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.

How does Texas law define a med-mal claim (health care liability claim)? Who is a covered provider? What is health care?

DEFINITION OF HEALTH CARE LIABILITY CLAIM 

Whether [a] claim is a health care liability claim is a question of law we review de novo. Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 177 (Tex. 2012). When construing a statute, we give it the effect the Legislature intended. See Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex. 2009). The best expression of the Legislature's intent is the plain meaning of the statute's text. Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011). More particularly, the broad language of the Medical Liability Act evinces legislative intent for the statute to have expansive application. Loaisiga v. Cerda, 379 S.W.3d 248, 256 (Tex. 2012). In determining whether Sok's claim is a health care liability claim, we focus on the underlying nature of the cause of action and are not bound by the pleadings. Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 847 (Tex. 2005).

The Medical Liability Act defines a health care liability claim as:

a cause of action against a health care provider or physician for treatment, lack of treatment, or other claimed departure from accepted standards of medical care, or health care, or safety or professional or administrative services directly related to health care, which proximately results in injury to or death of a claimant, whether the claimant's claim or cause of action sounds in tort or contract.
TEX. CIV. PRAC. & REM. CODE § 74.001(a)(13). In Texas West Oaks, we observed that this statutory definition contains three elements:

(1) a physician or health care provider must be a defendant; (2) the claim or claims at issue must concern treatment, lack of treatment, or a departure from accepted standards of medical care, or health care, or safety or professional or administrative services directly related to health care; and (3) the defendant's act or omission complained of must proximately cause the injury to the claimant.
371 S.W.3d at 179-80. No one element, occurring independent of the other two, will recast a claim into a health care liability claim.

Who is a Health Care Provider?

The Medical Liability Act defines a health care provider to include, inter alia, an affiliate of a physician. See TEX. CIV. PRAC. & REM. CODE § 74.001(a)(12)(B)(i). The statute defines "affiliate" as "a person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a specified person, including any direct or indirect parent or subsidiary." Id. § 74.001(a)(1). And the statute defines control as "the possession of the power to direct the management and policies of the person" through ownership. Id. § 74.001(a)(3). Therefore, if we determine Dr. Nguyen directly or indirectly controls Bioderm, then we must conclude Bioderm is Dr. Nguyen's affiliate and is a health care provider under the Act. Id. §§ 74.001(a)(1), (a)(12)(B)(i).

What is health care? 

The Medical Liability Act defines health care as "any act or treatment performed or furnished, or that should have been performed or furnished, by any health care provider for, to, or on behalf of a patient during the patient's medical care, treatment, or confinement." TEX. CIV. PRAC. & REM. CODE § 74.001(a)(10). In Texas West Oaks, we considered whether a claim alleged a departure from accepted standards of health care and held that "if expert medical or health care testimony is necessary to prove or refute the merits of the claim against a physician or health care provider, the claim is a health care liability claim." 371 S.W.3d at 182. Accordingly, in considering whether a claim alleges a departure from accepted standards of medical or health care, a court should first determine whether expert medical or health care testimony is needed to establish the requisite standard of care and breach.[11] See id. And only if expert testimony is not needed should a court proceed to consider the totality of the circumstances, as a claim may still be a health care liability claim despite that "in the final analysis, expert testimony may not be necessary to support a verdict." Murphy v. Russell, 167 S.W.3d 835, 838 (Tex. 2005).[12] Therefore, we address whether expert health care testimony is needed to prove or refute the merits of Sok's claim.

SOURCE: TEXAS SUPREME COURT - No. 11-077 - 3/28/2014 - BIODERM SKIN CARE, LLC v. SOC 
The crux of the parties' disagreement on this question is whether Bioderm qualifies as a health care provider. Because Bioderm is an affiliate of a physician, we conclude it is a health care provider under the Medical Liability Act. 

What is an "expert report" required by the Texas statute governing health care liability claims?

EXPERT REPORTS UNDER TEXAS MEDICAL LIABILITY ACT

The Texas Medical Liability Act requires a claimant asserting a health care liability claim to timely serve one or more expert reports addressing the conduct of each health care provider against whom a claim has been asserted. § 74.351(a). If a sufficient expert report is not filed within the requisite period specified, section 74.351(b) mandates the court enter an order dismissing that claim, with prejudice. As to the sufficiency of the report, section 74.351(l) provides a trial court "shall grant a motion challenging the adequacy of an expert report only if it appears to the court, after hearing, that the report does not represent an objective good faith effort to comply with the definition of an expert report . . . ." To qualify as an objective good faith effort the report must (1) inform the defendant of the specific conduct the claimant questions, and (2) provide a basis for the trial court to conclude there is a meritorious claim. Loaisiga v. Cerda, 379 S.W.3d 248, 260 (Tex. 2012); Scoresby v. Santillan, 346 S.W.3d 546, 556 (Tex. 2011) (citing Palacios, 46 S.W.3d at 879).

An "expert report" is defined as a written report by an expert that provides a fair summary of the expert's opinions regarding (1) the applicable standards of care, (2) the manner in which the care rendered by the physician or health care provider fails to meet those standards and (3) the causal relationship between that failure and the injury, harm or damages claimed. See § 74.351(r)(6); see also TTHR Ltd. P'ship v. Moreno, 401 S.W.3d 41, 44 (Tex. 2013) (citing Palacios, 46 S.W.3d at 879); Certified EMS, Inc. v. Potts, 392 S.W.3d 625, 630 (Tex. 2013). The expert report must not be conclusory in its explanation of causation and it must explain the basis for the expert's causation opinions by linking the expert's conclusions to the facts. Bowie Mem'l Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex. 2002); Palacios, 46 S.W.3d at 879; Wells v. Ashmore, 202 S.W.3d 465, 467 (Tex. App.-Amarillo 2006, no pet.). The report need not present evidence as if the plaintiff was actually litigating the merits, Palacios, 46 S.W.3d at 879, and there are no magic words required to establish causation. Bowie Mem'l Hosp., 79 S.W.3d at 53. "[A] report that satisfies these requirements, even if as to one theory only; entitle[s] the claimant to proceed with a suit against the physician or health care provider." Potts, 392 S.W.3d at 630.

SOURCE: AMARILLO COURT OF APPEALS - No. 07-13-00181-CV - 10/7/2014

Product liability claim vs negligence claim involving medical device

PRODUCT LIABILITY VS NEGLIGENCE (medical device) 

Normally, strict products liability and negligence are separate causes of action with different elements. Shaun T. Mian Corp. v. Hewlett-Packard, 237 S.W.3d 851, 857 (Tex. App.-Dallas 2007, pet. denied). However, here [PLAINTIFF] alleged no negligence other than conduct relating to whether the ventilator was unreasonably dangerous when sold. See id. As a result, [Plaintiff's] negligence theories are encompassed and subsumed in his defective product theories, and [Plaintiff's] burden at trial would be to prove injury resulting from a product defect. Id. Therefore, any error in disposing of [Plaintiff's] negligence claims cannot have caused the rendition of an improper judgment or prevented [PLAINTIFF] from properly presenting his case to this Court. See TEX. R. APP. P. 44.1(a); Hewlett-Packard, 237 S.W.3d at 857. [Plaintiff's] right to recover against Respironics stands or falls on the outcome of his products liability claims. Hewlett-Packard, 237 S.W.3d at 857. We thus affirm the trial court's judgment as to [Plaintiff's] negligence causes of action. Id.

STRICT LIABILITY 

Products liability imposes strict liability on the manufacturer of an unreasonably dangerous product that is a producing cause of a plaintiff's injuries. Id. The plaintiff must prove the product was defective when it left the hands of the manufacturer and that the defect was a producing cause of the plaintiff's injuries. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004); Hewlett-Packard, 237 S.W.3d at 858. A manufacturing defect exists when a product deviates, in its construction or quality, from the specifications or planned output in a manner that renders it unreasonably dangerous. Ridgway, 135 S.W.3d at 600; Hewlett-Packard, 237 S.W.3d at 858.

EXPERT TESTIMONY REQUIRED 

Generally, the requirements to prove a design defect in a products liability action necessitate competent expert testimony and objective proof that a defect caused the injury. See Nissan Motor Co. Ltd. v. Armstrong, 145 S.W.3d 131, 137 (Tex. 2004); Champion v. Great Dane Ltd. Partnership, 286 S.W.3d 533, 538 (Tex. App.-Houston [14th Dist.] 2009, no pet.).

Here, [Plaintiff] failed to present expert testimony that the ventilator was defective when it left the hands of Respironics. See Ridgway, 135 S.W.3d at 600; Hewlett-Packard, 237 S.W.3d at 858.

Products liability theories 

Products liability theories: defective design, defective manufacturing, and defective marketing.

Products liability imposes strict liability on the manufacturer of an unreasonably dangerous product that is a producing cause of a plaintiff's injuries.  The plaintiff must prove the product was defective when it left the hands of the manufacturer and that the defect was a producing cause of the plaintiff's injuries. Ridgway, 135 S.W.3d at 600; Hewlett-Packard, 237 S.W.3d at 858. A manufacturing defect exists when a product deviates, in its construction or quality, from the specifications or planned output in a manner that renders it unreasonably dangerous. Ridgway, 135 S.W.3d at 600; Hewlett-Packard, 237 S.W.3d at 858. Generally, the requirements to prove a design defect in a products liability action necessitate competent expert testimony and objective proof that a defect caused the injury. See Nissan Motor Co. Ltd. v. Armstrong, 145 S.W.3d 131, 137 (Tex. 2004); Champion v. Great Dane Ltd. Partnership, 286 S.W.3d 533, 538 (Tex. App.-Houston [14th Dist.] 2009, no pet.).

SOURCE: DALLAS COURT OF APPEALS - No. 05-11-01057-CV - 7/23/2014

See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004).

Under what circumstances is a contract construed as a matter of law, and extrinsic evidence precluded?

CONTRACT CONSTRUCTION AS A MATTER OF LAW 

If a written contract has a definite legal meaning, then a court should read the text and construe it as a matter of law without help from a jury. Frost Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (per curiam); Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). When the words on the page suffice, a court should not look outside the document to decide what the parties agreed. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). The overriding objective is to "ascertain and give effect to the parties' intentions as expressed in the document." Frost Bank, 165 S.W.3d at 311-12.

However, if a contract is ambiguous, the court should accept parol evidence and can empanel a jury to decide, as an issue of fact, the "true intent of the parties." Coker, 650 S.W.2d at 394-95. A contract is ambiguous if it is open to more than one reasonable reading. Frost Bank, 165 S.W.3d at 312. Deciding whether a contract is ambiguous is itself an issue of law for the court. Webster, 128 S.W.3d at 229.

To determine whether a contract is ambiguous, courts apply standard rules of interpretation. Frost Bank, 166 S.W.3d at 312. These rules require an attempt to harmonize the contract as a whole. Id. An ideal harmonization will not treat any clause as a nullity, and courts generally presume that every provision was intended to have some effect. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). Words should be given their ordinary meaning unless it appears from context that they were used in a technical or different sense. Id. Courts should interpret contracts from a utilitarian perspective, keeping in mind the parties' business objectives. Frost Bank, 165 S.W.3d at 312. Absurd, inequitable, or oppressive interpretations are to be eschewed unless they prove unavoidable. Id.

SOURCE: HOUSTON COURT OF APPEALS - No. 01-12-00677-CV - 2/13/2014

The lease unambiguously does not require First Industrial to give Michelin advance notice of the amount of the policy's deductible. See R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 519 (Tex. 1980) ("If a written instrument is so worded that a court may properly give it a certain or definite legal meaning or interpretation, it is not ambiguous."). As the contract is unambiguous, our determination of its meaning is a legal conclusion. See Frost Bank, 165 S.W.3d at 312. The trial court correctly disregarded the jury's findings and entered judgment in favor of First Industrial.

ADDITIONAL CASE

See Gilbert Tex. Contr., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 133 (Tex. 2010) ("If a contract as written can be given a clear and definite legal meaning, then it is not ambiguous as a matter of law.").

Can prevailing defendants get attorney's fees under the Texas Theft Liability Act (TTLA)?

Unlike other statutes that authorize recovery of attorney's fees as an exception to the American Rule, the Texas Theft Liability Act (TTLA) provides for an award of such fees to the prevailing party, which includes the party that successfully defends a statutory civil theft claim, not just the prevailing plaintiff. No showing of frivolousness is required. Dismissal with prejudice signifies success for fee purposes because it entails preclusive effect and thereby alters the relationship between the parties. 


THEFT LIABILITY ACT AND ATTORNEY FEE RECOVERY

Section 134.005(b) of the TTLA provides that "[e]ach person who prevails in a suit under this chapter shall be awarded court costs and reasonable and necessary attorney's fees." TEX. CIV. PRAC. & REM. CODE ANN. § 134.005(b). The award of fees to a prevailing party in a TTLA action is mandatory. Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998) ("Statutes providing that a party `may recover,' `shall be awarded,' or `is entitled to' attorney fees are not discretionary.").

The TTLA statute does not contain a definition of "prevails" to assist in determining who qualifies as a prevailing party. Courts have looked to the term's "ordinary" meaning to determine its scope for both statutory and contractual claims. See, e.g., Epps v. Fowler, 351 S.W.3d 862, 866 (Tex. 2011) (construing written contract to give meaning to undefined term "prevailed" while noting that phrase "prevailing party" is given its ordinary meaning and has been explicated through statutory interpretation by many courts).

Courts have held that the phrase "prevailing party" in section 134.005(b) of the TTLA includes both a plaintiff successfully prosecuting a theft suit and a defendant successfully defending against one. Peoples v. Genco Fed. Credit Union, No. 10-09-00032-CV, 2010 WL 1797266, at *7 (Tex. App.-Waco May 5, 2010, no pet.) (mem. op.); Brown v. Kleerekoper, No. 01-11-00972-CV, 2013 WL 816393, *5 (Tex. App.-Houston [1st Dist.] March 5, 2013, pet. filed) (mem. op.). A prevailing defendant is entitled to attorney's fees "without any prerequisite that the claim is found to be groundless, frivolous, or brought in bad faith." Air Routing Int'l Corp. (Canada) v. Britannia Airways, Ltd., 150 S.W.3d 682, 686 (Tex. App.-Houston [14th Dist.] 2004, no pet.). Thus, Equicap's status defending against a TTLA claim does not prevent recovery of attorney's fees.

Prevailing on portion of but not entire suit

In Moak v. Huff, No. 04-11-00184-CV, 2012 WL 566140, at *11 (Tex. App.-San Antonio Feb. 15, 2012, no pet.) (mem. op.), the defendant lost on the plaintiff's DTPA claim but successfully defended against the plaintiff's TTLA claim. Id., 2012 WL 566140, at *1. The defendant then sought an award of attorney's fees under the TTLA. Id., 2012 WL 566140, at *9. The plaintiff resisted, arguing that a person does not "prevail in a suit" unless he is the "party in whose favor a judgment is rendered" and is "vindicated by the judgment." Id., 2012 WL 566140, at *10. The plaintiff maintained that the defendant had to prevail on the entire suit to recover attorney's fees under the TTLA. Id.

The court of appeals disagreed, holding that "a person who prevails in a TTLA cause of action is entitled to recover the reasonable fees necessarily incurred prosecuting or defending that cause of action, even if the party is unsuccessful on other claims and counterclaims litigated in the same suit." Id., 2012 WL 566140, at *11; see Brown, 2013 WL 816393, at *5 (holding that defendant who successfully defended theft-of-property claim under TTLA was entitled to attorney's fees even if defendant did not prevail on other causes of action). Thus, Equicap's failure to obtain judgment on its breach-of-contract claim does not affect its recovery of attorney's fees as the prevailing party on the TTLA claim.

A defendant "prevails" if the plaintiff's claim is dismissed with prejudice

A party prevails if he "successfully prosecutes the action or successfully defends against it. . . ." Johns v. Ram-Forwarding, Inc., 29 S.W.3d 635, 637-38 (Tex. App.-Houston [1st Dist.] 2000, no pet.). A defendant who has the claims against him resolved by voluntary dismissal without prejudice generally is not considered a prevailing party or entitled to an award of attorney's fees. Cricket Commc'ns, Inc. v. Trillium Indus., Inc., 235 S.W.3d 298, 311 (Tex. App.-Dallas 2007, no pet.); Travel Music of San Antonio, Inc. v. Douglas, No. 04-00-00757-CV, 2002 WL 1058527, at *3 (Tex. App.-San Antonio May 29, 2002, pet. denied) (mem. op., not designated for publication). This is because a dismissal without prejudice does not materially alter the plaintiff's legal relationship with the defendant; the plaintiff is free to reassert his claims and may prevail against the defendant at a later date. See Epps, 351 S.W.3d at 869.

The legal relationship between a plaintiff and defendant does change, however, when the plaintiff's claims are dismissed with prejudice. Epps, 351 S.W.3d at 866-69. When a plaintiff's claims are dismissed with prejudice, the doctrine of res judicata prohibits the plaintiff from re-asserting his claims against that defendant in a later suit. Epps, 351 S.W.3d at 867; see Mossler v. Shields, 818 S.W.2d 752, 754 (Tex. 1991) (holding that dismissal with prejudice functions as final determination on merits); see also Williams v. TDCJ-Inst. Div., 176 S.W.3d 590, 594 (Tex. App.-Tyler 2005, pet. denied) (holding that dismissal with prejudice has full res judicata and collateral estoppel effect).

Res judicata attaches to a dismissal with prejudice even though the plaintiff's claims have not been fully litigated at trial. See Epps, 351 S.W.3d at 868-69. Res judicata applies because "a dismissal or nonsuit with prejudice is `tantamount to a judgment on the merits,'" and the effect of res judicata in that instance "works a permanent, inalterable change in the parties' legal relationship to the defendant's benefit: the defendant can never again be sued by the plaintiff or its privies for claims arising out of the same subject matter." Id. at 868-69.

The TTLA claim asserted against Equicap was dismissed with prejudice, but the basis for dismissal was specified as want of prosecution: "Accordingly, it is ORDERED and DECREED . . . that all claims by the Estate . . . are DISMISSED with PREJUDICE, for want of prosecution." See TEX. R. CIV. P. 165a (permitting dismissal of plaintiff's claims for want of prosecution).

A dismissal for failure to appear at trial or for want of prosecution should be without prejudice. See Att'y Gen. v. Rideaux, 838 S.W.2d 340, 342 (Tex. App.-Houston [1st Dist.] 1992, no writ) ("[A] trial court's authority to dismiss cases for want of prosecution does not confer upon it the authority to adjudicate and deny the merits of the dismissed claim."). An order dismissing a claim with prejudice when only dismissal without prejudice was appropriate can be challenged through a postjudgment motion. See El Paso Pipe & Supply v. Mountain States Leasing, Inc., 617 S.W.2d 189, 190 (Tex. 1981). While admittedly erroneous, a dismissal with prejudice that should have been without prejudice is not automatically void— it is merely voidable. Id.; Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 863-64 (Tex. 2010) (holding that erroneous order dismissing case with prejudice for want of prosecution "must be attacked directly in order to prevent the order from becoming final. . . ."). A plaintiff must affirmatively challenge the order to avoid it becoming a final judgment. Joachim, 315 S.W.3d at 863-64 (citing El Paso, 617 S.W.2d at 190). If the plaintiff fails to challenge the error, the order of dismissal with prejudice becomes "a final determination on the merits for purposes of res judicata." Id. at 866.

The Estate did not challenge the dismissal of its TTLA claim with prejudice. Accordingly, the dismissal is treated as a final determination on the merits and res judicata applies. Joachim, 315 S.W.3d at 864, 866; El Paso, 617 S.W.2d at 190; see Mossler, 818 S.W.2d at 754; see also Williams, 176 S.W.3d at 594.

Because res judicata applies to the Estate's TTLA claim against Equicap, the parties' legal relationship has changed in a manner that materially benefited Equicap and, as such, permits Equicap to qualify as a prevailing party under the TTLA statute. See Epps, 351 S.W.3d at 868 (stating that "we have no doubt that a defendant who is the beneficiary of a nonsuit with prejudice would be a prevailing party."); cf. Doolin's Harley-Davison, Inc. v. Young, No. 06-05-00101-CV, 2006 WL 27983, at *3 (Tex. App.-Texarkana Jan. 6, 2006, no pet.) (mem. op.) (holding that defendant was not prevailing party because matter was dismissed without prejudice and plaintiff retained right to refile case).

Accordingly, the trial court was required to award to Equicap its attorney's fees related to defending against the TTLA claim. TEX. CIV. PRAC. & REM. CODE ANN. § 134.005(b) (providing that prevailing party on TTLA claim "shall be awarded" attorney's fees); Brown, 2013 WL 816393, at *5. We sustain Equicap's first issue and hold that the trial court erred by denying Equicap's timely request for attorney's fees under the TTLA, given that the trial court ordered dismissal with prejudice.

Remand to determine attorney's fees

We have held that Equicap is entitled to an award of attorney's fees on the TTLA claim because it prevailed through dismissal of the Estate's claim with prejudice. When an award of attorney's fees to a prevailing party is mandated by statute, the factfinder can decide to award zero attorney's fees only if the evidence (1) failed to prove (a) that the attorney's services were provided or (b) the value of the services provided; or (2) affirmatively showed that (a) no attorney's services were needed or (b) that any services provided were of no value. Recognition Commc'ns, Inc. v. Am. Auto. Ass'n, Inc., 154 S.W.3d 878, 891 (Tex. App.-Dallas 2005, pet. denied); Citibank (S.D.), N.A. v. Tran, No. 05-11-01423-CV, 2013 WL 3205878, at *6 (Tex. App.-Dallas Aug. 26, 2013, pet. denied) (mem. op.).

If there is any evidence in support of the award of fees, the factfinder does not have discretion to award no fees. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311-14 (Tex. 2006); see also Tran, 2013 WL 3205878, at *7 (holding that prevailing party could not be awarded zero attorney's fees by jury when attorney testified that he provided legal services and his testimony established that services had value); Glenn v. Pack, No. 02-09-00204-CV, 2011 WL 167254, at *7 (Tex. App.-Fort Worth Jan. 13, 2011, no pet.) (mem. op.) (holding that jury could not award zero attorney's fees on breach-of-contract counterclaim when attorney testified to some fee amount).

A prevailing party entitled to attorney's fees is required to "segregate fees between claims for which they are recoverable and claims for which they are not." Chapa, 212 S.W.3d at 311. Failure to segregate, though, does not result in the denial of any fee. Tran, 2013 WL 3205878, at *7 (holding that testimony of aggregate fee was some evidence of segregated fees and, therefore, supported remand); Glenn, 2011 WL 167254, at *7 ("[Party's] failure to segregate fees does not mean that he cannot recover any fees. . . ."). Rather, testimony of the full, unsegregated amount of the fee is treated as "some evidence" of the segregated fee amount, and remand is appropriate to determine the segregated fee amount due. Glenn, 2011 WL 167254, at *7; Wright v. McCusker, No. 04-99-00592-CV, 2000 WL 863099, at *2 (Tex. App.-San Antonio June 28, 2000, no pet.) (mem. op., not designated for publication).

Because the reasonableness of a fee award is a question of fact and Equicap produced some evidence of its fees, we remand for a new trial on attorney's fees.

Conclusion

Having sustained Equicap's first issue, we reverse the trial court's judgment denying attorney's fees and remand for a new trial on attorney's fees.

SOURCE: FIRST COURT OF APPEALS IN HOUSTON - No. 01-12-01133-CV - 7/1/2014