
 
 
 
 
 
 
 
 
 

Monday, February 4, 2013

Ecclesiastical Abstention Doctrine (free exercise of religion)


Under the ecclesiastical abstention doctrine courts refrain from injecting themselves into issues of internal governance of churches and religious congregations. The doctrine can be raised as a defense and is jurisdictional in nature. Accordingly, it can be asserted in a plea to the jurisdiction.

 
ECCLESIASTICAL ABSTENTION DOCTRINE

The ecclesiastical abstention doctrine arises from the Free Exercise Clause of the First Amendment to the United States Constitution. See U. S. CONST. amend. I ("Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof."). After the ratification of the Fourteenth Amendment, the limitations on Congress in the First Amendment became equally applicable to state action abridging religious freedom. See Everson v. Bd. of Educ., 330 U.S. 1, 15 (1947). Government action can burden the free exercise of religion in one of two ways: by interfering with an individual's observance or practice of a particular faith, see, e.g., Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 532 (1993), or by encroaching on the church's ability to manage its internal affairs, see, e.g., Kedroff v. St. Nicholas Cathedral, 344 U.S. 94, 116 (1952); see also, Retta v. Mekonen, 338 S.W.3d 72, 76 (Tex. App.-Dallas 2011, no pet.) (citing Westbrook, 231 S.W.3d at 395) ("The First Amendment prohibits government action, including court action, that would burden the free exercise of religion by encroaching on a church's ability to manage its internal affairs.").

Courts give great deference to the First Amendment's freedom of religion guarantee. See In re Godwin, 293 S.W.3d 742, 745 (Tex. App.-San Antonio 2009, orig. proceeding). "The Supreme Court has broadly interpreted the command to `make no law' [respecting an establishment of religion or prohibiting the free exercise thereof] as prohibiting all forms of government action, including both statutory law and court action through civil lawsuits." Turner v. Church of Jesus Christ of Latter-Day Saints, 18 S.W.3d 877, 890 (Tex. App.-Dallas 2000, pet. denied). The Free Exercise Clause prohibition of government action that burdens the free exercise of religion "by encroaching on the church's ability to manage its internal affairs" precludes civil courts from intruding into inherently "religious" or "ecclesiastical" matters. Westbrook, 231 S.W.3d at 395, 398-99.
The ecclesiastical abstention doctrine stands for the proposition that the First Amendment prohibits civil courts from exercising jurisdiction over matters concerning "theological controversy, church discipline, ecclesiastical government, or the conformity of the members of a church to the standard of morals required of them." Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696, 713-14 (1976); see also Patton v. Jones, 212 S.W.3d 541, 547-48 (Tex. App.-Austin 2005, pet. denied) (ecclesiastical abstention doctrine "prevents secular courts from reviewing many types of disputes that would require an analysis of `theological controversy, church discipline, ecclesiastical government, or the conformity of the members of the church to the standard of morals required'") (quoting Watson v. Jones, 80 U.S. 679, 733 (1872)); Dean v. Alford, 994 S.W.2d 392, 395 (Tex. App.-Fort Worth 1999, no pet.) ("It is without dispute that the First Amendment prohibits civil courts from intruding into the church's governance of `religious' or `ecclesiastical' matters, such as theological controversy, church discipline, ecclesiastical government, or the conformity of members to standards of morality."); see also Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1, 13 (Tex. 2008) (dismissing case involving ecclesiastical issues for want of jurisdiction).

"The relationship between an organized church and its ministers is its lifeblood. The minister is the chief instrument by which the church seeks to fulfill its purpose. Matters touching this relationship must necessarily be recognized as of prime ecclesiastical concern." McClure v. Salvation Army, 460 F.2d 553, 558-59 (5th Cir. 1972); see also Hosanna-Tabor Evangelical Lutheran Church & School v. E.E.O.C., 132 S. Ct. 694, 706 (2012) ("According the state the power to determine which individuals will minister to the faithful also violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions."); Dean, 994 S.W.2d at 395 (issue of a pastor's ouster is ecclesiastical in nature); Tran v. Fiorenza, 934 S.W.2d 740, 743 (Tex. App.-Houston [1st Dist.] 1996, no writ) (relationships between organized church and its ministers is church's lifeblood). "[C]ourts should not involve themselves in matters relating to the hiring, firing, discipline, or administration of clergy." Lacy v. Bassett, 132 S.W.3d 119, 123 (Tex. App.-Houston [14th Dist.] 2004, no pet.).
To determine whether the ecclesiastical abstention doctrine applies or, conversely, whether subject-matter jurisdiction exists, "courts must look to the `substance and effect of a plaintiff's complaint to determine its ecclesiastical implication, not its emblemata.'" Westbrook, 231 S.W.3d at 405 (quoting Tran, 934 S.W.2d at 743). Courts applying the ecclesiastical abstention doctrine "have consistently held that civil courts lack subject matter jurisdiction to decide [a case involving an employment decision by a religious institution] if the employment decision concerns a member of the clergy or an employee in a ministerial position." Patton, 212 S.W.3d at 547; see e.g., Green v. United Pentecostal Church Int'l, 899 S.W.2d 28, 30 (Tex. App.-Austin 1995, writ denied). Even though the elements of a common law tort such as defamation, "may be defined by secular principles without regard to religion, it does not necessarily follow that application of those principles to impose civil tort liability would not run afoul of protections the constitution affords to a church's right to construe and administer church doctrine." Schubert, 264 S.W.3d at 10 (emphasis in original) (citing Westbrook, 231 S.W.3d at 400); see also Patton, 212 S.W.3d at 553 ("Under most circumstances, defamation is one of those common law claims that is not compelling enough to overcome First Amendment protection surrounding a church's choice of pastoral leader. When a defamation claim arises entirely out of a church's relationship with its pastor, the claim is almost always deemed to be beyond the reach of civil courts because resolution of the claim would require an impermissible inquiry into the church's bases for its action.") (quoting Heard v. Johnson, 810 A.2d 871, 875 (D.C. App. 2002)).

The Texas Supreme Court has applied the ecclesiastical abstention doctrine to tort claims brought by a church member against other church members who were not in authority positions. See Schubert, 264 S.W.3d at 12 (holding court lacked jurisdiction to consider church member's assault claims against other church members). The supreme court has also applied the ecclesiastical abstention doctrine in the context of a claim brought by a church member against her counselor and pastor for statements made in connection with the church's ecclesiastical disciplinary process. Westbrook, 231 S.W.3d 389. In Westbrook, Peggy Penley sued CrossLand Community Bible Church (Crossland), a secular professional counselor who also served as the pastor of CrossLand (Westbrook), and the church elders for defamation, negligence, breach of fiduciary duty, and intentional inflection of emotional distress. Penley asserted in her lawsuit that during a secular counseling session with Westbrook, she disclosed marital infidelity, and that Westbrook and church elders subsequently published information concerning her actions to the church's membership. In response to Penley's claims, Westbrook filed a plea challenging the court's jurisdiction, contending the suit involved an ecclesiastical dispute concerning a church disciplinary matter. Westbrook, 231 S.W.3d at 394. The church and the elders filed a similar motion to dismiss. The trial court granted the defendants' motions and dismissed the case. Penley pursued only her appeal of Westbrook's dismissal. Id. at 394. The publication about which Penley complained was made in the course of the church disciplinary process and communicated by Westbrook pursuant to the requirements of that process. Id. at 402. The supreme court stated that even though Penley's suit was "now against Westbrook and no longer the church," it is well-settled that the "interaction between the church and its pastor is an integral part of church government" and "the relationship between an organized church and its ministers is its lifeblood." Id. (quoting Simpson v. Wells Lamont Corp., 494 F.2d 490, 493 (5th Cir. 1974) and McClure, 460 F.2d at 558). The supreme court held it was clear from Penley's pleading that Penley's professional negligence claim against Westbrook unconstitutionally impinged upon internal matters of church governance in violation of the First Amendment and the trial court properly dismissed Penley's case against Westbrook. Westbrook, 231 S.W.3d at 405.

In Williams v. Gleason, 26 S.W.3d 54 (Tex. App.-Houston [14th Dist.] 2000, pet. denied), a dispute arose in connection with a disciplinary action brought by the church's elders against the Williamses. Id. at 54. The Williamses sued the elders of the church for libel, slander, and tortious interference with business and/or occupations, among other things. The Williamses alleged they were libeled by statements contained in an instrument through which church disciplinary charges were made against them. Although the Williamses contended their claims arose in tort, the court of appeals concluded that each claim implicated an ecclesiastical matter—the Williamses' subjection to the church's discipline. 26 S.W.3d at 59. The court of appeals stated:

Instead of suing the church for its disciplinary actions, which would have provided the church with ecclesiastical immunity, the Williamses sued members of the church conducting their disciplinary trial and appeal. Ecclesiastical immunity would be an empty protection if a disgruntled member, denied the chance to sue the religious body, sued instead the members of the religious body who disciplined him. If disciplined members were able to sue the members of the church, as opposed to the church itself, there would be an inappropriate chilling effect on the ability of churches to discipline their members.

Id.[3] 

SOURCE: DALLAS COURT OF APPEALS - No. 05-11-01253-CV – 1/28/2013