Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Monday, June 29, 2015

Texas Supreme Court expands civil immunity for bad apples in the legal profession - Comment on Cantey Hanger LLP v Byrd (Tex. 2015)



The big news last Friday from the judicial front was the legalization of same-sex marriage as a matter of constitutional right by the U.S. Supreme Court. But on the very same day, the Texas Supreme Court handed down a momentous ruling too. In a 5-4 decision, the Texas high court granted immunity to unethical lawyers by expanding attorneys' and law firms' litigation immunity to (mis)conduct that does not occur within the course and conduct of litigation, and may therefore not come within the scope of the court's power to sanction.

And that's nothing to cheer about. No matter if you are a Conservative or a Liberal.

The beneficiaries of the newly bloated definition of the scope of attorney immunity (no longer just judicial proceedings immunity or litigation immunity) will not be the ethical lawyers, not to mention the Texas Bar as a whole; much rather, the beneficiaries will be attorneys who cheat, prepare fraudulent documents, are dishonest in their dealings with their opponents, and engage in other forms of questionable conduct, if not outright wrongdoing that runs afoul of the law.

Having been exempted from civil liability predicated on complaints brought by non-clients by the court of last resort in Texas, these wayward practitioners will have one deterrent less to worry about. The prospect of having to pay civil damages to the victims of their malfeasance will no longer dissuade them from engaging in questionable, if not illegal, acts. And if may induce others to do the same.


Thanks to a majority of the Court, the bad apples in the profession have just been given a green light to bring down the ethical standards for the rest, -- and help give the practicing Bar in its entirety a bad name. For -- short of criminal prosecution -- wayward members of the profession will be able to engage in misconduct with impunity, and will be able to gain an unfair advantage over those attorneys who remain committed to honesty and high ethical standards.

Rather than promoting high standards of professionalism, the new protectionist precedent set by the Court last Friday will do the opposite: it will encourage others to stoop to low tactics likewise, lest they suffer a comparative disadvantage at the hands of those that have already gone that route, a route five members of the high court have just cleared and set up guideposts for.


Cause No. 13-0861

CANTEY HANGER, LLP v. PHILIP GREGORY BYRD, LUCY LEASING CO., L.L.C., AND PGB AIR, INC.; from Tarrant County; 2nd Court of Appeals District (02-11-00468-CV,
409 SW3d 772, 08-01-13)
The Court reverses the court of appeals' judgment in part and renders judgment.
Justice Lehrmann delivered the opinion of the Court in which Justice Guzman, Justice Boyd, Justice Devine, and Justice Brown joined.
Justice Green delivered a dissenting opinion, in which Chief Justice Hecht, Justice Johnson, and Justice Willett joined. 

Tuesday, June 23, 2015

State of Texas v Naylor & Daly - Cause of action for same-sex divorce in Texas? - Not yet (Comment on Texas Supreme Court's 6/19/2015 ruling)

Some of the media coverage of the Texas Supreme Court's resolution of the Attorney General's appeal of the same-sex divorce decree granted by a judge in Austin has created the impression the Texas now recognizes same-sex divorce even though it does not recognize same-sex marriage.
Attorney General Ken Paxton himself contributed to that mis-perception by issuing a press-release accusing the state supreme court of having "effectively" recognized same-sex divorce in its June 19, 2015 ruling.

That is simply not so. The majority makes clear that it turned the Attorney General away for the same reason the Third Court of Appeals did in the first instance. State of Texas v. Naylor, No. 11-0114 consolidated with No. 11-0222 (Tex. June 19, 2015)("We agree with the court of appeals that the State lacks standing to appeal the trial court’s decree."). The majority did not reach the merits.

The Attorney General (Greg Abbott at the time) did not timely intervene in the trial court, and the State therefore did not have standing to appeal as a party post-judgment. Nor could the State claim the right to appeal as a non-party under the "virtual representation" doctrine. The Third Court of Appeals accordingly dismissed the attempted appeal for lack of jurisdiction, and the Supreme Court agreed with the intermediate court's analysis of the procedural posture of the case.
Justice Willett would have exempted the Attorney General from having to play by the same rules that other intervenors (or would-be intervenors) have to abide by, and would have modified the common law to create "equitable standing" for the attorney general to attack the validity of the final decree that the trial court entered based on the parties' agreement. But only two of his colleagues signed on to his proposed ad hoc modification of the common law to favor the State in a private dispute that the parties had resolved to their mutual satisfaction.
Interestingly, none of the four opinions issued in the case acknowledges that it is the policy of the State of Texas to favor the amicable resolution of disputes, and that the Attorney General forced the parties into protracted appellate litigation that Naylor and Daly had sought to avoid by making peace with each other.

Click for link to all opinions here.

June 19, 2015 Texas  Supreme Court Orders List
High Court hands down decision in same-sex divorce case from Austin,
affirms intermediate court's dismissal of Attorney General's appeal for lack of jurisdiction   

Links to related blog posts by others:  

Why the Texas Supreme Court did not authorize same-sex marriage under Texas law (law firm blog post)  

Tuesday, June 16, 2015

Valdez v Hollenbeck (Tex 2015) SoL for Bill of Review in probate cases


A bill of review proceeding to set aside a prior judgment must normally be brought within four years, unless a specific statute sets a different limitations period under specific circumstances. The probate code, now estates code, provides for a statutory bill of review with a two year statute of limitations. But even when there is no dispute as to which limitations period applies, there may still be a litigable issue on when the limitations period begins to run, and whether an extension of the applicable limitations period is available based on a tolling theory, and if so, when the tolling effect ceases.  

In an opinion issued last week, the Texas Supreme Court held in an egregious case of theft from an estate by a "rogue probate clerk" that the heirs brought their bill of review to reopen the probate case too late. In reaching this conclusion, the Court applied the two-year limitations period because the applicable statute "unequivocally prescribes a two-year limitations period for all bills of review in probate proceedings." The invocation of tolling did not save the heirs' claims.  

Valdez v Hollenbeck
No. 13-0709 (Tex. June 12, 2015) (Opinion by Justice Guzman)

The heirs had petitioned the probate court to re-open the estate more than ten years after the estate's administration had closed, alleging that the estate administrator breached fiduciary duties and fraudulently concealed information about the estate’s assets. The probate court denied the statutory bill of review (subject to two-year limitations period), but granted the equitable bill of review (governed by the residual 4-yr SoL) and set aside the orders closing probate. The heirs successfully litigated their claims against the administrator and were awarded damages against the administrator and his surety. The San Antonio Court of Appeals affirmed.

The Supreme Court reversed, holding that the heirs’ petition for bill of review was filed more than two years after they received information that would cause a reasonably prudent person to make inquiry, which would have led to the discovery of the concealed cause of action. A half-million-dollar discrepancy in the value of an estate, the court reasoned, is considerable and gives rise to a duty to make further inquiry. The heirs’ claims were discoverable and the estoppel effect of tolling ceased more than two years before they initiated bill-of-review proceedings. Under these circumstances, their bill of review was time-barred.under the two-year statute of limitations. The Supreme Court accordingly reversed and rendered judgment for the administrator and the surety without considering the merits of the bill of review.


The threshold issue here is whether the equitable bill of review was timely filed.

Generally, a bill of review allows a party to challenge a judgment after the time for filing a motion for new trial or an appeal has expired. Recognizing the importance our legal system places on the finality of judgments, courts generally allow bills of review only in limited circumstances or as authorized by statute. An equitable bill of review must ordinarily be filed within four years of the date the judgment is signed unless extrinsic fraud is established or an express limitations period is prescribed by statute. See TEX. CIV. PRAC. & REM. CODE § 16.051 (prescribing four-year residual statute of limitations if "there is no express limitations period"); PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 275 (Tex. 2012) (tolling limitations period because there was some evidence of extrinsic fraud).

At the time of the events giving rise to this suit, Texas Probate Code section 31 provided that "no bill of review shall be filed after two years have elapsed from the date of [the probate court’s] decision, order or judgment." Act of March 17, 1955, 54th Leg., R.S., ch. 55, § 31, 1955 Tex. Gen. Laws 88, 97 (former TEX. PROB. CODE § 31).1 Section 31’s plain language thus establishes a two-year limitations period for bills of review attacking a probate decision, order, or judgment.
Although the heirs contend limitations was tolled, we need not decide whether and under what circumstances tolling doctrines might apply because the effect of any tolling would have ended more than two years before the heirs filed their bill-of-review petition. We therefore hold the heirs’ bill of review is untimely. Accordingly, without reaching the merits of either the bill of review or the underlying claims, we reverse the court of appeals’ judgment and render judgment for the administrator and the surety on the bill of review. 

SOURCE: Valdez v Hollenbeck, No. 13-0709 (Tex. June 12, 2015)(Opinion by Justice Eva Guzman)





Friday, June 5, 2015

Promissory estoppel in loan-modification / foreclosure context


Plaintiffs seek a reliance remedy against JPMC based on the doctrine of promissory estoppel. A cause of action for promissory estoppel requires: (1) a promise by the defendant; (2) foreseeable and actual reliance on the promise by the plaintiff to his detriment; and (3) that enforcement of the promise be necessary to avoid an injustice. See "Moore" Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 937 (Tex. 1972);Ford v. City State Bank of Palacios, 44 S.W.3d 121, 139 (Tex. App.—Corpus Christi 2001, no pet.). "To support a finding of promissory estoppel, the asserted promise must be sufficiently specific and definite that it would be reasonable and justified for the promisee to rely upon it as a commitment to future action." Comiskey v. FH Partners, LLC, 373 S.W.3d 620, 635 (Tex. App.—Houston [14th Dist.] 2012, pet. denied) (internal quotation marks omitted). One federal court applying Texas law has held "that a promise that [a plaintiff's] loan modification was `under consideration' would not trigger the promissory estoppel doctrine." Stolts v. Wells Fargo Bank, NA, No. 1:13-CV-19, 2014 WL 3545464, at *3 n.4 (S.D. Tex. Jan. 16, 2014) (citing Addicks Servs., Inc. v. GGP-Bridgeland, LP, 596 F.3d 286, 300 (5th Cir. 2010)).
According to the Third Amended Complaint, JPMC promised not only that it would consider Plaintiffs' application, but that "there would be no non-judicial foreclosure until the loan modification process was completed and they were given a response and answer." This additional representation makes JPMC's promise sufficiently definite to support a plausible claim for promissory estoppel.
SOURCE: FIFTH CIRCUIT: Guajardo v. JP Morgan Chase Bank, NA, Court of Appeals, 5th Circuit Jan 12, 2015  

Thursday, June 4, 2015

Is a borrower a consumer within the definition of the Texas DTPA?


Plaintiffs also allege that JPMC violated the DTPA. The district court dismissed this claim on the basis that Plaintiffs are not "consumers" within the meaning of the Act and thus have no basis for a DTPA claim.


To succeed on a DTPA claim, Plaintiffs must show: (1) they are consumers who sought or acquired, by purchase or lease, goods or services from JPMC; (2) JPMC can be sued under the DTPA; (3) JPMC committed an act in violation of the DTPA; and (4) JPMC's purported action was a producing cause of Plaintiffs' damages. See Tex. Bus. & Com. Code Ann. §§ 17.41-.63; see also In re Frazin, 732 F.3d 313, 323 (5th Cir. 2013); Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995).


The DTPA provides a private cause of action only for "consumers," meaning those who purchase a good or service. See Brittan Commc'ns Int'l Corp. v. Sw. Bell Tel. Co., 313 F.3d 899, 907 (5th Cir. 2002); see also Riverside Nat'l Bank v. Lewis, 603 S.W.2d 169, 173 (Tex. 1980) (citing Tex. Bus. & Com. Code Ann. § 17.45(4)). "Generally, a person cannot qualify as a consumer if the underlying transaction is a pure loan because money is considered neither a good nor a service." Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 160 (Tex. App.—Fort Worth 2007, pet. denied) (citing Riverside, 603 S.W.2d at 173-74).

We have dismissed DTPA claims based on nearly identical facts. In Miller v. BAC Home Loans Servicing, L.P., the plaintiffs based their claim on their lender's promises and conduct during attempts to modify their original purchase-money mortgage. 726 F.3d 717, 725 (5th Cir. 2013). We held that since the claim rested on promises and conduct related to a loan modification, not the original loan used to purchase the plaintiffs' house, the complaint was based on a "pure loan transaction" and the plaintiffs did not qualify as consumers. Id. (citing Ford, 44 S.W.3d at 133); see also Ayers v. Aurora Loan Servs., LLC, 787 F. Supp. 2d 451, 455 (E.D. Tex. 2011) ("[A] modification of an existing loan . . . is analogous to refinancing services. Refinancing is simply an extension of credit that does not qualify Plaintiff as a consumer."). Miller is directly on point and the district court did not err in dismissing this claim.

SOURCE: FIFTH CIRCUIT: Guajardo v. JP Morgan Chase Bank, NA, Court of Appeals, 5th Circuit Jan 12, 2015


To have standing to sue under the DTPA, a party must be a consumer. TEX. BUS. & COM.CODE ANN. § 17.50(a). To be a consumer under the DTPA, a party must show that he sought or acquired goods or services by purchase or lease. Id. § 17.45(4) (defining "consumer"). And he must show that the goods or services purchased or leased form the basis of the complaint. Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 351 (Tex.1987); Kennedy v. Sale, 689 S.W.2d 890, 892 (Tex. 1985).

The purpose of making misrepresentations actionable under the DTPA "is `to ensure that descriptions of goods or services offered for sale are accurate.'" Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 480 (Tex.1995) (quoting Pennington v. Singleton, 606 S.W.2d 682, 687 (Tex.1980)).
The DTPA does not require the consumer to be the person who actually purchased or leased the services. Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex.1996) ("Privity of contract with a defendant is not required for the plaintiff to be a consumer."); Kennedy, 689 S.W.2d at 892-93 (DTPA's language does not require "that the consumer must himself be the one who purchases or leases" the goods or services).

SOURCE: DALLAS COURT OF APPEALS - No. 05-12-01607-CV439 - S.W.3d 639 (2014) - 8/7/2014 
CITATION: McLeod v. Gyr, 439 S.W.3d 639 (Tex. App.-Dallas 2014, pet. denied) 



Tuesday, June 2, 2015

Unjust Enrichment not a Cause of Action in its own right, Fort Worth Court of Appeals says

Whether unjust enrichment is a cause of action under Texas common law is somewhat unsettled, with inconsistent appellate opinions from different courts of appeals. In Davis v OneWest Bank N.A., the Forth Worth Court of Appeals recently rejected the invitation to recognize such a cause of action, following its own prior decisions, rather than the case from Houston urged by the appellant. A petition for review is currently pending in the Texas Supreme Court.
In Pepi Corp. v. Galliford, 254 SW 3d 457 (Tex. App. - Houston [1st Dist.] 2008), the First Court of Appeals acknowledged that unjust enrichment could be brought as an independent cause of action, but that the plaintiff had sought relief under a quantum meruit theory.
The opinion rejecting the Houston case was written by Justice Bonnie Sudderth, who recently joined the Second Court of Appeals. Judge Sudderth is known for her blog on evidence during her tenure as a district judge in Forth Worth (Tarrant County).




In their summary judgment motion, appellees raised two grounds on the issue Davis appeals, under the heading, "Plaintiff's claim for unjust enrichment fails as a matter of law because the Moving Defendants acted in accordance with the law": (1) unjust enrichment is not an independent cause of action; and (2) appellees acted in accordance with law by foreclosing on the property. See Tex. R. Civ. P. 166a(b), (c); Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508-09 (Tex. 2010) (stating that a defendant who conclusively negates at least one essential element of a cause of action is entitled to summary judgment on that claim), cert. denied, 131 S. Ct. 1017 (2011).

In part of his sole issue, and relying on Pepi Corp. v. Galliford, 254 S.W.3d 457, 460 (Tex. App.-Houston [1st Dist.] 2007, pet. denied), Davis argues, "At the outset, [he] would show that he may bring a claim for unjust enrichment as an independent cause of action." In Pepi, the First Court held that unjust enrichment is an independent cause of action. Id.

However, this court has held the opposite, stating, "Unjust enrichment, itself, is not an independent cause of action but rather `characterizes the result of a failure to make restitution of benefits either wrongfully or passively received under circumstances that give rise to an implied or quasi-contractual obligation to repay.'"[3] Argyle ISD ex rel. Bd. of Trustees v. Wolf, 234 S.W.3d 229, 246 (Tex. App.-Fort Worth 2007, no pet.) (citations omitted); see also Hulen v. Hamilton, No. 02-06-00288-CV, 2008 WL 553812, at *4 (Tex. App.-Fort Worth Feb. 28, 2008, no pet.) (mem. op.) (stating same); Friberg-Cooper Water Supply Corp. v. Elledge, 197 S.W.3d 826, 832 (Tex. App.-Fort Worth 2006) (stating same), rev'd on limitations grounds, 240 S.W.3d 869, 869-71 (Tex. 2007); David Dittfurth, Restitution in Texas: Civil Liability for Unjust Enrichment, 54 S. Tex. L. Rev. 225, 238 (2012) ("Most of the Texas courts of appeals and federal courts that have considered the question under Texas law have rejected the existence of an independent cause of action for unjust enrichment."). But cf. HECI Exploration Co. v. Neel, 982 S.W.2d 881, 891 (Tex. 1998) ("We have recognized that, in some circumstances, a royalty owner has a cause of action against its lessee based on unjust enrichment, but only when the lessee profited at the royalty owner's expense."); Heldenfels Bros. v. City of Corpus Christi, 832 S.W.2d 39, 41-42 (Tex. 1992) (discussing subcontractor's inability to recover under quantum meruit and unjust enrichment theories); George P. Roach, Unjust Enrichment in Texas: Is it a Floor Wax or a Dessert Topping?, 65 Baylor L. Rev. 153, 203-40 (2013) (exploring "the ongoing dispute of whether unjust enrichment is a cause of action").

We decline Davis's invitation to reconsider our precedent, overrule this portion of his sole issue without reaching the rest of his arguments, and affirm the trial court's judgment. See Tex. R. App. P. 47.1.

Table of Contents of law review article by George P. Roach on Unjust Enrichment as a Legal Theory in Texas - Vol. 65 Baylor Law Review 153 (2013)
TOC: George P. Roach, Unjust Enrichment in Texas

[1] See Tex. R. App. P. 47.4.

[2] Valarie Berry is not a party to the appeal. In December 2004, Charlie M. Cook, Berry's mother, took out a reverse mortgage secured by a deed of trust on the property; the deed of trust was recorded in January 2005 and then ultimately assigned to and recorded by OneWest. Davis sued appellees, alleging, among other claims, fraud, quantum meruit, and the unjust enrichment claim at issue on appeal. In his pleadings, Davis claimed that Berry conveyed the property to him on her mother's behalf in November 2010 and told him that there were no liens on the property and that he made $70,000 in improvements before the property's foreclosure and sale to Fannie Mae. Davis does not appeal the trial court's summary judgment on his other claims.

[3] Also, we have scrutinized the record here, and contrary to Davis's contentions, there is no competent summary judgment evidence to raise a fact issue with regard to whether OneWest knew of Davis's claim to own the property at the time he repaired it. See Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009) (requiring the reviewing court to consider evidence presented in the light most favorable to the nonmovant); 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008) (requiring the reviewing court to indulge every reasonable inference and resolve any doubts in the nonmovant's favor). And although Davis argues in his reply brief that appellees never gave him notice of their superior title, property code section 13.002(1) provides that an instrument that is properly recorded in the proper county is notice to all persons of the existence of the instrument. Tex. Prop. Code Ann. § 13.002(1) (West 2014); Ford v. Exxon Mobil Chem. Co., 235 S.W.3d 615, 617 (Tex. 2007) ("While not all public records establish an irrebuttable presumption of notice, the recorded instruments in a grantee's chain of title generally do."). The record reflects that Davis had constructive notice of appellees' deed of trust, and on its face, Davis's deed states, "This deed is subject to all easements, restrictions, conditions, covenants, and other instruments of record." It also states, "This instrument was prepared based on information furnished by the parties, and no independent title search has been made." [Emphasis added.] The record does not reflect that Davis's deed was recorded.

SOURCE: FORT WORTH COURT OF APPEALS - NO. 02-14-00264-CV - 4/9/2015 Davis v OneWest Bank N.A. (Tex. App. - Fort Worth, April 9, 2015, pet. filed)(Opinion by Justice Sudderth) (affirming summary judgment for the bank, holding that unjust enrichment is not an independent cause of action and that the bank acted in accordance with law by foreclosing on the real property).  


Pepi Corp. v. Galliford, 254 S.W.3d 457
 (Tex. App.-Houston [1st Dist.] 2007, pet. denied)
Click to enlarge view

A person is unjustly enriched when he obtains a benefit from another by fraud, duress, or the taking of an undue advantage. Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992). A key element of unjust enrichment is that the person sought to be charged wrongly secured or passively received a benefit. Villarreal v. Grant Geophysical, Inc., 136 S.W.3d 265, 270 (Tex. App.-San Antonio 2004, pet. denied). It is not enough that the person sought to be charged received some incidental benefit. Bashara v. Baptist Mem'l. Hosp. Sys., 685 S.W.2d 307, 310 (Tex. 1985).