Failure to state a claim / cause of action as a basis for dismissal in the absence of a specific rule comparable to the federal rule

THE TEXAS WAY TO CHALLENGE PLEADINGS & PROCURE DISMISSAL: SPECIAL EXCEPTION
 

THE TEXAS APPROACH: SPECIAL EXCEPTION

 

“A special exception is a proper method to determine whether a plaintiff has pleaded a cause of action.”  Alpert v. Crain, Canton & James, P.C., 178 S.W.3d 398, 405 (Tex. App.—Houston [1st Dist.] 2005, pet. denied).  “Generally, when the trial court sustains special exceptions, it must give the pleader an opportunity to amend the pleading, unless the pleading defect is of a type that amendment cannot cure.”  Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007).  In such a case, the court may render a judgment dismissing the case.  See Friesenhahn v. Ryan, 960 S.W.2d 656, 658 (Tex. 1998); Alpert, 178 S.W.3d at 408.  “We review a trial court’s dismissal of a case upon special exceptions for failure to state a cause of action as an issue of law, using a de novo standard of review.”  Alpert, 178 S.W.3d at 405.  “We accept all of the plaintiff’s material factual allegations and all reasonable inferences from those allegations as true.”  Id.

SOURCE: HOUSTON COURT OF APPEALS - 01-10-01067-CV – 5/10/12

Is the plaintiff entitled to a second shot, i.e. amendment of the petition? – It depends.

Generally, a trial court must give the pleader an opportunity to replead defective claims before dismissing them upon special exceptions.  See Baylor Univ., 221 S.W.3d at 635; Friesenhahn, 960 S.W.2d at 658.  However, the opportunity to amend is available only when the defect is curable.  See Baylor Univ., 221 S.W.3d at 635.  In this case, the petition reveals that the alleged factual basis underlying the suit is that the Locke Lord attorneys and the Thompson Coe attorneys filed a “pretend lawsuit” and procured a void temporary restraining order and a void temporary injunction.  As previously noted, when attorneys file suits and pleadings in the course of representing clients, they enjoy qualified immunity from liability to non-clients.  Given that the alleged acts of the attorney-defendants in this case consisted of filing suits and pleadings on behalf of their clients, amendment of the pleadings would not “cure” the underlying facts triggering qualified immunity.  See Alpert, 178 S.W.3d at 408 (affirming dismissal of conspiracy-to-defraud claim upon attorney’s special exceptions when the attorney’s alleged acts included filing lawsuits and alleging baseless claims).  We accordingly hold that the trial court did not err in dismissing Easton’s and Whatley’s claims without allowing an opportunity to amend.  See id.; see also Baylor Univ., 221 S.W.3d 635–36 (affirming trial court’s dismissal upon special exceptions of breach-of-contract claim barred by statute of frauds).  

SOURCE: HOUSTON COURT OF APPEALS - 01-10-01067-CV – 5/10/12

CASE STYLE: Michael Easton and Dawn Johnson Whatley, Individually and as Executrix of the Estate of Perry Lee Whatley v. Shawn Phelan; Thompson Coe Cousins & Irons, LLP; David Cabrales; Rachel Hope Stinson; Locke Lord Bissell & Liddell, LLP. -- Appeal from 190th District Court of Harris County 

When is a debtor's transfer of property fraudulent under TUFTA?

 
TEXAS UNIFORM FRAUDULENT TRANSFER ACT (TUFTA)

  
TUFTA section 24.005(a) provides that a transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or within a reasonable time after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation (1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or (2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor: (a) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
 
(b) intended to incur, or believed, or reasonably should have believed the debtor would incur, debts beyond the debtor's ability to pay as they became due. Tex. Bus. & Com. Code Ann § 24.005(a)(1), (2) (West 2009).
 
The judgment creditor has the burden to prove the fraudulent transfer by a preponderance of the evidence. Walker v. Anderson, 232 S.W.3d 899, 913 (Tex. App.--Dallas 2007, no pet.); G.M Houser, Inc. v. Rodgers, 204 S.W.3d 836, 842 (Tex. App.--Dallas 2006, no pet.). It is the creditor's burden to offer evidence addressing the elements of fraudulent transfer as to each transfer. Walker, 232 S.W.3d at 913; G.M Houser, 204 S.W.3d at 843.
 
“Ordinarily, whether the transfer was made with the actual intent to defraud creditors is a fact question.” Walker, 232 S.W.3d at 914. Direct proof of a fraudulent intent is often unavailable, so circumstantial evidence may be used to prove fraudulent intent. Id.; G.M. Houser, 204 S.W.3d at 842; Mladenka v. Mladenka, 130 S.W.3d 397, 405 (Tex. App.--Houston [14th Dist.] 2004, no pet.). TUFTA section 24.005(b) sets out a non-exclusive list of “badges of fraud” to be considered in determining whether a transfer was made with actual intent to defraud. Walker, 232 S.W.3d at 914; G.M. Houser, 204 S.W.3d at 842. They include:

(1) the transfer or obligation was to an insider;

(2) the debtor retained possession or control of the property transferred after the transfer;

(3) the transfer or obligation was concealed;

(4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

(5) the transfer was of substantially all the debtor's assets;

(6) the debtor absconded;

(7) the debtor removed or concealed assets;

(8) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;

(9) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

(10) the transfer occurred shortly before or shortly after a substantial debt was incurred; and

(11) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.

Tex. Bus. & Com. Code Ann § 24.005(b). Under TUFTA, “reasonably equivalent value” is defined as including, “without limitation, a transfer or obligation that is within the range of values for which the transferor would have sold the assets in an arm's length transaction.” Id. § 24.004. Value is determined as of the date of the transfer. Mladenka, 130 S.W.3d at 407.

An individual badge of fraud is not conclusive but a concurrence of many badges of fraud in the same case can make a strong case of fraud. See G.M. Houser, 204 S.W.3d at 843; see also Tex. Sand Co. v. Shield, 381 S.W.2d 48, 53 (Tex. 1964). While evidence of a transfer to an insider is one factor to consider in determining actual intent to defraud, that fact alone does not support a conclusion the transfer constitutes a fraudulent transfer. See G.M. Houser, 204 S.W.3d at 843. Fraudulent intent is deduced from facts and circumstances that “the law considers as mere badges of fraud and not fraud per se,” so “these must be submitted to the trier of fact, which draws the inference as to the fairness or fraudulent characterization of the transaction.” Flores v. Robinson Roofing & Const. Co., Inc., 161 S.W.3d 750, 755 (Tex. App.--Fort Worth 2005, pet. denied).

SOURCE: DALLAS COURT OF APPEALS - 05-10-01510-CV - 5/8/2012

Doyle did not present any evidence contesting the value of KBI's Ford F-150, Dodge Dakota, or its computer, office furniture, and equipment. She also failed to present evidence regarding the value, if any, of KBI's goodwill, or that any goodwill of KBI was transferred to Elegant without reasonably equivalent value in exchange for the transfer or obligation. As the fact finder, the trial court was the judge of the weight and credibility of Bains's testimony, so we defer to the trial court's determination. After reviewing the evidence under the appropriate standards of review, we conclude the evidence is legally and factually sufficient to support the trial court's findings that Bains did not conspire with Elegant or engage in any fraudulent transfer to Elegant. We overrule Doyle's first issue.

Suit to enforce guaranty agreement upon default on promissory note or other contract by maker or obligor

 
NATURE OF GUARANTY AND ELEMENTS OF CLAIM BASED ON IT

WHAT IS A GUARANTY AGREEMENT?
  
“A guaranty creates a secondary obligation whereby the guarantor promises to answer for the debt of another and may be called upon to perform once the primary obligor has failed to perform.” Dann v. Team Bank, 788 S.W.2d 182, 183 (Tex. App.-Dallas 1990, no writ).
 
ELEMENTS OF PROOF
 
To recover under a guaranty, a claimant must prove (1) the existence and ownership of the guaranty agreement, (2) the terms of the underlying contract by the holder, (3) the occurrence of the conditions upon which liability is based, and (4) the guarantor's failure or refusal to perform the promise. Marshall v. Ford Motor Co., 878 S.W.2d 629, 631 (Tex. App.-Dallas 1994, no writ).
 
SOURCE: DALLAS COURT OF APPEALS - 05-10-00693-CV - 5/8/2012

Does Application for Turnover Order require a hearing?

ENFORCEMENT OF JUDGMENTS:
 
Is the Defendant entitled to a hearing when the Plaintiff requests that the Court sign a Turnover Order?
 
Houston Court of Appeals says 'No'.

OPINION EXCERPT

On August 10, 2009, Seeman moved for post-judgment relief under the Texas Turnover Statute, and apparently, a hearing was held on his motion on August 14, 2009.  In issues 25 and 26, Cantu complains that he did not receive notice of the hearing and that the turnover was erroneously granted ex parte.

 
However, due process does not require that a complainant who has been granted an opportunity to be heard and has had his day in court should, after a judgment has been rendered against him, have further notice and hearing before supplemental proceedings are taken to reach his property in satisfaction of the judgment against him. See Endicott–Johnson Corp. v. Encyclopedia Press, Inc., 266 U.S. 285, 288, 45 S. Ct. 61, 62–63 (1924); In re Guardianship of Bays, 355 S.W.3d 715, 720 (Tex. App.—Fort Worth 2011, no pet.).

The turnover statute itself does not require notice and a hearing. See TEX. CIV. PRAC. & REM. CODE ANN. § 31.002; Sivley v. Sivley, 972 S.W.2d 850, 861 (Tex. App.—Tyler 1998, no pet.). In the absence of a statutory requirement, it is not essential that a complainant be given notice before the issuance of an execution against his tangible property; after the rendition of the judgment, he must take notice of what will follow, no further notice being necessary to advance justice. Endicott–Johnson Corp, 266 U.S. at 288, 45 S. Ct. at 62–63; In re Guardianship of Bays, 355 S.W.3d at 720.

We overrule issues 25 and 26.

SOURCE: HOUSTON COURT OF APPEALS - 01-09-00545-CV - 5/3/12

On August 10, 2009, Seeman moved for post-judgment relief under the Texas Turnover Statute, and apparently, a hearing was held on his motion on August 14, 2009. In issues 25 and 26, Cantu complains that he did not receive notice of the hearing and that the turnover was erroneously granted ex parte.

Res judicata defense requires proof of the prior judgment in suit between the same parties or their privies

  
RES JUDICATA UNDER TEXAS AND FEDERAL LAW
 
The supreme court has admonished that, “[c]ertainly in courts of law, a claimant generally cannot pursue one remedy to an unfavorable conclusion and then pursue the same remedy in another proceeding before the same or a different tribunal.” Igal v. Brightstar Info. Tech. Grp., Inc., 250 S.W.3d 78, 86 (Tex. 2008). “Res judicata bars the relitigation of claims that have been finally adjudicated or that could have been litigated in the prior action.” Id. (citing Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex.1992)).
 
ELEMENTS OF RES JUDICATA UNDER TEXAS LAW
  
For res judicata to apply under Texas state law, the following elements must be present: (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) the same parties or those in privity with them; and (3) a second action based on the same claims as were raised or could have been raised in the first action. Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007). Thus, a party may not pursue a claim determined by the final judgment of a court of competent jurisdiction in a prior suit as a ground of recovery in a later suit against the same parties. Tex. Water Rights Comm’n v. Crow Iron Works, 582 S.W.2d 768, 771 (Tex. 1979).
    
Because [party] argues that the issues here were first decided in a federal tribunal, federal law controls the determination of whether res judicata will bar the later state court proceeding. See Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 718 (Tex. 1990).
 
ELEMENTS OF RES JUDICATA UNDER FEDERAL LAW   
  
Similar to Texas law, under federal law, res judicata will apply if: (1) the parties are identical in both suits; (2) the prior judgment is rendered by a court of competent jurisdiction; (3) there is a final judgment on the merits; and (4) the same cause of action is involved in both cases. Id.
     
SOURCE: HOUSTON COURT OF APPEALS - 01-11-00096-CV - 5/9/12
  
[Appellant] has not brought forth a prior final judgment on the merits of any issue that is the subject of the underlying litigation. Thus, he failed to raise a fact issue on res judicata. We need not reach [Appellee's] other arguments about why res judicata does not apply.

Judicial estoppel explained

   
THE DOCTRINE OF JUDICIAL ESTOPPEL IN TEXAS COURTS

The doctrine of judicial estoppel “precludes a party from adopting a position inconsistent with one that it maintained successfully in an earlier proceeding.” Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1, 6 (Tex. 2008) (quoting 2 Roy W. McDonald & Elaine G. Carlson, Texas Civil Practice § 9.51 at 576 (2d ed. 2003)).

RATIONALE FOR THE DOCTRINE, JURISPRUDENTIAL PURPOSE  

The doctrine is not strictly speaking estoppel, but rather is a rule of procedure based on justice and sound public policy. Id.; Long v. Knox, 155 Tex. 581, 291 S.W.2d 292, 295 (1956). Its essential function “is to prevent the use of intentional self-contradiction as a means of obtaining unfair advantage.” Pleasant Glade Assembly of God, 264 S.W.3d at 6; Andrews v. Diamond, Rash, Leslie & Smith, 959 S.W.2d 646, 650 (Tex. App.—El Paso 1997, writ denied); Hall v. GE Plastic Pac. PTE Ltd., 327 F.3d 391, 396 (5th Cir. 2003) (noting basis for estoppel is the assertion of a position clearly inconsistent with a previous position accepted by the court); Tenneco Chems., Inc. v. William T. Burnett & Co., 691 F.2d 658, 665 (4th Cir.1982) (finding “the determinative factor is whether the appellant intentionally misled the court to gain an unfair advantage”).

WHEN DOES IT APPLY? - ELEMENTS OF JUDICIAL ESTOPPEL   

This doctrine requires that: (1) a sworn, inconsistent statement be made in a prior judicial proceeding; (2) the party making the statement gained some advantage by it; (3) the statement was not made inadvertently or because of mistake, fraud, or duress; and (4) the statement was deliberate, clear, and unequivocal. Galley v. Apollo Associated Servs., Ltd., 177 S.W.3d 523, 528–29 (Tex. App.—Houston [1st Dist.] 2005, no pet.); see also Pagosa Oil & Gas, L.L.C. v. Marrs & Smith P’ship, 323 S.W.3d 203, 218 (Tex. App.—El Paso 2010, pet. denied) (holding same).

SOURCE: HOUSTON COURT OF APPEALS - 01-10-01016-CV - 5/2/12

The species of judicial estoppel alleged in this case is “based on the principle that a party should not be permitted to abuse the judicial process by obtaining one recovery based first on affirming a certain state of facts, and then another recovery based on denying the same set of facts.” Metroflight, Inc. v. Shaffer, 581 S.W.2d 704, 709 (Tex. Civ. App.—Dallas 1979, writ ref’d n.r.e).

Because the doctrines of double recovery and judicial estoppel do not entitle Ormiston and Allied to judgment as a matter of law, the trial court erred in granting a directed verdict in their favor. Accordingly, we reverse the judgment of the trial court and remand for further proceedings.

LEGAL TERMS: judicial estoppel, equitable estoppel 

Will courts enforce Rule 11 Agreements that don't have signatures? Does agreement have to be in writing?

  
Does an agreement under Rule 11 of the Texas Rules of Civil Procedure always have to be signed by both parties or their attorneys to become binding and enforceable?
  

ENFORCEABILITY OF RULE ELEVEN (TRCP 11) AGREEMENT

A Rule 11 agreement is an agreement between parties or attorneys "touching any pending suit" that, to be enforceable, must be either (1) in writing, signed, and filed as part of the record, or (2) made in open court and entered of record. Tex. R. Civ. P. 11. Whether a Rule 11 agreement is legally enforceable is a question of law. Ronin v. Lerner, 7 S.W.3d 883, 886 (Tex. App.--Houston [1st Dist.]  1999, no pet.).

RATIONALE FOR RULE 11 REQUIREMENTS
  

The purpose of Rule 11 is to avoid misunderstandings and controversies that often flow from oral agreements. Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995). Parties may enter into a binding settlement agreement even if they contemplate that a more formal document memorializing the agreement will be executed at a later date. See Ronin, 7 S.W.3d at 886; McLendon v. McLendon, 847 S.W.2d 601, 606-07 (Tex. App.--Dallas 1992, writ denied) ("[Party] understood that he was  obligated to execute documents to implement the agreement being submitted to the court.

SOURCE: AUSTIN COURT OF APPEALS - 03-11-00271-CV - 5/3/2012
  

There is no indication in the record that the parties contemplated that their agreement would not be binding until it was reduced to writing."). The exchange between Andrews, her attorney, Deutsche Bank's attorney, and the district court constitutes an enforceable Rule 11 agreement. Although the parties contemplated that the attorneys would later reduce the Rule 11 agreement to writing, the reporter's record reflects that the parties were aware that they were entering into a settlement agreement in court. See McLendon, 847 S.W.2d at 606-07. Specifically, both Andrews and her counsel agreed that she would release her lien and dismiss her appeal in exchange for receiving the money from the court registry.

Andrews does not dispute that she reached a settlement agreement in open court in compliance with Rule 11. Instead, she asserts that there is no evidence that she ever received any money from the court registry, the consideration for her dismissal of her appeal. To the contrary, however, the record contains an order commanding the district court clerk to withdraw the money from the court registry and pay it to Andrews's attorney.

Inverse Condemnation Claim – The intentional act element

  
INVERSE CONDEMNATION - WHAT MAKES FOR A VIABLE CLAIM?
  

“Inverse condemnation occurs when (1) a property owner seeks (2) compensation for (3) property taken for public use (4) without process or a proper condemnation proceeding.”  City of Houston v. Norcini, 317 S.W.3d 287, 292 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (quoting Villarreal v. Harris Cnty., 226 S.W.3d 537, 541 (Tex. App.—Houston [1st Dist.] 2006, no pet.)); see City of Abilene v. Burk Royalty Co., 470 S.W.2d 643, 646 (Tex. 1971). 

To state a cause of action for inverse condemnation under the Texas constitution, a plaintiff must allege (1) an intentional governmental act; (2) that resulted in his property being taken, damaged, or destroyed; (3) for public use.  Gen. Servs. Comm’n, 39 S.W.3d at 598.
  
SOURCE: EASTLAND COURT OF APPEALS - 11-11-00137-CV – 5/3/2012

 
The City asserts that appellee failed to allege facts that show an intentional act of the City.  If the government knows that specific damage is substantially certain to result from its conduct, then takings liability may arise even when the government did not particularly desire the property to be damaged.  Jennings, 142 S.W.3d at 314.  Thus, when a governmental entity physically damages private property in order to confer a public benefit, that entity may be liable under Article I, section 17 if it (1) knows that a specific act is causing identifiable harm or (2) knows that the specific property damage is substantially certain to result from an authorized government action—that is, that the damage is “necessarily an incident to, or necessarily a consequential result of” the government’s action.  Tex. Highway Dep’t v. Weber, 219 S.W.2d 70, 71 (Tex. 1949); accord Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 555 (Tex. 2004).

Appellee alleged that the City inspector knew she had a leak inside her property; her pleadings state that an inspector initially found only one leak, and it was inside appellee’s property at the toilet cutoff.  Appellee also alleged that she told the City that she was still being billed for water usage and that, at some point, the City replaced a pipe in the alley on the outside of her property.  Her pleadings describe a leak, in addition to the one inside her property, that the City admitted was “in their plumbing.”

However, appellee has not alleged that the City took a specific action that it knew was substantially certain to result in specific property damage to her property.  Appellee does not explain, in relation to when her property was damaged, when the repair to the leak in the alley was made or when her calls to the City were made.  Appellee did not live at the property in question and did not discover the damage until after its occurrence, and her pleadings did not state with any specificity when or how the damage was alleged to have occurred.  Her claim that the City’s representatives knowingly misrepresented facts about the existence of a leak or about checking the property is, thus, unsupported by factual allegations.

Taken as true, all that appellee’s pleadings establish is that there was a leak at some point in the City’s plumbing and that, at some point, the City repaired it. Appellee did not allege that the City intentionally caused the leak.  At most, the City’s actions in discovering and repairing the leak were negligent.  See Coyne v. Kaufman Cnty., 144 S.W.3d 129, 135 (Tex. App.—Eastland 2004, no pet.) (“An allegation that a person or entity failed to undertake an act it should have taken constitutes an allegation of negligent conduct.”).  Viewed in the light most favorable to appellee, the pleadings fail to allege an intentional act of the City rising to the level required to maintain a claim for inverse condemnation.  The trial court erred when it denied the City’s plea to the jurisdiction as it pertained to the inverse condemnation claim.  The City’s first issue on appeal is sustained.  If the exaction claim is a takings claim as argued by appellee, then for the same reasons (in addition to the ones earlier stated when we discussed a constitutional exactions case), we sustain the City’s Issue No. 3.   

SOURCE: EASTLAND COURT OF APPEALS - 11-11-00137-CV – 5/3/2012

Nuisance claim against governmental entity (variant of takings claim)

  

Governmental liability for nuisance arises from Article I, section 17 of the Texas Constitution.  Gotcher v. City of Farmersville, 139 S.W.2d 361, 362–63 (Tex. Civ. App.—Dallas 1940), aff'd, 151 S.W.2d 565 (Tex. 1941).  A city may be held liable for a nuisance that rises to the level of a constitutional taking.  Jennings, 142 S.W.3d at 316 (citing City of Abilene v. Downs, 367 S.W.2d 153, 159 (Tex. 1963)). 

A “nuisance” is a condition that substantially interferes with the use and enjoyment of land by causing unreasonable discomfort or annoyance to persons of ordinary sensibilities.  Holubec v. Brandenberger, 111 S.W.3d 32, 37 (Tex. 2003).  For an act of a governmental entity to qualify as a nuisance without being defeated by the doctrine of governmental immunity, the condition created by the entity must in some way constitute an unlawful invasion of property or the rights of others beyond that arising merely from its negligent or improper use.  Shade v. City of Dallas, 819 S.W.2d 578, 581–82 (Tex. App.—Dallas 1991, no writ)  (reversing summary judgment for the city on the plaintiff’s nuisance claim because the city failed to prove that its act was negligent and, therefore, shielded by sovereign immunity).  Nonnegligent or intentional nuisance is actionable, and the City is not immune under the Texas Tort Claims Act, Tex. Civ. Prac. & Rem. Code Ann. ch. 101 (West 2011 & Supp. 2011).  See Bible Baptist Church v. City of Cleburne, 848 S.W.2d 826 (Tex. App.—Waco 1993, writ denied).

SOURCE: EASTLAND COURT OF APPEALS - 11-11-00137-CV – 5/3/2012

Here, appellee has not shown or otherwise pleaded that the City created or maintained a nuisance in the course of nonnegligent performance of governmental functions.  As discussed above, appellee did not allege an intentional act and has at most alleged that the City acted negligently.  Furthermore, appellee did not allege that the line itself was inherently subject to frequent breaks or that the City kept the water system running in bad repair.  Rather, appellee alleged only that the City continued the “intentional running of the water system for the public use when they knew it was harming Plaintiff’s property.”  The water system itself was not a nuisance.  It did not create the condition that caused discomfort and annoyance to appellee.  This was done by the leak in appellee’s toilet cutoff pipe.  Viewed in the light most favorable to appellee, the pleadings fail to establish a claim for nuisance that rises to the level of a constitutional taking.  The trial court erred when it denied the City’s plea to the jurisdiction as it related to appellee’s constitutional nuisance claims.  We sustain the City’s second issue on appeal.
The judgment of the trial court is reversed, and judgment is rendered that appellee take nothing by her claims.

SOURCE: EASTLAND COURT OF APPEALS - 11-11-00137-CV – 5/3/2012

Capacity to sue and standing are distinct, and also have different procedural implications

 

CORPORATIONS’ CAPACITY TO SUE VS. STANDING

   

A corporation's authority to bring a lawsuit on a claim is an issue of capacity, not standing to sue. See El T. Mexican Rests., Inc. v. Bacon, 921 S.W.2d 247, 249 (Tex. App.-Houston [1st Dist.] 1995, writ denied) (capacity is a party's legal authority to go into court to prosecute or defend a suit). A party must challenge a corporation's capacity to file suit by a verified denial under rule 93. See id.; see also Sixth RMA Partners v. Sibley, 111 S.W.3d 46, 56 (Tex. 2003) (“When capacity is contested, Rule 93 requires that a verified plea be filed unless the truth of the matter appears of record.”).

  

SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12

  

Gutierrez's first three issues claim TWLF could not recover on the contract because its corporate privileges were forfeited by the secretary of state in 2004 for non-payment of franchise taxes. Gutierrez did not raise these arguments in a verified denial under rule 93; instead he raised them for the first time in a supplemental motion for new trial filed more than thirty days after the judgment was signed. Thus, the issues were not timely raised in the trial court and are not preserved for appeal. See Tex. R. Civ. P. 93(1), (2), (6), 329b(b); Tex. R. App. P. 33.1(a).

   

Gutierrez argues this is an issue of standing to sue and can be raised at any time. We disagree.

Gutierrez v. Wright Lawfirm, PLLC, No. 05-10-00725-CV, 2012 WL 1898950 (Tex. App.-Dallas Apr. 27, 2012, no pet.) (mem. op.)

Proving Lost Profits as a Category of Damages in a Lawsuit

     
GENERAL RULE REGARDING PROOF OF LOST PROFITS   
  

The general rules regarding adequate evidence of lost profit damages are well known:

 

Recovery for lost profits does not require that the loss be susceptible of exact calculation. However, the injured party must do more than show that they suffered some lost profits. The amount of the loss must be shown by competent evidence with reasonable certainty. What constitutes reasonably certain evidence of lost profits is a fact intensive determination. As a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Although supporting documentation may affect the weight of the evidence, it is not necessary to produce in court the documents supporting the opinions or estimates.

  

Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992) (citations omitted); see also ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010) (citing Holt Atherton). The injured party must do more than show it suffered “some” lost profits. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 504 (Tex. 2001). Lost profits are damages for the loss of net income to a business and, broadly speaking, reflect income from lost business activity, less expenses that would have been attributable to that activity. Bowen v. Robinson, 227 S.W.3d 86, 96 (Tex. App.--Houston [1st Dist.] 2006, pet. denied). The calculation of lost profits must be based on net profits, not gross revenues. Holt Atherton, 835 S.W.2d at 83 n.1; Texaco, Inc. v. Phan, 137 S.W.3d 763, 771 (Tex. App.--Houston 2004, no pet.).

  

SOURCE: DALLAS COURT OF APPEALS – 05-10-00777-CV – 4/27/2012

 

In this appeal, [Appellant] asserts [Plaintiff] presented no evidence from which the jury could determine lost profits with any reasonable certainty. We agree. [Plaintiff] did not present any expert testimony regarding lost profits nor did it provide a damage model to the jury or otherwise inform the jury how it should determine lost profits, and our own review of the record does not reveal any objective facts, figures, or data from which lost profits could have been determined with reasonable certainty.

Can contract be enforced if it contains an illegal provision?

   
SEVERABILITY OF ILLEGAL CONTRACT PROVISION

Dallas Court of Appeals has this to say in case involving attorney fee contract:  

  

We have held “that where an otherwise legal contract contains an illegal provision that is not an essential feature of the agreement, thus being clearly severable from other valid provisions, the other provisions of the agreement will not be deemed to be invalid simply because of the presence of the illegal provision.” Rogers v. Wolfson, 763 S.W.2d 922, 925 (Tex. App.-Dallas 1989, writ denied); see also Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 662 (Tex. App.-Dallas 1992, no writ) (“Where a contracting party agrees to perform separable acts, and one is void, the invalid provision may be severed from the valid provision and the valid provision enforced if the intent of the parties is not thereby frustrated.”); Mandril v. Kasishke, 620 S.W.2d 238, 247 (Tex. Civ. App.-Amarillo 1981, writ ref'd n.r.e.). 

SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12
 

[Father of client in criminal case] does not challenge the trial court's finding of fact that he signed the fee agreement. In another unchallenged finding, the trial court found that the fee agreement is “a valid contract and enforceable.” We conclude that the fee agreement is clearly severable from the irrevocable assignment and is valid regardless of the validity of the irrevocable assignment.

[Parent of client in criminal case]  agreed “to be responsible for my sons Atty Fees as set out in this Contract and Irrevocable Assignment” signed the same date. The fee is set out in both the fee agreement and the irrevocable assignment. But [Parent's] agreement to be responsible for those fees is not contingent of the validity of the irrevocable assignment. The irrevocable assignment was merely a means of payment of or security for the attorney's fees under the fee agreement. It was not an essential feature of the agreement to pay TWLF for its services in representing [son] in the federal criminal prosecution. The fee agreement is clearly enforceable without the irrevocable assignment. Nothing is illegal about a contract to pay an attorney for his services or an agreement by a parent to be responsible for the fees for representing his child in a criminal proceeding. 

Just what is a retainer? – Apparently, it depends, as there are multiple usages

 

THE WORD “RETAINER” IS AMBIGUOUS EVEN AMONG THE LEGALLY SOPHISTICATED

The word “retainer” has a variety of meanings, including a client's authorization for the attorney to act in matter, a fee paid simply to have the attorney available when the client needs legal help, a lump-sum fee paid to engage the lawyer at the outset of the matter, and an advance payment for work to be performed in the future. Black's Law Dictionary 1341-42 (8th ed. 2004). Indeed,

Over the years, attorneys have used the term “retainer” in so many conflicting senses that it should be banished from the legal vocabulary. . . . If some primordial urge drives you to use the term “retainer,” at least explain what you mean in terms that both you and the client will understand.

Id. (quoting Mortimer D. Schwartz & Richard C. Wydick, Problems in Legal Ethics 100, 101 (2d ed. 1988)).

SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12

Grounds to avoid arbitration

   

Affirmative Defenses to Arbitration: duress, fraudulent inducement, revocation

 

These defenses can be invoked, if applicable, after the movant for arbitration has discharged its burden to show that an arbitration agreement exists. The most basic defense of a party seeking to avoid arbitration, by contrast, involves contract-formation, i.e. the contention that an agreement to arbitrate was never reached in the first place and that there is accordingly no valid and enforceable arbitration agreement.  

   

AFFIRMATIVE DEFENSES TO ARBITRATION

  

If the party seeking arbitration carries its initial burden, then the burden shifts to the party opposing arbitration to present evidence on an affirmative defense to the arbitration agreement. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). In the context of enforcement of an arbitration agreement, defenses refer to unconscionability, duress, fraudulent inducement, and revocation. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 756 (Tex. 2001). Because the law favors arbitration, the burden of proving a defense to arbitration is on the party opposing it. See J.M. Davidson, Inc., 128 S.W.3d at 227.

  

SOURCE:  EL PASO COURT OF APPEALS -  No. 08-11-00091-CV – 4/25/2012

  

[Employee-Plaintiff] has not offered evidence as to any of the applicable affirmative defenses. Her only claims related to issues of arbitrability which we have already determined must be presented to the arbitrator. We conclude that the trial court erred in refusing to compel arbitration. We sustain both issues for review and reverse and remand for orders compelling arbitration.

Payment of commission in real estate transaction governed by statute of frauds in RELA

   

REAL Estate License Act requires commission agreement to be in writing and to contain specific items of essential information.

  

Written agreement compliant with statute of frauds provision of the Real Estate License Act (RELA) required for payment of commission for sale/purchase of real estate to be enforceable.
    
The statute of frauds provision of RELA provides,
 

A person may not maintain an action in this state to recover a commission for the sale or purchase of real estate unless the promise or agreement on which the action is based, or a memorandum, is in writing and signed by the party against whom the action is brought or by a person authorized by that party to sign the document.

 

Tex. Occ. Code Ann. § 1101.806(c) (West 2012).

 

To comply with this section, an agreement or memorandum must: (1) be in writing and must be signed by the person to be charged with the commission; (2) promise that a definite commission will be paid, or must refer to a written commission schedule; (3) state the name of the broker to whom the commission is to be paid; and (4) either itself or by reference to some other existing writing, identify with reasonable certainty the land to be conveyed. Lathem v. Kruse, 290 S.W.3d 922, 925 (Tex. App.-Dallas 2009, no pet.). Strict compliance with RELA is required; the agreement to pay a real estate commission must be in writing or it is not enforceable. Id. The essential elements of the agreement may not be supplied by parol evidence. Boyert v. Tauber, 834 S.W.2d 60, 62 (Tex. 1992).

   

SOURCE: DALLAS COURT OF APPEALS - 05-10-00675-CV – 4/26/12

  
None of the documents on which appellees rely contains a promise to pay a real estate commission or identifies appellees as brokers to whom a commission will be paid. Accordingly, there is no evidence of a written agreement complying with the statute of frauds provision of RELA. See Tex. Occ. Code Ann. § 1101.806(c); Lathem, 290 S.W.3d 925. We sustain Litton's third issue. Having sustained Litton's third issue, we need not consider its other issues. Tex. R. App. P. 47.1.