Texas Courts of Appeals Update-Procedural

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1 Ben L. Mesches, Haynes and Boone, LLP, Dallas Layne S. Keele, Haynes and Boone, LLP, Dallas Texas Courts of Appeals Update-Procedural PRE-SUIT DEPOSITIONS In re Denton, No CV, 2009 WL (Tex. App.-Waco Feb. 25, 2009, orig. proceeding) The trial court granted mandamus relief to vacate the trial court's Rule 202 pre-suit deposition order. The City of Midlothian sought to take a pre-suit deposition-according to the opening paragraph of its motion-to "investigate a potential claim." The body of the motion, however, relied on a separate provision of Rule 202, which permits a pre-suit deposition to obtain testimony for use in an anticipated suit. And that was the basis of the City's argument at the hearing in the trial court. The trial court granted the City's request to conduct a pre-suit deposition. The deponent sought mandamus review in the court of appeals. The appellate court agreed that no adequate remedy by appeal existed because mandamus relief-before the deposition occurred-was the only way to obtain meaningful appellate review. The court then vacated the order on the merits because the trial court did not make a finding that allowing a pre-suit deposition would prevent a failure or delay of justice, which is the legal standard for a pre-suit deposition for use in an anticipated suit, The appellate court rejected the City's "either/or approach," instead holding that the trial court's findings must conform to the route taken by the movant (either anticipated suit or investigate a claims). Absent the required finding, mandamus was appropriate. PERSONAL JURISDICTION Boyd v. Kobierowski, No CV, 2009 WL (Tex. App.-San Antonio Feb. 25, In this case, the San Antonio Court of Appeals held that a defendant entered a general appearance when he failed to specially appear after prevailing in a restricted appeal. After a Texas plaintiff obtained a default judgment against the defendant, the defendant successfully challenged service by a restricted appeal, and the default was reversed. When the defendant again failed to answer over the next six months, the plaintiff took a second default judgment, The defendant then filed a special appearance, which was denied, and the defendant appealed the denial. The San Antonio Court of Appeals examining Texas Rules of Civil Procedure 120 and 123- held that, by not filing the special appearance until after the second default judgment, the defendant effectively entered a general appearance. The court specifically declined to announce a deadline by which a defendant must file its special appearance following remand it simply held that defendant's failure to do so for more than six months "post-mandate" amounted to a general appearance. Luxury Travel Source v. An. Airlines, Inc., No CV, 2008 WL (Tex. App.-Fort Worth Dec. 31, 2008, no pet. h.) The Fort Worth Court of Appeals held that a defendant who had signed a forum selection clause was not subject to personal jurisdiction in Texas. The defendant had signed American Airlines' "American Use Agreement" (governing its rewards program), and was allegedly buying and selling award tickets in violation of the agreement. The agreement stated that it was made and entered into in Tarrant County, Texas, and was governed by Texas law. It also stated, "Any lawsuit brought by you [related to the program] must be brought in the state or federal courts of Tarrant County, Texas." Because American filed this lawsuit against the defendant (rather than the other way around), the forum selection provision did not apply. The court held that the agreement's other terms did not establish Page 20 - h Appellate Advocat HeinOnline App. Advoc

2 sufficient contacts in Texas to subject the defendant to Texas' jurisdiction. VENUE Beard v. Endeavor Gas, LP., No CV, 2008 WL (Tex. App.-Houston [list Dist.] Dec. 19, 2008, no pet. h.) The court of appeals affirmed the trial court's refusal to transfer venue from Harris County to Smith County in a declaratory judgment action. The plaintiff argued that venue was only proper in Smith County because the parties' dispute arose from a division order contract that was received, reviewed, and signed by the plaintiff in Smith County. But the oil-and-gas operator conducted business in Harris County, where the calculations under the contract, the parties' real dispute, occurred. The plaintiff relied extensively on a 1983 decision involving similar facts regarding a division order contract, which held that where the division order contract was made (i.e., signed by the royalty owner) determines venue. The court of appeals noted, however, that since 1983, the legislature had amended the venue statute with Section (a), which allows for venue to be proper in more than one county. In this case, the dispute was about a royalty calculation performed in Harris County. Therefore, venue was proper there. STATUTE OF LIMITATIONS-RESPONSIBLE THIRD PARTY DESIGNATIONS Kimbrell v. Molinet, No CV, No WL (Tex. App.-San Antonio Dec. 31, 2008, no pet. h.) The question in this case was whether the health care liability statute of limitations bars claims against health care providers who have been designated as responsible third parties. The statute of limitations, Tex. Civ. Prac. & Rem. Code 74,251, bars claims filed more than two years after treatment. The statute applies "[n]otwithstanding any other law." Section (e), however, provides that, if a person is designated a responsible third party, the claimant may join that person in the lawsuit "even though such joinder would otherwise be barred by limitations." The court held that section trumps the responsible third party scheme. Accordingly, the plaintiffs claims were barred. MASS TORT LITIGATION In re Allied Chem. Corp.. No CV, 2009 WL (Tex. App.-Corpus Christi Jan. 27, 2009, orig. proceeding) In another mandamus in the same suits that generated the Texas Supreme Court' s consolidation mandamus decision in In re Allied Chem. Corp., 227 S.W.3d 652 (Tex. 2007) (orig. proceeding), the court of appeals granted in part and denied in part mandamus relief related to the adequacy of the plaintiff's discovery responses in mass toxic tort litigation. The court first addressed the plaintiffs answers to defendants' Able Supply interrogatory. Such interrogatory answers must link each plaintiffs injuries to a particular product. Product-specific responses simplify the case, streamline costs, conserve judicial resources, and allow the trial court to prepare an effective trial plan. The court granted mandamus relief because the expert report did not provide defendant-specific causal link opinions. The expert opinion merely demonstrated which chemicals could have caused the plaintiffs' particular injuries. Mandamus was appropriate because without adequate discovery answers, defendants did not have the information they needed to prepare a viable defense. The court of appeals granted in part and denied in part mandamus relief seeking an order requiring new answers to Borg-Warner interrogatories. Such interrogatories require the expert to: (i) analyze whether the disease at issue can be related to chemical exposure; (ii) consider whether the plaintiff was exposed to the chemical in a way that would have caused absorption of the chemical in question; and (iii) opine on whether the dose was sufficient to cause the disease. The court held that the plaintiffs' answers were partially in compliance with the Borg-Warner standard and ordered that the trial court grant a I ae - TheAppelat Advocate HeinOnline App. Advoc

3 motion to compel new answers to the first two elements of this standard. Again, absent adequate answers, the defendants could not adequately prepare their defense and therefore no adequate appellate remedy existed. SANCTIONS In re Christus Health, No CV, 2008 WL (Tex. App.-Houston [list Dist.] Dec. 31, 2008, orig. proceeding) The panel majority denied mandamus review related to a $250,000 monetary sanction, emphasizing relators' failure to adequately present a request for mandamus relief from that aspect of the sanctions order. In dissent, Justice Alcala argued that the $250,000 sanction, ordered for concealing evidence and not timely producing documents, was improper on the merits because the amount bore no relationship to the conduct at issue. Nothing in the record linked that amount with the harm allegedly suffered by the plaintiffs as a result of the defendants' conduct. In particular, the dissenting Justice noted that "[w]e should not uphold an award for sanctions based on the mere claim that the misconduct has resulted in the loss of one quarter million dollars." Turning to whether mandamus should issue for this abuse of discretion, Justice Alcala would have held that no adequate appellate remedy exists for a sanction of $250,000 that must be paid within 10 days and before trial. Accordingly, Justice Alcala would have granted mandamus relief SUMMARY JUDGMENT JUDGMENT-FINALITY In re The Granite Shop, No CV, 2009 WL (Tex. App.-Fort Worth Feb. 24, 2009, orig. proceeding) The court of appeals considered the finality of a summary judgment order that stated that "[a]ll relief not expressly granted is hereby denied" and that the judgment "shall represent a full and final disposition of all claims brought by all parties" The judgment also contained a handwritten notation that "Plaintiff did not proceed with summary judgment against the individual defendants." The trial court concluded that the judgment was final. The court of appeals disagreed. After first finding that the judgment was ambiguous, the court examined the record to determine whether the judgment was intended to be final. The Fort Worth Court of Appeals concluded that neither the parties nor the trial court intended the judgment to be final at the time it was issued. JURY TRIAL Ogu v. CIA. Servs., Inc., No CV, 2009 WL (Tex. App.--Houston [list Dist.] Jan. 8, The trial court erred in denying the defendants in a declaratory judgment action the right to a jury trial on an attorneys' fees claim. The defendants made a timely jury demand and paid the required fee. After a bench trial on attorneys' fees, the trial court awarded $18,000 in fees in favor of the plaintiffs. The trial court heard evidence on fees and made findings as to the amount of reasonable and necessary fees. Although the Declaratory Judgment Act empowers the trial court to determine whether an award of fees is just and equitable (i.e., whether the claimant should recover fees), it is the jury's role to determine the amount. Noting that the denial of a right to a jury trial constitutes reversible error, the court reversed and remanded for a july trial on attorneys' fees. JURY SELECTION-BATSON CHALLENGES Moeller v. Blanc, No CV, 2008 WL (Tex. App.-Dallas Dec. 30, 2008, no pet. h.) Here, the Dallas Court of Appeals examined the sufficiency of counsel's race-neutral explanation for peremptorily striking a particular juror. The attorney's explanation was simply that the juror had not spoken or raised her hand during voir dire. The attorney said he struck her because he knew nothing about her-he "could not get a Page 20 - h Appellate Advocat HeinOnline App. Advoc

4 read" on her. The court of appeals found this explanation insufficient-it was too "obscure and vague" to suffice. Without a "clear and reasonably specific explanation," the court held that the trial court abused its discretion by failing to sustain the opposing party's objection to the peremptory challenge, and it remanded for a new trial. CLOSING ARGUMENT Sinegaure v. Bally Total Fitness Corp., No CV, 2008 WL (Tex. App.- Houston [1st Dist.] Dec. 18, 2008, no pet. h.) In this wrongful-death action against a health club, the jury returned a take-nothing verdict. On appeal, the plaintiff, among many challenges, argued that the health club's attorney's closing argument was improper and thus warranted a new trial. The substance of the complained-of closing argument was the defense lawyer's personal analogy. He noted that his father had recently died of lung cancer, was a life-long smoker but that "[t]here was no suit filed in his death." The lawyer concluded with this question: "Will it always be someone else's fault when we die 9 " The court held that the closing argument was not improper. The court called on the traditions of oral advocacy in allowing rhetoric that includes "personal experience, hyperbole, metaphors, history, politics, literature, analogy, jokes, and similar tools of persuasion." The lawyer's personal analogy although not strictly confined to the evidence was not so inflammatory as to be intrinsically improper. Accordingly, the court rejected the plaintiffs complaint about closing argument. JURY CHARGE Block v. Mora, No CV, 2009 WL (Tex. App.-Amarillo Jan. 7, 2009, pet. filed) The Court reversed and remanded for a new trial because the trial court improperly charged the jury with a comparative fault question when there was no evidence that the plaintiff was contributorily negligent. The defendant pulled out in front of and collided with the plaintiffs truck. The plaintiff suffered personal injuries as a result of the collision. At trial, there was evidence that the plaintiff placed a spare tire, unsecured, on top of five buckets of hydraulic oil in the bed of his truck. When the collision happened, the spare tire went through the truck's back window and hit the plaintiff in the back of the neck and shoulder. The trial court submitted a comparative fault question, asking the jury to decide whether the plaintiffs negligence was the proximate cause of his injuries. The plaintiff objected to the submission of this question. On appeal, the plaintiff argued that there was no evidence to support the submission of the contributory negligence question. The court of appeals agreed. Because the defendant did not establish that by leaving the spare tire unsecured the plaintiff "committed an intrinsically harmful act or breached a legal duty to [the defendant] or to the public at large," there was no evidence of contributory negligence. The failure to secure the tire did not cause the accident; it merely enhanced or increased the plaintiffs injuries. Negligence that only enhances an injury is not contributory negligence and will not defeat a negligence claim. Accordingly, submission of contributory negligence was improper. PREJUDGMENT INTEREST-TOLLING AMX Enters., L.L.P. v. Master Realty Corp., No CV, 2009 WL (Tex. App.- Fort Worth Jan. 8, The Fort Worth Court of Appeals addressed an issue of first impression in this opinion, holding that the trial court does not have discretion to toll prejudgment interest under the Prompt Payment of Contractors Act (Tex. Prop. Code (a)). The trial court tolled the prejudgment interest. It concluded that, because interest accrued throughout the litigation, and because the claimant's conduct unduly delayed the litigation, the accrual of interest should be equitably tolled to compensate for those periods of undue delay. I ae - TheAppelat Advocate HeinOnline App. Advoc

5 The court of appeals reversed. It noted that the statute fixes the interest rate at 1.5% per month, and it fixes the beginning and end of the interest period. Once it is shown to apply, the interest must be applied throughout the interest period, and it is not subject to equitable tolling. (The court also addressed whether this statutory prejudgment interest could be coupled with common law prejudgment interest, and concluded that it cannot.) ATTORNEYS' FEES-CALCULATION AMIX Enters., L.L.P. v. Master Realty Corp., No CV, 2009 WL (Tex. App.- Fort Worth Jan. 8, In another first-impression issue addressed in AMX, the Fort Worth Court of Appeals considered the appropriate method of calculating attorneys' fees awarded to a party represented by in-house counsel. The court considered two alternative approaches: (1) market value (the market rate for outside counsel) and (2) cost-plus (based on inhouse counsel's salary, plus overhead). The court noted the disagreement among jurisdictions outside of Texas, but held that the market rate method should be used to determine fees for inhouse counsel. This method, according to the court, "is predictable for the parties and easy to administer," "prevents a losing defendant from benefiting from the prevailing party's decision to control its own costs by employing in-house counsel," and "is consistent with the factors Texas courts consider when assessing attorney's fees." Scott v. Spalding, No CV, 2009 WL (Tex. App.-Eastland Jan. 30, The Eastland Court of Appeals took sides on the question of whether a trial court may take judicial notice of reasonable and customary attorneys' fees for awards not under Chapter 38 of the Civil Practice and Remedies Code. The court rejected the position of the Fort Worth and San Antonio courts, and followed Houston (14 th District), Dallas, and El Paso in holding that "unless the claim is one set forth in Section , the court may not take judicial notice that the usual and customary fees are reasonable." REPORTER'S RECORD Hagood v. Fishborn, Inc., No CV, 2009 WL (Tex. App.-Dallas Feb. 5, The Dallas Court of Appeals addressed the apparent tension between Texas Rule of Appellate Procedure 13.1-requiring the court reporter to make a record of court proceedings unless excused by the parties-and section of the Texas Government Code-providing that the reporter must record proceedings "on request." The Dallas Court of Appeals held that the rule must give way to the statute. Accordingly, the appellant's failure to request that a record be made of handwritten questions submitted to the court by the jury prevented the appellant from complaining about the absence of the questions from the record. PLENARY POWER-FINALITY OF JUDGMENTS In two cases, the Dallas Court of Appeals addressed the finality of a trial court's judgment. Hidalgo v. Hidalgo, No CV, 2009 WL (Tex. App.-Dallas Feb. 25, 2009, no pet. h.) This case involved a trial court's grant of a motion for new trial followed by a later "ungranting" of that same motion. In its original opinion, the Dallas Court of Appeals held that the order "ungranting" the motion for new trial was void, because it was entered more than 75 days after the order that it would have reinstated. On rehearing, however, the court determined that the Texas Supreme Court's intervening opinion in In re Baylor Medical Center at Garland, No , 2008 WL (Tex. Aug. 29, 2008), dictated a different result. The Dallas Court of Appeals held that, after a motion for new trial is granted, the trial court may reconsider its ruling at any time before rendering a new final judgment. Pag- e -h Appellate Advocat HeinOnline App. Advoc

6 In re Minter Elec. Co., No CV, 2009 WL (Tex. App.-Dallas Feb. 2, 2009, orig. proceeding) In this case, the trial court granted summary judgment as to one of two defendants. The other defendant had not been served at the time of the summary judgment (about ten months after the petition was filed). The trial court set aside the summary judgment about a year later, and the defendant who had won on summary judgment sought a writ of mandamus, arguing that the judgment had been final. Everyone agreed that, under Texas Supreme Court precedent, the determinative issue in the case was whether there was any evidence that the plaintiffs intended to proceed against the unserved defendant-if not, the summary judgment would have been final. The majority held that there was at least some evidence that plaintiffs intended to litigate against the unserved defendant at the time of the summary judgment-the plaintiffs had requested a citation for the unserved defendant, and they continued to include the defendant on pleadings following the summary judgment. The dissent argued that the judgment was final (and the order setting it aside was untimely and void). The dissent was troubled by the plaintiffs' failure to explain why they had not served the unserved defendant in the ten months prior to the judgment. APPELLATE APPEAL JURISDICTION-NOTICES In two cases, the Eastland Court of Appeals held that it lacked jurisdiction to review sanctions imposed against an attorney who neither filed a notice of appeal nor joined the client's notice of appeal. Matbon, Inc. v. Gries, No CV, 2009 WL (Tex. App.-Eastland Jan. 15, of appeals held that, because the attorneylthe only party sanctioned-did not file or join a notice of appeal, the court lacked jurisdiction to review the sanctions order. State Office of Risk Management v. Foutz, No CV, 2009 WL (Tex. App.-Eastland Jan. 22, 2009, pet. filed) In this case, the trial court imposed sanctions against both the plaintiff and its counsel. The plaintiff appealed the sanctions order, but the notice of appeal made no reference to the sanctions imposed against its counsel. In addition, the plaintiffs brief on appeal was filed only on behalf of the plaintiff, and its appellate counsel was shown only as counsel for the plaintiff Under these circumstances, the Eastland court held that the plaintiffs attorneys failed to perfect an appeal, and the court declined to address the sanctions imposed against them. BILL OF REVIEW-POST-TRIAL DILIGENCE Cash v. Beaumont Dealers Auto Auction, Inc., No CV, 2008 WL (Tex. App.-Beaumont Jan. 15, In this case, a party attacked a prior adverse judgment by bill of review. The trial court dismissed the bill of review, concluding that the party could have timely moved for a new trial or appealed the original judgment, and therefore did not exercise diligence in pursuing available remedies before filing the bill of review. The Beaumont Court of Appeals reversed. It held that, although a party collaterally attacking a prior judgment by bill of review generally must show that it exercised reasonable diligence in pursuing available remedies (new trial, appeal, and/or restricted appeal), a party who was never served does not have to show diligence in pursuing such remedies, even if it learns of the prior judgment in time to appeal. The trial court entered a final judgment against the defendants as well as an order imposing sanctions on a defendant's attorney. The defendants filed a notice of appeal, appealing the final judgment and the sanctions order. The court I ae - TheAppelat Advocate HeinOnline App. Advoc

7 APPELLATE COURT JUDGMENT Kleas v. BMC West Corp., No CV (Tex. App.-Austin Feb. 20, 2009) (Supplemental Order), available at hu D F/p iow. Oi,Itd ::: Appellee/plaintiff filed a motion for rehearing asking the court of appeals to correct its judgment, which affirmed the trial court's judgment "in all things," to clarify that judgment is rendered against three particular appellants. In denying the motion, the court of appeals explained that by affirming the trial court's judgment in all things, the court "in effect" has rendered judgment against all appellants. Similarly, by affirming, the court has effectively rendered judgment against the surety on the appellants' supersedeas bond, relying on Texas Rule of Appellate Procedure The court noted that Rule 43.5 does not require the court of appeals to render judgment against the appellants; it must merely affirm or modify and render judgment against the appellant. The court's judgment affirming the trial court's judgment was proper. Accordingly, the court declined to correct the judgment. the amount of reasonable and necessary attorneys' fees and to re-calculate interest based on the modified recovery. After the trial court made these determinations, the court of appeals explained, it was to render judgment (i) stating its determinations of these issues, (ii) the items on which the court of appeals rendered judgment, and (iii) the issues on which the court of appeals affirmed. LIMITED REMAND Brent v. Field, 275 S.W.3d 611 (Tex. App.- Amarillo 2008, no pet. h.) This opinion provides a clear example of what constitutes a limited remand. The court of appeals modified the plaintiffs recovery on a contract claim as a result of an offset. The court of appeals also held that the trial court improperly denied the plaintiffs attorneys' fees claim under Section (8) of the Civil Practice and Remedies Code. Even though the plaintiffs recovery was offset, the statute nevertheless authorizes a recovery of fees. Because the appellate court modified the overall recovery, revised prejudgment and postjudgment interest calculations were necessary. For these reasons, the court ordered a limited remand to determine Page 21-TheAppelat Advocate HeinOnline App. Advoc