Cases cited for breach-of-contract elements in 2014

FIRST COURT OF APPEALS IN HOUSTON

The essential elements of a breach of contract claim are (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. E.g., N. & W. Ins. Co. v. Sentinel Inv. Grp., LLC, 419 S.W.3d 534, 539 (Tex. App.—Houston [1st Dist.] 2013, no pet.).

SOURCE: FIRST COURT OF APPEALS IN HOUSTON - 01-13-00855-CV - 12/30/2014 

The essential elements of a breach of contract claim are (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. B & W Supply, Inc. v. Beckman, 305 S.W.3d 10, 16 (Tex. App.-Houston [1st Dist.] 2009, pet. denied) (citing Valero Mktg. & Supply Co. v. Kalama Int'l, 51 S.W.3d 345, 351 (Tex. App.-Houston [1st Dist.] 2001, no pet.)). "A breach of contract occurs when a party fails or refuses to do something he has promised to do." Id. (quoting Mays v. Pierce, 203 S.W.3d 564, 575 (Tex. App.-Houston [14th Dist.] 2006, pet. denied)). The elements of a valid contract are: (1) an offer, (2) an acceptance, (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. DeClaire v. G & B McIntosh Family Ltd. P'ship, 260 S.W.3d 34, 44 (Tex. App.-Houston [1st Dist.] 2008, no pet.).

SOURCE: COURT OF APPEALS FOR THE FIRST APPELLATE DISTRICT - 01-13-00384-CV - 7/10/2014 

DALLAS COURT OF APPEALS 

The elements of a breach of contract claim are (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 to the plaintiff resulting from that breach. Woodhaven Partners, Ltd. v. Shamoun & Norman, L.L.P., 422 S.W.3d 821, 838 (Tex.App.-Dallas 2014, no pet.).

ASSIGNABILITY OF CONTRACTS

Generally, all contracts are assignable. See Crim Truck & Tractor Co. v. Navistar Int'l Transp. Co., 823 S.W.2d 591, 596 (Tex. 1992); In re FH Partners, L.L.C., 335 S.W.3d 752, 761 (Tex. App.-Austin 2011, no pet.).

CORPUS CHRISTI COURT OF APPEALS

To prevail on a breach of contract action, the plaintiff must prove the following elements: (1) a valid contract; (2) the plaintiff performed or tendered performance; (3) the defendant breached the contract; and (4) the plaintiff was damaged as a result of the breach. See Keszler v. Mem'l Med. Ctr. of E. Tex., 105 S.W.3d 122, 128 (Tex. App.-Corpus Christi 2003, no pet.).

TEXARKANA COURT OF APPEALS

"The elements of a breach of contract claim are (1) the existence of a valid contract, (2) the plaintiff's performance or tendered performance, (3) the defendant's breach of the contract, and (4) damages as a result of the breach." Jespersen v. Sweetwater Ranch Apartments, 390 S.W.3d 644, 658 (Tex. App.-Dallas 2012, no pet.).

Conversion (2014 case law)

CONVERSION - DEFINITION AND ELEMENTS OF PROOF 

Conversion is the wrongful exercise of dominion and control over the personal property of another, to the exclusion of or inconsistent with the owner's rights. Waisath v. Lack's Stores, Inc., 474 S.W.2d 444, 447 (Tex. 1971). A plaintiff suing for conversion must prove that (1) the plaintiff owned, possessed, or had the right to immediate possession of personal property; (2) the defendant exercised dominion and control over the property in an unlawful and unauthorized manner, (3) the defendant refused plaintiff's demand for return of the property; and (4) the plaintiff suffered injury. Cluck v. Mecom, 401 S.W.3d 110, 116 (Tex. App.-Houston [14th Dist.] 2011, pet. denied); Robin Singh Educ. Servs., Inc. v. Test Masters Educ. Servs., Inc., 401 S.W.3d 95, 97 (Tex. App.-Houston [14th Dist.] 2011, no pet.).

SOURCE: HOUSTON COURT OF APPEAL - 14-13-00113-CV - 7/15/2014

Constructive Trust (2014 caselaw snips)

THE EQUITABLE REMEDY OF CONSTRUCTIVE TRUST 

A constructive trust is an equitable remedy created by the courts to prevent unjust enrichment. Baker Botts, L.L.P. v. Cailloux, 224 S.W.3d 723, 736 (Tex. App.-San Antonio 2007, pet. denied) (internal citations omitted).

"A constructive trust is a relationship with respect to property, subjecting the person by whom the title to the property is held to an equitable duty to convey it to another, on the ground that his acquisition or retention of the property is wrongful and that he would be unjustly enriched if he were permitted to retain the property." Id. (quoting Talley v. Howsley, 142 Tex. 81, 176 S.W.2d 158, 160 (1943)).

As an equitable remedy, the decision to impose a constructive trust, along with its scope and application, is within the trial court's discretion. Id.; see Carr v. Weiss, 984 S.W.2d 753, 767 (Tex. App.-Amarillo 1999, pet. denied) (suggesting a jury finding is not necessary to support imposition of a constructive trust).

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-13-00239-CV - 8/29/2014

Suit to Quiet Title - Elements of Proof

SUIT TO QUIET TITLE REQUIREMENTS

To prevail in a suit to quiet title, a plaintiff must prove: (1) he has an interest in a specific property; (2) title to the property is affected by a claim by the defendant; and (3) the claim, although facially valid, is invalid or unenforceable. See, e.g., Vernon v. Perrien, 390 S.W.3d 47, 61 (Tex. App.-El Paso 2012, pet. denied); see also U.S. Nat'l Bank Ass'n v. Johnson, No. 01-10-00837-CV, 2011 WL 6938507, at *3 (Tex. App.-Houston [1st Dist.] Dec. 30, 2011, no pet.) (mem. op.).

"[T]o contest a bank's foreclosure of a deed of trust, a party must, at the time of the foreclosure, either (1) be the mortgagor under the deed of trust or be in privity with the mortgagor, or (2) have an ownership interest in the property affected by the foreclosure." Ursic v. NBC Bank S. Tex., N.A., 827 S.W.2d 334, 336 (Tex. App.-Corpus Christi 1991, writ denied) (citing Goswami v. Metropolitan Sav., 751 S.W.2d 487, 489 (Tex. 1988)). And the plaintiff must recover on the strength of his own title, not on the weakness of his adversary's title. Fricks v. Hancock, 45 S.W.3d 322, 327 (Tex. App.-Corpus Christi 2001, no pet.) (citing Alkas v. United Sav. Ass'n of Tex., Inc., 672 S.W.2d 852, 857 (Tex. App.-Corpus Christi 1984, writ ref'd n.r.e.)).

He "must allege right, title or ownership in himself with sufficient certainty to enable the court to see that plaintiff has a right of ownership that will warrant judicial interference." Ellison v. Butler, 443 S.W.2d 886, 888-89 (Tex. Civ. App.-Corpus Christi 1969, no writ); see Wright v. Matthews, 26 S.W.3d 575, 578 (Tex. App.-Beaumont 2000, pet. denied). The plaintiff has the burden of supplying the proof necessary to establish his superior equity and right to relief. Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 387-88 (Tex. App.-Houston [1st Dist.], pet. denied) (op. on reh'g); Ellison, 443 S.W.2d at 888-89.

SOURCE: CORPUS CHRISTI COURT OF APPEALS - Nos. 13-12-00474-CV, 13-12-00753-CV - 2/13/2014


SUIT TO QUIET TITLE AND TRESPASS TO TRY TITLE - 2015 USDC CASE 

"To prevail in a trespass-to-try-title action, Plaintiffs must usually (1) prove a regular chain of conveyances from the sovereign, (2) establish superior title out of a common source, (3) prove title by limitations, or (4) prove title by prior possession coupled with proof that possession was not abandoned." Martin v. Amerman, 133 S.W.3d 262, 265 (Tex. 2004) (citation omitted). "The pleading rules are detailed and formal, and require a plaintiff to prevail on the superiority of his title, not on the weakness of a defendant's title." Id. (citation omitted).

A suit to quiet title is an equitable remedy to clarify ownership by removing clouds on the title. See Ford v. Exxon Mobil Chem. Co., 235 S.W.3d 615, 618 (Tex. 2007). To establish a claim for suit to quiet title, a plaintiff must show the following: (1) an interest in specific property; (2) that title to the property is affected by a claim by the defendant; and (3) that the claim, although facially valid, is invalid or unenforceable. Sadler v. Duvall, 815 S.W.2d 285, 293, n.2 (Tex. App.-Texarkana 1991, pet. denied). An adverse claim, to constitute a cloud on the title removable by the court, must be one that is valid on its face but is proved by extrinsic evidence to be invalid or unenforceable. Id.

Plaintiffs also bring a suit to quiet title and/or action for trespass to try title on the premise that they are the rightful owners of the Property because the foreclosure was improper.

Plaintiffs have failed to produce summary judgment evidence of their superiority of title. It is undisputed that the Property was purchased at a foreclosure sale. Plaintiffs have offered no summary judgment evidence that there was a defect in the foreclosure proceedings. When Plaintiffs defaulted on the Note, causing Defendants to foreclose on the Property, Plaintiffs lost any interest they could claim in the Property, and Plaintiffs have no evidence to establish they have an interest in the Property. Defendants' interest in the Property was valid and enforceable. The Court has already rejected Plaintiffs' other claims. Since Plaintiffs have abandoned their allegation that Defendants lacked authority to foreclose, the only bases for these claims are alleged violations of TILA and the TDCA. Plaintiffs have conceded their TDCA claims, and the Court has found that their TILA claim fails as a matter of law. Although Plaintiffs contend they have superior title to the Property because the foreclosure is void, they fail to identify any defect in the foreclosure proceeding which would render the sale void. Thus, Plaintiffs have no basis for an action based upon trespass to try title or quiet title.

SOURCE: Brewer v. Bank of America, NA, Dist. Court, ED Texas January 7, 2015.  

The One Satisfaction Rule in Texas

THE ONE SATISFACTION RULE AND SETTLMENT CREDIT 

The one-satisfaction rule is "the longstanding proposition that a plaintiff should not be compensated twice for the same injury." Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991); Galle, Inc. v. Pool, 262 S.W.3d 564, 573 (Tex. App.-Austin 2008, pet. denied). "The rationale for this doctrine is that the plaintiff should not receive a windfall by recovering an amount in court that covers the plaintiff's entire damages, but to which a settling defendant has already partially contributed. The plaintiff would otherwise be recovering an amount greater than the trier of fact has determined would fully compensate for the injury." First Title Co. v. Garrett,860 S.W.2d 74, 78 (Tex. 1993); Galle, 262 S.W.3d at 573. The one-satisfaction rule applies both when several defendants commit the same act and when multiple defendants commit technically different acts that result in the same, single injury. Stewart Title, 822 S.W.2d at 7; Galle, 262 S.W.3d at 573. The application of the rule is not limited to tort claims, and whether the rule may be applied depends not on the cause of action asserted but rather on the injury sustained. Galle, 262 S.W.3d at 573. Thus, if the plaintiff has suffered only one injury, even if based on "overlapping and varied theories of liability," the plaintiff may recover only once. Id. The fact that more than one defendant may have caused the injury or that there may be more than one theory of liability does not modify this rule. See Stewart Title, 822 S.W.2d at 8; Galle, 262 S.W.3d at 573-74. We review the trial court's application of the one-satisfaction rule de novo. See Galle, 262 S.W.3d at 570 n.3.

The party seeking a settlement credit has the burden to prove its right to such a credit. Utts v. Short, 81 S.W.3d 822, 828 (Tex. 2002); Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 927 (Tex. 1998); see Galle, 262 S.W.3d at 570, 572. The party must prove the settlement amount by introducing into the record either the settlement agreement or some other evidence of the settlement amount. Ellender, 968 S.W.2d at 927; Galle, 262 S.W.3d at 572. If the nonsettling party meets this burden, the burden shifts to the plaintiff—the party in a better position to prove the proper allocation of the settlement—to show the extent to which the settlement amounts were allocated to separate damages caused by the settling defendants as opposed to joint or common damages. Galle, 262 S.W.3d at 572 (citing Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 391-92 (Tex. 2000); Ellender, 968 S.W.2d at 928-29). If the plaintiff fails to satisfy this burden, then the nonsettling party is entitled to a credit equaling the entire settlement amount. See Ellender, 968 S.W.2d at 928; Galle, 262 S.W.3d at 574.

SOURCE: AUSTIN COURT OF APPEALS - No. 03-14-00738-CV - 1/20/2017

THE SINGLE SATISFACTION RULE IN TEXAS

"The one satisfaction rule applies to prevent a plaintiff from obtaining more than one recovery for the same injury." Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991); see also Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 390 (Tex. 2000). Under this rule, a plaintiff is entitled to one recovery for damages suffered when multiple defendants commit the same act as well as when multiple defendants commit technically different acts resulting in a single injury. Casteel, 22 S.W.3d at 390. A court can grant summary judgment based on the one satisfaction rule. See El Paso Natural Gas Co. v. Berryman, 858 S.W.2d 362, 363 (Tex. 1993) (per curiam).

The one satisfaction rule is grounds for granting summary judgment when (1) the one satisfaction rule applies, (2) the credit sought by the defendant entirely sets off the maximum compensatory liability claimed by the plaintiff, and (3) punitive damages are not at issue. Cohen v. Arthur Andersen, L.L.P., 106 S.W.3d 304, 309-10 (Tex. App.-Houston [1st Dist.] 2003, no pet.).

SOURCE: FOURTEENTH COURT OF APPEALS HOUSTON - No. 14-13-00113-CV - 7/15/2014

PUNITIVE DAMAGES ARE A DIFFERENT MATTER 

"The `one satisfaction rule' is usually inapplicable to punitive damage awards because punitive damages do not concern compensation; they are, instead, intended to punish the wrongdoer and to deter future similar acts." Universal Servs. Co. v. Ung, 882 S.W.2d 460, 467 (Tex. App.-Houston [14th Dist.] 1994), rev'd on other grounds, 904 S.W.2d 638 (Tex. 1995); see Casteel, 22 S.W.3d at 391 ("A nonsettling defendant cannot receive credit for settlement amounts representing punitive damages."); Ratner v. Sioux Natural Gas Corp., 719 F.2d 801, 804 (5th Cir. 1983) ("The purpose of the [one satisfaction] rule is to ensure that a plaintiff receives no more than full compensation for his loss. A plaintiff awarded punitive damages has been given the right to receive more than `one satisfaction.'" (citations omitted)). Punitive damage calculations are based on the award of compensatory damages, not the amount actually recovered. See Tex. Civ. Prac. & Rem. Code Ann. § 41.004(a) (West 2008); Gilcrease v. Garlock, Inc., 211 S.W.3d 448, 458 (Tex. App.-El Paso 2006, no pet.). Consequently, a plaintiff would be entitled to recover punitive damages based on an award of compensatory damages even though his ability to recover compensatory damages is entirely offset by a credit based on the one satisfaction rule. See Gilcrease, 211 S.W.3d at 458-59.

Standing as consumer under the DTPA

WHO MAY SUE UNDER THE DECEPTIVE TRADE PRACTICES ACT? 

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 - 05-12-01607-CV - 5/5/2014

McLeod does not cite authority for his argument that Gyr cannot establish standing to sue because he received the money he used to acquire McLeod's services from other people and did not personally lose "a dollar." Gyr testified, however, that he acquired McLeod's legal services for the purpose of filing an N-400 application to become a naturalized United States citizen, and his complaint arises from false representations made in connection with the purchase of those services. Regardless of the source of the funds or Gyr's obligation to repay them, Gyr is a consumer under the DTPA and has standing to sue McLeod. See Kennedy, 689 S.W.2d at 892-93; Bus. Staffing, Inc. v. Viesca, 394 S.W.3d 733, 742-43 (Tex. App.-San Antonio 2012, no pet.).  

When must attorney's fees be segregated?

FEE SEGREGATION REQUIREMENT

Where a party seeks attorney's fees in a case where some claims permit the recovery of fees and others do not, the party must segregate and exclude the fees for services related to the claims for which fees are not recoverable unless the discrete legal services advanced both the recoverable claim and the unrecoverable claim. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313-14 (Tex. 2006).

GENERAL RULE AND EXCEPTION TO RULE

The general rule is that a party seeking to recover attorney's fees in a suit involving multiple claims or parties has a duty to segregate the fees owed. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10-11 (Tex. 1991). A recognized exception to the duty to segregate arises when the attorney's fees rendered are in connection with claims arising out of the same transaction and are so interrelated that their "prosecution or defense entails proof or denial of essentially the same facts." Id. at 11 (quoting Flint & Assocs. v. Intercont'l Pipe & Steel, Inc., 739 S.W.2d 622, 624-25 (Tex. App.-Dallas 1987, writ denied)). When the causes of action involved in the suit are dependent upon the same set of facts or circumstances and thus are intertwined to the point of being inseparable, the party suing for attorney's fees may recover the entire amount covering all claims. See id. at 11-12.

CASES:

Amerada Hess Corp. v. Wood Group Prod. Tech., 30 S.W.3d 5, 14 (Tex. App.-Houston [14th Dist.] 2000, pet. denied) (remanding where no evidence presented to support exception to duty to segregate)

Oadra v. Stegall, 871 S.W.2d 882, 888 (Tex. App.-Houston [14th Dist.] 1994, no writ) ("We have reviewed the entire record and after such review conclude that the attorney's fees in this case were not capable of segregation. The testimony in the record supports the finding that the issues and parties in this case were so intertwined that they were inseparable.").

SOURCE: FOURTEENTH COURT OF APPEALS - Nos. 14-13-00086-CV, 14-13-00088-CV - 5/15/2014

EXCEPTION WHEN SAME COUNSEL REPRESENTS PARTIES ON SAME ISSUES/CLAIMS 

"When a lawsuit involves multiple claims or parties, the proponent of attorney's fees must segregate recoverable fees from those incurred by parties or on claims for which fees are not recoverable." Clearview Props., L.P. v. Prop. Tex. SC One Corp., 287 S.W.3d 132, 143 (Tex. App.-Houston [14th Dist.] 2009, pet. denied) (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313 (Tex. 2006)). Attorney's fees that relate solely to a claim for which fees are unrecoverable must be segregated. Chapa, 212 S.W.3d at 313. The Supreme Court of Texas has held that attorney's fees are recoverable only as provided by contract or statute, and it "eliminated the exception for fees incurred solely on separate but arguably intertwined claims." Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex. 2007) (citing Chapa, 212 S.W.3d at 313). But the Supreme Court did not require that all fees be segregated even when incurred by co-defendants jointly represented by the same counsel and when such fees are incurred as a result of the same discrete tasks and work.

SOURCE: HOUSTON COURT OF APPEALS - 01-13-00855-CV – 12/30/2014 

Causation and Foreseeability in legal malpractice action

Causation — Foreseeability

The causation element of a professional negligence claim is met when a jury is presented with pleading and proof that establishes a direct causal link between the actions of the attorney, the injury suffered, and the damages awarded. Haynes & Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179, 181 (Tex. 1995).

Proximate cause consists of two elements — cause in fact and foreseeability — neither of which can be established by mere conjecture, guess, or speculation. Akin, Gump, 299 S.W.3d at 122; Doe, 907 S.W.2d at 477. Cause in fact is established by proof that the negligent act or omission was a substantial factor in bringing about the injury and without which the harm would not have occurred. Akin, Gump, 299 S.W.3d at 122; Marathon Corp. v. Pitzner, 106 S.W.3d 724, 727 (Tex. 2003).

The test for foreseeability is whether "the actor, as a person of ordinary intelligence, should have anticipated the dangers that [his] negligent conduct created for others." Byrd, 891 S.W.2d at 701 (citing Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 550 (Tex. 1985)). Generally, a third party's criminal conduct is a superseding cause which relieves the negligent actor from liability. Byrd, 891 S.W.2d at 701; Nixon, 690 S.W.2d at 550. However, the actor's negligence will not be excused where the criminal conduct is a foreseeable result of the actor's negligence. Byrd, 891 S.W.2d at 701; Nixon, 690 S.W.2d at 550.

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-13-00239-CV - 8/29/2014

Statute of limitations and attorney malpractice: special tolling rule

LEGAL MALPRACTICE CLAIMS ARE GOVERNED BY A TWO YEAR LIMITATIONS PERIOD, BUT WHEN DOES THAT START TO RUN? 

A two-year statute of limitations governs legal malpractice claims. TEX.CIV. PRAC. & REM. CODE ANN. § 16.003 (West Supp. 2014); Willis v. Maverick,760 S.W.2d 642, 644 (Tex. 1988). The statute of limitations begins to run when the claim accrues. TEX. CIV. PRAC. & REM. CODE ANN. § 16.003. A legal malpractice claim accrues when the client sustains a legal injury or, in cases
governed by the discovery rule, when the client discovers or should have discovered through the exercise of reasonable care and diligence the facts establishing the elements of the claim. Hughes v. Mahaney & Higgins, 821 S.W.2d 154, 156 (Tex. 1991); Nowak v. Pellis, 248 S.W.3d 736, 739 (Tex. App.—Houston [1st Dist.] 2007, no pet.).

EQUITABLE TOLLING EXTENSION

However, in Hughes, the Texas Supreme Court established an equitable tolling rule for the statute of limitations in legal malpractice cases: “[W]hen an attorney commits malpractice in the prosecution or defense of a claim that results in litigation, the statute of limitations on the malpractice claim against the attorney is tolled until all appeals on the underlying claim are exhausted.” 821 S.W.2d at 157.

SOURCE: FIRST COURT OF APPEALS - 01-13-00962-CV - 12/23/2014  

Who may bring legal malpractice claim?

ATTORNEY-CLIENT RELATIONSHIP REQUIRED TO SUE FOR LEGAL MALPRACTICE

A legal malpractice claim is dependent on the existence of an attorney-client relationship. Barcelo v. Elliott, 923 S.W.2d 575, 577 (Tex. 1996) (attorney owes a duty of care only to his client, and privity rule requires this relationship as a predicate for legal malpractice claim); Gamboa v. Shaw, 959 S.W.2d 662, 664-65 (Tex. App.-San Antonio 1997, no pet.); see Swank v. Cunningham, 258 S.W.3d 647, 666 (Tex. App.-Eastland 2008, pet. denied) (applying privity rule).

Therefore, we must first determine whether an attorney-client relationship existed between Sloan and Gonzalez/the Law Office.

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-13-00239-CV - 8/29/2014

The existence of an attorney-client relationship gives rise to a duty on the attorney's part to act with ordinary care, in other words, in a manner consistent with the standard of care expected to be exercised by a reasonably prudent attorney. Cosgrove, 774 S.W.2d at 664. An attorney must use "the utmost good faith in dealings with the client" and "reasonable care in rendering professional services to the client." Byrd, 891 S.W.2d at 700; see also Meyer v. Cathey, 167 S.W.3d 327, 330-31 (Tex. 2005) (per curiam) (in a formal relationship such as an attorney-client relationship a fiduciary duty arises as a matter of law). See TEX. DISCIPLINARY R. PROF'L CONDUCT §§ 1.01-8.05, reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit. G, App. A, art. X (West 2013 & Supp. 2014) (rules defining attorney's responsibilities within an attorney-client relationship). An attorney's failure to exercise "that degree of care, skill, and diligence that a lawyer of ordinary skill and knowledge commonly possesses and exercises" gives rise to a legal malpractice or professional negligence claim.[6] Cosgrove, 774 S.W.2d at 664-65 (complaints about an attorney's care, skill, or diligence in representing a client implicate this duty of ordinary care and sound in negligence).

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-13-00239-CV - 8/29/2014

The Texas rule against fracturing a negligence claim prevents legal malpractice plaintiffs from dividing a claim that sounds only in negligence into other claims in order to benefit from a longer limitations period, the availability of treble damages, or "other tactical advantages." Riverwalk, 391 S.W.3d at 236; Beck, 284 S.W.3d at 427; see Deutsch v. Hoover, Bax & Slovacek, 97 S.W.3d 179, 189 (Tex. App.-Houston [14th Dist.] 2002, no pet.). When the real issue is whether the professional exercised that degree of care, skill and diligence that professionals of ordinary skill and knowledge commonly possess and exercise, then the complaint may not be "fractured" into separate claims for negligence, breach of fiduciary duty, fraud, breach of contract, or DTPA. Beck, 284 S.W.3d at 426-27; Kimleco Petroleum, Inc. v. Morrison & Shelton, 91 S.W.3d 921, 924 (Tex. App.-Fort Worth 2002, pet. denied).

The rule against fracturing does not, however, preclude a client from asserting causes of action other than negligence against an attorney if those other claims are supported by the facts. Riverwalk, 391 S.W.3d at 236; Murphy, 241 S.W.3d at 695; Deutsch, 97 S.W.3d at 189; see also Beck, 284 S.W.3d at 427-28 (noting the fracturing rule does not necessarily bar the simultaneous assertion of negligence and non-negligence claims that are predicated on some "common or overlapping facts"); Deutsch, 97 S.W.3d at 190. However, the client must do more than "merely reassert the same claim for legal malpractice under an alternative label." Beck, 284 S.W.3d at 427 (quoting Duerr v. Brown, 262 S.W.3d 63, 70 (Tex. App.-Houston [14th Dist.] 2008, no pet.)). If the "gist" of the complaint is that the attorney did not exercise the degree of care, skill, or diligence that attorneys of ordinary skill and knowledge commonly possess and exercise, then the complaint should be pursued as a negligence claim rather than as some other claim. Riverwalk, 391 S.W.3d at 236; Beck, 284 S.W.3d at 427-28; Deutsch, 97 S.W.3d at 189-90. Claims regarding the quality of the lawyer's representation of the client are professional negligence claims. Murphy, 241 S.W.3d at 696-97; Ersek v. Davis & Davis, P.C., 69 S.W.3d 268, 274-75 (Tex. App.-Austin 2002, pet. denied) (if the ultimate issue is whether there has been a breach of duty leading to damages, then the claim constitutes a negligence claim).

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-13-00239-CV - 8/29/2014

Governmental immunity from suit and statutory exception for some contract claims against local government entities

GOVERNMENTAL IMMUNITY AND LIMITED WAIVER UNDER THE LOCAL GOVERNMENT CODE 

Governmental immunity has two components: immunity from liability and immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). Immunity from suit is a bar to the suit in its entirety. Id. When a governmental entity enters into a contract, it waives immunity from liability; however, that waiver of liability does not establish waiver of immunity from suit. For there to be waiver of immunity from suit, the Legislature must specifically provide for the waiver. See Tooke, 197 S.W.3d at 332-33 (requiring clear and unambiguous language for waiver of governmental immunity).

Texas Local Government Code Section 271.152, entitled "Waiver of Immunity to Suit for Certain Claims," provides:

A local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract, subject to the terms and conditions of this subchapter.

Tex. Local Gov't Code § 271.152 (West 2005) (Emphasis added).

Section 271.151 defines "governmental entity" as "a political subdivision of this State . . . including a . . . public school district." Tex. Local Gov't Code § 271.151(3) (West 2005); see also Witchita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 n.3 (Tex. 2003); Gatesco Q.M., Ltd. v. City of Houston, 333 S.W.3d 338, 348 n.7 (Tex. App.-Houston [14th Dist.] 2010, no pet.).

Section 271.151(2) defines "contract subject to this subchapter" as:

a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity."

Tex. Loc. Gov't Code § 271.151(2) (West 2005) (Emphasis added).

Section 271.153, entitled "Limitation on Adjudication Awards," provides the total amount of money awarded in a breach-of-contract action brought against a governmental entity is limited to "the balance due and owed by the local governmental entity under the contract . . . ." Tex. Loc. Gov't Code § 271.153(a) (West 2005) (Emphasis added). Thus, the party seeking to establish waiver must allege a local governmental entity is involved, the entity entered into a contract subject to the subchapter, and the adjudication involves the breach of that contract.

SOURCE: FOURTEENTH COURT OF APPEALS - 14-13-00882-CV - 11/6/2014

WAIVER OF GOVERNMENTAL IMMUNITY UNDER SECTION 271.152

TEX. LOC. GOV'T CODE ANN. § 271.152 (West, Westlaw through 2013 3d C.S.).

Under section 271.152 of the Texas Local Government Code, "A local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract . . . ." Id. "`Contract subject to this subchapter' means a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity." Id. § 271.151(2) (West, Westlaw through 2013 3d C.S.). "Local governmental entity" includes public school districts such as BISD. Id. § 271.151(3)(B). By entering into a written contract stating the essential terms of an agreement to provide insurance services, a government entity waives its immunity from suit. Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 327 (Tex. 2006).

SOURCE: CORPUS CHRISTI COURT OF APPEALS - No. 13-11-00270-CV - 4/30/2014

Novation defined (2014 Dallas Court of Appeals case)

WHAT IS A NOVATION IN A CONTRACTUAL RELATIONSHIP?

A novation is the substitution of a new agreement in place of an existing agreement between the parties. Goldman v. Olmstead, 414 S.W.3d 346, 358 (Tex. App.-Dallas 2013, pet. denied); In re B.N.L.-B., 375 S.W.3d 557, 562 (Tex. App.-Dallas 2012, no pet.). "A novation occurs if a contract evidences an intention to relinquish and extinguish pre-existing claims and rights of action; in lieu of the old obligation, a party accepts the promise of performance of the new obligation instead of the performance itself." Fulcrum Cent. v. AutoTester, Inc., 102 S.W.3d 274, 277 (Tex. App.-Dallas 2003, no pet).

ELEMENTS OF PROOF FOR NOVATION

To establish a novation, the party must prove: (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. Goldman, 414 S.W.3d at 358. The substitution of a new agreement occurs when a later agreement is so inconsistent with a former agreement that the two cannot subsist together. B.N.L.-B., 375 S.W.3d at 562-63. "In the absence of inconsistent provisions, `a second contract will operate as a novation of a first contract only when the parties to both contracts intend and agree that the obligations of the second shall be substituted for and operate as a discharge of the obligations of the first.'" Fulcrum Cent., 102 S.W.3d at 277. Whether a subsequent agreement works a novation of an earlier agreement is a question of intent. Id. The parties must have clearly intended a novation and a novation is never presumed. White v. Harrison, 390 S.W.3d 666, 675 (Tex. App.-Dallas 2012, no pet.).

SOURCE: DALLAS COURT OF APPEALS - 05-12-01719-CV - 7/30/2014

Res Judicata (2014 caselaw snips)

Res judicata (14th Court of Appeals Houston)

A party claiming the affirmative defense of res judicata must prove (1) a prior final determination on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims as were or could have been raised in the first action. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010); McNeil Interests, Inc. v. Quisenberry, 407 S.W.3d 381, 387 (Tex. App.-Houston [14th Dist.] 2013, no pet.).

SOURCE: HOUSTON COURT OF APPEALS -  14-13-00113-CV - 7/15/2014

Res Judicata Doctrine (First Court of Appeals 2014)

The doctrine of res judicata bars parties from collaterally attacking a prior final judgment. Matthews Constr. Co. v. Rosen, 796 S.W.2d 692, 694 (Tex. 1990). A party seeking dismissal of a suit based on res judicata must prove (1) the existence of a prior final judgment on the merits by a court of competent jurisdiction, (2) identity of parties or those in privity with them, and (3) a subsequent action based on the same claims that were or could have been raised in the prior action. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010); Houtex Ready Mix Concrete & Materials v. Eagle Constr. & Envtl. Servs., L.P., 226 S.W.3d 514, 519 (Tex. App.-Houston [1st Dist.] 2006, no pet.). "[A] judgment is final for the purposes of issue and claim preclusion `despite the taking of an appeal unless what is called an appeal actually consists of a trial de novo.'" Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 6 (Tex. 1986) (op. on reh'g) (quoting RESTATEMENT (SECOND) OF JUDGMENTS § 13 cmt. f (1982)).

Res judicata applies to persons in privity with a party to the prior judgment—that is, a person who is so connected with a party to the prior judgment that the party represented the same legal right. See Benson v. Wanda Petroleum Co., 468 S.W.2d 361, 363 (Tex. 1971). For purposes of res judicata, this identity of interest exists when: (1) the person can control an action even if he is not a party to it; (2) the party to the prior action represented the person's interests; or (3) the person is a successor-in-interest to the party in the prior action. Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 653 (Tex. 1996). To determine whether res judicata bars a subsequent suit, we examine the circumstances of each case to identify any interests the parties may share. See Getty Oil Co. v. Ins. Co. of N. Am., 845 S.W.2d 794, 800-01 (Tex. 1992).

SOURCE: FIRST COURT OF APPEALS IN HOUSTON -

Res Judicata (Corpus Christi Court of Appeals) 

Res judicata prevents the relitigation of a claim or cause of action that has been finally adjudicated, as well as matters that, with the use of diligence, should have been litigated in the prior suit. Barr v. Resolution Trust Corp. ex rel. Sunbelt Fed. Sav., 837 S.W.2d 627, 628 (Tex. 1992). To be entitled to res judicata, the moving party must establish: (1) a prior final judgment on the merits was rendered by a court of competent jurisdiction; (2) the parties are identical or in privity; (3) the pending action is based on the same claims that were raised or could have been raised in the previous action. Id.

SOURCE: CORPUS CHRISTI COURT OF APPEALS- 13-12-00452-CV  5/29/2014

Offensive use of Collateral Estoppel doctrine by the Plaintiff against the Defendant

When the Plaintiff invokes collateral estoppel 

In seeking to invoke the doctrine of collateral estoppel, a party must establish three elements: (1) the facts sought to be litigated in the second action were fully and fairly litigated, (2) those facts were essential to the judgment in the prior action, and (3) the issue is identical to an issue in the prior action. Tex. Dep't of Pub. Safety v. Petta, 44 S.W.3d 575, 579 (Tex. 2001).

When collateral estoppel is being used offensively, as it is here, the plaintiff uses the doctrine to estop a defendant from relitigating an issue that the defendant litigated and lost in prior litigation. Yarbrough's Dirt Pit, Inc. v. Turner, 65 S.W.3d 210, 216 (Tex. App.-Beaumont 2001, no pet.).

A trial court has broad discretion in determining whether to allow a plaintiff to use collateral estoppel offensively. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979); see also Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 7 (Tex. 1986) (citing Parklane Hosiery with approval); Goldstein v. Comm'n for Lawyer Discipline, 109 S.W.3d 810, 812-13 (Tex. App.-Dallas 2003, pet. denied). A trial court abuses its discretion only when its action is arbitrary and unreasonable, without reference to guiding rules or principles. Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex. 1991).

In determining whether to apply collateral estoppel offensively, the trial court must consider the Parklane Hosiery factors. See Parklane Hosiery Co., 439 U.S. at 329-30; Yarbrough's Dirt Pit, 65 S.W.3d at 216. The first factor is whether application of the doctrine will tend to increase litigation by allowing a plaintiff to "wait and see" before filing suit instead of joining in the prior litigation. See Parklane Hosiery, 439 U.S. at 329-330; see also Avila v. St. Luke's Lutheran Hosp., 948 S.W.2d 841, 858 (Tex. App.-San Antonio 1997, pet. denied).

Second, the trial court must determine whether the offensive use of collateral estoppel is unfair under the circumstances of the particular case. See Parklane Hosiery, 439 U.S. at 330. Under this factor, we consider the defendant's incentive in the first action to vigorously defend the suit, the foreseeability of future suits, and the availability of procedural safeguards in the second suit that were not available in the first suit. See id.; see also Goldstein, 109 S.W.3d at 812-13.

SOURCE: CORPUS CHRISTI COURT OF APPEALS- 13-12-00452-CV - 5/29/2014

When the res judicata defense is based on a JP court judgment, the outcome may be a different one

Austin-based court of appeals explains that preclusive effect under res judicata doctrine is more limited when the prior judgment was rendered by justice court (which is not a court of record), and reverses the trial court's dismissal of second lawsuit in district court for lack of evidence of privity as to the plaintiffs in the first suit and the second lawsuit. 
   
RES JUDICATA WHEN THE FIRST JUDGMENT WAS RENDERED BY THE JUSTICE OF THE PEACE & PRIVITY FOR RES  JUDICATA PURPOSES 

Res judicata prevents parties and those in privity with them from relitigating a case that a competent tribunal has adjudicated to finality. Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 206 (Tex. 1999). Res judicata generally bars claims or defenses that, through diligence, could have been litigated in the earlier suit but were not. Id. at 206-07; Getty Oil v. Insurance Co. of N. Am., 845 S.W.2d 794, 798 (Tex. 1992). "The doctrine is intended to prevent causes of action from being split, thus curbing vexatious litigation and promoting judicial economy." Ingersoll-Rand Co., 997 S.W.2d at 207.

ELEMENTS OF RES JUDICATA DEFENSE 

Res judicata "requires proof of the following elements: (1) a prior final judgment on the merits by a court of competent jurisdiction, (2) identity of parties or those in privity with them, and (3) a second action based on the same claims that were raised or could have been raised in the first action." Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996). A litigant is generally not bound by a judgment in a suit to which he was not a party unless he was in privity with a party to the original suit. McGee v. McGee, 936 S.W.2d 360, 364 (Tex. App.-Waco 1996, writ denied).

SPECIAL RULE NARROWS APPLICABILITY OF RULE IN CASE OF JP COURT JUDGMENTS [Note: Small Claims courts have been abolished] 

Regardless of party or privity status, however, judgments from small-claims courts are not accorded the same common-law finality as judgments from district courts. Under section 31.004 of the Texas Civil Practice and Remedies Code,

[a] judgment or a determination of fact or law in a proceeding in a lower trial court [e.g., a small-claims court] is not res judicata and is not a basis for estoppel by judgment in a proceeding in a district court, except that a judgment rendered in a lower trial court is binding on the parties thereto as to recovery or denial of recovery.

Tex. Civ. Prac. & Rem. Code § 31.004(a); see id. § 31.004(c).

This Court has held that

[i]n the situation where a litigant brings a lawsuit in a district court subsequent to filing suit in a court of limited jurisdiction, section 31.004 of the civil practice and remedies code modifies the common law so that "res judicata bars only those claims that were actually litigated in the limited-jurisdiction court."

Kizer v. Meyer, Lytton, Alen & Whitaker, Inc., 228 S.W.3d 384, 391 (Tex. App.-Austin 2007, no pet.) (quoting Wren v. Gusnowski, 919 S.W.2d 847, 848 (Tex. App.-Austin 1996, no writ)). The purpose of section 31.004 is to narrow the preclusive effect of judgments from courts of limited jurisdiction by precluding a subsequent suit on claims actually tried in such courts but not "any other claim that could have been joined and tried but were not." Webb v. Persyn, 866 S.W.2d 106, 107 (Tex. App.-San Antonio 1993, no writ). Section 31.004 thus abrogates the common-law rules of res judicata for small-claims-court judgments and does not bar subsequent prosecution of unlitigated claims simply because they could have been litigated in the lower court. See, e.g., id.; McClendon v. State Farm Mut. Auto. Ins. Co., 796 S.W.2d 229, 232 (Tex. App.-El Paso 1990, writ denied).

Therefore, in accordance with section 31.004, if the pleadings in the underlying lawsuit here include claims not actually adjudicated in the small-claims court, then res judicata and collateral estoppel do not bar those pleaded claims even if Voges was in privity with his grandfather with respect to the prior judgment.

If Voges was in privity with his grandfather, the claims actually litigated in small-claims court would not survive even under section 31.004. Therefore, the threshold issue in this case is whether the trial court erred in dismissing Voges's claims based on a finding of privity.

PRIVITY FOR RES-JUDICATA PURPOSES 

For purposes of res judicata, the term "privity" refers to parties who (1) exert control over the original action even if they are not parties to it, (2) have interests that were represented by a party to the original action, or (3) are successors in interest who derive their claims through a party to the prior action. HECI Exploration Co. v. Neel, 982 S.W.2d 881, 890 (Tex. 1998); Benson v. Wanda Petroleum Co., 468 S.W.2d 361, 363 (Tex. 1971); McNeil Interests, Inc. v. Quisenberry, 407 S.W.3d 381, 388 (Tex. App.-Houston [14th Dist.] 2013, no pet.).

The existence of privity turns on the particular circumstances of each case, see Getty Oil, 845 S.W.2d at 800, but "privity is not established by the mere fact that persons may happen to be interested in the same question or in proving the same state of facts," Benson, 468 S.W.2d at 363; see McNeil Interests, 407 S.W.3d at 388-90 (50% ownership interest in business did not give rise to privity relationship for purposes of res judicata and owner acting in representative capacity to hire attorney and serve as corporate representative did not constitute control by owner in individual capacity).

The trial court expressly found that (1) Voges participated in the previous litigation to such a degree that he exercised control in that litigation and (2) his interests were fully represented and litigated on his behalf by his grandfather in the lower-court proceeding.

NO EVIDENCE OF PRIVITY 

The evidentiary record to support these findings, however, is nonexistent. In fact, no evidence was admitted at the dismissal hearing and no testimony was given. There is no evidence that Voges's grandfather instituted the small-claims court proceeding on Voges's behalf or in a representative capacity. Nor is there evidence that Voges himself exerted any control over the prior litigation or that he is a successor-in-interest to his grandfather. At the dismissal hearing, Campbell stated, but did not testify under oath, that Voges was present at the hearing before the small-claims court and had argued the case on his grandfather's behalf. Even if such participation could constitute sufficient "control" to bind Voges to the outcome of the prior proceeding, there is no competent evidence of that fact. The record is simply devoid of any evidence that would support a finding of privity. Accordingly, there is no evidence to support the trial court's conclusion that Voges's claims are barred by res judicata.

CONCLUSION

Because the record contains no evidence that Voges was a party to the small-claims-court litigation or in privity with a party to that proceeding, we reverse the trial court's dismissal order and remand the cause to the trial court for further proceedings.[1]

[1] We do not hold that privity cannot be established in this case; we hold only that the trial court's finding of privity is not supported by the present record.

SOURCE: AUSTIN COURT OF APPEALS - 03-14-00125-CV - 10/28/2014

Texas Construction Fund Act

THE TEXAS CONSTRUCTION FUND ACT   

The Texas Construction Fund Act is found in chapter 162 of the Texas Property Code. See TEX. PROP. CODE ANN. §§ 162.001-.033 (West, Westlaw through 2013 3d C.S.). This act "imposes fiduciary responsibilities on contractors to ensure that Texas subcontractors, mechanics, and materialmen are paid for work completed." In re Waterpoint Int'l LLC, 330 F.3d 339, 345 (5th Cir. 2003). This statute provides that construction payments are trust funds if the payments are made to a contractor or to an officer of the contractor for the improvement of specific real property. Id. § 162.001(a); see also Kelly v. Gen'l Interior Const. Inc., 262 S.W.3d 79, 85 (Tex. App.-Houston [14th Dist.]), overruled on other grounds, 301 S.W.3d 653 (Tex. 2010).

The contractor or officer who receives the trust funds is considered a trustee of the funds. TEX. PROP. CODE ANN. § 162.002. The artisan, laborer, mechanic, contractor, subcontractor, or materialman who furnished labor or material for the construction or repair on the real property is considered the beneficiary of any trust funds. Id. § 162.003.

A trustee who intentionally, knowingly, or with the intent to defraud, directly or indirectly retains, uses, disburses, or otherwise diverts the funds without first fully paying current or past due obligations has misapplied the trust funds. See id. § 162.031(a). "Thus, a party who misapplies these trust funds is subject to civil liability if (1) the party breaches the duty imposed by chapter 162, (2) with the requisite scienter, and (3) the claimants are within the class of people chapter 162 was designed to protect and have asserted the type of injury chapter 162 was intended to prohibit." C & G, Inc. v. Jones, 165 S.W.3d 450, 453 (Tex. App.-Dallas 2005, pet. denied). Any officer or director who has control or direction over the funds is also a trustee of the funds and is personally liable. Id. at 453-54.

SOURCE: CORPUS CHRISTI COURT OF APPEALS - No. 13-13-00118-CV - 5/29/2014

MORE ON TEXAS TRUST FUND ACT FROM FEDERAL COURT 

The Construction Trust Fund Act ("Trust Fund Act") is found in Chapter 162 of the Texas Property Code. See TEX. PROP. CODE ANN. § 162.001 et seq.

The Trust Fund Act "imposes fiduciary responsibilities on contractors to ensure that subcontractors, mechanics and materialmen are paid for work completed." In re Waterpoint Int'l LLC, 330 F.3d 339, 345 (5th Cir.2003); accord Fidelity & Guar. Ins. Underwriters, Inc. v. Wells Fargo Bank, N.A., No. Civ. A. 04-2833, 2006 WL 870683, at *9 (S.D.Tex. Mar.31, 2006). This provision was "enacted to serve as a special protection for subcontractors and materialmen in situations where contractors or their assignees refused to pay the subcontractor or materialman for labor and materials." In re Waterpoint LLC, 330 F.3d at 345; see McCoy v. Nelson Utils. Servs., Inc., 736 S.W.2d 160, 164 (Tex.App.—Tyler 1987, writ ref'd n.r.e.).

Accordingly, construction payments constitute trust funds under Chapter 162 of the Texas Property Code if they are "made to a contractor or subcontractor or to an officer, director, or agent of a contractor or subcontractor, under a construction contract for the improvement of specific real property in this state." TEX. PROP. CODE ANN. § 162.001 (Vernon 1995 & Supp.2005); accord Argyle Mech., Inc. v. Unigus Steel, Inc., 156 S.W.3d 685, 687 (Tex.App.—Dallas 2005, no pet.); Holladay v. CW & A, Inc., 60 S.W.3d 243, 246 (Tex.App.—Corpus Christi 2001, pet. denied). In such a situation, the "contractor, subcontractor, or owner or an officer, director, or agent of a contractor, subcontractor, or owner, who receives trust funds or who has control or direction of trust funds" serves as trustee. TEx. PROP. CODE ANN. § 162.002 (Vernon 1995); accord C & G, Inc. v. Jones, 165 S.W.3d 450, 453 (Tex. App.—Dallas 2005, pet. denied); Holladay, 60 S.W.3d at 246. The artisan, laborer, mechanic, contractor, subcontractor, or materialman who labors or furnishes labor or material for the construction or repair of an improvement on specific real property located in Texas is the beneficiary of any trust funds paid or received in connection with the improvement. See TEX. PROP. CODE ANN. § 162.003 (Vernon 1995 & Supp. 2005); accord In re Waterpoint Int'l LLC, 330 F.3d at 345.

Pursuant to the Trust Fund Act, "[any] trustee who, intentionally or knowingly or with intent to defraud, directly or indirectly retains, uses, disburses, or otherwise diverts trust funds without first fully paying all current or past due obligations incurred by the trustee to the beneficiaries of the trust funds, has misapplied the trust funds." TEx. PROP. CODE ANN. § 162.031(a) (Vernon 1995); accord C & G, Inc., 165 S.W.3d at 453; Argyle Mech., Inc., 156 S.W.3d at 687; Holladay, 60 S.W.3d at 245-46. Trustees, however, are provided with an affirmative defense under the Trust Fund Act. Namely, a trustee can avoid liability for misapplication of trust funds by showing "the trust funds not paid to the beneficiaries of the trust were used by the trustee to pay the trustee's actual expenses directly related to the construction or repair of the improvement." TEX. PROP. CODE ANN. § 162.031(b); accord Holladay, 60 S.W.3d at 247; Lively v. Carpet Servs., Inc., 904 S.W.2d 868, 875 (Tex. App.—Houston [1st Dist.] 1995, writ denied). "The law interpreting section 162.031(b) does not require . . . an explicit level of proof tying particular expenditures to the improvements at issue." Holladay, 60 S.W.3d at 248. Rather, construction trust funds may be applied to overhead costs as well as other "directly related" expenses. See In re Nicholas, 956 F.2d 110, 113 (5th Cir.1992); In re Boyle, 819 F.2d 583, 586 (5th Cir.1987); Holladay, 60 S.W.3d at 248; Lively, 904 S.W.2d at 875-76; see also Op. Tex. Att'y Gen. No. J945 (1988) (affirmative defense allows paying funds for overhead and other expenses, even if not readily traceable to a particular job, so long as actually incurred). 

SOURCE: United States District Court, E.D. Texas, Beaumont Division. 438 F.Supp.2d 696 (2006)

What is a gift, legally speaking

CLAIM THAT TRANSFERRED PROPERTY WAS A GIFT: ELEMENTS OF PROOF

   

“A gift is a transfer of property made voluntarily and gratuitously, without consideration.” In re Marriage of Skarda, 345 S.W.3d 665, 671 (Tex. App.—Amarillo 2011, no pet.); see also Mora v. Mora, No. 04-12-00638-CV, 2014 WL 769441, at *7 (Tex. App.—San Antonio Feb. 26, 2014, no pet.) (mem. op.); Magness v. Magness, 241 S.W.3d 910, 912 (Tex. App.—Dallas 2007, pet. denied). 

  

“The existence of a gift requires sufficient proof of: (1) intent to make a gift; (2) delivery of the property; and (3) acceptance of the property.” In re Marriage of Skarda, 345 S.W.3d at 671; see also Mora, 2014 WL 769441, at *7; Magness, 241 S.W.3d at 912. “The intent of the donor is the principal issue in determining whether a gift was made.” In re Marriage of Skarda, 345 S.W.3d at 671; see also Mora, 2014 WL 769441, at *7.

PRESUMPTION ARISING FROM INTER-SPOUSAL TRANSFER OF REAL PROPERTY 

“A deed for property from one spouse as grantor to the other spouse as grantee creates a rebuttable presumption that the grantee spouse received the property as separate property by gift.” In re Marriage of Skarda, 345 S.W.3d at 671; see also Mora, 2014 WL 769441, at *7; Magness, 241 S.W.3d at 912. “The presumption may be rebutted by proof the deed was procured by fraud, accident, or mistake.” Magness, 241 S.W.3d at 912-13; see also Mora, 2014 WL 769441, at *7.  

INTERSPOUSAL GIFT - FACT ISSUE 

  

“Whether property given by one spouse to the other is a gift and the recipient’s separate property is a fact-intensive decision.” In re Marriage of Skarda, 345 S.W.3d at 671; see also Mora, 2014 WL 769441, at *7. The trial court, as the fact-finder in this case, is the sole judge of the credibility of the witnesses and may accept or reject any or all of a witness’s testimony. In re Marriage of Skarda, 345 S.W.3d at 672; see also Mora, 2014 WL 769441, at *7; Magness, 241 S.W.3d at 913. 

   

SOURCE: SANANTONIO COURT OF APPEALS - 04-14-00011-CV - 11/19/2014

  

Does failure to keep promise provide basis for fraud cause of action, or is it simply a breach of contract?

It depends on whether there was intent not to perform (or no intent to ever perform) at the time the promise was made, but that may be hard to prove. Evidence of partial performance may disprove such intent. Additionally, not every promise qualifies as a contract.  

ELEMENTS OF FRAUD AS CAUSE OF ACTION IN TEXAS

To establish a cause of action for fraud, the plaintiff must demonstrate each of the following elements: (1) the defendant made a material representation; (2) the representation was false; (3) when the representation was made, the defendant knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the defendant made the representation with the intent that the plaintiff should act upon it; (5) the plaintiff acted in reliance on the representation; and (6) the plaintiff thereby suffered an injury. See Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex. 2011). If the representation is a promise of future performance, the plaintiff must further demonstrate that the defendant made the promise with no intent of performing it. See Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam).

Assuming the existence of an enforceable promise, the Agents argue that there is no evidence that they made the promise while having no intent to perform it. We agree.

PROMISE OF PERFORMANCE IN THE FUTURE 

A promise of future performance is actionable in fraud only if, at the time the promise was made, the promisor intended to deceive and had no intention of performing. See Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). Showing that a party had no intent to perform "is not easy," as such matters are not usually susceptible to direct proof. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 305 (Tex. 2006). The failure to perform, standing alone, is no evidence of intent. See Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 435 (Tex. 1986). Similarly, a party's denial that a promise had been made is not legally sufficient evidence of fraudulent inducement. See Tony Gullo, 212 S.W.3d at 305; T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222 (Tex. 1992). The claimant must present some circumstantial evidence, however slight, showing an intent to deceive. See Spoljaric, 708 S.W.2d at 435.

SOURCE: FOURTEENTH COURT OF APPEALS IN HOUSTON - No. 14-13-00730-CV 11/6/2014

[The] undisputed evidence of partial performance negated the Investor's claim of fraud. See Reyna v. First Nat'l Bank in Edinburg, 55 S.W.3d 58, 68 (Tex. App.-Corpus Christi 2001, no pet.) (holding that defendants' tender of partial payment negated any claim that they had no intention of paying for equipment); Bank One, Tex., N.A. v. Stewart, 967 S.W.2d 419, 446 (Tex. App.-Houston [14th Dist.] 1998, pet. denied) (holding there was no evidence that party made representations with intent not to perform on note when the party subsequently made payment for five years).

The parol evidence rule is not a rule of evidence, even though it governs admissibility of testimony

NATURE OF PAROL EVIDENCE RULES, EFFECT, AND POSSIBLE EXCEPTIONS 

The parol evidence rule is a rule of substantive law, not a rule of evidence. See Hubacek v. Ennis State Bank, 159 Tex. 166, 169, 317 S.W.2d 30, 31 (1958). When parties reduce an agreement to writing, the law of parol evidence presumes, in the absence of fraud, accident, or mistake, that any prior or contemporaneous oral or written agreements merged into the final written agreement. See DeClaire v. G&B McIntosh Family Ltd. P'ship, 260 S.W.3d 34, 45 (Tex. App.-Houston [1st Dist.] 2008, no pet.). Any provisions not set out in the writing are presumed to have been abandoned before execution of the agreement or, alternatively, they are presumed to have never been made. Id.

PAROL EVIDENCE TO BE DISREGARDED WHEN RULE APPLIES 

Evidence that violates the parol evidence rule has no legal effect and "merely constitutes proof of facts that are immaterial and inoperative." See Piper, Stiles & Ladd v. Fid. & Deposit Co. of Md., 435 S.W.2d 934, 940 (Tex. Civ. App.-Houston [1st Dist.] 1968, writ ref'd n.r.e.). Such evidence cannot be considered by the court when it construes the contract, even if the evidence is admitted without objection. See Johnson v. Driver, 198 S.W.3d 359, 364 (Tex. App.-Tyler 2006, no pet.).

WHAT EXCEPTIONS ARE THERE AND WHEN CAN THEY BE INVOKED? 

There are exceptions, however. Parol evidence may be admitted to show (1) that the contract was induced by fraud, accident, or mistake; (2) that an agreement was to become effective only upon certain contingencies; or (3) in the case of ambiguity, that the parties' true intentions differ from those expressed in the agreement. See Gonzalez v. United Bhd. of Carpenters & Joiners of Am., Local 551, 93 S.W.3d 208, 211 (Tex. App.-Houston [14th Dist.] 2002, no pet.).

Parol evidence may also be admitted under an additional exception to show collateral, contemporaneous agreements that are consistent with the underlying written agreement. See DeClaire, 260 S.W.3d at 45. However, this exception does not permit parol evidence that varies or contradicts the express or implied terms of the written agreement. Id.

SOURCE: HOUSTON COURT OF APPEALS - No. 14-13-00730-CV - 11/6/2014

ADDITIONAL CASELAW EXCERPT ON PAROL EVIDENCE RULE FROM CITED CASE: 

The parol evidence rule is a rule of substantive law. Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30, 31 (1958); Gonzalez v. United Bd. of Carpenters & Joiners, 93 S.W.3d 208, 211 (Tex. App.-Houston [14th Dist.] 2002, no pet.); Piper, Stiles & Ladd v. Fid. & Deposit Co., 435 S.W.2d 934, 940 (Tex.Civ.App.-Houston [1st Dist.] 1968, writ ref'd n.r.e.).

When parties reduce an agreement to writing, the law of parol evidence presumes, in the absence of fraud, accident, or mistake, that any prior or contemporaneous oral or written agreements merged into the written agreement and, therefore, that any provisions not set out in the writing were either abandoned before execution of the agreement or, alternatively, were never made and are thus excluded from consideration in interpreting the written agreement. See Hubacek, 317 S.W.2d at 31; Smith v. Smith, 794 S.W.2d 823, 827 (Tex.App.-Dallas 1990, no writ); Muhm v. Davis, 580 S.W.2d 98, 101 (Tex. Civ.App.-Houston [1st Dist.] 1979, writ ref'd n.r.e.). The terms of a promissory note cannot be contradicted or varied by parol evidence of a manner of payment other than as expressed in the note. Dameris v. Homestead Bank, 495 S.W.2d 52, 54 (Tex.Civ.App.-Houston [1st Dist.] 1973, no writ).

We review parol evidence questions de novo, as questions of law. City of Pasadena v. Gennedy, 125 S.W.3d 687, 691 (Tex.App.-Houston [1st Dist.] 2003, pet. denied). Evidence that violates the parol evidence rule has no legal effect and "merely constitutes proof of facts that are immaterial and inoperative." Piper, Stiles & Ladd, 435 S.W.2d at 940. Because all prior negotiations and agreements are presumed merged into the final agreement, parol evidence is not admissible to vary, alter, or supplement the terms of an otherwise unambiguous contract except to show (1) that the contract was induced by fraud, accident, or mistake; (2) that an agreement was to become effective only upon certain contingencies; or (3) in the case of ambiguity, that the parties' true intentions differ from those expressed in the agreement. See Messer v. Johnson, 422 S.W.2d 908, 912 (Tex.1968); Gonzalez, 93 S.W.3d at 211; Litton v. Hanley, 823 S.W.2d 428, 430 (Tex.App.-Houston [1st Dist.] 1992, no writ).

Parol evidence may also be admissible, under an additional exception, to show collateral, contemporaneous agreements that are consistent with the underlying agreement to be construed. See Hubacek, 317 S.W.2d at 31; see also Transit Enter., Inc. v. Addicks Tire & Auto Supply, Inc., 725 S.W.2d 459, 461 (Tex.App.-Houston [1st Dist.] 1987, no writ) (applying exception for collateral, consistent, contemporaneous agreements); Sherrod v. Bailey, 580 S.W.2d 24, 29 (Tex.Civ.App.-Houston [1st Dist.] 1979, writ ref'd n.r.e.) (same). But this latter exception does not permit parol evidence that varies or contradicts either the express terms or the implied terms of the written agreement. Hubacek, 317 S.W.2d at 31; Loe v. Murphy, 46*46 611 S.W.2d 449, 451-52 (Tex.Civ. App.-Dallas 1980, writ ref'd n.r.e.); NHA, Inc. v. Jones, 500 S.W.2d 940, 944-45 (Tex. Civ.App.-Fort Worth 1973, writ ref'd n.r.e.) (both citing Hubacek).

Rule 13 Sanctions Order requires findings of bad conduct to hold up on appeal

$5,000 IN SANCTIONS WITHOUT EXPLANATION IN TRIAL COURT'S ORDER REVERSED BY DALLAS COURT OF APPEALS 

After notice and a hearing, rule 13 authorizes sanctions against a party who files a pleading that is both groundless and brought in either bad faith or harassment.[3] TEX. R. CIV. P. 13. No sanctions under rule 13 may be imposed except for good cause, the particulars of which must be stated in the sanction order. Id. We review a trial court's imposition of sanctions under rule 13 for an abuse of discretion. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004); Arnold v. Life Partners, Inc., No. 05-12-00092-CV, 2013 WL 4553379, at *3 (Tex. App.-Dallas Aug. 28, 2013, pet. filed).

Here, regarding sanctions, the trial court's judgment states only that it orders attorney's fees of $5,000 as sanctions. The court did not make the required particularized findings of good cause to support sanctions under rule 13. Failure to comply with this clear directive is an abuse of discretion. King v. First Nat'l Bank of Baird, 161 S.W.3d 661, 663 (Tex. App.-Eastland 2005, no pet.); Tex.-Ohio Gas, Inc. v. Mecom, 28 S.W.3d 129, 135 (Tex. App.-Texarkana 2000, no pet.). Thus, to the extent it ordered sanctions under rule 13, the trial court abused its discretion.

• Footnote [3]: Rule 13 expressly provides that a general denial does not constitute a violation of the rule. TEX. R. CIV. P. 13.

COURT'S INHERENT POWER TO SANCTION AS ALTERNATIVE TO RULE 11 

Brandon argues that the sanctions can be upheld under the trial court's inherent power to impose sanctions.

A trial court has inherent power to sanction to the extent necessary to deter, alleviate, and counteract bad faith abuse of the judicial process, such as any significant interference with the court's administration of its core functions, including hearing evidence, deciding issues of fact raised by the pleadings, deciding questions of law, rendering final judgment, and enforcing its judgments. Cherry Petersen Landry Albert, 2014 WL 7076496, at *9.

When using its inherent power to sanction, the court must make findings, based on evidence, that the conduct complained of significantly interfered with the court's legitimate exercise of its core functions. Union Carbide Corp. v. Martin, 349 S.W.3d 137, 147 (Tex. App.-Dallas 2011, no pet.). The court made no such findings in this case, and thus the sanction order cannot be upheld under the court's inherent power to sanction. See id. at 148.

We sustain Gerardo's second issue.

SOURCE: FIFTH COURT OF APPEALS IN DALLAS - 05-13-01219-CV - 10/20/2014

The 8-corners Rule

The eight corners rule (insurance litigation)

The rule takes its name from the fact that only two documents are ordinarily relevant to the determination of the duty to defend: the policy and the pleadings of the third party claimant. GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 308 (Tex. 2006). Under that rule, we determine whether a liability insurer has a duty to defend by comparing the allegations within the four corners of the claimant's pleadings to the language within the four corners of the insurance policy. Nat'l Union Fire Ins. Co. v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997). If the claimant's factual allegations potentially support a covered claim, the insurer must defend its insured. GuideOne Elite Ins. Co., 197 S.W.3d at 310. We give the allegations in the petition a liberal interpretation in favor of the insured. Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 643 (Tex. 2005); Gehan Homes, Ltd. v. Employers Mut. Cas. Co., 146 S.W.3d 833, 838 (Tex. App.-Dallas 2004, pet. denied). If the pleading "does not state facts sufficient to clearly bring the case within or without the coverage, the general rule is that the insurer is obligated to defend if there is, potentially, a case under the [pleading] within the coverage of the policy." Merchs. Fast Motor Lines, 939 S.W.2d at 141. In other words, if there is doubt as to whether the claimant has pleaded a cause of action within coverage, the doubt is resolved in favor of the insured, and the insurer must defend. Id.
 
SOURCE: DALLAS COURT OF APPEALS - No. 05-07-01255-CV - 12/4/2008

Limitations period for defamation & single publication rule as to web-published material

LIMITATIONS PERIOD FOR DEFAMATION & SINGLE PUBLICATION RULE WHEN COMPLAINED-OF MATERIAL IS POSTED ON THE INTERNET 

Under Texas law, the statute of limitations for libel is one year after the date that the cause of action accrues. Tex. Civ. Prac. & Rem. Code Ann. § 16.002(a) (West 2002). To support their limitations ground, appellees relied on "the single publication rule," which our court has adopted in cases alleging mass media libel. See Holloway v. Butler, 662 S.W.2d 688, 690-91 (Tex. App.-Houston [14th Dist.] 1983, writ ref'd n.r.e.); see also Williamson v. New Times, Inc., 980 S.W.2d 706, 710 (Tex. App.-Fort Worth 1998, no pet.). The "single publication rule" provides,

No person shall have more than one cause of action for damages for libel . . . or any other tort founded upon any single publication or exhibition or utterance, such as any one edition or issue of a newspaper or book or magazine or any one presentation to an audience or any one broadcast over radio or television or any one exhibition of a motion picture. Recovery in any action shall include all damages for any such tort suffered by the plaintiff in all jurisdictions.
Holloway, 662 S.W.2d at 690. When the rule applies, a libel action accrues, for statute-of-limitations purposes, upon "publication." See id. at 692; see also Williamson, 980 S.W.2d at 710. Publication is complete on "the last day of the mass distribution of copies of the printed matter" because that is the day "when the publishers, editors and authors have done all they can to relinquish all right of control, title and interest in the printed matter." See Holloway, 662 S.W.2d at 692; see also Williamson, 980 S.W.2d at 710. Our court rejected the principle that each time a libelous article is brought to the attention of a third person, such as each time a libelous book, paper, or magazine is sold, a new publication has occurred, creating a separate tort. See Holloway, 662 S.W.2d at 690-91. The rationale behind the single-publication rule includes (1) preventing the assertion of stale claims, multiplicity of claims, and problems concerning apportionment of damages, conflicts of laws, and venue, and (2) the fact that the mass communication of a single defamatory statement constitutes, for all practical purposes, a single wrong. See id. at 691. A plaintiff is not limited to a single cause of action in the event the same information appears in separate printings of the same publication or in different publications. Id. at 692. The single publication rule applies strictly to multiple copies of a libelous article published as part of a single printing. Id.

Application of the single publication rule to internet publication

We recognize that the Holloway court defined the single publication rule to include only one cause of action for "any one broadcast over . . . television," but its discussion regarding determining when a publication has occurred focused on printed media, such as a newspaper. See id. at 690-92. Regardless, Mayfield does not challenge application of the single publication rule relative to the television broadcasts at issue; she focuses solely on the internet publication of the reports. In fact, as mentioned above, there is no evidence controverting appellees' proof that the reports were each broadcast only once on television. Thus, we need not further address the single publication rule relative to television broadcasts.

Rather, we turn to Mayfield's argument that the single publication rule should not apply when, as in the present case, a news report is posted on the publisher's webpage. Mayfield suggests a report posted on the internet has a greater potential than a report published in a newspaper or on television to remain publicly available for a long period, be repeatedly viewed, and be viewed by a wide audience. She apparently maintains that a new cause of action for libel accrues, for limitations purposes, each day that the report remains on the internet; i.e., there is a new publication and Mayfield has been defamed every day because the report remains accessible to third parties.

We have not found, and the parties do not cite, any Texas cases addressing whether the single publication rule applies to a media report posted on the internet. However, in Nationwide Bi-Weekly Administration, Inc. v. Belo Corp., 512 F.3d 137, 141-46 (5th Cir. 2007), the Fifth Circuit Court of Appeals predicted The Supreme Court of Texas would apply the rule to a report published on the internet and reject "the continuous publication rule" suggested by Mayfield—that when such a report remains constantly available on the internet, each day results in a new publication. See id. at 143 (recognizing Fifth Circuit, when applying Texas law but addressing unsettled issue, is required to follow the rule it believes the Supreme Court of Texas would adopt). The Fifth Circuit based its decision on (1) the majority view among courts, and (2) the rationale behind the rule. See id. at 142-46.

With respect to the first factor, the Fifth Circuit was persuaded by the fact that every court that had decided the issue as of that date had held the single publication rule applies to information publicly available on the internet. See id. at 144 (citing, e.g., Oja v. U.S. Army Corps of Eng'rs, 440 F.3d 1122, 1133 (9th Cir. 2006); Van Buskirk v. New York Times Co., 325 F.3d 87, 89 (2nd Cir. 2003); Mitan v. Davis, 243 F.Supp.2d 719, 724 (W.D. Ky. 2003); Churchill v. State, 378 N.J. Super. 471, 876 A.2d 311, 316 (2005); McCandliss v. Cox Enters., 265 Ga. App. 377, 593 S.E.2d 856, 858 (2004); Traditional Cat Ass'n, Inc. v. Gilbreath, 118 Cal.App.4th 392, 13 Cal.Rptr.3d 353, 361-62 (2004); Firth v. State, 98 N.Y.2d 365, 747 N.Y.S.2d 69, 775 N.E.2d 463, 466 (2002)).[6]

With respect to the second factor, the Fifth Circuit relied on the rationale behind the widespread acceptance of the single publication rule in the internet context, which consisted of the following considerations:

• The "functional similarities" between print and internet publications: "A statement electronically located on a server which is called up when a web page is accessed, is no different from a statement on a paper page in a book lying on a shelf which is accessed by the reader when the book is opened." Id. at 144 (quoting Mitan, 243 F.Supp.2d at 724); see also Kaufman v. Islamic Soc'y of Arlington, 291 S.W.3d 130, 140 (Tex. App.-Fort Worth 2009, pet. denied) (citing "functional similarities" recognized by Belo court as a factor when holding journalist author of internet article was "a member of the electronic or print media," same as one publishing through more traditional media, and thus authorized to bring interlocutory appeal from order denying summary judgment);
• More importantly, the "potential for endless retriggering of the statute of limitations, multiplicity of suits and harassment of defendants" and a corresponding chilling effect on internet communication. Belo, 512 F.3d at 145 (quoting Firth, 747 N.Y.S.2d 69, 775 N.E.2d at 466); and
• The fact that application of the rule to internet publications is consistent with the policy considerations cited by Texas courts for applying the rule to print media: to support the statute of limitation and prevent the filing of stale claims. Id. (citing Holloway, 662 S.W.2d at 691).
The Fifth Circuit further rejected arguments similar to those suggested by Mayfield in the present case. See id. at 145. Its plaintiff urged that "the publication of defamatory and private information on the web has the potential to be vastly more offensive and harmful than it might otherwise be in a more circumscribed publication." Id. The court reasoned that the concern more persons will read internet publications because they are likely accessible for a potentially indefinite period is outweighed by the competing policy interest of enforcing the statute of limitations and preventing stale claims. Id. (citing Holloway, 662 S.W.2d at 691). The court also reasoned that the concern regarding broader readership (irrespective of the temporal component) is likely relevant only to the issue of damages—not to the triggering of the statute of limitations. Id.

Although we are not bound by the Fifth Circuit's interpretation of Texas law, see Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex. 1993) Longview Bank & Trust Co. v. First Nat'l Bank of Azle, 750 S.W.2d 297, 300 (Tex. App.-Fort Worth 1988, no pet.), or its predictions about what rule The Supreme Court of Texas likely would apply, we agree with the Fifth Circuit's reasoning and hold that the single publication rule applies to a television station's news report publicly available on the internet. Accordingly, Mayfield's libel claim for each of the two reports at issue accrued on the sole date that the report was broadcast on television and posted on the station's website. Because Mayfield filed suit more than one year after each such broadcast and internet publication, her libel claim is barred by the statute of limitations.

SOURCE: FOURTEENTH COURT OF APPEALS IN HOUSTON - No. 14-13-00268-CV – 8/21/2014 – Mayfield v. Fullhart

Liability under the Texas Construction Fund Act

TEXAS CONSTRUCTION FUND ACT IMPOSES FIDUCIARY DUTIES 

The Texas Construction Fund Act is found in chapter 162 of the Texas Property Code. See TEX. PROP. CODE ANN. §§ 162.001-.033 (West, Westlaw through 2013 3d C.S.). This act "imposes fiduciary responsibilities on contractors to ensure that Texas subcontractors, mechanics, and materialmen are paid for work completed." In re Waterpoint Int'l LLC, 330 F.3d 339, 345 (5th Cir. 2003). This statute provides that construction payments are trust funds if the payments are made to a contractor or to an officer of the contractor for the improvement of specific real property. Id. § 162.001(a); see also Kelly v. Gen'l Interior Const. Inc., 262 S.W.3d 79, 85 (Tex. App.-Houston [14th Dist.]), overruled on other grounds, 301 S.W.3d 653 (Tex. 2010). 

The contractor or officer who receives the trust funds is considered a trustee of the funds. TEX. PROP. CODE ANN. § 162.002. The artisan, laborer, mechanic, contractor, subcontractor, or materialman who furnished labor or material for the construction or repair on the real property is considered the beneficiary of any trust funds. Id. § 162.003. A trustee who intentionally, knowingly, or with the intent to defraud, directly or indirectly retains, uses, disburses, or otherwise diverts the funds without first fully paying current or past due obligations has misapplied the trust funds. See id. § 162.031(a). "Thus, a party who misapplies these trust funds is subject to civil liability if (1) the party breaches the duty imposed by chapter 162, (2) with the requisite scienter, and (3) the claimants are within the class of people chapter 162 was designed to protect and have asserted the type of injury chapter 162 was intended to prohibit." C & G, Inc. v. Jones, 165 S.W.3d 450, 453 (Tex. App.-Dallas 2005, pet. denied). Any officer or director who has control or direction over the funds is also a trustee of the funds and is personally liable. Id. at 453-54.

SOURCE: CORPUS CHRISTI COURT OF APPEALS - No. 13-13-00118-CV - 5/29/2014

When courts refrain from involvement in the affairs and internal disputes of religious organizations: The ecclesiastical abstention doctrine

The Ecclesiastical Abstention Doctrine

"The Free Exercise clause of the First Amendment to the United States Constitution precludes civil courts from delving into matters focused on `theological controversy, church discipline, ecclesiastical government, or the conformity of the members of a church to the standard of morals required of them.'" Thiagarajan v. Tadepalli, Nos. 14-13-00132-CV & 14-13-00133-CV, 2014 WL 1711224, at *5 (Tex. App.-Houston [14th Dist.] Apr. 30, 2014, no pet. h.) (quoting Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696, 713-14, 96 S. Ct. 2372, 2382 (1976)). "The First Amendment is applicable to the states through the Fourteenth Amendment." Masterson v. Diocese of Nw. Tex., 422 S.W.3d 594, 601 (Tex. 2013) (citing Cantwell v. Connecticut, 310 U.S. 296, 303, 60 S. Ct. 900, 903 (1940)).

"Determining the reach of subject matter jurisdiction in disputes involving religious organizations requires consideration of competing demands." Thiagarajan, 2014 WL 1711224, at *5. "Courts do not have jurisdiction to decide questions of an ecclesiastical or inherently religious nature, so as to those questions they must defer to decisions of appropriate ecclesiastical decision makers." Masterson, 422 S.W.3d at 605-06. "But Texas courts are bound to exercise jurisdiction vested in them by the Texas Constitution and cannot delegate their judicial prerogative where jurisdiction exists." Id. at 606 (courts must "fulfill their constitutional obligation to exercise jurisdiction where it exists, yet refrain from exercising jurisdiction where it does not exist."); see also id. at 596 (Texas courts have a "constitutional duty to decide disputes within their jurisdiction while still respecting limitations the First Amendment places on that jurisdiction.").

"Properly exercising jurisdiction requires courts to apply neutral principles of law to non-ecclesiastical issues involving religious entities in the same manner as they apply those principles to other entities and issues." Masterson, 422 S.W.3d at 606. "Thus, courts are to apply neutral principles of law to issues such as land titles, trusts, and corporate formation, governance, and dissolution, even when religious entities are involved." Id. "[T]he line between required judicial action and forbidden judicial intrusion `will not always be distinct' because many disputes `require courts to analyze church documents and organizational structures to some degree.'" Thiagarajan, 2014 WL 1711224, at *5 (quoting Masterson, 422 S.W.3d at 606). "[C]ourts must look to the substance and effect of a plaintiff's complaint to determine its ecclesiastical implication, not its emblemata." Tran v. Fiorenza, 934 S.W.2d 740, 743 (Tex. App.-Houston [1st Dist.] 1996, no writ) (citing Green v. United Pentecostal Church Int'l, 899 S.W.2d 28, 30 (Tex. App.-Austin 1995, writ denied)); see also Williams v. Gleason, 26 S.W.3d 54, 59 (Tex. App.-Houston [14th Dist.] 2000, pet. denied) ("Whether this suit is ecclesiastical, or concerns property rights, torts, or criminal conduct, is determined by first examining the substance and effect of the [plaintiffs'] petition—without considering what they use as claims—to determine its ecclesiastical implication.").

SOURCE: HOUSTON COURT OF APPEALS - 01-13-00872-CV - 7/31/2014

We hold the trial court lacked subject-matter jurisdiction over this dispute under the ecclesiastical abstention doctrine. Cf. Masterson, 422 S.W.3d at 608 (dispute could be resolved by application of neutral principles of law, where bylaws expressly governed the question presented); see also Hosanna-Tabor, 132 S. Ct. at 706; Dean, 994 S.W.2d at 395.

Because we conclude that the trial court lacked subject-matter jurisdiction over this case, we do not reach Anderson's issues regarding the merits of the trial court's denial of his application for a temporary injunction.

Conclusion

We vacate the trial court's October 7, 2013 order and render judgment dismissing the case for want of subject-matter jurisdiction.