Sunday, December 15, 2013

How do courts interpret contracts in Texas?


Basic Principles 

“[A] court interprets a contract by ascertaining the true objective intentions of the parties, based on the contract language.” SAS Inst., Inc. v. Breitenfeld, 167 S.W.3d 840, 841 (Tex. 2005) (citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). A court construes written instruments as a whole in an effort to harmonize and give effect to all the provisions of the instrument so that none will be rendered meaningless. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). Shell Oil Co. v. Khan, 138 S.W.3d 288, 292 (Tex. 2004). Contract terms are given their “plain, ordinary, and generally accepted meanings unless the contract itself shows them to be used in a technical or different sense.” Dorsett, 164 S.W.3d at 662. If a contract is capable of more than one reasonable interpretation, it is ambiguous; if, however, the contract can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and we will construe it as a matter of law. Coker, 650 S.W.2d at 393; Cook Composites, Inc. v. Westlake Styrene Corp., 15 S.W.3d 124, 131 (Tex. App.—Houston [14th Dist.] 2000, pet. dism’d). 

SOURCE: Houston Court of Appeals 01-10-00141-CV 5/12/12
 LEGAL TERMS: contract construction (interpretation) of contractual provisions, terms of agreement

To be enforceable, contract requires agreement on material terms

To be enforceable, a contract must be sufficiently definite in its terms that a court can understand what the promisor undertook. T. O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). The material terms of the contract must be agreed on before a court can enforce it. Id.

If an alleged agreement is so indefinite as to make it impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract. University Nat'l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex. App.--San Antonio 1989, no writ).

A lack of definiteness in an agreement may concern various elements, including time of performance, price to be paid, work to be done, or service to be done. Gannon v. Baker, 830 S.W.2d 706, 709 (Tex. App.--Houston [1st Dist.] 1992, writ denied); Terrell v. Nelson Puett Mortgage Co., 511 S.W.2d 366, 369 (Tex. Civ. App.--Austin 1974, writ ref'd n.r.e.).

Whether an agreement has all the essential terms to be an enforceable agreement is a question of law. See America's Favorite Chicken Co. v. Samaras, 929 S.W.2d 617, 625 (Tex. App.--San Antonio 1996, writ denied). Each contract should be considered separately to determine its material terms. See T. O. Stanley Boot Co., 847 S.W.2d at 221 (citing Bridewell v. Pritchett, 562 S.W.2d 956, 958 (Tex. Civ. App.--Fort Worth 1978, writ ref'd n.r.e.)).

AGREEMENT TO AGREE [on unspecified contract terms yet to be determined] NOT ENFORCEABLE

To be enforceable, an agreement to enter into a future contract must specify all its material and essential terms, leaving none to be agreed on as the result of future negotiations. See Ski River Dev., Inc. v. McCalla, 167 S.W.3d 121, 135 (Tex. App.--Waco 2005, pet. denied) (citing Parker Chiropractic Research Found. v. Fairmont Dallas Hotel Co., 500 S.W.2d 196, 201 (Tex. Civ. App.--Dallas 1973, no writ)). When an essential term is left open for future negotiation, the parties have nothing more than an unenforceable "agreement to agree." See Oakrock Exploration Co. v. Killam, 87 S.W.3d 685, 690 (Tex. App.--San Antonio 2002, pet. denied).

SOURCE: Austin Court of Appeals - 03-10-00656-CV - 5/11/11

Tuesday, November 19, 2013

Tortious interference with prospective business relations - Elements of this biz tort under Texas law


Texas has long recognized the tort of interference with prospective business relations. Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 712-13 (Tex. 2001).
Although the Texas Supreme Court has never set forth the elements for this claim, see Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 78 (Tex. 2000), several appellate courts have. See, e.g., Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 367 (Tex. App.-Dallas 2009, pet. denied); Labor v. Warren, 268 S.W.3d 273, 278 (Tex. App.-Amarillo 2008, no pet.); Tex. Disposal Sys. Landfill, Inc. v. Waste Management Holdings, Inc., 219 S.W.3d 563, 590 (Tex. App.-Austin 2007, pets. denied); Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 860 (Tex. App.-Houston [14th Dist.] 2001, pets. denied).

These courts hold that to establish a claim for tortious interference with prospective business relations, a plaintiff must show: (1) a reasonable probability that the parties would have entered into a business relationship; (2) an intentional, malicious intervention or an independently tortious or unlawful act performed by the defendant with a desire to prevent the relationship or with the knowledge the interference was likely to occur as a result of its conduct; (3) lack of privilege or justification for the defendant's actions; and (4) actual harm or damages suffered by the plaintiff as a result of the defendant's interference, i.e., the defendant's actions prevented the relationship. Labor, 268 S.W.3d at 278.

SOURCE: SAN ANTONIOCOURT OF APPEALS - 04-13-00033-CV - 11/6/2013 

Wednesday, October 16, 2013

Quasi-contract theories: Money had and received

Money Had and Received and Unjust Enrichment 
as theories of recovery under Texas law 
Unjust enrichment and money had and received are examples of quasi-contract theories. See Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000); Merry Homes, Inc. v. Luc Dao, 359 S.W.3d 881, 883 (Tex. App.-Houston [14th Dist.] 2012, no pet.). A quasi-contract, or a "contract implied in law," is "not a contract at all but an obligation imposed by law to do justice even though it is clear that no promise was ever made or intended." Bank of Am. v. Jeff Taylor LLC, 358 S.W.3d 848, 856 (Tex. App.-Tyler 2012, no pet) (quoting Fortune Prod. Co., 52 S.W.3d at 684).

Unjust enrichment occurs when the person sought to be charged has wrongfully secured a benefit or has passively received one that it would be unconscionable to retain. Villareal v. Grant Geophysical, Inc., 136 S.W.3d 265, 270 (Tex. App.-San Antonio 2004, pet. denied). "To prove a claim for money had and received, a plaintiff must show that a defendant holds money which in equity and good conscience belongs to him." MGA Ins. Co. v, Charles R. Chesnutt, P.C., 358 S.W.3d 808, 814 (Tex. App.-Dallas 2012, no pet.); accord Edwards v. Mid-Continent Office Distrib., L.P., 252 S.W.3d 833, 837 (Tex. App.-Dallas 2008, pet. denied).

SOURCE: DALLAS COURT OF APPEALS - 05-12-00534-CV - 6/19/2013 

Tuesday, October 15, 2013

Implied-in-fact Contract - Texas case law cite

An implied-in-fact contract "arises from the acts and conduct of the parties, it being implied from the facts and circumstances that there was a mutual intention to contract." Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros. Welding Co., 480 S.W.2d 607, 609 (Tex. 1972); accord Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 850 (Tex. 2009). 
A meeting of the minds is an essential element of an implied-in-fact contract. Tex. Ass'n of Counties Cnty. Gov't Risk Mgmt. Pool v. Matagorda Cnty., 52 S.W.3d 128, 133 (Tex. 2000). 

The court must look to the conduct of the parties to determine the terms of the contract on which the minds of the parties met. Parker Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68, 75 (Tex. App.-Houston [14th Dist.] 2010, pet. denied); Wal-Mart Stores, Inc. v. Lopez, 93 S.W.3d 548, 557 (Tex. App.-Houston [14th Dist.] 2002, no pet.). The determination of a meeting of the minds is based on the objective standard of what the parties said and did, not on their subjective states of mind. Parker Drilling Co., 316 S.W.3d at 75; Lopez, 93 S.W.3d at 557.  

SOURCE: DALLAS COURT OF APPEALS - 05-12-00534-CV - 6/19/2013 

Monday, October 14, 2013

Legal instruments (notes, contracts) and the parol evidence rule

The nature of the parol evidence rule
The parol evidence rule functions to make the instrument sued on the sole repository of the legal transaction. Lawrence Gen. Corp. v. Anchor Post Prod. of Tex., Inc., No. 05-95-01771-CV, 1997 WL 78913 at *2 (Tex. App.-Dallas Feb. 26, 1997, no writ) (not designated for publication). In other words, the terms of the transaction must be derived from the writing alone. 

Where the instrument sued on is a professedly partial or incomplete agreement, however, the rule excluding parol evidence does not apply. Id.; see also Garner v. Redeaux, 678 S.W.2d 124, 128 (Tex. App.-Houston [14th Dist.] 1984, writ ref'd n.r.e.). An instrument is incomplete when it refers to terms or understandings not embraced in its provisions. Lawrence Gen. Corp., 1997 WL 78913 at *2.

SOURCE:  DALLAS COURT OF APPEALS -  No. 05-11-01536-CV - 6/7/2013 

Also see Anglo-Dutch Petroleum Int'l,352 S.W.3d at 451; Baroid Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 13 (Tex. App.-Houston [1st Dist.] 2005, pet. denied) ("The parol evidence rule is not a mere rule of evidence, but a rule of substantive contract law. . . . Evidence violating the parol evidence rule has no legal effect and merely constitutes proof of facts that are immaterial and inoperative."). But the parol evidence rule
does not prohibit consideration of surrounding circumstances that inform, rather than vary from or contradict, the contract text. Those circumstances include . . . the commercial or other setting in which the contract was negotiated and other objectively determinable factors that give a context to the transaction between the parties.
Houston Exploration Co. v. Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462, 469 (Tex. 2011) (internal citations omitted).

Friday, October 11, 2013

Mutual Mistake argument in contract dispute to avoid enforcement or liability

Mutual Mistake as affirmative defense in contract dispute

To establish the defense of mutual mistake in a written instrument, [Defendant] must plead and prove (1) the original agreement, and (2) a mutual mistake made in reducing the original agreement to writing. Peters v. Gifford-Hill & Co., 794 S.W.2d 856, 860 (Tex. App.-Dallas 1990, writ denied). 
The party asserting mutual mistake must prove what the true agreement was, but "his case is not made by proof that there was an agreement which is at variance with the writing. He must go further and establish the fact that the terms and provisions of the writing which differ from the true agreement made were placed in the instrument by mutual mistake." Id. (citing Sun Oil Co. v. Bennett, 84 S.W.2d 447, 451 (Tex. 1935)); see also Balboa Ins. Co. v. K&D & Assoc., 589 S.W.2d 752, 757 (Tex. Civ. App.-Dallas 1979, writ ref'd n.r.e.) (evidence must show both parties were acting under the same misunderstanding of the same material fact to establish mutual mistake). 
Mutual mistake is generally established from all of the facts and circumstances surrounding the parties, and the execution of the instrument. Simpson v. Curtis, 351 S.W.3d 374, 378 (Tex. App.-Tyler 2010, no pet.).

SOURCE:  DALLAS COURT OF APPEALS -  No. 05-11-01536-CV - 6/7/2013 

Thursday, October 10, 2013

What is equitable title versus legal title?

What is equitable title?

Equitable title is the present right to compel legal title. Smith v. Dass, Inc., 283 S.W.3d 537, 542 (Tex. App.-Dallas 2009, no pet.). Equitable title may be shown where the plaintiff proves it has paid the purchase price and fully performed the obligations under the contract. Cullins v. Foster, 171 S.W.3d 521, 533 (Tex. App.-Houston [14th Dist.] 2005, pet. denied).

SOURCE:  DALLAS COURT OF APPEALS  -  No. 05-11-01536-CV - 6/7/2013 

Wednesday, October 9, 2013

Can causes of actions be assigned in Texas?

Can causes of action be assigned – General Rule and Exceptions

As a general rule, causes of action are freely assignable. City of Brownsville ex rel. Pub. Utils. Bd. v. AEP Tex, Cent. Co., 348 S.W.3d 348, 358 (Tex. App.-Dallas 2011, pet. denied). The Texas Supreme Court has recognized a few exceptions to this general rule, but it has not held that bill-of-review claims may not be assigned. See PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P'ship, 146 S.W.3d 79, 92 (Tex.2004) (holding that "DTPA claims generally cannot be assigned by an aggrieved consumer to someone else"); State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 707-11 (Tex.1996) (discussing four circumstances in which claims cannot be assigned: legal-malpractice claims, Mary Carter agreements, assignments of a plaintiffs claim to a joint tortfeasor, and assignments of certain interests in an estate). The law generally prohibits the assignment of a claim only when the particular assignment presents specific dangers, such as jury confusion, the multiplication of disputes, and potential prejudice to the parties. See Gandy, 925 S.W.2d at 707-11. Unless the assignment of a bill-of-review claim like HSBC's would present similar dangers, the general rule of assignability ought to apply.

SOURCE:  DALLAS COURT OF APPEALS - No. 05-10-00676-CV – 6/15/2012

The policy of this State is to permit the assignment of a cause of action in the absence of policy reasons to forbid the particular kind of assignment. See generally Gandy, 925 S.W.2d at 705-11. We have not been presented with any reason to conclude that permitting the assignment of Fieldstone's bill-of-review rights to HSBC would be inimical to public policy. We conclude that HSBC is correct and that Fieldstone's right to bring a bill of review to challenge the underlying default judgment is assignable.

Tuesday, October 8, 2013

Contract ambiguity as an affirmative defense in a contract dispute


When asserting ambiguity as an affirmative defense, the pleading must set out the alleged ambiguous portion of the contract and the meaning or construction relied on by the party asserting ambiguity. See World Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662, 680 (Tex. App.-Fort Worth 1998, pet. denied). 

SOURCE:  DALLAS COURT OF APPEALS  -  No. 05-11-01536-CV - 6/7/2013

Plaintiffs prevented from double-dipping on damages claims under the one-satisfaction rule


The one-satisfaction rule is the longstanding proposition that precludes a plaintiff from recovering twice for the same injury. Utts v. Short, 81 S.W.3d 822, 831 (Tex. 2002) (citing Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 390 (Tex. 2000)); Galle, 262 S.W.3d at 573. The rule applies when several defendants commit the same act and when multiple defendants commit technically different acts that result in a single injury. Crown Life, 22 S.W.3d at 390; Galle, 262 S.W.3d at 573. 
The one-satisfaction rule guards against a plaintiff's "receiving a windfall `by recovering an amount in court that covers the plaintiff's entire damages, but to which a settling defendant has already contributed.'" Galle, 262 S.W.3d at 573 (quoting Osborne v. Jauregui, 252 S.W.3d 70, 75 (Tex. App.-Austin 2008, pet. denied) (en banc)).

SOURCE: AUSTIN COURT OF APPEALS - 03-10-00499-CV – 8/23/2013  

Wednesday, September 4, 2013

The American Rule applies in Texas courts (regarding award of attorney's fees in a lawsuit)


Texas follows the American Rule, meaning that attorney’s fees can only be awarded as part of the judgment if a contract or statute provides for them

Whether a party may recover reasonable attorney's fees is a question of law for the trial court which we review de novo. Brent v. Field, 275 S.W.3d 611, 621 (Tex. App.-Amarillo 2008, no pet.) (citing Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94, 95 (Tex. 1999)). 
It has long been the rule in Texas that attorney's fees paid to prosecute or defend a lawsuit cannot be recovered in that suit absent a statute or contract that allows for their recovery. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006) ("Absent a contract or statute, trial courts do not have inherent authority to require a losing party to pay the prevailing party's fees."); Wm. Cameron & Co. v. Am. Sur. Co. of N.Y., 55 S.W.2d 1032, 1035 (Tex. Comm'n App. 1932, judgm't adopted) ("It is settled law in this state that, unless provided for by statute or by contract between the parties, attorneys' fees incurred by a party to litigation are not recoverable against his adversary either in an action in tort or a suit upon a contract."); Sherrick v. Wyland, 14 Tex. Civ. App. 299, 37 S.W. 345, 345 (Tex. Civ. App. 1896) ("It has often been ruled, in this state and elsewhere, that fees of counsel, incurred in prosecuting a suit for or defending against a wrong, are not ordinarily recoverable as actual damages, because they are not considered proximate results of such wrong."). The rule is known as the American Rule. See Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health and Human Res., 532 U.S. 598, 602, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001) ("[P]arties are ordinarily required to bear their own attorney's fees—the prevailing party is not entitled to collect from the loser.").

SOURCE:  WACO COURT OF APPEALS - 10-12-00241-CV – 8/8/2013  Pharia, LLC v Childers (Trial court erred in awarding attorney's fees; court of appeals reverses portion of the judgment that awarded the attorney's fees and renders a take-nothing judgment on that claim, but otherwise affirms). 


Texas has long followed the "American Rule," which prohibits an award of attorney's fees unless specifically provided by contract or statute. MBM Fin. Corp. v. The Woodlands Operating Co., 292 S.W.3d 660, 6693d (Tex. 2009).

Here, there is no contract between the parties, and Sherman does not seek attorney's fees under any statutory provision. Rather, he contends that because Wein filed a fraudulent lawsuit against him, causing him to expend money in attorney's fees and expenses, he is entitled to recover those fees and expenses as actual damages.

Attorney's fees, however, are ordinarily not recoverable as actual damages in and of themselves. See Tana Oil & Gas Corp. v. McCall, 104 S.W.3d 80, 81-82, 83 (Tex. 2003) (attorney plaintiffs who sought to recover damages based solely on value of time and costs incurred in defending claims had not suffered actual damages and were not entitled to only damages they claimed; plaintiffs should have pursued attorney's fees as sanctions under Rule 13 or Chapter 10); Worldwide Asset Purchasing, L.L.C. v. Rent-a-Center East, Inc., 290 S.W.3d 554, 570 (Tex. App.-Dallas 2009, no pet.) (attorney's fees not recoverable as actual damages); Haden v. David J. Sacks, P.C., 222 S.W.3d 580, 597 (Tex. App.-Houston [1st. Dist.] 2007) (same), rev'd on other grounds, 266 S.W.3d 447 (Tex. 2008); Quest Commc'ns Int'l, Inc. v. AT&T Corp., 114 S.W.3d 15, 35-36 (Tex. App.-Austin 2003) (damages measured by plaintiff's attorney's fees recoverable only under certain exceptions not implicated here), rev'd in part on other grounds, 167 S.W.324 (Tex. 2005) (per curiam).

Because Sherman neither sought nor proved any damages other than attorney's fees, there is no evidence to support the actual damage element of any of his asserted claims, and the district court did not err in granting summary judgment in Wein's favor. We overrule Sherman's cross-issue.

SOURCE: AUSTIN COURT OF APPEALS - 03-10-00499-CV – 8/23/2013  

Tuesday, July 16, 2013

Defamation law principles - Elements of cause of action and defenses to defamation suit

The General Law Concerning Defamation

"Defamation" is generally defined as the invasion of a person's interest in his or her reputation and good name. PROSSER & KEETON ON TORTS § 111, at 771 (5th ed. 1984 & Supp. 1988). "Defamation" encompasses both libel and slander. By statute, Texas law defines "libel" as a defamation expressed in written or other graphic form that tends to injure a living person's reputation and thereby expose the person to public hatred, contempt, ridicule, or financial injury or to impeach any person's honesty, integrity, virtue, or reputation or to publish the natural defects of anyone and thereby expose the person to public hatred, ridicule, or financial injury. TEX. CIV. PRAC. & REM. CODE ANN. § 73.001 (Vernon 2011).

Elements of defamation tort as a cause of action under Texas law 
To prevail on a defamation cause of action, the plaintiff must prove that the defendant (1) published a statement, (2) that was defamatory concerning the plaintiff, (3) while acting with actual malice regarding the truth of the statement where the plaintiff was a limited purpose public figure.[4] See WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998); Tex. Disposal Sys. Landfill, Inc. v. Waste Mgmt. Holdings, Inc., 219 S.W.3d 563, 574 (Tex. App.-Austin 2007, pet. denied).
Whether a statement is capable of a defamatory meaning is a question of law. See Fort Worth Star-Telegram v. Street, 61 S.W.3d 704, 708 (Tex. App.-Fort Worth 2001, pet. denied) (citing Musser v. Smith Protective Servs., Inc., 723 S.W.2d 653, 655 (Tex. 1987)). We must view the statements alleged to be defamatory as a whole and in light of the surrounding circumstances; the determination is based upon how a person of ordinary intelligence would perceive the entire statement. Ezrailson v. Rohrich, 65 S.W.3d 373, 376 (Tex. App.-Beaumont 2001, no pet.). Statements alleged to be defamatory must be viewed in their context; they may be false, abusive, unpleasant, or objectionable to the plaintiff and still not be defamatory in light of the surrounding circumstances. Id. We must consider the entire communication, not mere isolated sentences or portions. Musser, 723 S.W.2d at 655.
Purely subjective assertions or opinions that do not imply the existence of undisclosed facts and do not misconstrue the facts are not actionable as defamation. See Bentley v. Bunton, 94 S.W.3d 561, 583-84 (Tex. 2002); see also Carr v. Brasher, 776 S.W.2d 567, 570 (Tex. 1989) (explaining that "[a]ll assertions of opinion are protected by the first amendment of the United States Constitution and article I, section 8 of the Texas Constitution"). This is particularly so when the facts underlying an opinion are set out in the publication itself, thereby allowing the listener to evaluate the facts and either accept or reject the opinion. Brewer, 986 S.W.2d at 643. Instead, to be actionable as defamation, a statement must be an assertion of verifiable fact, that is, a statement that purports to be verifiable. Bentley, 94 S.W.3d at 583-84.
The determination of whether a publication is an actionable statement of fact or a constitutionally protected statement of opinion, like the determination whether a statement is false and defamatory, is a question of law. Bentley, 94 S.W.3d at 580; see also Turner v. KTRK, Television, Inc., 38 S.W.3d 103, 114 (Tex. 2000). And, like the determination whether a publication is false and defamatory, the determination whether a publication is an actionable statement of fact or a protected expression of opinion depends upon a reasonable person's perception of the entirely of the publication. Bentley, 94 S.W.3d at 579.
Statements 1 through 4 listed above are all statements reflecting Jones's opinion that Vecchio was not properly appointed or elected according to Huisache Acres' Bylaws. Specifically, Jones considered Vecchio "a threat" to the HOA because he "[held] himself out as an elected director," brought "reckless" lawsuits, "deemed" himself a director though never "duly elected," and brought suits for "questionable" HOA violations.
In Falk & Mayfield LLP v. Molzan, 974 S.W.2d 821, 822-23 (Tex. App.-Houston [14th Dist.] 1998, pet. denied), the defendant placed a sign in from of his place of business stating, "Ask me about lawsuit abuse & the Law Firm of Falk & Mayfield." Id. at 822. The law firm referenced in the sign filed a suit for defamation against the defendant. Id. The court of appeals held that, although the term "lawsuit abuse" is an accusation of legally manipulating the civil justice system to gain an unfair advantage, it was "an individual judgment that rests solely in the eye of the beholder" and was "an expression of opinion which is absolutely protected." Id. at 824.
Despite Vecchio's claims that Jones's statements amounted to accusations of barratry, we hold that the statements by Jones that Vecchio was a "threat" and brought "reckless lawsuits" for "questionable" HOA violations to be, like the term "lawsuit abuse" in Falk, nothing more than Jones's opinions, thus not actionable. See also Tomlinson v. McComas, No. 02-11-00175-CV, 2011 WL 5607604, at *8 (Tex. App.-Fort Worth Nov. 17, 2011, pet. denied) (holding that statements regarding how president of homeowners' association presided over matters constituted opinions that were not actionable for defamation).
Substantial Truth
Truth is a defense to defamation. Klentzman v. Brady, 312 S.W.3d 886, 898 (Tex. App.-Houston [1st Dist.] 2009, no pet.) A showing of substantial truth of defamatory words likewise will defeat a defamation cause of action. McIlvain v. Jacobs, 794 S.W.2d 14, 15-16 (Tex. 1990); Gustafson v. City of Austin, 110 S.W.3d 652, 656 (Tex. App.-Austin 2003, pet. denied) ("The defense of truth does not require proof that the alleged defamatory statement is literally true in every detail; substantial truth is sufficient."). The test of substantial truth is "whether the alleged defamatory statement was more damaging to [plaintiff's] reputation, in the mind of the average listener, than a truthful statement would have been." McIlvain, 794 S.W.2d at 16; see Turner, 38 S.W.3d at 115 (noting substantial truth doctrine "precludes liability for a publication that correctly conveys a story's `gist' or `sting' although erring in the details"); Langston v. Eagle Printing Co., 797 S.W.2d 66, 69-70 (Tex. App.-Waco 1990, writ ref'd n.r.e.) (concluding statement is substantially true even if it greatly exaggerates plaintiff's misconduct, as long as the average reader would not attach any more opprobrium to the plaintiff's conduct merely because of the exaggeration). In making the determination as to substantial truth, we look to the "gist" of the statement alleged to be defamatory. See McIlvain, 794 S.W.2d at 16.
Actual Malice
To establish a defamation claim, a limited purpose public figure must show that the defendant published the allegedly defamatory statements with actual malice. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 342, 94 S. Ct. 2997, 3008 (1974); McLemore, 978 S.W.2d at 571. A defendant may prevail on his motion for summary judgment by offering evidence negating the actual malice element as a matter of law. See Hearst Corp. v. Skeen, 159 S.W.3d 633, 637 (Tex. 2005); Huckabee v. Time Warner Entm't Co. L.P., 19 S.W.3d 413, 420 (Tex. 2000). Once the defendant meets this burden, then the plaintiff must present evidence raising a genuine issue of material fact regarding actual malice to avoid summary judgment. Huckabee, 19 S.W.3d at 420.
The actual malice standard serves to protect innocent, but erroneous, speech on public issues, while deterring "calculated falsehoods." Turner, 38 S.W.3d at 120. A showing of "actual malice" in a defamation suit requires proof that the defendant made a statement with knowledge that it was false or with reckless disregard of whether it was true or false. New Times, Inc. v. Isaacks, 146 S.W.3d 144, 162 (Tex. 2004); Huckabee, 19 S.W.3d at 420. In this context, actual malice refers to the defendant's attitude toward the truth of what he said, McLemore, 978 S.W.2d at 573, and means that the defendant made the statement knowing that it was false or with reckless disregard about whether the statement was false or not. HBO v. Harrison, 983 S.W.2d 31, 36 (Tex. App.-Houston [14th Dist.] 1998, no pet.).
Reckless disregard is a subjective standard, focusing on the defendant's state of mind. Isaacks, 146 S.W.3d at 162; Bentley, 94 S.W.3d at 591. Specifically, the plaintiff must establish that the defendant in fact entertained serious doubts as to the truth of his publication, or had a high degree of awareness of the probable falsity of the published information. Isaacks, 146 S.W.3d at 162 (citing Bentley, 94 S.W.3d at 591) (internal quotations omitted).
Thus, we look to the record to determine whether Jones has negated actual malice, thus shifting the burden to Vecchio. In Casso v. Brand, 776 S.W.2d 551, 559 (Tex. 1989), the court considered the adequacy of Casso's evidence negating actual malice and concluded some of Casso's summary judgment proof was sufficient to negate actual malice, and some of it was not. Id. When Casso testified "he did not believe the allegations were false and did not act with reckless disregard as to their truth or falsity in repeating those allegations," summary judgment was proper. Id. When Casso's proof provided "no information as to Casso's knowledge that the statements were not false or were not made with reckless disregard to their truth or falsity," it was not sufficient. Id. In Huckabee, the supreme court further explained that to negate actual malice, an affidavit from an interested witness "must establish the defendant's belief in the challenged statements' truth and provide a plausible basis for this belief." Huckabee,19 S.W.3d at 424.
"Actual malice" in the defamation context is a term of art. Id. Unlike common-law malice, it does not include ill will, spite, or evil motive. Id. Rather, to establish actual malice, a plaintiff must prove that the defendant made the statement "with knowledge that it was false or with reckless disregard of whether it was true or not." New York Times Co. v. Sullivan, 376 U.S. 254, 279-80, 84 S. Ct. 710, 727 (1964); Huckabee, 19 S.W.3d at 420. "Reckless disregard" is also a term of art. Huckabee, 19 S.W.3d at 420. To establish reckless disregard, a public official or public figure must prove that the publisher "entertained serious doubts as to the truth of his publication." St. Amant v. Thompson, 390 U.S. 727, 731, 88 S. Ct. 1323, 1326 (1968); Huckabee, 19 S.W.3d at 420. "Actual malice concerns the defendant's attitude toward the truth, not toward the plaintiff." Isaacks, 146 S.W.3d at 165.
SOURCE: HOUSTON COURT OF APPEALS - 01-12-00442-CV – 7/9/2013

Monday, July 15, 2013

Forcible Detainer ... Huh? What?

What do lawyers and landlords mean by "forcible detainer"?

It's what leads to eviction; -- the failure to move out when the renter or previous owner no longer has the right to be in the house or in the apartment ("premises"), and denies the rightful owner the right to have control over it ("possession"). A forcible detainer action is an eviction suit, whose purpose is to get a justice of the peace to order the occupant(s) out of the habitation. The landlord or property manager will typically also ask for any unpaid rent.   

Forcible detainer occurs when a person, who is a tenant at sufferance, refuses to surrender possession of real property after his right to possession has ceased. See TEX. PROP. CODE ANN. § 24.002; ICM Mortg. Corp. v. Jacob, 902 S.W.2d 527, 530 (Tex. App.-El Paso 1994, writ denied).

A forcible detainer action is "a summary, speedy, and inexpensive" procedure for determining the right to immediate possession of real property where no claim of unlawful entry exists. Williams v. Bank of N.Y. Mellon, 315 S.W.3d 925, 926-27 (Tex. App.-Dallas 2010, no pet.). To maintain the intended simplicity, the applicable rule of civil procedure, rule 746, provides that "the only issue shall be as to the right to actual possession; and the merits of the title shall not be adjudicated."[5] TEX. R. CIV. P. 746; Williams, 315 S.W.3d at 927. In other words, entitlement to possession of premises is decided "without resorting to an action upon the title." Rice v. Pinney, 51 S.W.3d 705, 710 (Tex. App.-Dallas 2001, no pet.) (quoting Scott v. Hewitt, 127 Tex. 31, 35, 90 S.W.2d 816, 818-19 (Tex. 1936)). Proof of the existence of a landlord-tenant relationship establishes a plaintiff's entitlement to possession. Pinney, 51 S.W.3d at 712. 

SOURCE: DALLAS COURT OF APPEALS - 05-12-00899-CV - 7/10/2013

Application of Law to Facts

[Former home owner's] issue on appeal mirrors his argument to the trial court. He does not dispute that (1) he defaulted on the loan, (2) the property was sold at foreclosure, (3) GMAC purchased the property at the foreclosure sale and subsequently conveyed it to FNMA, (4) he did not surrender possession of the property upon demand, and (5) the home equity agreement provided that, upon sale of the property and his failure to surrender, a tenancy at sufferance was created, which established a landlord-tenant relationship, and which established FNMA's entitlement to possession. See id. Rather, he disputes the validity of the foreclosure sale in light of the automatic bankruptcy stay, which addresses the merits of the title. Because [former home owner's] issue as to the merits of the title may not be raised in a forcible detainer action, we resolve his sole issue against him. See Williams, 315 S.W.3d at 927.  

Monday, July 8, 2013

Suit on sworn account is not a cause of action, but a different way to plead a common-law suit on account

San Antonio Court of Appeals reiterates that a sworn account is not a cause of action in its own right, but instead a procedural vehicle to present a prima facie case. The benefit of a prime facie case under Rule 185 are lost when the defendant files a sworn denial. When that happens, the plaintiff must prove the suit on account under the ordinary evidentiary standards (i.e. those applicable to a trial on the merits, or for summary judgment).  


A suit on a sworn account is not an independent cause of action. Southern Mgmt. Servs., Inc. v. SM Energy Co., No. 14-12-00377-CV, 2013 WL 793153, at *2 (Tex. App.-Houston [14th Dist.] Mar. 5, 2013, no pet. h.). "It is based instead on Rule 185, which affords a procedural right of recovery in certain contract disputes." Id.; see also Pine Trail Shores Owners Ass'n v. Aiken, 160 S.W.3d 139, 144 (Tex. App.-Tyler 2005, no pet.) (noting Rule 185 is not a rule of substantive law and suit on sworn account is not a cause of action).

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-12-00029-CV – 6/5/2013

Under rule 185 of the Texas Rules of Civil Procedure, when an action is founded on an open account on which a systematic record has been kept and is supported by an affidavit, the account shall be taken as prima facie evidence of the claim, unless the party resisting the claim files a written denial under oath. See Tex. R. Civ. P. 185; Panditi v. Apostle, 180 S.W.3d 924, 926 (Tex. App.-Dallas 2006, no pet.).
SUBSTANTIVE ELEMENTS OF SWORN ACCOUNT (common-law suit on account) 
The essential elements to prove a sworn account are: (1) that there was a sale and delivery of merchandise or performance of services; (2) that the amount of the account is just, that is, that the prices were charged in accordance with an agreement or were customary and reasonable prices; and (3) that the amount is unpaid. Adams v. H & H Meat Prods., Inc., 41 S.W.3d 762, 773 (Tex. App.-Corpus Christi 2001, no pet.). See also Cass v. Stephens, 156 S.W.3d 38, 70 (Tex. App.-El Paso 2004, pet. denied); Burch v. Hancock, 56 S.W.3d 257, 264 (Tex. App.-Tyler 2001, no pet.); Tex. R. Civ. P. 185.   
A "sale and delivery of merchandise or performance of services" is one of the elements essential to prove a sworn account. Adams, 41 S.W.3d at 773.
A "sale" consists in the passing of title from the "seller" to the "buyer" for a price. Tex. Bus. & Com. Code Ann. § 2.106(a) (Vernon 1994). "Buyer" means a person who buys or contracts to buy goods. Tex. Bus. & Com. Code Ann. § 2.103(a)(1) (Vernon Supp. 2006). "Seller" means a person who sells or contracts to sell goods. Id. § 2.103(a)(4). Unless otherwise agreed by the parties, title to goods passes to the buyer at the time and place of delivery. Tex. Bus. & Com. Code Ann. § 2.401(b) (Vernon Supp. 2006).
SOURCE: DALLAS COURT OF APPEALS05-06-00216-CV - 2/23/2007

Tuesday, June 18, 2013

Credit card debt claim as breach of contract (breach of cardmember or account agreement) in Texas courts


In Texas, collection of the amount due under a credit card agreement is treated as a claim for a breach of contract. In re Tran, 351 B.R. 440, 445 (Bankr. S.D. Tex. 2006), aff'd, 369 B.R. 312 (S.D. Tex. 2007); see Tully v. Citibank (South Dakota), N.A., 173 S.W.3d 212, 215-20 (Tex. App.-Texarkana 2005, no pet.).


To recover for breach of contract, a plaintiff must show (1) the existence of a valid contract, (2) the plaintiff performed or tendered performance, (3) the defendant breached the terms of the contract, and (4) the plaintiff suffered damages as a result of the defendant's breach. Transworld Leasing Corp. v. Wells Fargo Auto Fin., LLC, No. 04-12-00036-CV, 2012 WL 4578591, at *3 (Tex. App.-San Antonio 2012, pet. denied); McLaughlin, Inc. v. Northstar Drilling Tech., Inc., 138 S.W.3d 24, 27 (Tex. App.-San Antonio 2004, no pet.).

Thus, in this case, the Credit Union had the burden to prove each element of a breach of contract claim at trial. See Preston State Bank v. Jordan, 692 S.W.2d 740, 744 (Tex. App.-Fort Worth 1985, no writ) (affirming a take-nothing judgment in a suit to recover a credit card debt when the bank failed to present evidence of the contract between the bank and the credit card holder).

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) a meeting of the minds; (4) each party's consent to the terms; and (5) the execution and delivery of the contract with the intent that it be mutual and binding. Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 236 (Tex. App.-Houston [1st Dist.] 2008, no pet.).
To be enforceable, a contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the parties. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). The material terms of a contract must be agreed upon before a court can enforce the contract. Id. A breach of contract occurs when a party to the contract fails or refuses to do something he has promised to do. West v. Triple B Services, LLP, 264 S.W.3d 440, 446 (Tex. App.-Houston [14th Dist.] 2008, no pet.).  

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-12-00080-CV – 6/12/2013
Hooper v. Generations Community Federal Credit Union

Credit Union failed to prove breach-of-contract claim by failing to submit the contract under which it sought to hold the customer liable, and failing to show breach of specific terms.
We conclude the record discloses the complete absence of evidence of the third element of the Credit Union's breach of contract claim, i.e., that Hooper breached the terms of an agreement with the Credit Union. In the absence of evidence that Hooper failed or refused to do something he promised to do under an agreement, the Credit Union failed to prove its breach of contract claim. See Pioneer Land & Cattle Co. v. Collier, No. 07-12-00320-CV, 2013 WL 2150814, at *6 (Tex. App.-Amarillo 2013, no pet. h.) (concluding the trial court did not err in granting a no-evidence summary judgment on the plaintiff's breach of contract claim when there was no evidence of the first, third, or fourth elements of the claim). We, therefore, hold the evidence was legally insufficient to support the trial court's judgment. Hooper's second issue is sustained.

Saturday, June 1, 2013

Physical vs. psychological pain as elements of damages in tort case

physical pain and mental anguish as separate elements of damages  

Courts have held that physical pain and mental anguish are in fact separate and distinct elements of damage for personal injuries. See SunBridge Healthcare Corp. v. Penny, 160 S.W.3d 230, 248 (Tex.App.-Texarkana 2005, no pet.); Leyendecker v. Harlow, 189 S.W.2d 706, 711 (Tex.Civ.App.-Galveston 1945, writ ref'd w.o.m.); see also Sw. Tex. Coors, Inc. v. Morales, 948 S.W.2d 948, 954 (Tex.App.-San Antonio 1997, no writ) (Green, J., concurring).

SOURCE:  EL PASO COURT OF APPEALS - 08-10-00261-CV – 2/15/2012 

Nowak also points out that the Texas Pattern Jury Charges place physical pain and mental anguish together as one element of damages. The pattern charges serve as a guide only and are not binding on trial courts. See Styers v. Schindler Elevator Corp., 115 S.W.3d 321, 325-26 (Tex.App.-Texarkana 2003, pet. denied). Given that physical pain and mental anguish are separate elements of damage, the court did not abuse its considerable discretion in submitting them that way, rather than following the pattern charge.

We also note that the jury was instructed to "[c]onsider each element separately" and not to "award any sum of money on any element if you have otherwise, under some other element, awarded a sum of money for the same loss. That is, do not compensate twice for the same loss, if any." The Texas Supreme Court has approved this type of instruction. See Golden Eagle, 116 S.W.3d at 770-71. Unless the record indicates otherwise, we presume the jury followed the instruction. See id. at 771.

SOURCE:  EL PASO COURT OF APPEALS - 08-10-00261-CV – 2/15/2012 

Friday, May 31, 2013

How do parties enter into a legally binding arbitration agreement?


The elements of a valid arbitration agreement are: (1) an offer; (2) acceptance in strict compliance with the terms of the offer; (3) a 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. Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d 21, 24 (Tex. App.-Houston [14th Dist.] 2005, no pet.). 
The term "meeting of the minds" refers to the parties' mutual understanding and assent to the expression of their agreement. Principal Life Ins. Co. v. Revalen Dev., LLC, 358 S.W.3d 451, 454 (Tex. App.-Dallas 2012, pet. denied). Contracts require mutual assent to be enforceable. Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007) (per curiam). Evidence of mutual assent in written contracts generally consists of signatures of the parties and delivery with the intent to bind. Id. Whether the parties reached an agreement is a question of fact. Parker Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68, 72 (Tex. App.-Houston [14th Dist.] 2010, pet. denied).
Arbitration clauses generally do not require mutuality of obligation so long as adequate consideration supports the underlying contract. In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 233 (Tex. 2008) (orig. proceeding) (per curiam). When an arbitration agreement is part of a larger, underlying contract, the remainder of the contract may constitute sufficient consideration for the arbitration provision. In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 676 (Tex. 2006) (orig. proceeding). 
Stand-alone arbitration agreements require binding promises from both sides as they are the only consideration rendered to create a contract. In re Advance PCS Health L.P., 172 S.W.3d 603, 607 (Tex. 2005) (orig. proceeding) (per curiam). 
A promise is illusory if it does not bind the promisor, as when the promisor retains the option to discontinue performance. In re 24R, Inc., 324 S.W.3d 564, 567 (2010) (orig. proceeding) (per curiam). When illusory promises are all that support a purported bilateral contract, there is no mutuality of obligation and, therefore, no contract. Id. An arbitration agreement is not illusory unless one party can avoid its promise to arbitrate by amending the provision or terminating it altogether. Id.

SOURCE: HOUSTON COURT OF APPEALS - 14-12-00263-CV – 2/2/2013 


To create an enforceable contract, there must be (1) an offer, (2) acceptance in strict compliance with the terms of the offer, (3) a 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. See Parker Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68, 72 (Tex. App.-Houston [14th Dist.] 2010, pet. denied). "Meeting of the minds" describes the mutual understanding and assent to the agreement regarding the subject matter and the essential terms of the contract. See Potcinske v. McDonald Property Investments, Ltd., 245 S.W.3d 526, 530 (Tex. App.-Houston [1st Dist.] 2007, no pet.) Mutual assent concerning material, essential terms is a prerequisite to formation of a binding contract. See id.

Declarations as a form of judicial relief (under the DJA)

Declaratory relief under the DJA (Declaratory Judgments Act)

Under the declaratory judgment act, "[a] person interested under a . . . written contract. . . may have determined any question of construction or validity arising under the . . . contract . . . and obtain a declaration of rights, status, or other legal relations thereunder." See Tex. Civ. Prac. & Rem. Code Ann. § 37.004 (West 2008). 

A declaratory-judgment proceeding is "an additional remedy and does not supplant any existing remedy, but is intended as a speedy and effective remedy for the determination of the rights of the parties when a real controversy has arisen." Cobb v. Harrington, 144 Tex. 360, 190 S.W.2d 709, 713 (Tex. 1945). A declaratory-judgment action "is appropriate when a justiciable controversy exists as to the rights and status of the parties and the controversy will be resolved by the declaration sought." Texas Health Care v. Seton Health Plan, Inc., 94 S.W.3d 841, 846 (Tex. App.-Austin 2002, pet. denied). 
A declaratory-judgment action may not be used to obtain an advisory opinion. Transportation Ins. Co. v. WH Cleaners, Inc., 372 S.W.3d 223, 227 (Tex. App.-Dallas 2012, no pet.) (explaining that declaratory-judgment action is proper only when justiciable controversy exists). In other words, the declaratory-judgment statute does not empower courts to comment on "hypothetical or contingent situations, or to determine questions not then essential to the decision of an actual controversy." Texas Health Care, 94 S.W.3d at 846.

SOURCE: AUSTIN COURT OF APPEALS - 03-10-00784-CV - 01/4/2013

Thursday, May 30, 2013

Claim of third-party beneficiary status: two types under Texas law


A third party may recover on a contract made between other parties only if the parties intended to secure some benefit to that third party, and only if the contracting parties entered into the contract directly for the third party's benefit. Stine v. Stewart, 80 S.W.3d 586, 589 (Tex. 2002). The mere fact that a person might receive an incidental benefit from a contract does not give that person a right of action to enforce the contract. Id. In determining whether a third party can enforce a contract, the intention of the contracting parties is controlling. S. Tex. Water Auth. v. Lomas, 223 S.W.3d 304, 306 (Tex.2007). The intention to confer a direct benefit to a third party must be clearly and fully spelled out, or enforcement by the third party must be denied. Id. Courts may not create third-party beneficiary contracts by implication. Stine, 80 S.W.3d at 589. There is a presumption in Texas against third-party beneficiary agreements. Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex.2011).


Texas recognizes two forms of third-party beneficiary: creditor and donee.

A party is a creditor beneficiary if no intent to make a gift appears from the contract (which would make the party a donee beneficiary), but performance will satisfy an actual or asserted duty of the promisee to the beneficiary. Lomas, 223 S.W.3d at 306; Esquivel v. Murray Guard, Inc., 992 S.W.2d 536, 543 (Tex.App.-Houston [14th Dist.] 1999, pet. denied).[4] This duty may be an indebtedness, contractual obligation, or other legally enforceable commitment to the third party. Esquivel, 992 S.W.2d at 544. The promisee must intend that the beneficiary will have the right to enforce the contract. Id.

SOURCE: HOUSTON COURT OF APPEALS - Nos. 14-10-00821-CV, 14-10-00856-CV, 14-10-01145-CV – 5/17/12 375 - Garcia v. Bank of America Corporation, 375 S.W.3d 322 (2012)

Wednesday, May 29, 2013

How do Texas courts resolve disagreements about what the contract means or requires?


"The construction of an unambiguous contract is a question of law for the court," which we review de novo. Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011). "A contract is not ambiguous simply because the parties disagree over its meaning." Dynegy Midstream Servs., Ltd. P'ship v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009). Rather, a contract is ambiguous only when "its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation." Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). "When discerning the contracting parties' intent, courts must examine the entire agreement and give effect to each provision so that none is rendered meaningless." Tawes, 340 S.W.3d at 425.

When performing this review, no single provision will be given controlling effect; instead, all of the provisions must be considered in light of the whole agreement. Id. "In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument." Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). Accordingly, we "give contract terms their plain and ordinary meaning unless the instrument indicates the parties intended a different meaning." Apache Corp., 294 S.W.3d at 168.


The construction of a contract is a question of law that we review de novo in light of the entire agreement. See Chrysler Ins. Co. v. Greenspoint Dodge of Houston, Inc., 297 S.W.3d 248, 252-53 (Tex. 2009).

Contract construction is a question that we review de novo, and when performing that task, we review the entire contract. See Greenspoint Dodge of Houston, Inc., 297 S.W.3d at 252-53.

SOURCE: AUSTIN COURT OF APPEALS - 03-10-00784-CV - 01/4/2013

The interpretation or construction of an unambiguous contract is a matter of law to be determined by the court. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). When interpreting a contract, our primary concern is to ascertain and give effect to the intent of the parties as expressed in the agreement. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex.2006). To discern this intent, we examine and consider the entire writing in an effort to harmonize and give effect to all of its provisions so that none will be rendered meaningless. Id. No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Id. Interpretation of an insurance policy is governed by the same rules of construction applicable to other contracts. Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995).

SOURCE: HOUSTON COURT OF APPEALS - Nos. 14-10-00821-CV, 14-10-00856-CV, 14-10-01145-CV – 5/17/12 375 -  Garcia v. Bank of America Corporation, 375 S.W.3d 322 (2012)

Monday, May 20, 2013

Presumption of good faith in pleadings and sanctions for groundless suit and harrassment by litigation


Chapter 10 of the Civil Practices and Remedies Code provides that the signing of a pleading or motion constitutes a certificate by the signatory that, to the best of the signatory's knowledge, "each allegation or other factual contention in the pleading or motion has evidentiary support or, for a specifically identified allegation or factual contention, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery." Low v. Henry, 221 S.W.3d 609, 614-15 (Tex. 2007) (citing TEX. CIV. PRAC. & REM. CODE ANN. § 10.001(3) (West 2002)). Each allegation and factual contention in a pleading or motion must have, or be likely to have, evidentiary support after a reasonable investigation. Id. at 615. A trial court may impose sanctions against a party if the court finds that the party has failed to comply with this requirement. Nolte, 348 S.W.3d at 269 (citing TEX. CIV. PRAC. & REM. CODE ANN. § 10.004(a) (West 2002)).

Rule 13 of the Rules of Civil Procedure allows a court to impose sanctions on a party, counsel, or both for pleadings, motions, or other papers signed and filed that are groundless and brought in bad faith or for the purpose of harassment. Loeffler v. Lytle Indep. Sch. Dist., 211 S.W.3d 331, 348 (Tex. App.-San Antonio 2006, pet. denied). The rule defines "groundless" as having no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law. TEX. R. CIV. PROC. 13. Groundlessness turns on the legal merits of a claim. Dike v. Peltier Chevrolet, Inc., 343 S.W.3d 179, 184 (Tex. App.-Texarkana 2011, no pet.). A claim without evidentiary support is groundless for purposes of Rule 13, as it has no basis in fact or law. Nath v. Texas Children's Hosp., 375 S.W.3d 403, 427 (Tex. App.-Houston [14th Dist.] 2012, pet. filed). To determine if a pleading was groundless, the trial court uses an objective standard: did the party and counsel make a reasonable inquiry into the legal and factual basis of the claim? Loeffler, 211 S.W.3d at 348; see Robson, 267 S.W.3d at 405. The court will look to the facts available to the litigant and the circumstances at the time the suit was filed. Robson, 267 S.W.3d at 405. There must have been a reasonable inquiry, which means the amount of examination that is reasonable under the circumstances. Robson, 267 S.W.3d at 406 (citing Monroe v. Grider, 884 S.W.2d 811, 817 (Tex. App.-Dallas 1994, writ denied)).

In deciding whether a pleading was filed in bad faith or for the purpose of harassment, the trial court must consider the acts or omissions of the represented party or counsel, not merely the legal merit of a pleading or motion. New York Underwriters Ins. Co. v. State Farm Mut. Auto. Ins. Co., 856 S.W.2d 194, 205 (Tex. App.-Dallas 1993, no writ.); see Davila v. World Car Five Star, 75 S.W.3d 537, 544 (Tex. App.-San Antonio 2002, no pet.). The party moving for sanctions must prove the pleading party's subjective state of mind. Thielemann v. Kethan, 371 S.W.3d 286, 294 (Tex. App.-Houston [1st Dist.] 2012, pet. denied) (citing Mattly v. Spiegel, Inc., 19 S.W.3d 890, 896 (Tex. App.-Houston [14th Dist.] 2002, no pet.)). Bad faith does not exist when a party merely exercises bad judgment or is negligent; rather bad faith is the conscious doing of a wrong for dishonest, discriminatory, or malicious purposes. Thielemann, 371 S.W.3d at 294. A party acts in bad faith if he has been put on notice that his claim may be groundless and he does not make reasonable inquiry before pursuing the claim further. See Robson, 267 S.W.3d at 407; Monroe, 884 S.W.2d at 818 (concluding public policy supports lesser standard for bad faith under Rule 13 than under DTPA). A court may therefore find bad faith where a party asserts a claim with knowledge that the evidence fails to support the claim. Nath, 375 S.W.3d at 427. "Harass" is used in a variety of legal contexts to describe words, gestures, and actions that tend to annoy, alarm, and verbally abuse another person. Thielemann, 371 S.W.3d at 294 (citing Elkins v. Stotts-Brown, 103 S.W.3d 664, 669 (Tex. App.-Dallas 2003, no pet.)).

Courts must presume that pleadings are filed in good faith, and the burden is on the party moving for sanctions to overcome that presumption. GTE Commc'n Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993). Under some circumstances, the trial court may be able to make such a determination by taking judicial notice of items in the case file. Texas-Ohio Gas, Inc. v. Mecom, 28 S.W.3d 129, 139 (Tex. App.-Texarkana 2000, no pet.). Circumstantial evidence will suffice to allow a trial court to infer bad faith and improper motive. Dike, 343 S.W.3d at 194. A party cannot avoid Rule 13 sanctions by claiming he was not actually aware of the facts making his claim groundless when he had not made reasonable inquiry, nor by claiming he was not acting with malicious or discriminatory purpose in bringing the claim. Robson, 267 S.W.3d at 407.

The imposition of sanctions is within the sound discretion of the trial court, and we set aside the order only upon a clear showing of abuse of discretion.[2] Low, 221 S.W.3d at 614; see Tanner, 856 S.W.2d at 730. The determination whether the court's imposition of sanctions constitutes an abuse of discretion requires an examination of the entire record. Loeffler, 211 S.W.3d at 347. A trial court abuses its discretion in imposing sanctions only if it bases the order on an erroneous view of the law or on a clearly erroneous assessment of the evidence. Id. at 347-48. An appellate court, therefore, will view the conflicting evidence in the light most favorable to the trial court's ruling and will draw all reasonable inferences in favor of the trial court's judgment. Id. at 348.

SOURCE: SAN ANTONIO COURT OF APPEALS – 04-11-00444-CV – 3/20/2013