CIVIL PROCEDURE

WINTER 2009-2010

CA Partners v. Spears, 274 S.W.3d 51 (Tex. App.—Houston [14th Dist.] 2008, pet. denied)

Permanent Injunction Reviewed on Appeal Under Abuse of Discretion Standard: The court of appeals reiterated the standard of review for a permanent injunction: “We review the trial court’s grant of permanent injunctions for an abuse of discretion.” The court of appeals upheld the trial court’s grant of a permanent injunction. See also Hot Rod Hill Motor Park v. Triolo, 276 S.W.3d 565 (Tex. App.—Waco 2008, pet. filed) (“We review a trial court’s decision to grant a permanent injunction for abuse of discretion”; the court of appeals affirms the trial court’s grant of a permanent injunction).

In re TCW Global Project Fund II, Ltd., 274 S.W.3d 166 (Tex. App.—Houston [14th Dist.] 2008, orig. proceeding)

Failure to Raise Challenge to Ground for Denial of Motion Until Reply Brief in Mandamus Proceeding Waived That Challenge and Warrants Denial of Mandamus Relief: The defendants moved to dismiss based on a forum selection clause in a contract between the parties, and the trial court denied the motion. The defendants sought a petition for writ of mandamus in the court of appeals, but did not challenge one of the possible grounds relied on by the trial court, concerning the scope of the forum selection clause, in their petition, and raised this ground for the first time in their reply brief. Held: Construing Texas Rule of Appellate Procedure 52.5, providing for reply briefs in original proceedings, and the Court concluded that the defendants waived the argument that the scope of the forum selection clause was sufficiently broad to include all of the plaintiff’s claims. Accordingly, the court of appeals denied the petition for writ of mandamus.

Kerlin v. Arias, 274 S.W.3d 666 (Tex. 2008)

Plaintiffs’ Summary Judgment Affidavit Insufficient to Raise Fact Issue: The plaintiffs sued Kerlin for fraud over title to a substantial part of Padre Island. Kerlin acquired title in 1942, but the plaintiffs alleged fraud in an 1847 deed by one of the original owners of Padre Island. Kerlin moved for summary judgment relying on the 1847 deed and an English translation filed in the deed records the same year. These documents established that the original owner was a minor, his lawful guardian was his father, and the father signed the deed on his son’s behalf. The plaintiffs did not contest the authenticity of the document relied on by Kerlin, but instead relied on a 2003 affidavit by Eva Castillo, in which she alleged that the original owner was not a minor. The trial court granted summary judgment for Kerlin, but the court of appeals reversed, finding that Castillo’s affidavit raised a fact issue. Held: The Supreme Court disagreed with the court of appeals. First, the only representation Castillo made about the truth of her affidavit was that “[a]ll statements contained herein are true and correct to the best of my personal knowledge and belief.” To have probative value, an affidavit must swear that the facts presented reflect the affiant’s personal knowledge, an affiant’s belief about the facts was legally insufficient. Second, Castillo stated that she was competent to make the affidavit because she “heard testimony” in a related trial, “reviewed documents” related to the plaintiffs’ claims, and “read historical accounts about Padre Island.” This testimony was hearsay. “Third, nothing in the affidavit affirmatively shows how Castillo could possibly have personal knowledge about events occurring in the 1840s.”

Gardner v. U. S. Imaging, Inc., 274 S.W.3d 669 (Tex. 2008)

Taking of Default Judgment Causes Facts Alleged to be Deemed Admitted: The Supreme Court reiterated that, where the claim was for unliquidated damages, “once a default judgment is taken, all factual allegations contained in the petition, except the amount of damages, are deemed admitted.”

In re International Profit Associates, Inc., 274 S.W.3d 672 (Tex. 2009, orig. proceeding)

Mandamus Available to Enforce Forum Selection Clauses: The Supreme Court held that the trial court abused its discretion by refusing to enforce a forum selection clause. “Forum-selection clauses are generally enforceable, and a party attempting to show that such a clause should not be enforced bears a heavy burden. . . . A trial court abuses its discretion if it refuses to enforce a forum-selection clause unless the party opposing enforcement clearly shows that (1) the clause is invalid for reasons of fraud or overreaching, (2) enforcement would be unreasonable or unjust, (3) enforcement would contravene a strong public policy of the forum where the suit is brought, or (4) the selected forum would be seriously inconvenient for trial. . . . Mandamus relief is available to enforce forum-selection agreements because there is no adequate remedy by appeal when a trial court abuses its discretion by refusing to enforce a valid forum-selection clause that covers the dispute.”

No Undue Delay in Seeking Mandamus Relief: The Supreme Court noted that, although mandamus was not an equitable remedy, “its issuance is controlled largely by equitable principles.” One of these principles was that “equity aids the diligent and not those who slumber on their rights.” The Supreme Court examined several alleged periods of undue delay in the trial court and between the time the court of appeals denied mandamus relief and the time the relator sought relief in the Supreme Court. The Supreme Court concluded that none of these time periods was sufficiently long to support a finding of laches.

Badiga v. Lopez, 274 S.W.3d 681 (Tex. 2009)

Supreme Court Has Jurisdiction to Determine Court of Appeals’ Jurisdiction: The court of appeals dismissed an interlocutory appeal. The Supreme Court held, as it had in the past, that it had jurisdiction to decide whether the court of appeals lacked jurisdiction. This ground for Supreme Court jurisdiction was in addition to the statutory grounds.

SIGNIFICANT OPINION

Southwestern Bell Telephone Company, L.P. v. Mitchell, 276 S.W.3d 443 (Tex. 2008)

Stare Decisis Rejected: In a 2002 opinion, the Texas Supreme Court construed a provision in the Workers’ Compensation Act in a manner at odds with the interpretation adhered to by the Workers’ Compensation Commission, but the Legislature immediately thereafter enacted an amendment to restore the rule the Commission previously had applied. Under these circumstances, the Supreme Court declined to apply the doctrine of stare decisis and instead overruled its previous opinion. “Generally, the doctrine of stare decisis dictates that once the Supreme Court announces a proposition of law, the decision is considered binding precedent, but we have long recognized that the doctrine is not absolute. [W]e adhere to our precedents for reasons of efficiency, fairness, and legitimacy, and when adherence to a judicially-created rule of law no longer furthers these interests, and the general interest will suffer less by such departure, than from a strict adherence, we should not hesitate to depart from a prior holding. [U]pon no sound principle do we feel at liberty to perpetuate an error, into which either our predecessors or ourselves may have unadvisedly fallen, merely upon the ground of such erroneous decision having been previously rendered. We have observed that in the area of statutory construction, the doctrine of stare decisis has its greatest force because the legislature can rectify a court’s mistake, and if the legislature does not do so, there is little reason for the court to reconsider whether its decision was correct. But when the legislature does not acquiesce in the court’s construction, when instead it immediately makes clear that the proper construction is one long adopted by the agency charged with enforcing the statute, judicial adherence to the decision in the name of stare decisis may actually deserve the interests of efficiency, fairness, and legitimacy that support the doctrine. It is hardly fair or efficient to give effect to a judicial construction of a statute for a brief period of time when the legislature has reinstated for future cases, the same rule that had been followed before the court’s decision. The doctrine of stare decisis does not justify inequity and confusion in such a narrow gap of time.”

ETC Katy Pipeline, Ltd. v. FLR Pipeline Corridor No. 1, LLC, 276 S.W.3d 577 (Tex. App.—Waco 2008, no pet.)

When Merits Not Reached, Dismissal Should be Without Prejudice: Katy Pipeline filed five condemnation proceedings with the district court. Before the special commissioners met or made an award, Katy Pipeline filed a motion to dismiss, asserting that the matters had been settled between the parties. The trial court dismissed with prejudice, and refused to modify the order in accordance with Katy Pipeline’s request that the dismissal be without prejudice. Held: The court of appeals held that dismissal with prejudice was improper. “Generally, an order dismissing a proceeding with prejudice is improper when there has not been an adjudication of the merits of the claims. . . . When a dismissal does not implicate the claims’ merits, the trial court should dismiss the claims without prejudice.”

In re Coppock, 277 S.W.3d 417 (Tex. 2009)

Contempt Order Unenforceable Because Judgment Failed to Order or Command Performance: The trial court’s final decree of divorce incorporated a mediated settlement agreement between the husband and the wife which permanently enjoined them from communicating with each other “in a coarse or offensive manner.” The order referred to a “permanent injunction granted below,” and listed 21 different prohibited behaviors, but contained no injunctive language commanding or ordering the parties not to engage in the described conduct. Over the next two years, the former wife communicated numerous times with the former husband by telephone and e-mail in a manner the former husband considered violative of the decree concerning “coarse or offensive” communications. The trial court held the former wife in contempt. Held: The court of appeals denied relief, but the Supreme Court granted the former wife’s petition for habeas corpus. The former wife argued that the injunctive provision violated her constitutional rights, but the Supreme Court did not reach the constitutional issues. Instead, the Supreme Court held that the contempt order was unenforceable because the divorce decree did not contain “language commanding or ordering the parties not to engage in the described conduct.” “Without decretal language making clear that a party is under order, agreements incorporated in divorce decrees are enforced only as contractual obligations. . . . Obligations that are merely contractual cannot be enforced by contempt.”

Merck & Company, Inc. v. Garza, 277 S.W.3d 430 (Tex. App.—San Antonio 2008, pet. granted)

Jury Misconduct Supports Granting of New Trial: The deceased’s wife and children brought suit against Merck following deceased’s death, allegedly caused by his consumption of a drug manufactured by Merck. During voir dire, juror Rios stated that he knew the plaintiff’s wife “from school,” that is, from a school where both the wife and Rios were employed. After the jury trial that resulted in a verdict for plaintiffs, Merck discovered that Rios had received a number of interest free loans from the wife, including a final loan for $2,500 six months before trial. Merck also discovered several calls from Rios’ cell phone to the wife, including one within days after Rios’ receipt of the jury summons, another the night before jury selection, and four calls on the day after Merck filed a post-trial motion to take Rios’ deposition. Rios voted with the 10 to 2 majority in rendering a verdict against Merck. Merck filed a motion for new trial, but the trial court denied the motion. Held: The court of appeals reversed and remanded for a new trial, based on jury misconduct. “A new trial for jury misconduct is warranted if (1) the misconduct occurred, (2) it was material, and (3) probably caused injury.” All three elements were satisfied, the court of appeals concluded.

Retamco Operating, Inc. v. Republic Drilling Company, 278 S.W.3d 333 (Tex. 2009)

Personal Jurisdiction, Based on Specific Jurisdiction Doctrine, Satisfied Where Out of State Company Purchased Texas Oil and Gas Interests: Retamco, a Texas corporation, sued Paradigm Oil, another Texas Corporation, over unpaid royalties for oil and gas interests in several Texas counties. After a finding of discovery abuse, the trial court assessed sanctions against Paradigm and rendered a $16 million interlocutory default judgment. Thereafter, Retamco amended its petition to include a claim against Republic Drilling Company, a California corporation, for violation of the Uniform Fraudulent Transfer Act. Retamco claimed that during the pendency of the litigation, Paradigm fraudulently assigned to Republic a 72% interest in oil and gas properties in several Texas counties. Retamco alleged that these transfers led to Paradigm’s insolvency, rendering it unable to satisfy Retamco’s claims. Republic filed a special appearance, contending that because the allegedly fraudulent assignment of the Texas interests occurred entirely outside of Texas, Texas courts did not have personal jurisdiction over it. The trial court denied Republic’s special appearance, but in an interlocutory appeal the court of appeals reversed, holding that Republic is not subject to personal jurisdiction in Texas. Held: The Supreme Court reversed the judgment of the court of appeals. The Supreme Court’s opinion reviews numerous principles governing personal jurisdiction in general and specific jurisdiction in particular. The fact that the transaction concerned Texas oil and gas interests looms large in the court’s analysis and conclusion that the exercise of personal jurisdiction over Republic was proper.

In re Bank of America, N.A., 278 S.W.3d 342 (Tex. 2009, orig. proceeding)

Contractual Waiver of Jury Trial Enforceable; No Presumption Against Waiver: The plaintiff, the purchaser in a real estate contract, sued the defendant seller. When the plaintiff demanded a jury trial, the defendant moved to enforce a contractual waiver of the right to a jury trial. The court of appeals reversed, holding that the defendant did not meet its burden of producing prima facie evidence that the plaintiff knowingly and voluntarily waived its right to a jury trial. The court of appeals imposed this burden by inferring a presumption against a contractual jury waiver purportedly arising from the Supreme Court’s opinion in In re Prudential Insurance Company of America, 148 S.W.3d 124 (Tex. 2004, orig. proceeding). Held: The Supreme Court reversed, holding that the court of appeals’ inference was erroneous for two reasons. “First, a presumption against waiver would incorrectly place the initial burden of establishing a knowing and voluntary execution on [defendant], which is inapposite to our burden-shifting rule as articulated in In re General Electric, 203 S.W.3d 314, 316 (Tex. 2006) (per curiam) (‘[A] conspicuous provision is prima facie evidence of a knowing and voluntary waiver and shifts the burden to the opposing party to rebut it.’). Second, a presumption against waiver would create an unnecessary distinction between arbitration and jury waiver clauses, even though we have expressed that our jurisprudence ‘should be the same for all similar dispute resolution agreements.’ Prudential, 148 S.W.3d at 134.”

In re Lovito-Nelson, 278 S.W.3d 773 (Tex. 2009, orig. proceeding)

Motion for New Trial Granted Only by Written, Signed Order: Following a bench trial in a family law matter, the defendants timely moved for a new trial. The court heard the motion and initialed a handwritten entry on the docket sheet stating, “new trial granted.” The same date the trial court and counsel for all parties signed an agreed “pre-trial scheduling order” that set various pretrial deadlines and a final date and time for trial. The scheduling order also stated: “Trial on the merits is hereby set on this date.” Lovito-Nelson petitioned for a writ of mandamus in the court of appeals, but that court denied relief without an opinion. Held: The Supreme Court granted Lovito-Nelson’s petition for writ of mandamus. The Supreme Court reiterated prior rulings that a new trial can be granted only by a written, signed order in accordance with Texas Rule of Civil procedure 329b(c), which stated: “In the event an original or amended motion for new trial or a motion to modify, correct or reform a judgment is not determined by written order signed within seventy-five days after the judgment was signed, it shall be considered overruled by operation of law on expiration of that period.” “It is important that the requirement of a written order granting a motion for new trial be a bright-line rule. Otherwise, one might argue that all sorts of conduct should be given the same effect—a trial setting or other setting, a status conference, a hearing on a discovery motion, a request for discovery—the list is endless.”

In re Stonebridge Life Insurance Company, 279 S.W.3d 360 (Tex. App.—Austin 2008, orig. proceeding)

Failure to Consolidate Cases Warrants Mandamus Relief: Over a several year period, the plaintiff purchased 11 accidental death and dismemberment insurance coverage from Stonebridge, and the coverage language and exceptions in all 11 policies were essentially identical. The plaintiff made a claim under all the policies due to the amputation of his left hand and wrist that he alleged resulted from an automobile accident. Stonebridge denied coverage, alleging that at least some of the injury leading to the amputation was due to an earlier chain saw accident. The plaintiff brought 11 separate suits against Stonebridge and alleged in each suit that damages did not exceed $75,000, apparently to avoid removal to federal court. Stonebridge moved to consolidate the 11 suits, but the trial court denied the motion and Stonebridge sought appellate relief through a petition for writ of mandamus. Held: The court of appeals granted the petition. “Texas trial courts have broad discretion regarding the severance and consolidation of cases—but that discretion is not unlimited. . . . One well-established limitation on that discretion is the single-action rule, or the rule against splitting claims. . . . Purposes served by this rule include ‘preventing vexatious and oppressive litigation . . . where a single suit would suffice.’ . . . A trial court abuses its discretion—and is subject to correction by mandamus—by severing a single cause of action into two or more parts. . . . A trial court also abuses its discretion by severing a cause that is so interwoven with the remaining action as to involve the same facts and issues. . . . We view the failure to consolidate the eleven lawsuits here, which are pursuing essentially eleven pieces of a single claim for a single injury, as analogous to a trial court’s improper severance of a single lawsuit into eleven separate suits. The difference here being that [plaintiff] unilaterally severed the claims at the time of filing rather than filing one suit and then obtaining a severance. Whether the claim is split at the time of filing or after filing, the effect is the same from the standpoint of the single-action rule.”

In re Labatt Food Service, L.P., 279 S.W.3d 640 (Tex. 2009, orig. proceeding)

Wrongful Death Claim by Beneficiaries Must Be Arbitrated; Claim of Invalidity of Entire Agreement Containing Arbitration Clause Must Be Decided by Arbitrator: The deceased employee was a participant in Labatt’s occupational injury plan, offered in lieu of workers’ compensation insurance, and the plan provided for arbitration of claims. The deceased employee died while working, and his beneficiaries brought suit against Labatt for wrongful death. Labatt moved to arbitrate the wrongful death claim under the Federal Arbitration Act, but the trial court denied the motion and the court of appeals denied mandamus relief. Held: The Supreme Court granted Labatt’s petition for writ of mandamus to compel arbitration. First, the Supreme Court held that the beneficiaries, though nonsignatories to the contract containing the arbitration agreement, were required to arbitrate. “Several rules of law and equity may bind nonsignatories to a contract. For example, we have held that the principles of equitable estoppel and agency may bind nonsignatories to an arbitration agreement.” Here, the court held that the nonsignatories were bound by the agreement because of the derivative nature of a wrongful death claim. “Under the Wrongful Death Act as it applies here, wrongful death beneficiaries may pursue a cause of action ‘only if the individual injured would have been entitled to bring an action for the injury if the individual had lived.’ Tex. Civ. Prac. & Rem. Code § 71.003(a). . . . And we have consistently held that the right of statutory beneficiaries to maintain a wrongful death action is entirely derivative of the decedent’s right to have sued for his own injuries immediately prior to his death.” Second, the Supreme Court held that the beneficiaries’ contention that the entire contract containing the arbitration agreement was invalid was a claim that must be decided by the arbitrator, not the trial court. “There are two types of challenges to an arbitration provision: (1) a specific challenge to the validity of the arbitration agreement or clause, and (2) a broader challenge to the entire contract, either on a ground that directly affects the entire agreement, or on the ground that one of the contract’s provisions is illegal and renders the whole contract invalid. . . . A court may determine the first type of challenge, but a challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator.”

Ford Motor Company v. Castillo, 279 S.W.3d 656 (Tex. 2009)

Defendant Entitled to Discovery on Issue of Possible Outside Influence on Presiding Juror: The plaintiffs sued Ford in a products liability action, and the parties reached a settlement agreement after the presiding juror sent a note to the judge asking the maximum amount that could be awarded to the plaintiffs. Based on later discussions with jurors, Ford suspected that outside influence on the presiding juror may have occurred. When Ford was denied permission by the trial court to obtain discovery on the outside influence issue, it withdrew its consent to the settlement. The plaintiffs then moved for summary judgment against Ford for breach of the settlement agreement. Ford renewed its request for discovery, but the trial court rendered summary judgment for the plaintiffs for breach of the settlement agreement. The court of appeals affirmed. The Supreme Court reversed the judgment of the court of appeals and remanded the case to the trial court. The Supreme Court first reviewed principles governing settlement agreements. Written settlement agreements may be enforced as contracts even if one party withdraws consent before judgment was rendered on the agreement. But if consent was withdrawn, the agreed judgment that was part of the settlement may not be rendered. The party seeking enforcement of the settlement agreement must pursue a separate claim for breach of contract. “Like any other breach of contract claim, a claim for breach of settlement agreement is subject to the established procedures of pleading and proof. . . . Parties are ‘entitled to full, fair discovery’ and to have their cases decided on the merits. . . . A trial court abuses its discretion when it denies discovery going to the heart of a party’s case or when that denial severely compromises a party’s ability to present a viable defense. . . . Because the trial court denied discovery, Ford was unable to develop facts relevant to the presentation of its defense. Therefore, the trial court abused its discretion by denying Ford the right to conduct discovery on the breach of settlement agreement claim.”

In re Baylor Medical Center at Garland, 280 S.W.3d 227 (Tex. 2008, orig. proceeding)

Mandamus Proceeding Abated to Allow New Judge to Reconsider Order Granting New Trial; Supreme Court Overrules Prior Opinion Preventing Trial Judge From “Ungranting” New Trial Order More Than 75 D After It Is Signed: In this medical malpractice suit, the jury found for the defendant hospital, but the trial judge granted a new trial, allegedly based on juror affidavits prohibited by the rules. The hospital filed a petition for writ of mandamus in the court of appeals that was denied. The Supreme Court first addressed Texas Rule of Appellate Procedure 7.2, which provided for the substitution of a party in an official capacity and which further stated, “If the case is an original proceeding under Rule 52, the court must abate the proceeding to allow the successor to reconsider the original party’s decision.” In accordance with this rule, “[m]andamus will not issue against a new judge for what a former one did.” Because a new trial judge replaced the judge who granted a new trial, the Supreme Court was obligated to abate the mandamus proceeding to permit the new judge to reconsider the granting of a new trial. “But another rule prevents a trial judge from ‘ungranting’ (i.e., vacating) a new trial order more than 75 days after it is signed.” This rule originally derived from a provision in Rule 329b, which established a deadline for deciding motions for new trial. In 1981, however, Rule 329b was amended to eliminate the limit on plenary power if motions for new trial are granted. Nonetheless, in Porter v. Vick, 888 S.W.2d 789 (Tex. 1994), the Supreme Court had reiterated the “ungranting” deadline. Now, the Supreme Court overruled Porter v. Vick and abated the mandamus proceeding to allow the new district judge to reconsider the order granting a new trial.

Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419 (Tex. 2008)

In Equity Action, Jury Decides Disputed Facts, But Court Decides Whether to Grant Relief: “As with other equitable actions, a jury may have to settle disputed issues about what happened, but ‘the expediency, necessity, or propriety of equitable relief’ is for the trial court, and its ruling is reviewed for an abuse of discretion.”

Ginn v. Forrester, 282 S.W.3d 430 (Tex. 2009)

Restricted Appeal Dismissed Because No Error Apparent On Face of Record: The trial court dismissed the case for want of prosecution. Six months later, the plaintiff filed a notice of restricted appeal. At the plaintiff’s request, the district clerk included in the clerk’s record a notation that the clerk’s office was unable to locate documents indicating notice was sent or a hearing was held concerning the dismissal. The court of appeals reversed, relying on the district clerk’s notation. Held: The Supreme Court reversed the judgment of the court of appeals and rendered judgment dismissing the case. Texas Rule of Civil Appellate 165a(1) provided that before a trial court may properly dismiss a case for want of prosecution, “[n]otice of the court’s intention to dismiss and the date and place of the dismissal hearing shall be sent by the clerk to each attorney of record.” The Supreme Court then summarized governing principles. “When extrinsic evidence is necessary to challenge a judgment, the appropriate remedy is by motion for new trial or by bill of review filed in the trial court so that the trial court has the opportunity to consider and weigh factual evidence. . . . Accordingly, we have held that affidavits field for the first time in the appellate court from the district clerk and its counsel averring, respectively, that notice was neither given nor received constituted extrinsic evidence and did not support a restricted appeal. . . . As to what does constitute error on the face of the record, we have clearly said that silence is not enough. The rules governing dismissals for want of prosecution direct the district clerk to mail notice containing the date and place of hearing at which the court intends to dismiss the case, Tex. R. Civ. P. 165a(1), and a similar notice of the signing of the dismissal order, see Tex. R. Civ. P. 306a(3). But the rules do not impose upon the clerk an affirmative duty to record the mailing of the required notices; accordingly, the absence of proof in the record that notice was provided does not establish error on the face of the record. . . . We fail to see the distinction . . . between a record that is silent and a record that contains a written notation that the record is silent; either way, proof of error is absent.”